Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
February 27, 2007

Regulatory Report:
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California Mulls, NYC Delays Calorie Counts On Menus
Massachusetts Poised To Pass Franchisee Protection
Colorado's No-Bare-Hand Contact Rule Takes Effect March 1
Wisconsin, Virginia, County in Kentucky Step Closer To Smoking Bans

Industry Report:
Sponsored by:
A.J. Antunes & Co.
Free Book On Sustainable Building Design Offered
Study Shows Copper Is An E. coli Killer
EPA Announces Lifecycle Building Competition
Canada Reports Another Mad Cow

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In This Section:
Operators Saw Traffic, Sales Rebound In Late 2006
Economists Boost 2007 GDP, Consumer Spending Forecast
Consumer Prices Jump More Than Anticipated In January

This issue's Regulatory ReportSponsor: Enodis Industry ReportSponsor: A.J. Antunes & Co.
Economic Report FHA2008

Operators Saw Traffic, Sales Rebound In Late 2006
Falling gasoline prices helped fuel a 2% gain in customer traffic and a 2% gain in check averages for the three months ended November 2006 versus the year earlier period, according to data from the NPD Group's CREST Executive Topline. The combination means operators' overall sales for the year rose 4% . Overall, traffic rose 2% for the year.

But the report notes some dramatic changes in where operators are seeing gains. Traditional foodservice occasions—dinner, mail-meal entrees and on-premise business, especially in full service segments—are limping along. Meanwhile, breakfast and late-night snacks, casual dining takeout, non-traditional beverages and sandwiches, including burgers, are doing well.

One thing that hasn't changed—major chains continue to drive the market, led by McDonald's. Major chains took another point of total traffic in the period, a 3% gain, to 57% of the total. Small chains saw a two point gain and held at 13%. Independents were down 1% to only 30% share of traffic. During the past five years, major chains have gained seven points of share while independents lost six points.

Some of the change in traffic can be attributed to unit changes. Independents had a net loss of 2% in units while chains gained a point.


Section sponsored by FHA2008

Economists Boost 2007 GDP, Consumer Spending Forecast
The big boys think things are looking up for the U.S. economy. Better than expected growth in the fourth quarter of 2006 and an improving inflation outlook led the 53 major economists polled by Blue Chip Economic Indicators to raise their forecast for real growth of U.S. gross domestic product to 2.7% for '07. It's a 0.3 point rise from their forecast just last month.

The economists have not changed their opinion that growth will ramp up gradually during the year, with the first quarter annualized growth slowest at 2.5% and reaching 3% growth by the fourth quarter.

Significantly for foodservice prospects, the economists raised their forecast of real growth of personal consumption expenditures for the year 0.2 point to 3.1%.

The economists do believe, as the Chairman of the Federal Reserve Bank Ben Bernanke said before Congress last week, that core inflation will continue to moderate.

The GDP forecast for '08 held at 3%.

Section sponsored by FHA2008

Consumer Prices Jump More Than Anticipated In January
Unexpected jumps in food and medical costs drove the Consumer Price Index higher than expected in January. The overall Index rose 0.2% according to the U.S. Labor Department. The so-called "core" rate, which excludes food and energy, rose a surprising 0.3%.

While energy prices including natural gas fell 1.5% last month, food prices increased 0.7%, the largest rise since April 2005. Prices were higher for fruits and vegetables and for dairy products. Produce prices were severely impacted by freezing weather in several key growing areas.

Medical costs rose a whopping 0.8% in January. Both food and medical costs directly impact foodservice operators.

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