Foodservice Equipment Reports Fortnightly
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Welcome to FER Fortnightly Online Newsletter
May 4, 2010








Regulatory Report:
Sponsored by:
Manitowoc Foodservice
Food-Safety Bill Sidetracked By Financial Reform
Salt Comes Under Fire—Again
NRA Convenes On Public Affairs
Smoke Bans Set For Kansas, Michigan
NSF OK'd To Register Food-Safety Management Systems

Industry Report:
Sponsored by:
Server Products
Wendy's/Arby's Creates E&S Sourcing Co-op
CKE Picks New Merger Deal
Chick-fil-A Plans 78 Units, Will Debut In Chicago
Dunkin' Donuts To Add 17 Stores Across Florida
Manitowoc Named Energy Star Partner Of The Year
First-Ever AHF Conference Nears



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In This Section:
NRA Performance Index Signals End Of Great Foodservice Recession
E&S List Prices Barely Budged Last Six Months, AutoQuotes Reports
MAFSI Barometer Sales Numbers Still Negative, But Less So
State Tax Revenues Posted Fifth Straight Decline In 4Q 2009
Technomic Top 500 Now Available

This issue's Regulatory ReportSponsor: Manitowoc Foodservice
Industry ReportSponsor: Server Products
Economic Report Henny Penny

By Robin Ashton

NRA Performance Index Signals End Of Great Foodservice Recession

The monthly Restaurant Performance Index maintained by the National Restaurant Association spiked sharply upward in March and moved above the 100 mark that separates expansion from contraction in the restaurant industry. It was the first time the index exceeded 100 since it went negative in November 2007 and signals the foodservice industry may be emerging from the greatest downturn in our lifetimes. The overall index rose 1.4 points to 100.5, its highest level since September '07.

The only less-than-happy news in the March survey is that the two capital goods indicators are now the weakest components in the index.

Both the Current Situation Index and the Expectations Index rose, the CSI sharply so, jumping 2.4 points. The CSI remains at 99, still below the 100 tipping point. The Expectations Index, which hit 100 back in December and has been above 100 since, rose another 0.5 point to 101.9, its highest point since August '07.

The CSI was driven higher by very strong gains in the same-store sales and customer-traffic components. The sales marker jumped 3.7 points, the traffic indicator 3.5 points. Both now stand above 100 together for the first time in 31 months.

In the Expectations Index, operators' outlook for business conditions in the next six month rose nearly a point, reaching 103.4. The outlook for same-store sales was up 0.7 point and now stands at 103.5, up nearly three points since last November.

The capital-goods purchasing components make it clear that buying new equipment and supplies always lags in recoveries. The percentage of operators reporting a capital purchase in the past three months rose to 36% from February's record low 30%. This pushed the indicator up 1.2 points, but it still stands at 97.2, the weakest number in the entire index. Operators saying they plan to make a capital purchase in the next six months fell to 47% from 48% in February, which dropped the indicator 0.2 point, the only negative number in this month's index. And at 99.5, this indicator is the only one in the Expectation Index still below 100.

It's a rule of thumb in analyzing economic indicators that one month doesn't make a trend. Still, the NRA's RPI has been on the upswing since late last year, and being above the line beats being below. If the improving sales and traffic trends continue, E&S purchases will follow. And given the depth and length of the recession in foodservice, there's a lot of pent-up demand.

 

Section sponsored by Henny Penny

E&S List Prices Barely Budged Last Six Months, AutoQuotes Reports
The severe downturn in the market for foodservice equipment and supplies helped hold down list-price increases during the past six months, according to the latest data from AutoQuotes Inc.

AutoQuotes CEO Kent Motes wrote in the company's April e-newsletter that an analysis of blended list-price data for 350,000 E&S products from 344 manufacturers revealed a negligible 0.6% increase for the period from October 2009 to March '10, compared to the same six-month period last year. The E&S list-price increase "is the lowest since we began keeping the stats in the late 1990s," Motes noted. More than two-thirds of manufacturers did not raise any prices during the period, and 41% have not raised prices in 18 months. List prices do not necessarily reflect street prices or pricing for large customers, but are an indication of pricing trends.

Among the product categories, list prices for prep equipment rose 3.2% during the six-month period versus last year, the biggest increase. Published prices for serving counters actually fell 0.1%. Only five categories registered increases of more than 1%. Ice machines, primary cooking equipment, tabletop, janitorial and beverage equipment reported increases of 1.8% to 1.3%. The following product categories increased prices less than 1%: furniture, coffee, holding/heated cabinets, cookware, fabrication, ventilation, linens, shelving, refrigeration and warewashing equipment.

Motes said he expects this period of very restrained increases to end, as the market begins to improve and manufacturers try to pass through recent increases in materials prices. As we noted in the last issue of FER Fortnightly (www.fermag.com/fortnightly/04.20.10/economic/home.htm#commodity), carbon-steel and nickel prices rose at double-digit rates in the first quarter '10, while 304 stainless prices were up 7.4%, according to data from Purchasing magazine.

For more information on AutoQuotes products and data, click www.aqnet.com.


Section sponsored by Henny Penny

MAFSI Barometer Sales Numbers Still Negative, But Less So
Overall sales of like lines of foodservice equipment, supplies and furnishings fell 5.3% in the first quarter 2010 compared to the same quarter in '09, according to the latest Business Barometer fielded by the Manufacturers' Agents Association for the Foodservice Industry. While it was the ninth consecutive quarter the MAFSI Barometer has reported overall sales declines, the number was a substantial improvement over the record-matching 12.8% drop in the fourth quarter '09, and the double-digit declines registered every quarter last year.

In a sign the E&S market may be turning, supplies and tabletop sales showed marked improvement. Overall tabletop sales, a number that incorporates sales from all four U.S. regions and Canada, were actually positive 0.4 point, after being down 5.4% in the fourth quarter '09. Supplies sales were off a mere 0.1 point. Sales of supplies and tabletop usually rebound first after a downturn as operators reorder these less expensive items as their sales rebound.

Equipment sales fell 7.5%. This compares with a record 14.8% decline last quarter. Furnishings sales fell 8.3% versus -10.5% last quarter.

Among the regions, overall sales in Canada rose a healthy 5.7% with equipment sales up 7.3%. That's a more than 10-point swing in overall sales in Canada, where sales fell 5.5% in the fourth quarter.

Sales in all four U.S. regions fell, but only the West, which has been the worst affected throughout the downturn, still saw double-digit declines. Overall sales in the West were off 12%, compared to a 17.8% decline in the fourth quarter. Overall sales fell 4.5% in the Northeast, 5.7% in the South and 7.1% in the Midwest. All regions were off less than in the fourth quarter.

The full first-quarter Business Barometer report will be available shortly at MAFSI's Web site, www.mafsi.org.


Section sponsored by Henny Penny

State Tax Revenues Posted Fifth Straight Decline In 4Q 2009
State tax revenues fell 4.2% in the fourth quarter last year, the fifth straight quarterly decline, the Rockefeller Institute of Government reported April 16. The only good news was the negative number was more moderate than the double-digit declines in state revenues during the first three quarters of '09. The numbers are important because states fund many capital programs for publicly funded foodservice operators, such as schools, healthcare and colleges and universities. This impacts their ability to build new or renovate existing facilities.

Forty-one states reported falling tax revenues during the quarter, with seven states down by double-digit rates. In what is perhaps a sign the worst is over, nine states saw revenues increase in the quarter, including New Hampshire and North Carolina. Last year, all but one or two states were consistently in the red.

Still, the Institute believes any recovery in revenue trends will be protracted. "State fiscal recovery is likely to be long and slow, presenting policymakers with several years of lingering difficulty in balancing budgets," said Donald J. Boyd, a senior fellow at the Institute.

The report also noted pronounced regional differences in revenue trends. Western states, especially in the Southwest, and some Midwestern states have been most severely affected.

The full report, including data for individual states, is available at www.rockinst.org.


Section sponsored by Henny Penny

Technomic Top 500 Now Available
As we mentioned last month, the top 500 chain brands eked out current-dollar growth of a mere 0.8% 2009, according to Technomic Inc.'s annual ranking and analysis of the largest 500 chain concepts, the Top 500 Chain Restaurant Report. The full report, which includes a wealth of data on the sales and unit growth of individual chains, menu segments, services types and the like, as well as details on international growth, is now available.

Information on the Top 500 and other Technomic products is available at www.technomic.com or by calling 312/876-0004.


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