Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
April 7, 2009

Regulatory Report:
Sponsored by:
Manitowoc Foodservice
California, Vermont Limiting Lead In Pipes
National LEAN Law Gaining Momentum
New Bills Mean FEASTing On Safer Food
B.C. First Province To Ban Trans Fat
Utah Relaxes Bar Laws

Industry Report:
Sponsored by:
HOFEX 2009
Manitowoc Sells Enodis Ice, Elevates Karssiens
Chili's To Open In Turkey, Brinker Shifts Management
BK New-Unit Growth Up 19%
CRFA Names O'Reilly Chairwoman
MAFSI Marks Its 60th Year

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In This Section:
Commodities Prices Continue Decline Even As Stainless Suppliers Try To Raise Prices
NRA Performance Index Mainly Flat In February
Consumer Confidence, Spending Up Slightly
Newly Revised FER E&S Market Forecast Available

This issue's Regulatory ReportSponsor: Manitowoc Foodservice
Industry ReportSponsor: HOFEX 2009
Economic Report Food&HotelVietnam2009

By Robin Ashton

Commodities Prices Continue Decline Even As Stainless Suppliers Try To Raise Prices

As our partner Brian Ward said recently, "It's amazing how prices come down when no one's buying." That's precisely the case with scores of industrial commodities, according to the latest transaction-price data from Purchasing magazine, released April 2.

The magazine's Commodities Supplies Price Index has been falling like a stone since mid-year 2008, when it peaked over 300. The index fell to 165 in March, its lowest level since January '05. And Purchasing Executive Editor Tom Stundza said he expects the trend to continue through at least the second quarter.

Most metals and other materials commonly used in foodservice equipment and supplies have followed the trend. The average price of a ton of 304 stainless steel dropped to $2,452 a ton in first-quarter '09, down from $3,589 in fourth-quarter '08. The material hit its peak in the third quarter '07, as it soared to $5,670 a ton. Purchasing forecasts the price of 304 will fall to $2,059 a ton in the second quarter before beginning a very mild rebound.

Contrary to the general decline, three of the biggest suppliers of stainless in the United States announced price increases for 304 in late March and early April, according the latest edition of Prime Times, the e-newsletter from Prime Advantage, a materials buying group.

So it's worth noting that averages are just that—averages. And there's always pipeline lag time, too. Manufacturers generally are locked into long-term contracts that reflected earlier, higher pricing, so it takes a while for commodities prices to be reflected in finished goods.

As for other materials: Carbon steels, which soared in price in the second and third quarters of last year, have seen price declines similar to stainless. Hot- and cold-rolled sheet and the galvanized grades are priced at half or less of what they sold for in third-quarter '08.

Aluminum, building materials and plastic resin, too, have seen the same price patterns. Extrusion-grade polyethylene traded for an average $0.53 a pound in the first quarter, down from $0.79 in the fourth quarter. Only copper sheet prices have stubbornly held some ground, but are forecast to move lower in the second and third quarters of '09.

Purchasing also forecasts energy prices, including those for natural gas, will remain depressed through all of '09.

For information on Purchasing research data, go to

(Editor's Note: Purchasing's Tom Stundza will be a featured speaker at the Prime Advantage Spring Conference, April 22-25, in Reno, Nev.)


Section sponsored by Food&HotelVietnam2009

NRA Performance Index Mainly Flat In February
A very slight uptick in the National Restaurant Association's Restaurant Performance Index for February masked the industry's reality: It's been in recession for 16 consecutive months, since November 2007.

The overall Index moved 0.1 point higher in the February survey, to 97.5, still below the 100-level that marks the balancing point between contraction and expansion.

Of that overall Index value, all eight components were below 100. Two weakened from January levels, two were unchanged and four rose slightly. The Index stands 1.1 point higher than the record low reached in December '08.

Among the Current Situation Index indicators, same-store sales fell 0.4 point while customer traffic was flat. The labor availability indicator rose 0.5 point. Overall the Current Situation Index rose a mere 0.1 point, to 96.6. The Expectations Index, which measures a six-month forward outlook, rose 0.2 point as expectations for business conditions and for staffing both rose. The outlook for future sales was flat.

The indicator measuring capital expenditures during the past three months rose 0.2 point, as 35% of operators said they made such a purchase, up slightly from December and January. The expected capital-expenditure measure, the measurement looking forward six months, fell a slight 0.1 point in February. Forty-one percent of operators said they anticipated making a capital purchase, they same number as January.

Section sponsored by Food&HotelVietnam2009

Consumer Confidence, Spending Up Slightly
The two consumer-confidence measures operated separately by The University of Michigan Surveys of Consumers and the Conference Board both nudged off record or near-record lows in March. Meanwhile, the U.S. Commerce Department announced consumer spending rose in February.

The final reading of the Consumer Sentiment Index from the University of Michigan rose a full point to 57.3 in the March survey. The Sentiment Index hit its recent low point, 55.3, in November 2008. The organization's Expectations Index rose three full points to 53.5.

The New York City-based Conference Board's Consumer Confidence Index rose marginally as well, to 26 from February's record low of 25.3. The group's Expectations Index also gained.

The government reported personal consumption expenditures rose 0.2% in February, a move that surprised many economists. The Commerce Department also revised January's number upward to a full-point gain. Consumer spending fell a record 4.3% in the fourth quarter of '08. Many economists, including those polled by Blue Chip Economic Indicators expected another real decline in spending in the first quarter. It now appears spending may be slightly positive.

Section sponsored by Food&HotelVietnam2009

Newly Revised FER E&S Market Forecast Available
With the E&S market as stressed as we've seen it in decades, don't you need the very latest data? Well, we have just what you need. Publisher Robin Ashton and forecasting partner John Muldowney, principal at Clarity Marketing, Tipp City, Ohio, completely revised our print sister publication Foodservice Equipment Reports' 2009 E&S market forecast in mid-March.

The completely updated forecast PowerPoint, including the latest data on macroeconomic, operator, material and pricing trends, as well as the forecast itself detailing nine product categories, is available for $299 by e-mailing Ashton at or by calling the office at 800/986-9616. Those who have participated in FER forecast seminars or have purchased the forecast during the past year will receive the new deck shortly.

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