Foodservice Equipment Reports Fortnightly
www.fermag.com

Welcome to FER Fortnightly Online Newsletter
January 20, 2009








Regulatory Report:
Sponsored by:
Manitowoc Foodservice
Texas To Try Trimming Trans Fat
Two More Cities Say No To FOG
Orange County Gets 'F' On Restaurant Grading
Clock Ticking In Seattle For Polystyrene Take-Out Packaging
N.H. Bill Says 'Live Allergen-Free Or Die'

Industry Report:
Sponsored by:
Server Products
Meeting Set For Energy Star Griddle Standard
Whalen To Head Electrolux F.S. Americas
Reminder: NSF Awards Deadline Nears
Pizza Fusion Plans Faster Growth
Quiznos To Break Ground In India



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In This Section:
FER Sticks To Forecasting Guns, At Least For Now
NRA Forecast: Southwest, West To Fare Best In Tough Year
Purchasing Magazine Shows Prices In Freefall
Employment, Retail Sales Dive In December

This issue's Regulatory ReportSponsor: Manitowoc Foodservice
Industry ReportSponsor: Server Products
Economic Report The NAFEM Show '09

By Robin Ashton

FER Sticks To Forecasting Guns, At Least For Now

If you've seen the January issue of Foodservice Equipment Reports, you now have our complete forecast of the market for foodservice equipment and supplies for 2009, updated with the recently released 2008 Size & Shape of the Industry market numbers for '07 from the North American Association of Food Equipment Manufacturers.

We just went back and read what we wrote for the issue about six weeks ago. Things are changing fast, but for now we're not revising the forecast for the E&S market we released in mid-October. At that time, we predicted E&S sales at the manufacturers' level, including exports, would fall 3.8% in real terms in '09 on the heels of a 3.5% real decline in '08. Forecast nominals are also negative, down 0.8% for '08 and 1.4% in '09.

Until we see the fourth-quarter '08 numbers from the Manufacturers' Agents Association for the Food Service Industry's MAFSI Business Barometer and numbers from the public E&S companies in late February or early March, we're sticking with our October forecasts. Our forecasting partner John Muldowney at Clarity Marketing, Tipp City, Ohio, and we will look at things again then and report them in this space.

There's no question we could revise downward our forecast given the current climate of job losses, negative retail sales and negative consumer sentiment. The casual dining numbers for the fourth quarter have been especially appalling. Some more-upscale operators have seen double-digit same-store sales declines versus the period in '07.

Anecdotally, some large manufacturers have been telling us they think heavy equipment sales could be down as much as 10% in '09, declines the industry hasn't experienced since the recession of 1990-'91. They didn't say whether they meant nominal or real. Nominal would be really ugly, since many manufacturers are still trying to raise prices. But we remain inclined to think conditions won't be that bad.

So you have it electronically, we include the current forecast following in PDF format so you can download it.

You can get our complete forecast, including the assumptions and data behind our forecasts for a now-discounted $249. The forecast includes six PowerPoint decks including general economic, operator, material-price and E&S trends leading to the hard-number forecasts; an analysis of the top 150 E&S manufacturers from Muldowney; and historical E&S price-change data from AutoQuotes Inc. To order the forecast or for more information, contact Jessica Scurlock at jscurlock@fermag.com or call 800/986-9616.

 

Section sponsored by The NAFEM Show '09

NRA Forecast: Southwest, West To Fare Best In Tough Year
We promised last issue to revisit the National Restaurant Association's 2009 forecast for the state-by-state forecasts and regional data, so here goes:

Long story short, growth markets are seeing slower growth. Most areas are seeing negative data. And overall, the gap between the front of the pack and the back has narrowed considerably.

Consistent with the past decade or more, the fastest growth in restaurant sales for 2009 will again be in Southwestern and Mountain States as they continue to benefit from in-migration from other regions of the country.

Texas will show the largest percentage growth in restaurant sales in '09, at 4% in nominal dollars, NRA forecasts, followed by Nevada, Colorado and New Mexico.

Which is not to say we're looking at several growth states. Texas is the only one with nominal growth that exceeds NRA's predicted menu price increase hurdle of 3.6%. The rest all fall into flat or negative territory.

The state with the slowest growth in '09 is expected to be New York, with only a 1.2% gain, followed by Ohio at 1.3%. A slew of Mid-Atlantic and New England states, Michigan, and, perhaps surprisingly, Florida, are predicted to grow only in the 1.6% to 1.8% range.

In the past few years, the gap between the fastest and slowest growing states has been five to six points nominal. But not this year. The high-growth states tend to be those most affected by the housing crisis, and the rapid pace of restaurant development in these states has slowed dramatically.

The complete '09 NRA forecast, including detailed segment and state-by-state forecasts, as well as a wealth of trends data, is available from NRA for a nominal fee by calling 800/482-9122 or by going to NRA's Web site at www.restaurant.org. We'll look at the forecast's menu and other trends in the next edition of FER Fortnightly.


 Section sponsored by
The NAFEM Show '09

Purchasing Magazine Shows Prices In Freefall
How about a little good news amid the gloom: The commodity price bubble has burst, at least for the moment. Transaction prices for Purchasing magazine's market basket of 109 materials and industrial commodities plunged a remarkable 22% in the fourth quarter of 2008, according the magazine's latest historical data.

Both producers and distributors slashed prices throughout the quarter as manufacturers rapidly cut production and purchases of commodities and materials. The size of the drop was exacerbated by the remarkable fall of energy prices.

As Purchasing Executive Editor Tom Stundza said in his commentary accompanying the quarterly data and forecasts, "The shift from 'boom' to 'bust' in many commodities has been the most rapid in the 16-year history of the Purchasing Commodity Price Index." The big decline in the fourth quarter followed six consecutive quarters of run-ups.

Purchasing forecasts prices will drop another 4% in the first quarter of '09 as suppliers continue to cut prices.


 Section sponsored by
The NAFEM Show '09

Employment, Retail Sales Dive In December
Most of you no doubt noted that the U.S. economy shed jobs in December, and indeed in the last quarter of 2008, at an alarming rate. And last week, the U.S. Commerce Department released dreadful numbers on retail sales in December, with downward revisions for November and October.

Some 524,000 folks lost jobs in December, following a revised 584,000 decline in November, according to the Bureau of Labor Statistics. December was the 12th consecutive month of job declines. Overall, the economy shed 1.9 million jobs in the four-month period from September through December, and more than 2.5 million for the year, a record for any period since the transition from a war to a civilian economy in 1945. The unemployment rate came in at 7.2% in December. It stood at 4.9% in January '08.

The leisure and hospitality industries lost 22,000 jobs in December, less than nearly every other major category. Retail trade, for example, shed 67,000 jobs, and manufacturing lost a whopping 149,000.

The other worrisome aspect of the report was average weekly hours, which fell to 33.3 hours, the lowest level since BLS began tracking the number in 1964. Employers usually cut hours before resorting to layoffs, so many analysts saw the trend as foreboding several more months of large job cuts.

Employment levels and trends have long been a key indicator of foodservice sales. And the retail sales number released by the Commerce Department last Wednesday reflected this. Eating and drinking place sales fell 2.2% in December. Overall, retail sales were down 2.7% versus the prior month on a seasonally adjusted basis, following declines revised downward for October and November of 3.4% and 2.1% respectively. It was the sixth consecutive monthly decline in retail sales.



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