Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
January 7, 2010

Regulatory Report:
Sponsored by:
Manitowoc Foodservice
California Trans-Fat Ban Now In Effect
Illinois Fire Marshal Clarifies New Code Requirements
More Towns Work To Lift FOG
North Carolina, Michigan Join List Of Smoke-Free States

Industry Report:
Sponsored by:
Server Products
IFMA Opens Voting To Honor Regional Chains
Obit: Industry Veteran Ray Donovan
EQ Or IQ: FEDA To Examine Why Businesses Succeed
Middleby Finalizes Doyon Deal
Vollrath Acquires Lincoln Smallwares
Snap-Drape Now Known As Forbes Group

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In This Section:
Commodities Prices To Rise Over Next Two Years
Back To Waffling: NRA Index Falls Again In November
State Tax Revenues Decline Again By Double Digits
FER E&S Forecast Now Available For Only $249

This issue's Regulatory ReportSponsor: Manitowoc Foodservice
Industry ReportSponsor: Server Products
Economic Report Henny Penny

By Robin Ashton

Commodities Prices To Rise Over Next Two Years

The downs and ups of commodities prices during 2009 turned out to be essentially a wash, according to price transaction data from Purchasing magazine. But looking ahead, things may be different.

The magazine and its data arm at are forecasting upward price pressure on commodities during the next two years as the manufacturing and construction industries recover. The organization's latest price data and forecasts were released Jan. 5.

The magazine's Industrial Commodity Price Index finished '09 only a point below where it started the year, though it had fallen 34% in mid-year as the recession bit deeply. The bounceback that began late spring affected most but not all of the 140 industrial materials and inputs Purchasing tracks and weights for the index. Carbon steels, for example, saw prices rise 25% to 30% between the second and fourth quarters, while 304 stainless prices rose 20.4%. Aluminum and copper sheet prices rose a more moderate 9% to 11% during the second half of '09. Extrusion-grade LDPE plastic was also up 11% from its second-quarter low. Even lumber and some plywood prices rose double digit.

Purchasing expects overall 14% growth of commodity prices for '10 and at least another 8% in '11. As the magazine's Executive Editor Tom Stundza notes in the commentary accompanying the data and forecasts, "Economists call this outlook a correction; buyers see it as inflation."

Still, according to Stundza, demand has yet to catch up with supply for many materials and energy-input categories. The forecast for 304 stainless prices—and the nickel and chromium alloys that help drive stainless costs—is restrained through most of the next two years. Natural-gas prices are at historically low levels, in part because new extraction techniques have driven up supplies. While slight gains are forecast, prices for the energy input are expected to remain in the $5 to $6 a thousand-cubic-feet range through '11, well below the $10 to $13 prices seen following Hurricane Katrina in '05. And since natural gas is the feedstock for many plastics, plastics prices should follow suit with only restrained increases.

Information on Purchasing's commodities-price data and forecasts is available at


Section sponsored by Henny Penny

Back To Waffling: NRA Index Falls Again In November
Gosh, we were hoping things had turned for the National Restaurant Association's Restaurant Performance Index. It rose half a point in October, after all. But no. The index turned down again—the third time in four months—in November. The November measurement marked the 25th straight month the index has been below 100, the dividing line between contraction and expansion.

The overall RPI fell 0.2 point to 97.8. Six of the eight total components, including all four of those in the Current Situation Index, declined in November.

The Current Situation Index lost half a point, to 96. A big 1.4-point drop in the component measuring ose making a capital buy the last three months was the big factor. All the other Current Situation Index components were off only 0.1 to 0.2 point.

The overall Expectations Index was flat, with the glimmer coming from the only component showing an upward trend, expected same-store sales six months out. On the flip side, the Expectations component for plans to make a capital expenditure in the next six months declined 0.3 point.

The RPI decline appears to be a reflection of the recession finally hindering quick-service and fast-casual operators the way it's hit full-service casual, family and fine-dining operators for more than two years. Despite some signs of light in the general economy and even in the jobs picture, restaurant sales and traffic have not yet shown improvement. With the faster food segments also negative finally, the overall RPI continues waffling. It has fallen three of the past four months, but only moderately. We still have some way to go before the market improves.

Section sponsored by Henny Penny

State Tax Revenues Decline Again By Double Digits
We've forecasted that the publicly-funded foodservice segments will face tough going over the next year, and new data are backing up that projection. Preliminary data from the Rockefeller Institute of Government on state tax revenue receipts for third-quarter '09 show overall state revenues fell 10.7% in current dollars over the same period of '08.

If the third-quarter report is correct, it'd mark the fourth consecutive quarter of state-tax revenue declines. While this quarter's fall isn't as bad as the 16.6% drop reported for the second quarter, it's bad enough. Total tax revenues fell in all 44 states for which comparable data are available.

If there is any good news in the report, it's that all three major sources of state revenue—personal income taxes, sales taxes and corporate taxes—apparently bottomed out in the second quarter.

State tax revenues help fund a wide variety of capital and operating budgets for foodservice segments including schools, colleges and universities, corrections, public healthcare, eldercare programs and the like.

Section sponsored by Henny Penny

FER E&S Forecast Now Available For Only $249
The revised FER forecast, newly updated in November, is now available for just $249—discounted from the original autumn 2009 price of $349, when the forecasting was further in advance.

In addition to an "Executive Summary" presentation, purchasers of the updated forecast receive six more sections in PowerPoint format, providing updated data and forecasts on macroeconomic, operator, materials pricing and E&S sales trends, an overview of the Top 150 E&S Manufacturers from Clarity Marketing and historical data on E&S pricing from AutoQuotes Inc.

Those who have attended FER forecasts or other meetings, or have purchased the forecast in the past, will receive a $50 discount. Those who attended the President's Preview Forecast Seminar in August get the revised forecast at no charge and should have received an e-mail link to the updates. For information, or if you missed the link, e-mail Robin Ashton at or Chris Palmer at, or call the magazine's office at 800/986-9616.

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