Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
January 17, 2006

Regulatory Report:
Sponsored by:
APW Wyott
Fed Energy Efficiency Tax Credits Kick In
Outlying Chicago 'Burbs Facing Permanent Water Shortages
California Utilities Team Up For Statewide Energy Rebates
Score-On-The-Door For Chicago?
Iowa Offers Web-Based Inspection Scores

Industry Report:
Sponsored by:
MUFES '06,
Feb. 11-13, 2006

DIFC Changes Name To Unified Brands
Middleby Acquires Oven Maker Alkar
FER's Second Annual Awards Program Gears Up
NSF Puts Out Call For Food Safety Stars
NSF, ILSI And WHO Team Up For Hard Water Conference

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In This Section:
For Those Who Took a Long Holiday, Our 2006 Forecasts
NAFEM Index Charts Strong Manufacturer Growth In Third Quarter
NRA Forecasts Strongest Growth In Mountain States, Southeast
Blue Chip Economists Hold 2006 Real GDP Forecast At 3.4%

This issue's Regulatory ReportSponsor: APW Wyott Innovations Industry ReportSponsor: MUFES '06, Feb. 11-13, 2006

Economic Report FER's Customer Choice Dealer Awards

For Those Who Took a Long Holiday, Our 2006 Forecasts:
For those who may have been distracted, this is our final reminder that our exclusive 2006 forecasts remain available in the FER Fortnightly archives.

The E&S forecast, including a downloadable file of the numbers, is available at

The operator, commodity and macroeconomic forecasts are at

And the National Restaurant Association's 2006 forecast and materials price forecasts are at


NAFEM Index Charts Strong Manufacturer Growth In Third Quarter
Foodservice equipment manufacturers continued to post healthy domestic and export sales gains in third-quarter 2005, according to the latest data from the Industry Index Program maintained by the North American Association of Food Equipment Manufacturers.

For the quarter, North American sales rose 6.9% versus the year-earlier period and were up 4.1% over the second quarter. Year-to-date, sales for the first three quarters rose 8% in North America compared to same-period '04, while export sales jumped a whopping 17.7%. Third quarter export sales were up 5.6% over second quarter. Export sales are normally about 8% of the total market.

It is the seventh consecutive quarter of North American sales gains compared with the quarter the year before. The pace of growth in the second and third quarters '05 has moderated some from the previous three quarters, two of which showed double-digit growth.

NAFEM reports nominal growth, so these growth rates include price increases, which have been higher the last two years as manufacturers attempt to recoup very large materials price increases.

The trend of the NAFEM numbers—continued growth with a slight moderation in the rate of increase—is in line with earlier third quarter data from Marketing Agents Association for the Foodservice Industry and John Muldowney's tracking of E&S public company performance.

Section sponsored by FER's Customer Choice Dealer Awards

NRA Forecasts Strongest Growth In Mountain States, Southeast
Fueled by torrid population increases in Nevada, Arizona and Colorado, the Mountain region is forecast to show the strongest growth in foodservice sales of any of the nine U.S. regions. This prediction comes from the National Restaurant Association's detailed state-by-state forecasts that are included with the association's annual forecast.

Other regions that should show above average growth in '06 are the South Atlantic, Pacific and Middle Atlantic areas. All four central regions and New England are forecast to have below average growth this year, as population and job growth trends trail national averages. The national growth rate is forecast by NRA at 5.1% nominal, which includes predicted menu price increases of 2.6%. Given the deflator, NRA still expects all nine regions will show real growth this year.

Led by Nevada's forecast 8.9% and Arizona's 8.1% growth rates, the eight Mountain states are predicted to show an overall 7.1% growth rate this year. The South Atlantic region is projected to grow 6.1%, led by Florida's 6.9% and North Carolina's 6.2%. And the five Pacific states are forecast to grow 6.0%. California, with nearly $51.5 billion in estimated foodservice sales, a market nearly twice as large as Texas, the next largest, is projected to grow a healthy 6.2%. Texas's growth is predicted to be a robust 6.7%, but the West South Central region's overall growth is pulled down to 4.4%, second lowest, by the -8.8% hit Louisiana takes because of Hurricane Katrina's damage.

The five East North Central states surrounding the Great Lakes are forecast to post the lowest growth rate of any of the nine regions at 4.2%.

The NRA forecast includes detailed discussions of prospects in each of the nine regions, as well as forecasts for all 50 states. It is available in print and electronic formats from NRA for $49.95, $24.95 for members, at

Section sponsored by FER's Customer Choice Dealer Awards

Blue Chip Economists Hold 2006 Real GDP Forecast At 3.4%
While the leading economists polled monthly by Blue Chip Economic Indicators expect some slowing in consumer spending in 2006, they have held their consensus forecast of real growth of gross domestic product at 3.4%, unchanged from last month's survey.

The consensus is that stronger growth in business investment, which accounts for about a third of the total economy, and exports, will offset slowdowns in consumer spending and residential investment. Most economists also expect inflation pressures to moderate, as energy prices come down a bit. And that has many believing that the Federal Reserve will raise interest rates a quarter point once or twice more, then halt the current round of increases. This expectation has in part fueled the recent run-up in stock prices to levels not seen since '01.

The economists also made their first consensus forecast of '07 real GDP growth. It appears they see continuing moderation of the current growth cycle. First '07 forecast: 3.1% year over year. Growth was 4.2% in '04 and 2.7% in '03.

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