Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
July 11, 2006

Regulatory Report:
Sponsored by:
Franke Foodservice Systems
ICC Holding Town Hall Meeting On Joint Codes
San Francisco Bay Area Foaming About Foam
Mercury Reduction Laws Slip Into Effect
South Carolina Says Okay To Rare Burgers
Smokers On The Run, Hither And Yon

Industry Report:
Star Aquires Lang
Worldwide Energy Use To Grow Two-Thirds By 2030
Sbarro Takes Italian Food South Of The Border
NAFEM Announces Town Hall Meetings

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In This Section:
You Don't Want To Miss The FER 2007 E&S Market Forecast President's Preview July 27
Prices To Remain High For Core E&S Materials
Will Rising Construction Material Costs Cast Shadow On New Unit Plans?
Traffic, Sales Bounce Back In Latest Survey, NRA Says

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

Economic Report FER E&S Economic Forecast Meetings

You Don't Want To Miss The FER 2007 E&S Market Forecast President's Preview July 27
Yes, you still have time, but not a whole lot of it, to register for Foodservice Equipment Reports' 2007 E&S Market Forecast President's Preview. The meeting, created to give senior executives of E&S suppliers an in-depth look at current conditions and prospects for the coming year, will be held July 27 at the Eaglewood Resort in Itasca, Ill., a convenient 30-minute drive from Chicago's O'Hare Airport.

Featuring FER's exclusive hard number forecasts of the growth of the E&S market, an open forum with five prominent operators, forecasts for materials costs and E&S price increases, the newly created meeting will provide attendees with extensive material they can use in their own planning and budgeting processes for 2007.

Scheduled from 10 a.m. to 4 p.m., the meeting has been planned so many in the Eastern and Midwestern parts of the country can fly in and fly out same day.

For those who can't make the July meeting, FER will run a second version with much similar information, "Focus on Channels," Oct. 4 at the Hilton Pittsburgh.

For more information on both meetings, click on the link through the ad at the top of the Economic Report section.


Prices To Remain High For Core E&S Materials
Those hoping for relief from historically high prices for stainless steel, copper, aluminum and plastics will have to wait awhile. According to Purchasing magazine's quarterly transaction-price data and forecasts of 100 key commodities, released last week, prices rose again in the second quarter. And they are expected to remain elevated, in most cases, through at least the beginning of 2007.

Purchasing's Commodity Price Index of 100 commodities and raw materials reached 205.2 (1992=100), just shy of the record 208.6 for the first quarter of '05. The Index was up from 199.1 in the first quarter. And Purchasing expects the Index will move 3% higher in the third quarter before beginning to slow in the fourth.

In materials key to foodservice equipment, the big gainer was copper. As short supply and speculators drove up prices, copper sheet soared 27.1% to $3.70 a pound in the second quarter. It is not forecast to drop below $3 a pound until first quarter '07. The price in first quarter '04 was $1.99.

Type 304 stainless sheet rose to $2,440 a ton with surcharge in the second quarter, up nearly 8%. The forecast calls for an increase to $2,492 in the third quarter. And prices are predicted to remain above $2,200 until the second quarter next year.

Aluminum costs also shot up in the first half of the year. The second quarter price of $1.78 a point for 3003 sheet was 8.9% ahead of the last quarter of '04. Purchasing expects prices will remain in the $1.55 to $1.60 a pound range through the end of '07.

On a positive note, natural gas prices have moderated a bit since the beginning of the year. This had led to some pull-back in plastic resin prices. Still, resins remain well above 2004 prices and are forecast to remain so for the next year.

Section sponsored by FER E&S Economic Forecast Meetings

Will Rising Construction Material Costs Cast Shadow On New Unit Plans?
It's clear that rising costs of stainless, aluminum, copper and plastics have driven up prices of foodservice equipment and supplies. But higher prices for a host of construction materials are creating their own challenges for facilities and construction officials at major chains.

Ken Simonson, chief economist for the Associated General Contractors of America, recently urged his members to "Get used to higher cost inflation," according to an AGC release.

"Many materials are contributing to the increase," Simonson commented. "In the last 12 months, there have been increases of 87% for copper and brass mill shapes, 48% for asphalt, 40% for diesel fuel, 26% for gypsum products, 18% for plastic construction products, and 15% for cement."

And while Simonson predicts a slowing U.S. housing market will take some of the steam out of increases, he says continued worldwide demand and high freight costs linked to diesel fuel will prevent any significant moderation.

His predictions are borne out by Purchasing magazine's latest forecasts. While prices for some wood products such as QSB Waferboard and 2x4 Douglas fir have come down, other materials such as particleboard, finer plywood grades and 1x12 Ponderosa pine remain at historical highs. The forecast is for prices of many of these materials to decline only gradually over the coming year.

At Technomic Inc.'s recent "Restaurants 2006, Trends & Directions" seminar, the consulting firm predicted that the high cost of construction materials, teamed with higher interest rates, will lead some chains to slow their new-unit and renovation plans for '07.

Section sponsored by FER E&S Economic Forecast Meetings

Traffic, Sales Bounce Back In Latest Survey, NRA Says
Same-store sales and traffic returned to positive growth in May, according to the Restaurant Performance Index survey fielded by the National Restaurant Association. The gains helped the overall Index to remain flat, overcoming a decline in the Expectations Index.

The Expectations Index fell 0.4 point to 104, as expectations for same-store sales, business conditions and capital expenditures declined. The outlook for future staff was flat.

The capital expenditure component of the Current Situations Index, reflecting purchases the previous three months, also was off 0.4 point.

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