Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
June 17, 2008

Regulatory Report:
Sponsored by:
Flush With Approval: EPA To Set Specs For High-Efficiency Urinals
California May Preempt Local Calorie Counters With State Bill
Retro Flush: Atlanta Requires Low-Flow Toilets In Older Buildings
Bonita Springs Looking At New Grease Trap Rules

Industry Report:
Sponsored by:
FER E&S Market Forecast Meeting
Tax Stimulus Encourages Equipment Updates
Pizza Hut Celebrates 50 Years
Starbucks Unit Brews Up Self-Vending Espresso Machines
High Fuel Prices Create New Foodservice Position: Fry Crook
McD's Kicks Last Of Trans Fats
Call For Entries!

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In This Section:
NRA Performance Index Better But Still Below Flat For April
All Regions Show Soft Operator Sales, Traffic; Quick-Service, Quick Casual Outperform Others
Wholesale Food Prices Ease; Menu Prices Still Catching Up
Early Bird Discount For FER's President's Preview Forecast Seminar Flies Away Friday; Operators Join Panel

This issue's Regulatory ReportSponsor: Enodis
Industry ReportSponsor: FER E&S Market Forecast Meeting
Economic Report Manitowoc Foodservice Group

NRA Performance Index Better But Still Below Flat For April
The hopeful question is, "Has the restaurant industry bottomed out?" The Restaurant Performance Index, based on a survey fielded monthly by the National Restaurant Association, improved slightly but remained below 100—below the balancing point between expansion and contraction—in April.

The overall RPI rose 0.4 point, to 98.3. It was the sixth month the overall Index remained mired below 100.

Of the two main components, the current Situation Index climbed 0.8 point, to 97.9, and the Expectations Index gained 0.1 point, to 98.9.

None of the eight sub-components, four in the Current Situation Index and four in the Expectations Index, declined from their March readings; six of the eight and all four of the Current Situation markers rose.

Both same-store sales and customer traffic numbers, part of the Current Situation Index, rose more than a full point in April, though again, both markers remained well below 100. The sales indicator rose 1.2 point to 98.5, and the traffic marker was up 1.1 point to a still-depressed 96.9.

The capital-spending marker in the Expectation Index, which reflects plans to purchase in the next six months, was flat at 99.5. And according to the expanded survey detail in NRA's Restaurant Trendmapper, the percentage of operators planning an expenditure fell to another record low of 47%. The capital expenditure number in the Current Situation Index, tracking spending during the past three months, rose 0.4 point to 98.6.

The outlook for business conditions in six months was also flat, signaling that operators don't think the pain is likely to ease immediately. Still an upward turn, even a paltry one, beats continuing downward slides.


Section sponsored by Manitowoc Foodservice Group

All Regions Show Soft Operator Sales, Traffic; Quick Service, Quick Casual Outperform Others
Operators in all four major regions of the country are feeling the pain of declining same-store sales, but quick-service and quick-casual operators apparently continue to benefit from customers trading down, according to expanded data from the same survey the National Restaurant Association uses to plot its Restaurant Performance Index.

Overall, 35% of operators in the country said same-store sales rose in April, while 50% said sales declined, compared to April the year before. Those numbers are five to seven points better than March's record low reading, but still clearly skewed toward the negative.

Operators in the South are getting hammered the worst, according to the survey responses. Only 31% of operators responding to the April survey in that region said same-store sales rose, while 53% reported sales declined. The Northeast had the highest percentage of operators reporting sales gains: 42%, though it also had slightly more operators reporting decreases, 49%, than either the Midwest or West. The percentage that reported sales gains in the Midwest was 35% while 34% of operators in the West said sales rose.

And quick-service and quick-casual operators continue to buck the downturn trends. Both segments had more operators reporting same-store sales gain than decreases. The numbers for quick service were 46% up, 40% down. For quick casual, they were 39% up, 32% down..

As one might expect, these quick-service and quick-casual trends also translate into stronger intentions to make a capital expenditure in the next six months: 54% of those surveyed in quick service plan such buying while 52% of quick-casual operators plan capital expenditures. Perhaps surprisingly, or because they must replenish durable supplies and tabletop stocks, 54% of casual dining operators also expect to purchase capital goods in the next six months.

Section sponsored by Manitowoc Foodservice Group

Wholesale Food Prices Ease; Menu Prices Still Catching Up
After months of continuously upward pressure, wholesale food prices dropped a bit in April. Meanwhile, operators, battered by months of food-price increases, continued to raise menu prices, though not as quickly as supermarkets. A few months of these trends, and operators' margin-squeeze may begin to ease.

Wholesales food prices fell 0.4% in April, according to numbers from the Bureau of Labor Statistics. This follows a 1.6% rise in March, the last of a series of strong monthly gains. Wholesale food prices have risen 6.2% since April 2007. On a year-to-date basis through April, wholesale food prices are up 7.9%.

Not surprisingly, operators are trying to raise menu prices to cover the gap. Food-away-from-home prices rose 0.3% in April and have risen 4.1% since April last year. This rate is slightly above the overall consumer price rate of 3.9%.

Among the segments, quick-service, whose sales and traffic have held up better, raised prices 4.3% while fullservice, more affected by sales declines, saw menu prices increase 4%.

Supermarkets have raised prices even more, a robust 5.9% gain in the last 12 months.

Section sponsored by Manitowoc Foodservice Group

Early Bird Discount For FER's President's Preview Forecast Seminar Flies Away Friday; Operators Join Panel
Martin Cowley from Disney, Les Karel from Arby’s and Bernard Morauw from McDonald’s have signed on to the leading-operator panel that traditionally kicks off Foodservice Equipment Reports’ annual President’s Preview Equipment And Supplies Market Forecast meeting. The seminar will be held at the Eaglewood Resort and Spa in Itasca, Ill., on July 30. The operators will participate in an open forum and discuss drivers affecting their businesses and their organizations' capital spending plans.

You only have a few days to take advantage of the early-bird discount on the seminar fee. Sign up by June 20 and you save $100.

The meeting features the magazine's hard-number forecasts for E&S market growth in 2008 and '09, and includes a wealth of data on general economic, operator and materials and E&S price trends.

The meeting program is one day, with a mid-morning start, so that most attendees can fly in and out the day of the meeting. A limited number of hotel rooms at Eaglewood is also available for July 29. The seminar fee is $845 before June 20, $945 after.

registration and the hotel is available at or by calling Jessica Scurlock or Robin Ashton at 800/986-9616.

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