Foodservice Equipment Reports Fortnightly
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Welcome to FER Fortnightly Online Newsletter
March 9, 2010








Regulatory Report:
Sponsored by:
Manitowoc Foodservice
Virginia Ponders Tracking Grease Handlers
Starbucks Opts For Local Laws On Handguns
Grease Traps Spur Local Ordinances
Kentucky Implements New Food-Safety Code

Industry Report:
Sponsored by:
Server Products
Hardee's Parent CKE To Be Acquired
Scotsman Issues Voluntary Cuber Recall
India Is New Focus For Yum!
Subway Tops 32,000 Stores, Eyes Boston Expansion
Carlson Taps New Leadership For T.G.I. Friday's
NAFEM Announces New Officers, Directors



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In This Section:
January NRA Index Falls, But Expectations Rise
Wholesale Food Prices Up As Menu-Price Increases Moderate
Demographics Driving Drop In Restaurant Evening-Meal Visits, NPD Says
Revised FER 2010 E&S Forecast Available

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

By Robin Ashton

January NRA Index Falls, But Expectations Rise

Different components pointed in different directions, but overall, the National Restaurant Association's Restaurant Performance Index dipped slightly again in January. The RPI was off 0.3 point, to 98.3. January marked the 27th consecutive month the index has been below 100, the dividing line between industry expansion and contraction.

The two capital-expenditure components, which had taken a beating lately, rebounded in the most recent survey. In December the percentage of operators responding to the survey who made a capital purchase in the preceding three months and those intending such a purchase in the next six months both hit record lows. The measure for purchases made in the preceding three months fell almost two full points from October to December 2009. But in the January survey, the cap-ex indicators rose, driving the capital expenditure component up 0.3 point.

On the flip side, components for both current and anticipated same-store sales, traffic and future business conditions fell.

The Current Situation Index fell in January 0.8 point, on 1.6- and 1.1-point declines respectively in current same-store sales and customer traffic. The labor component was off 0.8 point.

At the same time, however, the Expectations Index rose 0.2 point on gains of 0.7 points in both the cap-ex measure and staffing outlook. The index rose to 100.1, the first time the Expectations Index has been above the 100 level in nine months. It had reached 100, but no higher, twice during the period. Moderating the Expectations Index gain in January, the measure for same-store sales expectations during the next six months fell 0.2 point; the measure for expected business conditions fell 0.4 point.

The overall index has waffled the past six months but remains nearly two points ahead of its record low at the end of 2008.

 

Section sponsored by Henny Penny

Wholesale Food Prices Up As Menu-Price Increases Moderate
One of the few things that helped foodservice operators weather the biggest sales declines in recent history last year was a near-record decline in wholesale food prices. On an average annual basis, wholesale food prices fell 3.7% last year, allowing many operators to post profit gains even as sales and customer counts fell.

But unfortunately, the party's over. Overall wholesale food prices rose 0.4% in January, after posting a 1.8% gain in December. It was the sixth consecutive month of gains in the index for all wholesale foods. The Producer Price Index for all finished goods also rose 1.4% in January, the fourth straight month of increases. A 5.1% gain in energy prices was a key factor in the January increase. The finished goods index is up 4.6% from 12 months ago on a seasonally unadjusted basis.

Meanwhile, menu-price increases, a component of the Consumer Price Index, continued to moderate in January, up only 0.1%. Menu-price increases have slowed dramatically during the past six months. For the past 12 months, menu prices have increases only 1.6%, the smallest gain since 1994, according to the National Restaurant Association.

Grocery prices, on the other hand, rose 0.4% in January, the largest increase since September 2008. Grocery prices fell dramatically last year, even as menu prices continued to increase, leading some observers to say the differential was hurting restaurant sales. The overall CPI rose 0.2% in January, though the so-called "core" rate, minus energy and food, fell 0.1%.


Section sponsored by Henny Penny

Demographics Driving Drop In Restaurant Evening-Meal Visits, NPD Says
The evening meal, what The NPD Group calls supper, has long been the biggest sales generator for restaurants, thanks to factors such as higher check averages. But generational shifts, including the aging of the Baby Boomers, has led to a 10% decline in overall occasions between 2001 and '09, and NPD research shows it's not just the economy.

During the eight-year period, supper-meal occasions have dropped for every age group except those over 62. The drop has been most pronounced among those 18-31 years old, still the most frequent visitors at supper. Per-capita occasions for this group have dropped from 79 in the year ended '01 to 66 last year. In contrast, visits by those older than 62 rose to 49 from 48.

"The fact that older consumers make up a larger portion of the population—and are lighter restaurant-supper users—is part of the explanation for this slip in per-capital visit, but not the full explanation," said Bonnie Riggs, NPD industry analyst and author of Getting a Grip on the Supper Market. "Even if you [account for] the changing age composition of the population, restaurant usage for supper would still be slipping," she said. "While this is especially notable since the recession began, it was also visible between 2002 and 2007."

Riggs urges operators to analyze the needs and marketing levers of their younger customers to appeal to them and bring them back for supper.

Information on research from The NPD Group can be found at www.npd.com.


Section sponsored by Henny Penny

Revised FER 2010 E&S Forecast Available
For those needing insight into the dynamics of the foodservice equipment and supplies market, a newly revised version of Foodservice Equipment Reports' 2010 Equipment and Supplies Market Forecast is now available. The new forecast includes updated information on general economic, operator, materials and E&S pricing trends, as well as hard-number forecasts of E&S sales at the manufacturer level for '07-'13.

The revision is available in PowerPoint format for $349. Those who have attended past FER forecasts or other meetings, or have purchased the forecast in the past, will receive a $50 discount. For information, e-mail Robin Ashton at rashton@fermag.com or Chris Palmer at cpalmer@fermag.com, or call the magazine at 800/986-9616.


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