Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
May 5, 2009

Regulatory Report:
Sponsored by:
Manitowoc Foodservice
Texas To Flush Old Toilet Standards
Stamford Says FOG Will Cost $250/Day
Calorie Posting Probable In Ontario, Off In W.V., Voluntary In U.K.
Trans Fat To Go On Diet In Texas, Maine

Industry Report:
Sponsored by:
HOFEX 2009
Middleby Buys CookTek
And Middleby Acquires Assets Of Anetsberger Bros.
Vollrath Acquires Anvil America
Vicorp Sells Assets, Units Stay Open
ASHFSA, HFM Vote To Consolidate
Starbucks Debuts In Poland
FEDA Honors Ken Gill

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In This Section:
MAFSI Barometer Has E&S Sales Down 11% In Q1
Now For Some Good News: NRA’s Performance Index Rises Again
Q1 GDP Plummeted 6.1%, But Consumer Confidence, Spending Up
Given What We’ve Seen, The Revised FER E&S Market Forecast Still Looks Good

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

By Robin Ashton

MAFSI Barometer Has E&S Sales Down 11% In Q1

What’s amazing is that it wasn’t worse. The quarterly tracking survey of sales of foodservice equipment, supplies and furnishing fielded by the Manufacturers’ Agents Association for the Foodservice Industry said sales fell 11% in the first quarter compared with the same quarter in 2008. And while the number is a record by a long shot—sales fell 4.7% in the fourth quarter of ’08, the earlier record—the overall numbers are not as bad as some of the anecdotal stories we’ve heard.

Many manufacturers, especially of heavy equipment, have told us they were off 15% to 30% in the first quarter. The difference might be inventory related, or a factor of the chain or specification market pipelines. At any rate, the MAFSI numbers, while dire, show the market has not fallen off the end of the Earth.

Equipment and furnishings sales were off dramatically more than supplies. Overall, equipment sales fell 12.6%, and furnishings were off 8.3%. In contrast, durable supplies sales fell 6.1% while tabletop declined 4.5%.

But these numbers are also propped up slightly by the Canadian market, which, while also off by record numbers, has performed significantly better during this downturn than the U.S. market. The Canadian market was down only 5.2% overall in the quarter. In contrast, sales in the U.S. South fell 9.7%, those in the Midwest 10.9%, in the Northeast 11.8% and in the West, more dependent on casual-dining chain sales, a whopping 15.5%. Equipment sales in the West fell 18%.

Reps responding to the survey say they think things will improve in the second quarter, but only very slightly. Their forecast is for sales to fall 9.7% in the quarter versus same-period last year.


Section sponsored by Food&HotelVietnam2009

Now For Some Good News: NRA’s Performance Index Rises Again
Restaurateurs are beginning to suggest the worst might be over. The Restaurant Performance Index, charted monthly by the National Restaurant Association, rose slightly again in March, the third consecutive month of improvement.

Not that actual growth was suggested in the data, not yet. Both same-store sales and customer traffic fell again in March, off 1.2 and 0.7 points respectively, driving the Current Situation Index down 0.4 point. NRA noted that part of the downward pressure came from Easter falling in March in 2008, versus April this year.

But a strong jump in the indicator tracking operators’ expectations for business conditions drove the overall Index 0.2 point higher, to 97.7. The index now stands 1.3 points higher than its historic low, reached in December. Still, the index remained below the 100 tipping point between expansion and contraction for the 17th consecutive month.

The Expectations Index, comprised of four components, jumped 0.9 point, and now stands at 99.4, its highest level in 14 months. The big driver was a 2.2-point jump in operators’ expectations for business conditions in six months. The marker is the first of the eight components to pass the 100 level since the market began its slide. And for the first time in 18 months, a higher percentage of operators, 30%, said conditions would be better in six months, versus 21% who said they would be worse, down from 36% last month.

Both indicators tracking capital expenditures rose. The one tracking those who made a capital expenditure during the past three months nosed up 0.1 point, while that for expenditures planned during the next six months rose 0.8 point. The latter indicator reached its highest level in nine months.

Section sponsored by Food&HotelVietnam2009

Q1 GDP Plummeted 6.1%, But Consumer Confidence, Spending Up
We’re still looking for bits of good news in all the economic data. So here are a few more. In another sign things may be bottoming out, consumer confidence, as tracked by The Conference Board, surprisingly surged more than 12 points in April, to 39.2, its highest level since November. It was the biggest jump in the Consumer Confidence ndex since post-Hurricane Katrina. Consumer Expectations also rose sharply.

In its mid-month reading, the Consumer Sentiment Index maintained by The Reuters/University of Michigan Surveys of Consumers also rose, though not as dramatically.

And equally surprising, real consumer spending rose a seasonally adjusted 2.2% in the first quarter, following declines of 3.8% and 4.3% in the last two quarters of 2008, the Commerce Department reported. The rise in spending contrasted with yet another dreadful number on real gross domestic product, which fell 6.1% in the quarter, the Commerce Department said. The report also said business spending on equipment and software fell 33.8%, the largest quarterly drop since 1958. So perhaps the 11% drop in equipment sales reported by MAFSI (see story above) really isn’t that bad.

Finally, just for the record, gasoline and diesel prices fell in most of the country in late April, according to the Federal government’s Energy Information Administration. The EIA data for April 27 had the national-average price of a gallon of gasoline at $2.049, down a penny from the week before and $1.55 lower than a year earlier. Diesel prices fell two cents to $2.201 a gallon.

Section sponsored by Food&HotelVietnam2009

Given What We’ve Seen, The Revised FER E&S Market Forecast Still Looks Good
In an economy like the current one, forecast updates are everything. So in March Foodservice Equipment Reports Publisher Robin Ashton and John Muldowney, principal at Clarity Marketing, Tipp City, Ohio, did a major rebuild of the FER E&S Market Forecast. And given what we’ve seen from the Manufacturers’ Agents Association for the Foodservice Industry’s MAFSI Barometer and the first dribbles of public company numbers for the first quarter, the updated FER forecast looks right on to us.

To receive your own copy of the updated PowerPoint, including the latest data on macroeconomic, operator, material and pricing trends, as well as the forecast itself detailing nine product categories, e-mail Robin Ashton at or call the office at 800/986-9616. Price is $299. Those who have participated in FER forecast seminars or have purchased the forecast should have received the update by now. If you haven’t, let us know.

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