Foodservice Equipment Reports Fortnightly
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Welcome to FER Fortnightly Online Newsletter
March 23, 2010








Regulatory Report:
Sponsored by:
Manitowoc Foodservice
UPDATE MARCH 29, 2010: Maid-Rite Wins On Food Safety
NYC To Restaurateurs: Make The Grade
NSF Partners With MET Labs

Industry Report:
Sponsored by:
A.J. Antunes & Co.
Panera Boasts Full Calorie Disclosure
Long-Term Plans Cooking At Tim Hortons
Philippines To Welcome Eight P.F. Chang?s
New Concepts Driving Johnny Rockets Expansion
Curran Heads Canada?s Restaurant Association
IFMA Announces Silver Plate Winners
Hobart Offers Fourth Annual Sustainability Grant



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In This Section:
Public E&S Companies Not So Negative In Q4
Full-Service Same-Store Sales Also Not So Negative
Technomic Sees Slow Recovery, Challenges Ahead
Strong INTERNORGA Looks Good For Foodservice In Europe
Get Your FER 2010 E&S Market Forecast While Supplies Last

This issue's Regulatory ReportSponsor: Manitowoc Foodservice
Industry ReportSponsor: A.J. Antunes & Co.
Economic Report Henny Penny

By Robin Ashton

Public E&S Companies Not So Negative In Q4

Organic, blended sales for the big publicly traded foodservice equipment and supplies companies fell again in the fourth quarter of last year, down 4.2% against same-period 2008, according to an analysis by John Muldowney, principal at Clarity Marketing, Tipp City, Ohio. For the year as a whole, the seven companies tracked by Muldowney—including five equipment-oriented and two supplies-oriented firms—were off 10.8%.

As usual during times of prolonged capital-spending cutbacks, equipment companies are feeling the pain. The equipment-oriented companies reported a blended sales decline of 5.5% for the quarter and 11.6% for the year. The supplies companies, not surprisingly, have felt the impact, but not as severely. The supplies-oriented companies have seen a moderating of falling sales. Sales for the quarter were up 1% and down 7.6% for the year.

The numbers for the fourth quarter are a significant improvement over the previous four quarters, during which sales fell double digits. The trend improved for the first time since the second quarter of '08.

In comparison, the Business Barometer compiled by the Manufacturers' Agents Association for the Foodservice Industry provides a broader read on the E&S market. The Barometer reported a 12.8% drop in sales in the United States and Canada for the fourth quarter, matching the record decline of second-quarter '09. MAFSI numbers have been off double digits since the first quarter of '09.

Several of the big publics are highly chain-dependent and benefited from significant rollouts. But as the chains normally move first into recession and recovery, the upturn in the public-company numbers may signal the market is finally hitting bottom.

 

Section sponsored by Henny Penny

Full-Service Same-Store Sales Also Not So Negative
You've seen and heard us say this before: A key sign foodservice is returning to health will be a turn in casual dining and other full-service operator segments. Now that many of the publicly traded restaurant chains have reported fourth-quarter 2009 results, we may be seeing that turn.

Same-store sales for both casual-dining and family-style full-service chains were off again in the fourth quarter of '09 versus same-period '08, but the decline was not as steep as it had been in previous quarters, according to data from Technomic Inc.

Casual dining has seen negative growth in same-store sales since the fourth quarter of '08. And with the exception of second-quarter '09, until now the declines had been steeper with each successive quarter. Blended same-store sales declined 6.7% for 47 chains in the third quarter last year. The preliminary number for the fourth quarter, with 38 chains reporting, is off 4.5%.

Meanwhile, family-dining chains saw a 3.22% drop in same-store fourth-quarter sales versus 3.87% in the third.

The trend is not as good for quick-service chains. Excluding McDonald's, which is so large as to skew the segment data, same-store sales at quick-service chains fell 3.63%. With McDonald's, the figure was down 2.57%. These numbers have declined since the third quarter.

While the change in full-service performance is a hopeful sign, challenges remain, and one of them has been the severe weather. We may see another downturn in comp sales for first-quarter '10.

Information on Technomic's research products is available at www.foodpubs.com.


Section sponsored by Henny Penny

Technomic Sees Slow Recovery, Challenges Ahead
The latest Technomic Viewpoint features an article entitled "The Long Road Back," by Bob Goldin, Technomic Inc.'s executive v.p. He writes: "Despite some improvements in the overall economy, the foodservice industry has not (yet) turned the corner. It is still plagued by declines in both traffic and check averages and by net unit closures." He writes that in previous recessions, foodservice behaved as a leading indicator; this time, it seems to be a lagging one.

And significantly, he notes that the next five years will be tough as "the industry will face macro-economic headwinds" of long-term high un- and underemployment, reduced household wealth, flat wages, and demographic challenges as the baby-boom generation retires and cuts back on eating away from home. "It will be a slow recovery," he concludes. The firm predicts 2011 will be flat for operator sales—the current forecast is a 3% real decline in '10—and only very moderate growth through '15. Oh, well.


Section sponsored by Henny Penny

Strong INTERNORGA Looks Good For Foodservice In Europe
The German foodservice and foodservice equipment and supplies markets had negative years in 2009, but both operators and suppliers seemed upbeat at INTERNORGA, the large German trade show held March 12-17.

In a provisional closing report issued last Wednesday, the Hamburg Messe, which hosts the show, reported "more than 100,000 visitors from all parts of the world" viewed offerings from 1,105 exhibitors from 28 countries. The organization said the show was fully booked and in fact, had to expand "to meet the strong demand in the bakery and confectionary area."

The expansive mood was also apparent at the International Foodservice Forum, a daylong seminar that preceded the show. Gretel Weiss, editor at food service and FoodService Europe & Middle East, who organizes the Forum, said more than 1,600 attended the event, up from 1,500 two years ago.

In an overview of the German and European markets that kicked off the Forum, Weiss noted that '09 was a negative year in Germany for most operators. According to government data, the market on the foodservice side was down 3.1% in nominal terms and 4.9% in real terms, as check averages declined.

But customer traffic fell less in Germany than in other European countries, and significantly less than in the United States, according to data from NPD Group. And the Top 100 foodservice organizations, tracked by DFV, did better than the overall market too, with nominal sales up 1.1%. While '09 sales growth for the Top 100 was significantly off the 4.9% recorded in '08, Weiss noted that the quick-service and delivery/takeout pizza chains, as well as contract firms serving the leisure and sports markets, did especially well. A couple of Italian-themed concepts, Vapiano and L'Osteria, and a Japanese-menu chain, Sushi Circle, also exhibited rapid growth in sales and units last year.


Section sponsored by Henny Penny

Get Your FER 2010 E&S Market Forecast While Supplies Last
Since it's now more than a month old, we've discounted the revised version of FER's 2010 Equipment and Supplies Market Forecast. The forecast includes updated information from early February 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 $249. 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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