Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
June 15, 2010

Regulatory Report:
Sponsored by:
Manitowoc Foodservice
Salmonella Outbreak Hits Illinois Subway Stores
ASHRAE Conference To Debut New Refrigeration Handbook
Hawaii Bans Shark Fin
CRFA Scores Goal For World Cup
Boston Facilities Go Retro: From Restroom to Restaurants
NRA Offers Healthcare Webinar

Industry Report:
Sponsored by:
FER Market Forecast Meetings
Yum! China Makes No Small Plans
Corner Bakery Will Double In Size By 2014
Vietnam Welcomes First of 25 Planned Carl's Jr. Units
Bar Louie Joins Sun Capital's Lineup
Jamba Juice Focusing On Franchising, Coffee

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In This Section:
FER Annual E&S Market Forecast Meeting Set For Aug. 4
Operator Traffic Declines In U.S. Eased In First Quarter, Says NPD
Stainless Steel, Other Metals Prices Continue To Surge
Blue Chip Economists Don't See Much Risk Of Double-Dip Recession
McDonald's U.S. Same-Store Sales Up Again In May

This issue's Regulatory ReportSponsor: Manitowoc Foodservice
Industry ReportSponsor: FER Market Forecast Meetings
Economic Report Henny Penny

By Robin Ashton

FER Annual E&S Market Forecast Meeting Set For Aug. 4

It's clear the foodservice equipment and supplies market has begun to recover. But how fast and how robust will the recovery be? You'll need to attend Foodservice Equipment Reports' annual President's Preview E&S Market Forecast seminar to find out. This annual meeting offers senior manufacturing executives, dealers, multiunit operators and others interested in E&S trends an in-depth analysis and forecast of the market in 2011, in time for most companies' planning and budgeting cycles.

The day-long meeting is scheduled for Wednesday, Aug. 4, at the Hotel Orrington, in Evanston, Ill.

FER Publisher Robin Ashton will detail data and analyze trends for the general economy, foodservice operators and materials prices with an eye to their impacts on the E&S market. AutoQuotes Inc. will once again present exclusive information on E&S-manufacturer pricing trends. The program's annual ranking of the top 150 E&S manufacturers will be updated. New to the program this year will be an analysis of E&S dealer trends. The meeting will close with Ashton offering hard-number forecasts of the E&S market in 2011. Attendees receive all presentations and data in both print and electronic formats.

The meeting, scheduled from 9:30 a.m. to 4 p.m., has been planned so many in the Eastern and Midwestern United States can fly in and fly out on Aug. 4. Cost of the seminar is $845 until July 2, $945 afterwards. For agenda, hotel and registration information, go to, or call Chris Palmer at 847/336-2049.


Section sponsored by Henny Penny

Operator Traffic Declines In U.S. Eased In First Quarter, Says NPD
Commercial foodservice traffic continued to decline during the first quarter of 2010, but the rate of decline is easing, according to consumer data from NPD Group's CREST research. Restaurant traffic fell another 2% during the quarter, but that is an improvement over the 3% to 3.5% drops recorded in the third and fourth quarters last year. And the performance was better by about half a point than NPD had earlier forecasted.

The rate of decline in noncommercial traffic also moderated in the quarter, though remained substantial at -7%. Noncommercial traffic fell 10% each quarter in the second half of '09. All data is versus the quarter year prior. Total restaurant spending by consumers fell only 0.3% during the quarter compared to last year's first quarter.

NPD also reported that its weekly study of 47 quick-service and family-dining chains, SalesTrac, showed same-store-sales increases in both March and April versus year prior, the first gains after nine negative months.

"There are signs of improvement," said Bonnie Riggs, NPD's restaurant industry analyst, "but the industry isn't out of the woods yet." Riggs added that before traffic moves into positive territory, "our foodservice forecast suggests there will be two more quarters of traffic weakness."

The traffic declines at commercial restaurants moderated for all segments except at midscale operations. Quick-service restaurants saw traffic fall 2% versus a 3% drop in the fourth quarter last year. Casual dining was down 3% first quarter, compared with a 4% decline fourth quarter. Fine dining/upscale hotel traffic was off 6%, a marked improvement over the double-digit traffic declines seen every quarter last year. Fine-dining traffic fell 16% in the fourth quarter '09. Only midscale operators saw traffic worsen. They saw traffic off 4% versus a 3% decline in the fourth quarter.

Among the noncommercial segments, traffic at school foodservice facilities remained stable versus last year's first quarter. NPD noted significant improvement in traffic at lodging foodservice, which was down only 3% in the quarter. Jobs-affected segments such as business and industry and vending continue to see the biggest traffic losses.

Section sponsored by Henny Penny

Stainless Steel, Other Metals Prices Continue To Surge
Prices for key metals used in foodservice equipment and supplies are continuing to rise, putting pressure on E&S manufacturers to raise their own prices, in spite of continuing weak demand for their products.

The composite global price of 304 stainless products, as tracked by MEPS Ltd., a British information service, hit $3,690 a ton in May. That's up from $2,912 a ton in January, a 26.7% increase. At the bottom of the commodity-price cycle in May 2009, the composite price was $2,110 a ton. Stainless prices thus stand nearly 75% higher than a year ago.

Prices for nickel are, as usual, driving the surge in stainless prices. O'Neal Steel reported in May's Prime Times, the monthly e-newsletter from Prime Advantage, that the company expected another double-digit increase in the nickel surcharge in June.

Other key nonferrous metals, including copper and aluminum, are also moving significantly higher. Some carbon steels are also feeling the price pressures.

Several E&S manufacturers have told us that while they fear trying to raise prices in the current soft market, the materials-price trends leave them no option but to put through mid-year increases.

Section sponsored by Henny Penny

Blue Chip Economists Don't See Much Risk Of Double-Dip Recession
Wall Street and the financial centers of Europe have been worrying about "contagion" from the European debt crisis, and the possibility it will spill over into the U.S. economy. But the more than 50 leading economic forecasting groups polled monthly by Blue Chip Economic Indicators aren't worried much about it.

The consensus forecasts for real growth of U.S. gross domestic product rose a tenth point to 3.3% for 2010 and held steady at 3.1% for '11 in the June newsletter, dated June 10. This year's forecast for growth of real disposable personal income rose 0.3 point to 1.6%. All other forecasts for DPI and personal consumption expenditures for '10 and '11 held in the 2.5% to 2.7% range.

A third of the economists have lowered their forecasts of U.S. growth because of the problems in Europe, but only slightly. They consider the primary risks to the U.S. economy as lower exports or tighter financial conditions. But asked to place odds on a double-dip recession in the U.S., those surveyed place them at only one in six.

Section sponsored by Henny Penny

McDonald's U.S. Same-Store Sales Up Again In May
McDonald's had another good month in May, according to financial data released June 8. U.S. comparable-store sales rose 3.4%. In the U.S. Global comp sales were up 4.8%, with growth in Europe once again leading the chain's three major regions with a sales gain of 5.7% in stores open at least 13 months.

It was the second consecutive 3%-plus increase in U.S. same-store sales for the quick-service giant. U.S. comp sales rose 3.8% in April, after six months of flat comp-sales trends.

McDonald's attributed the U.S. increase to "compelling food and beverage value offerings, the recent addition of frappes" and child-oriented promotions.

Systemwide sales increased 5.5% worldwide, or 6.2% in constant currencies.

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