Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
January 30, 2007

Regulatory Report:
Sponsored by:
Lincoln Foodservice Products Inc./Enodis
New Jersey's New Food Code Finally Nods To FDA
California Food Code To Change July 1
Georgia's New Food Code Finally Kicks In
New Code Says You Have To Be Green To Build In Santa Cruz
County Inspection Grades Clearer Than Dancing Rules

Industry Report:
Sponsored by:
A.J. Antunes & Co.
NRA Names 19 Products KI Award Recipients
Last Roundup For Charity Riders To NAFEM Show?
California Utilities Tell How To Boost Profits With Energy Savings
New Discoveries May Help Prevent E. Coli Outbreaks
Where's Kevin Bacon When We Need Him?

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In This Section:
Technomic Tweaks 2007 Forecast, Boosts Full Service
Consumers' Mood Improves As Gasoline Prices Fall
Outlooks Tick Up In Europe, China, Down Elsewhere

This issue's Regulatory ReportSponsor: Lincoln Foodservice Products Inc./Enodis
Industry ReportSponsor: A.J. Antunes & Co.
Economic Report HOFEX 2007

Technomic Tweaks 2007 Forecast, Boosts Full Service
Chicago-based Technomic Inc. has revised upward its forecast for 2007 foodservice operator sales. Citing an improving outlook, the research firm raised its forecast for full-service restaurant sales nearly a full point, to 4% from an earlier projection of 3.1% nominal sales growth. Given the weight of the full-service segment in foodservice—it is the single largest segment in dollars—the revision pushes the firm's forecast for total foodservice market growth to 4% from 3.8%. The change also means Technomic's '07 forecast now slightly exceeds its estimate of '06 growth, which stands at 3.9%.

In the only other change from Technomic's original '07 forecast, released in September, the strong growth of lodging foodservice was cut back from 8% to a still-robust 6.5%.

Technomic pegs food-away-from-home inflation at 2.8% for both years. (The National Restaurant Association forecast for '07 is a similar 2.9%.) Thus Technomic's '07 forecast for real growth is 1.2%.

Technomic V.P. Joe Pawlak told FER Fortnightly several factors led to the full-service revision. "Some of the (recent full-service chain) same-store-sales declines have stabilized a bit," he said. "Economists are pretty optimistic about disposable personal income growth this year. And finally, falling prices at the (gasoline) pump are putting more discretionary dollars in consumers' pockets."

He added that the downward revision in the lodging forecast resulted from a slowdown in the growth rate of "rooms sold."

For information on Technomic research products, including its 100 Top Emerging Chains report, go to or call 312/876-0004.


Section sponsored by HOFEX 2007

Consumers' Mood Improves As Gasoline Prices Fall
In more good news for foodservice, consumer sentiment and other indicators rose sharply in the January preliminary reading from the University of Michigan Surveys of Consumers. The readings were released Jan. 19 by Reuters, which now has an exclusive arrangement with the research body.

The Index of Consumer Sentiment jumped to 98 in mid-January, well ahead of the December reading, released before Christmas, of 91.7. It was the highest reading for the Sentiment Index since January 2004.

Director of Surveys Richard Curtain said falling gasoline prices have led consumers to be more optimistic. Thus, "Consumers reported more favorable assessments of their personal finances and anticipated a higher rate of economic growth."

The indexes of Current Conditions and Consumer Expectations, the latter a component of the Index of Leading Economic Indicators, showed similar strong gains.

But consumers are still somewhat cautious. Curtain added that the declines in gasoline prices "did not relieve concerns among consumers with the otherwise persistently high inflation rate."

Many economists and the Federal Reserve governors are similarly watchful. The Consumer Price Index was up 0.5% in December, mostly due to a temporary uptick in energy prices. The core rate, less energy and food, rose 0.2%.

The Conference Board's Consumer Confidence Index is due out today (Jan. 30), and the full month University of Michigan indices will be released Feb. 2. They should help indicate whether the strong confidence gains are more than a blip.

Section sponsored by HOFEX 2007

Outlooks Tick Up In Europe, China, Down Elsewhere
Although most of the forecasts of economic growth for 2007 in major world economies remain below '06 estimates, the outlook for several big economies improved in January. Consensus growth forecasts of '07 real gross domestic product from Blue Chip Economic Indicators improved for the Eurozone, China, Singapore and Brazil among others.

The forecast for the Eurozone was 0.1 point higher in January than in December, rising to 2.1% real GDP growth. A big part of the gain resulted from a 0.2-point higher forecast for the German economy, to 1.8%. The outlook for France was down 0.1 point to 1.9%

China's rapidly expanding economy is now forecast to grow 9.4% in '07, up 0.1 point from the December consensus. It is estimated to have grown 10.4% last year. Chinese authorities have been trying to slow growth, at least slightly.

Among countries with lower GDP forecasts, South Korea and Japan saw the most deterioration, though both remain positive by recent standards. The forecast for South Korea stood at 4.6%, that for Japan 2%, both down 0.3 points. The forecast for Canada, closely tied to the U.S. economy, also fell slightly, to 2.4%. Forecasted GDP growth for Mexico held at 3.4%.

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