Foodservice Equipment Reports Fortnightly
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Welcome to FER Fortnightly Online Newsletter
June 13, 2006








Regulatory Report:
Sponsored by:
Franke Foodservice Systems
Energy-Efficient Equipment Pays In More Ways Than One
Water Shortages Prompt New Illinois State Initiative
Florida Gov. Bush Lets The Dogs Out
Strict Sign Laws Sign Of The Times

Industry Report:
Frigidaire Debuts Commercial Refrigeration
Sill Named FCSI Fellow
Modesto To Turn Restaurant Waste Into Compost
UK Businesses No Longer Accepting Credit Card Signatures
Howie's Hungry For Bigger Slice Of Pizza Market
Enodis Board Considers, Rejects Offer From Manitowoc



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In This Section:
NRA's Performance Index Drops In April; Another Sign Foodservice Is Softening A Bit?
EU Tariffs On Equipment Won't Be Raised
Want To Know About Foodservice And E&S Markets In Europe? Good Luck

This issue's Regulatory ReportSponsor: Franke Foodservice Systems Industry Report

Economic Report FER E&S Economic Forecast Meetings

NRA's Performance Index Drops In April; Another Sign Foodservice Is Softening A Bit?
Our friend Hudson Riehle doesn't put it this way, but some might say the National Restaurant Association's Restaurant Performance Index tanked in April, falling a full point to 101.6. Riehle, senior v.p. of research and information services at NRA, points out that the Index remains well above the 100 that is the tipping point between expansion and contraction.

But both the Current Situation Index and the Expectations Index fell after three months of relative stability or slight gains. And same-store sales and traffic took 2.8- and 2.4-point hits respectively. The drop is worrisome as it comes at a time when some other indicators are showing that foodservice operator sales growth may be moderating. Same-store sales for major chains are showing some signs of softening, though McDonald's continues to do well.

Technomic reported a couple weeks ago (see FER Fortnightly June 1, 2006 issue) that a recent study it conducted shows some signs high gasoline prices and other economic factors are beginning to push consumers toward trading down and smaller check averages.

And the stock markets fell again last week, as Wall Street continues to react to spotty retail sales, rising interest rates and inflation, the falling U.S. dollar and uncertainty about the signals being sent by the new chairman of the Federal Reserve.

Still, Riehle has a point. His indexes remain in positive territory: Seven of the eight components of the RPI remain above 100 and the one that is at 99.6 is labor, a sign that can be construed as positive as operators struggle to find enough help.

And the one component that rose in the April survey was capital expenditures during the past three months. It was up 0.4 point to 101.2. The component for capital expenditures anticipated during the next six months did fall 0.4 point, but remains at a healthy 102.2. In other words, the end is hardly nigh.

 

EU Tariffs On Equipment Won't Be Raised
The threat of a 14% tariff on U.S.-made foodservice equipment sold in the European Union was averted last month. The EU proposed the tariff in response to a proposed tax cut here in the United States that would have given a break to large companies exporting goods to Europe.

The World Trade Organization ruled the tax break an illegal export subsidy. The EU retaliatory tariff was supposed to go into effect May 16, adding a 14% hit to a long list of equipment including commercial freezers and dish machines, though it wasn't clear exactly what products would be affected. Congress pulled the export break from the tax bill, however, heading off the tariff's imposition.

The tax bill "still extends the reductions in capital gains and dividend taxes now in effect [by] two years, through 2010, as well as the rules that let small businesses depreciate up to $100,000 of capital spending immediately, rather than over time," according to sources at the North American Association of Food Equipment Manufacturers.


Section sponsored by FER E&S Economic Forecast Meetings

Want To Know About Foodservice And E&S Markets In Europe? Good Luck
Data on the foodservice market in Europe are hard to come by, and insight into the equipment and supplies part of the business is particularly challenging, according to a leading UK-based consultant, Peter Backman, who compiles such data as a principal at Horizons FS Ltd.

Despite what Backman calls "the worrying lack of official statistics in Europe," however, he tells us that Horizons has been able to create a highly detailed and widely used statistical model of the foodservice industry over there. And Horizons is now at work on an estimate of the UK equipment market for the Catering Equipment Suppliers Association, Britain's equivalent of the North American Association of Food Equipment Manufacturers.

We exchanged some e-mails with Backman that we'd like to share, with his permission, as they provide insight into what European market data are available—and what are not.

Robin, you may think there is little known about the U.S. foodservice equipment market, but compared with the UK (and even more so, Europe), you have a mountain of information and insight!

The problem over here (compared with you, over there) is that:

  • Our economies are growing more slowly.
  • The size of the foodservice business is smaller (UK foodservice is one-eighth to one-tenth the size of the U.S. market—and even the fragmented total European market, spread over 40 countries, is only as large as the U.S.
  • In terms of the foodservice share of the total food market, the scale is smaller and, therefore, suppliers (particularly food and drink companies, not so much equipment suppliers) give less attention to the foodservice market than they do to other markets.
  • There are few sources of credible information. In the UK, the British Hospitality Association (the NRA equivalent), the Food and Drink Federation (roughly equivalent to IFMA), the Institute of Grocery Distribution, publish foodservice data, but it's all Horizons'. (We work closely with all of them.)

Backman went on in another e-mail to note others doing foodservice research in Europe:

  • NPD are over here. But they only cover a part of the market and it's all consumer (not trade) based, and they only let out dribbles of information (as in the U.S.).
  • TNS Sofres do similar work—in the UK. Similar comments to NPD, but we work with TNS to reconcile our views of the total market in the UK. They say it's worth £27 billion at consumer prices (foodservice operator sales), but when we add in the bits they miss (children, school meals, Northern Ireland, foreign visitors, etc.) they agree with our figure of £35.8 billion (2005) So count your blessings! If you need to know anything about Europe, we're your man (men?).

Backman can be reached at peter@horizonsforsuccess.com.



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