Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
June 29, 2010

Regulatory Report:
Sponsored by:
Manitowoc Foodservice
A Special Announcement From Foodservice Equipment Reports: FER To Host New MUFES For Noncommercial Operators June 2011
Red Tape Gets Cut For Restaurant Development In L.A. County
House Bill On Child Nutrition Targets Food Safety
Walk Through The Regulated Restaurant
Menu Labeling Hits Down Under

Industry Report:
Sponsored by:
Server Products
Plans Afoot For Emerging Markets At McD's
Arby's Has Big Plans for Turkey
CPK Debuts Travel-Plaza And Quick-Serve Sites
Luby's Has Winning Bid For Fuddrucker's
FHC China To Open A Day Early

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In This Section:
Tom Stundza To Provide Exclusive Materials-Price Forecasts For FER Forecast Meeting
Technomic Sees Slow Foodservice Recovery During Next 18 Months
General Economy Improving, Says Leading Economist At Technomic Conference
Traffic Jumps 2.3% In Canada First Quarter, Reports NPD
Food Prices Down, Menu Prices Flat, Gas Prices Up A Bit

This issue's Regulatory ReportSponsor: Manitowoc Foodservice
Industry ReportSponsor: Server Products
Economic Report Henny Penny

By Robin Ashton

Tom Stundza To Provide Exclusive Materials-Price Forecasts For FER Forecast Meeting

Tom Stundza, former executive editor at Purchasing magazine and a leading authority on metals and materials pricing trends, will provide exclusive materials-price forecasts as a featured speaker at Foodservice Equipment Reports annual President's Preview E&S Market Forecast meeting

The day-long event is scheduled for Wednesday, Aug. 4, 2010, at the Hotel Orrington, in Evanston, Ill. The 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.

Stundza, who long oversaw Purchasing's commodities transaction-price data, maintained the magazine's Commodities Price Index and forecast materials prices. For FER, he will develop forecasts through 2012 of materials and commodities widely used in foodservice equipment and supplies. With prices for many metals and other commodities on the rise again, these forecasts should be of great use to manufacturers and buyers making plans for 2011 and beyond.

The meeting will also detail data and analyze trends for the general economy and foodservice operators with an eye to their impacts on the E&S market. AutoQuotes Inc. will present exclusive information on E&S-manufacturer pricing trends. The program's annual ranking of the top 100 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 FER Publisher Robin Ashton offering hard-number forecasts of the E&S market in 2011 and beyond. Attendees receive all presentations and data in both print and electronic formats.

The meeting is scheduled from 9:30 a.m. to 4 p.m., and planned so many in the Eastern and Midwestern U.S. 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

Technomic Sees Slow Foodservice Recovery During Next 18 Months
After the greatest foodservice recession in decades, the market is finally beginning to show signs of recovery. That was the word from the researchers and analysts at Technomic Inc.'s annual day-long conference, Restaurants 2010: Trends and Directions, held June 23 in Rosemont, Ill. But Technomic principal and founder Ron Paul cautioned that high unemployment and underemployment, a "new frugality" among consumers, and slow income and spending growth will restrain the pace of foodservice operator growth well into next year.

"Some consumers have decided they can forego eating out," Paul said. He also noted that with unemployment and underemployment at more than 16%—and with the number as high as 25% in some communities—some consumers have little choice but to "trade down or trade out." With economists forecasting that employment growth will be painfully slow over the next few years, Technomic analysts have little choice but to assume foodservice sales and traffic growth will also be very sluggish. "It really all comes down to jobs and employment," Paul said.

Still, Technomic research presented during the conference showed that both operators and consumers believe the economy and foodservice market have bottomed out. In a survey Technomic undertook of consumer attitudes, only about 8% indicated they have permanently changed their attitude toward dining out. A large majority of consumers would like to eat out more often, if finances allow.

Section sponsored by Henny Penny

General Economy Improving, Says Leading Economist At Technomic Conference
In the opening presentation of the Technomic Restaurants 2010 conference, Paul Kasriel, chief economist for Northern Trust (and whose family owned a foodservice equipment dealership) offered some hope. "The economy has begun to hit on all cylinders," he joked, "but without much compression. Still, there is every reason to believe that the U.S. economy will grow this year and

He discounted the danger of the European credit crunch, noting Greece, Portugal and Spain account for less than 4% of the global economy while China, India and Brazil control 12.6%. The economies in the latter countries continue to grow robustly. And nearly all the growth in U.S. exports in the past year has gone to "non-Japan Asia and Latin America."

On another positive note, he said "only about 40% of the federal stimulus" approved last year has in fact been spent to date. "You're seeing a tremendous amount of infrastructure building" this year, he said, noting all the work is keeping tens of thousands employed.

Still, the U.S. economy is structurally changing, moving towards exports and business spending and moving away from discretionary consumer spending and housing. This is likely to be a slow, painful process which has already led to significant structural dislocation, particularly in the automobile, housing construction, and financial sectors. "Many who were working in these sectors will have to retrain and find other ways to make a living," he said

The most crippled sector of the U.S. economy remains the financial sector, he said. Credit is likely to remain tight as new financial rules (close to passage as we went to press) and the danger of continuing loan losses on commercial real estate lead financial institutions to hold on to or build their reserves, rather than lending to businesses or consumers.

Section sponsored by Henny Penny

Traffic Jumps 2.3% In Canada First Quarter, Reports NPD
The Canadian foodservice market has consistently been in "less bad" shape than the U.S. market throughout the Great Foodservice Recession. We've seen that consistently from the MAFSI Business Barometer, which tracks reps' equipment and supplies sales in Canada. Now it appears Canada will beat the U.S. to foodservice recovery, too.

The NPD Group recently reported that restaurant traffic in Canada actually rose 2.3% in the first quarter this year, compared with the same quarter in 2009. It was the first positive quarter since the last quarter '08.

But while Canadian commercial foodservice is attracting more customers, spending rose only 1% total, as the average check fell 1.3% during the quarter. The research group noted that heavy dealing continued. Deal-related visits were up 7% in quick service and 6% in family/midscale operations. Still, it was the second consecutive quarter for growth in spending on Canadian foodservice.

All segments of the industry posted traffic gains. QSR saw traffic rise 3%, casual dining and retail were up 2%, and family/midscale grew by 1%. Family visits, which have been hit hard even in Canada, also grew, which particularly benefited QSR.

Overall it was an encouraging quarter," said Linda Strachan, NPD restaurant industry analyst for Canada, "with signs emerging that the Canadian restaurant industry is poised for recovery."

Section sponsored by Henny Penny

Food Prices Down, Menu Prices Flat, Gas Prices Up A Bit
Wholesale food prices fell for the second consecutive month in May, easing concerns that the run-up in the key cost component for most operators other than labor would begin to crimp operators' ability to discount while sales remain sluggish, and undermine margins.

At the finished foods level, prices were off 0.6%, following a 0.2% drop in April. Still, the declines come on the heels of eight consecutive months of increases—prices were up 2.4% in March—which has more than wiped out the near-record declines in wholesale food prices seen last year. Those declines allowed many operators to remain profitable while experiencing record sales declines. Using a total wholesale food number (factoring in food at the intermediate and crude levels), the National Restaurant Association reported food prices are up 4.9% year-to-date including the declines in April and May.

On the consumer side, the food-away-from-home component of the Consumer Price Index rose a mere 0.1%, the sixth month in the last seven that have seen only 0.1% gains. The menu-price increase marker was flat in March. For the past 12 months on a seasonally unadjusted basis, food-away-from-home prices have risen only 1.1%, by far the lowest 12-month period on record.

Finally, gasoline prices continue to remain essentially stable, a pattern that has been in place for nearly a year. Prices were up a bit over three cents a gallon in the week ending June 21, but are only three cents higher than this time last year. Gas prices have not experienced their usual run-up during the peak summer driving season this year.

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