Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
June 28, 2005

Regulatory Report:
Sponsored by:
APW Wyott Innovations

Busting Bulbs Will Get You Busted In California
EU Rolls Out Disposal Ban On Products Containing Hazardous Waste
Pennsylvania Pushes Energy Efficient Equipment
Washington, D.C., Considers Smoking Ban
Federal Obesity-Lawsuit Bill Moves Forward

Industry Report:
Sponsored by:
Kolpak/Manitowoc Foodservice Group

A Bit Of Golf In Anaheim Before The NAFEM Show, Anyone?
Starbucks Shifting Torrefazione Italia To Co-Brand
Restaurant Patrons Discover 'Price-less' Menu
Maricopa County Program Earns IAFP Award
Chains Show Solid Growth
If Readers Gave Just $10 To 'Road To Anaheim' Project

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In This Section:
NAFEM Indices Show Strong First Quarter
Technomic Calls Climate For Industry Growth 'Positive'
No Sign Of Gas Prices Affecting Restaurant, E&S Sales

This issue's Regulatory ReportSponsor: APW Wyott Innovations Industry ReportSponsor: Kolpak/Manitowoc Foodservice Group

Economic Report Hatco Corp.

NAFEM Indices Show Strong First Quarter
Fueled by a solid domestic market, price increases and a roaring market in Asia, North American foodservice equipment and supplies manufacturers reported very strong sales increases in the first quarter of 2005. The data, reported as part of the Industry Index Program run by the North American Association of Food Equipment Manufacturers, show North American sales rose 11.8% vs. year-earlier figures and 6.1% over fourth quarter '04. Export sales were up a whopping 26.8% over same-quarter '04 and 3.8% compared to the previous quarter.

Without question, these are the strongest first quarter gains seen in the business since before '01. While some of the gains are certainly augmented by price increases, there is no question real sales gains in the first quarter were very strong. The NAFEM numbers are in line with those reported by many large public E&S companies. As reported two weeks ago, John Muldowney at Clarity Marketing charted gains by six large public equipment companies at a blended 13.3% for the first quarter vs. the same period in 2004. Large public supplies companies were flat to slightly lower, however, reflecting what may be slower recent operator sales growth.


Section sponsored by Hatco Corp.

Technomic Calls Climate For Industry Growth 'Positive'
Citing favorable disposable income and employment growth outlooks, Chicago-based research and consulting firm Technomic Inc. forecast restaurant operators will see solid real growth through the remainder of 2005 and into '06. The research group's preliminary '06 forecast, among other data, was presented at its "Restaurants 2006 Trends & Directions Conference," held June 22 in Rosemont, Ill.

Technomic Pres. Ron Paul noted that "the industry is experiencing its strongest growth over a two-year period since 1998-'99." And while Technomic expects some slight moderation of the growth rate in '06, the "trends remain very positive." Paul did point out the downside risks of waning consumer confidence and inflation worries, but noted so far these are outweighed by the positives.

The forecasts call for real growth in restaurant operator sales of 3.0% this year and 2.8% in '06. Menu price inflation is predicted at 3.2% this year and 3.0% next. These gains come on the heels of revised 4.2% real growth in '04.

Led by strong growth in casual dining segment and a moderation of the very robust growth rates posted during the past two years by quick-service chains, full-service will grow a bit faster than quick-service this year and next, the forecast states.

The conference also featured the release of new psycho-analytic research fielded by the group that charts the different ways consumers use foodservice depending on their moods and occasion needs.

Information on Technomic Inc. research products is available at or by calling 312/876-0004.

Section sponsored by Hatco Corp.

No Sign Of Gas Prices Affecting Restaurant, E&S Sales
Oil passed the psychologically heavy $60/barrel mark last week, but consumers don't appear to be reacting by cutting back on restaurant usage—at least not yet, according to Joe Pawlak, v.p. of Chicago-based Technomic Inc.

And the "private" preliminary mid-month read on consumer sentiment from the University of Michigan took an unexpectedly strong upward leap to 94.8 from 86.9 at the end of May, according to Barron's Online. Both the current conditions and future outlook indices recorded robust jumps.

Anecdotal discussions with manufacturers, dealers and others also indicate E&S sales remain strong for most. One leading manufacturer told FER Fortnightly, "Our chain business is booming, we're up big with all the dealer buying groups, and the spec market is good." Several large dealers have mentioned sales gains in double digits versus last year.

Still, high gasoline prices have affected foodservice sales in the past. In the current situation it might just be that employment and wage growth are offsetting the oil-price anchor.

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