Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
March 25, 2008

Regulatory Report:
Sponsored by:
ICC Grows Plans For Certification Of Green-Building Officials
Doughnuts, Coffee Driving Drive-Through Angst
Kansas May Shift Inspections To Ag Department
Californians, Chicagoans Take Heart: You Can Still Get Foie Gras In Maryland

Industry Report:
Sponsored by:
FCSI Announces Super Regionals Schedule
Must-Read: List Of High-Efficiency Toilets Out
Time To Register For FMI Show
Singer To Host 21st Trade Showt
NRAEF Issues New Edition Of ServSafe

FER QuickLinks Menu
Subscribe to FER
FER Buyer's Guide
FER Services Guide
FER Calendar

FER Media Kit

Advertise with FER, contact Robin Ashton

To subscribe to this newsletter, click:
Subscribe FER Fortnightly

To unsubscribe from this newsletter, click:
Unsubscribe FER Fortnightly

To view archived issues of Fortnightly, click here.

This e-mail was brought to you by the folks at:
Foodservice Equipment Reports
8001 N. Lincoln Ave.
Skokie, IL 60077
Fax: 847/673.8679

In This Section:
NPD Cautions Structural Market Changes Affecting Slowdown
Macroeconomic Forecasts Continue To Fall
And Now For Some Good News
Foodservice Equipment Reports Revised 2008 E&S Market Forecast Available

This issue's Regulatory ReportSponsor: Enodis
Industry ReportSponsor: FHA2008
Economic Report Manitowoc Foodservice Group

NPD Cautions Structural Market Changes Affecting Slowdown
It ain't just the economy, folks, that's driving the slowdown in restaurant traffic, according to a new report from The NPD Group.

"While the economy is a major factor here," said NPD's Bonnie Riggs, author of the report Why This Downturn Will Be Different for Restaurants, "this particular slowdown goes beyond economics. NPD is seeing consumer behavior changing."

Overall traffic rose only 0.7% in 2007, a number driven completely by unit expansion, according to the report. In other words, comparable-store traffic was flat. It's the slowest growth since the '00 through '03 downturn.

Riggs analyzed traffic patterns during five previous periods of stress for restaurants and pointed out the biggest traffic declines were during the 1979-'80 inflation-driven recession. "The current conditions are most similar to those experienced then," she said.

Among the behavioral changes noted by Riggs is a leveling off of women entering the workplace. "The trend in working women may be more of a long-term issue for the industry that the current economic situation," Riggs said.

Riggs and NPD's V.P. Harry Balzer added that the growth of supermarket take-away options, both prepared and frozen, is also a factor in the slowdown of dinner occasions at restaurants. In previous restaurant industry downturns, dinner occasions held up. Not this time.

"Make no mistake, Americans don't want to cook," Balzer said. "We're just trying to figure out how to put food on the table the easiest and cheapest way possible. With restaurant meals costing three times that of in-home meals, the question is who will do the cooking."

Still, Riggs said customer traffic growth may stay positive in '08, though at a slower rate than in '07. "It's pretty clear that we are not going to have a strong environment moving the industry along. ... Restaurant companies need to look for new ways to offer value and find ways to make the restaurant experience as pleasant as possible."


Section sponsored by Manitowoc Foodservice Group

Macroeconomic Forecasts Continue To Fall
Think how much fun it is to be a forecaster right now. The more than 50 leading economic forecasting groups surveyed monthly by Blue Chip Economic Indicators newsletter are revising as fast as they can. In the latest survey (early March), they cut their forecast for real growth of U.S. gross domestic product by another 0.2 point, to 1.5%. About half of the economists think we'll be in recession the first two quarters of this year. The forecast for '09 GDP fell to 2.3%, down 0.3 point.

The economists also cut their forecasts for real disposable personal income and personal consumption expenditures 0.2 points each, to 2.1% and 1.5% respectively. These levels are not good for foodservice.

On the other hand, the consensus forecast for inflation at the consumer level rose 0.4 point to 3.4% as the outlook for energy and food costs continues to make everyone nervous.

And all this was before the economists saw the negative February jobs report and heard about Bear Stearns.

Section sponsored by Manitowoc Foodservice Group

And Now For Some Good News
And there is some. Wholesales food prices, which have been soaring recently, actually declined 0.3% in the February wholesale price data. This follows gains of 2.1% in December and 1.6% in January.

For the 12 months ending February, food prices rose 7.6%, a significant drag, along with falling same-store sales and traffic, on foodservice operators' margins.

Not all the food-inflation news was good, however. Wholesale flour prices rose a whopping 15.2% in February, compared with January, marking the 11th consecutive month of increase. Flour costs 93% more now than it did a year ago.

In other "sort of" good news, the University of Michigan's Surveys of Consumers reported its preliminary reading of consumer sentiment in March held essentially steady, though at recession levels. The Index of Consumer Sentiment slipped slightly to 70.5 in the mid-March measurement.

Section sponsored by Manitowoc Foodservice Group

Foodservice Equipment Reports Revised 2008 E&S Market Forecast Available
Foodservice Equipment Reports magazine, FER Fortnightly's printed-paper sister publication, has revised its forecast of 2008 foodservice equipment and supplies market growth, and the report is now available. The PowerPoint deck includes updated data on macroeconomic, operator and materials price trends, as well as the forecast revision.

Those who attended FER's President's Preview Forecast Meeting last August, or have purchased the forecast since, can obtain the revision for no charge by requesting a copy with an e-mail to Others can purchase the revision for $249. Further details can also be obtained by calling 800/986-9616.

© Copyright 1996-2007. Foodservice Equipment Reports. All rights reserved.