Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
May 8, 2007

Regulatory Report:
Sponsored by:
STAR Service & Parts/Enodis
California Raises Ice Maker Standards For 2008
Lights Out For Incandescent Bulbs In Ontario
Georgia To Study Trans Fat Issue
FTC Requests Kid Marketing Info
Oregon Lawmaker: Dogs Not Just For Patios

Industry Report:
Sponsored by:
Server Products
FCSI Consultants To Offer Free Design Help At NRA Show
Angrick Named New NAFEM President-Elect
KFC, Taco Bell Complete Switch To Trans Fat-Free Oils
NSF Presenting Food Safety Leadership Awards At NRA Show
Motorcycle Charity Ride To NAFEM Show Gaining Momentum

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In This Section:
MAFSI Reports E&S Growth Slowed To Normal In First Quarter
Operator Sales, Traffic Bounce Back In March, Says NRA
Most Public E&S Companies Did Well In 2006, Study Shows
First Quarter GDP Tanks; Consumer Sentiment Better Than Expected

This issue's Regulatory ReportSponsor: STAR Service & Parts/Enodis
Industry ReportSponsor: Server Products
Economic Report Manitowoc Foodservice Group

MAFSI Reports E&S Growth Slowed To Normal In First Quarter
Sales of equipment, supplies and furnishings grew in first quarter 2007 by 2.3% over year-earlier figures, according to data just released from the MAFSI Business Barometer survey. The Barometer is fielded quarterly by the Manufacturers' Agents Association for the Foodservice Industry.

While the numbers show a distinct cooling of the Barometer growth rate, compared with record increases of 4.5% in both the third and fourth quarters of '06, the 2.3% growth is in line with average increases in the Barometer before last year's spikes. In first quarter '06, by comparison, growth was 2.7%. The numbers are based on reports from reps throughout the United States and Canada and chart year-on-year quarterly growth of like lines.

The slower growth was most pronounced in regions that have recently driven the strong sales gains. The South registered a meager 0.7% gain, with two product categories, durable supplies and tabletop, in negative territory, compared to 4.9% in the preceding quarter. Similarly, the West slowed to 1.1%. The Northeast grew at 2.5%, and the Midwest at a surprisingly strong 2.7%. The Midwest has typically been the slowest growing region during the past several years.

The market in Canada bucked the trend entirely, with growth remaining at a very robust 4.8%.

The product categories followed the general trend. Equipment sales grew 2.4%, supplies and tabletop were up 2.1% each and furnishings grew 2.2%.


Section sponsored by Manitowoc Foodservice Group

Operator Sales, Traffic Bounce Back In March, Says NRA
After two months of tough comparisons, the Restaurant Performance Index maintained by the National Restaurant Association jumped 1.1 point in March, its strongest improvement in 17 months, led by substantial gains in same-store sales and traffic. Seven of the eight components in the Index moved higher, including both current and planned capital expenditure measures. The Index also hit a 12-month high.

The overall Index stood at 101.9. Above 100 represents expansion; below marks contraction.

The gains in same-store sales and traffic over year-earlier levels were dramatic. Same-store sales shot up 3.6 points, while traffic rose 2.9 points. The Current Situation Index jumped 2.1 point overall, including a 0.1 point rise in capital expenditures in the previous three months.

The rise in the Expectations Index was less pronounced but still positive. The Index rose 0.2 point even though expectations of business conditions during the next six months actually fell 0.3 point. Plans to make a capital purchase during the next six month rose 0.4 point.

Section sponsored by Manitowoc Foodservice Group

Most Public E&S Companies Did Well In 2006, Study Shows
It was a very good year in 2006 for nearly all the big public equipment and supplies-oriented companies, according to John Muldowney, principal at Clarity Marketing, Tipp City, Ohio. Blended sales for 10 public companies—eight equipment oriented, two supplies and tabletop oriented—rose 8.8% for the year, excluding effects of acquisitions. The year ended on a strong note with an 11.6% gain in the fourth quarter.

Blended sales for the two supplies oriented companies showed double-digit gains for both the fourth quarter, 11.4%, and the year, 10.9%. These gains far outpaced what one might expect, given rather modest operator sales gains during the year—a sign both companies increased market share dramatically.

Eight equipment-oriented companies saw sales rise 8% on the year and 11.6% for the quarter. Only one of the eight saw sales fall during the year, given hard chain roll-out comparisons. Several recorded double-digit increases for the year as a whole. Cooking equipment oriented companies appeared to see larger increases than refrigeration, ice and food prep oriented companies.

Section sponsored by Manitowoc Foodservice Group

First Quarter GDP Tanks; Consumer Sentiment Better Than Expected
The April 27 advance reading on first quarter real growth in gross domestic product was even worse than expected. The Commerce Department reported that real GDP rose a mere 1.3% for the period as a big 17% decline in the housing market and a slight decline in exports offset growth in consumer and business spending. It was the slowest GDP growth rate since the first quarter of 2003, when GDP rose only 1.2%.

The current preliminary number was significantly lower than most economists expected. Those surveyed by Blue Chip Economic Indicators in early April had forecast a rise of 2.1%. On the other hand, the pronounced drop in consumer sentiment noted by the University of Michigan's Surveys of Consumers in its mid-April preliminary reading was moderated somewhat in the study's final reading. The final number came in at 87.1, almost two points over the preliminary reading of 85.3. The Index stood at 88.4 in March.

Nearly all the improvement came in the last week of the month among higher-income households. The big run-ups in the stock market indices seemed to have overcome their discouragement over the housing slump and rising gasoline prices.

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