Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
April 10, 2007

Regulatory Report:
Sponsored by:
Lincoln Foodservice Products Inc./Enodis
N.Y. Senator Wants Letter Grades For Restaurants
Fair Franchising Laws Proposed In Kansas, Tennessee
R.I. Businesses Want To Change Fire Code
Toilet Paper: We Need A Law For This?
Trans Fat Debate Still A Weighty Issue In Many Locales

Industry Report:
Sponsored by:
Server Products
Food Companies Among ENERGY STAR 2007 Winners
Holman Cooking Equipment Founder Passes
Foodservice Industry Mourns Pacifico
Carl's Jr. Franchisee Uses Fry Oil As Biofuel
T.G.I. Friday's Bucks Bigger Is Better Trend

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In This Section:
NRA's February Performance Index Edges Up; Outlook Good
Consumer Sentiment Slides To Six-Month Low
Wheel Of (Purchasing) Fortune Keeps Spinning

This issue's Regulatory ReportSponsor: Lincoln Foodservice Products Inc./Enodis
Industry ReportSponsor: Server Products
Economic Report The NAFEM Show 2007

NRA's February Performance Index Edges Up;
Outlook Good

The National Restaurant Association's Restaurant Performance Index rose slightly in February, up two-tenths of a point, to 100.8. It wasn't a huge gain, but it was a gain, and the February result marked 46 consecutive months above the 100 level. Anything above 100 signifies growth; below marks contraction.

The overall RPI gain was based mainly on healthy expectations, although current activity has not been particularly strong. The Current Situation Index rose two-tenths of a point, to 99. It was an improvement but remained below the 100 level for the second straight month. The reading was soft primarily because of slower traffic and same-store sales compared to unusually strong year-earlier results. Roughly a third of respondents reported improvements over February 2006 levels; nearly half reported lesser results.

The Expectations Index, which measures a six-month outlook for same-store sales, employee hiring, capital expenditures and business conditions, rose a slim two-tenths to 102.4. More than half of respondents indicated they're optimistic about growth in the coming half year, while only 14% were cynical about prospects.

Among other positive indicators: More than a third of respondents say the expect general economic conditions to improve, and 52% said they've made capital expenditures for equipment, expansion or remodeling during the preceding three months. Even more—59%—said they plan to make similar capital outlays in the coming six months.


Section sponsored by The NAFEM Show 2007

Consumer Sentiment Slides To Six-Month Low
Rising prices, stagnant wages and uncertainty about the longer-term economy combined to take some wind out of the sails of consumer sentiment in March, according to the latest data from the Reuters/University of Michigan Surveys of Consumers.

Final figures for the Consumer Sentiment Index fell 2.9 points from February's level, to 88.4. The preliminary projection for the March reading had been 88.8.

The final March reading was the lowest since September, when the Index stood at 85.4.

Rising gasoline prices might put additional pressure on consumer sentiment, a statement accompanying the data said.

The overall survey data includes breakdowns for current economic conditions and consumer expectations for the future. In the March reading, the index for current economic conditions slide to 103.5, from 106.7 in February. The Consumer Expectations Index took a similar tumble, falling to a six-month low of 78.7, down from 81.5 in February.

Section sponsored by The NAFEM Show 2007

Wheel Of (Purchasing) Fortune Keeps Spinning
News from Purchasing magazine ebbs and flows, but mainly flows these days. Prices for certain key items in foodservice equipment and supplies manufacturing continue to climb.

Some don't just climb; they skyrocket. Stainless Type 304 sheet, which Purchasing measured at a "typical" transaction price of $2,261 per net ton (including surcharge) in first-quarter 2006, rose to $2,550 in the second quarter, then $3,051 in the third quarter and $3,885 in the fourth quarter. Current data puts the first-quarter '07 reading at a staggering $4,406. That's a 95% climb in 12 months. And those figures of course include very large buyers who get significantly better pricing than most foodservice manufacturers.

Some "easing" is expected for the remainder of the year, but in this case easing means prices might come down to what they were this past December. Which was unprecedented at the time.

The culprits? The usual suspects: Nickel, whose price will rise further before returning to current levels. And chromium, which also remains in short supply.

Among other key foodservice materials: Hot- and cold-rolled sheet have fallen recently and will likely hold fairly steady. Aluminum, in various forms, has remained pretty stable over the past year but is projected to rise moderately over the next two quarters. Copper, after enormous jumps last year, looks steady and shows no sign of significant decline.

Electricity, which rose a national average of about 9% last year, will continue to rise, but at a slower rate. And natural gas, whose price has been soft because of a mild winter season, is likely to rebound to normal seasonal levels and then some as the year progresses. Industrial buyers, according to the Purchasing forecast, might expect roughly 10% to 20% increases over year-earlier prices. But forecasts adjust as new data come in, and recent soft demand might moderate some of those projects.

Stay tuned.

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