Foodservice Equipment Reports Fortnightly
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Welcome to FER Fortnightly Online Newsletter
April 21, 2009








Regulatory Report:
Sponsored by:
Manitowoc Foodservice
Interior Designers For Kitchen Layout In Florida?
N.C. Town Offers Incentive To Cut FOG
S.F. Restaurateurs Denied Health-sInsurance Relief
After Fat, Town Now Targets Calories
Surf City Implements FOG Law To Keep Surf Down
Your Mama Can't Dance, But Your Daddy Can Rock And Roll

Industry Report:
Sponsored by:
Server Products
FER Magazine To Host New 'Innovations Exchange' Meeting
Middleby Changes Up Divisional, Operations Management
Quizno's Creates Lease-Renegotiation Program
Yum! Buys Into China Restaurant Group
NRA Offers New Online Food-Safety Course For Servers



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In This Section:
View From The Road: It's A Dining Bargain Bonanza
Food Prices Still Falling, Menu Prices Still Rising
General Economic Numbers Slightly Better In Latest Forecasts
Get Your Own Copy Of The Revised FER E&S Market Forecast

This issue's Regulatory ReportSponsor: Manitowoc Foodservice
Industry ReportSponsor: Server Products
Economic Report Food&HotelVietnam2009

By Robin Ashton

View From The Road: It's A Dining Bargain Bonanza

Spend two weeks driving around the Midwest and Mid-South ferrying kids on spring break and traveling Ohio making calls on manufacturers and dealers, and you'll notice some things about the restaurant scene.

There are a lot of boarded up operations. Most of them appear to be casual-dining concepts, both chain and independent, or smaller operators in marginal towns or locations. If you go to nearly any "restaurant row" in any place from Chicago to Indianapolis to Columbus and Cleveland, you'll discover one or two or more closed stores.

This is both a problem and an opportunity. Some of these are good sites that will make money for someone else going forward, especially after a serious negotiation with the lease holder. According to industry friends who know, a number of chains, from smaller local operators to the big folks, are taking advantage of this unique environment to tie up good locations.

But there is also a lot of good used equipment in these shuttered facilities. That's always an issue when things get tough and stores close.

Most remaining operators appear to be busy. While NPD reports traffic off a few points (it was down 3% in January), operators are working hard to get customers into the stores. It seems everyone is promoting aggressively, especially the casual dining concepts. In the past two weeks we've enjoyed half-price, happy-hour appetizer deals; 99-cent wings; two-for-one entrees and 15% off the bill on Tax Day.

Food prices have been falling big time, including the proteins, and this has given operators leeway to cut some deals to get people into the store without giving away all the profit. In fact, I've heard some operators are seeing higher profits on lower customer counts. That bodes well for the future, as does the simple fact that Americans are still eating away from home.

 

Section sponsored by Food&HotelVietnam2009

Food Prices Still Falling, Menu Prices Still Rising
As if to underscore the lower costs that are allowing operators to make some deals, the latest Federal government data on both wholesale and consumer prices show wholesale food prices continue to drop while operators continue to raise menu prices, if only slightly.

The Bureau of Labor Statistics reported last week that the overall Producer Price Index for finished goods, seasonally adjusted, fell 2.1% in March. This follows smaller declines of 0.1% and 0.8% in February and January. The overall PPI is off 0.9% for the three months ending March 31. This compares with a 24.9% plummet during the fourth quarter of 2008.

Wholesale food prices at the finished-goods level fell another 0.7%. For the three months ending March, wholesale food prices have fallen 10.1%. This follows a 4.8% decline in prices in the fourth quarter '08.

At the consumer level, BLS reported the overall Consumer Price Index fell 0.1% in March. The index is actually up 2.2% for the three months ending March, but off 0.4% from a year ago.

Consumer prices for food at home fell 0.4% in March while food-away-from-home prices continued to rise, up a slight 0.1%.


Section sponsored by Food&HotelVietnam2009

General Economic Numbers Slightly Better In Latest Forecasts
The outlook for disposable income and consumer spending for 2009 improved slightly in the latest round of consensus forecasts from economists surveyed by Blue Chip Economic Indicators for the April newsletter.

The economists now forecast real disposable income will grow 1.9% this year, up 0.2 point from the March survey. Real personal consumption spending is now forecast to decline 1.1% in '09, up from a 1.5%-drop predicted last month. Even these improved numbers, however, remain as bad as they've been for decades.

And the '10 forecasts for both income and consumption fell slightly in the latest forecasts. Disposable income is predicted to grow only 1.8% next year while PCEs are forecast up 1.7%. In other words, we won't see a robust recovery in consumer spending next year if the predictions are right.


Section sponsored by Food&HotelVietnam2009

Get Your Own Copy Of The Revised FER E&S Market Forecast
The Foodservice Equipment Reports E&S Market Forecast has been completely revised by Publisher Robin Ashton and John Muldowney, principal at Clarity Marketing, Tipp City, Ohio.

The 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. To order, email Ashton at rashton@fermag.com or call 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 revised version shortly.


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