Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
August 12, 2008

Regulatory Report:
Sponsored by:
L.A., Seattle Jump On Bag-Ban Wagon
'Governator' Signs Trans-Fat Ban
ICC Sets Up Green Building Committee
Massachusetts Eyes Hood-Cleaning Standard

Industry Report:
Sponsored by:
The NAFEM Show '09
IH/M&RS Gears Up For New York
NSF Lab Expansion Takes LEED Silver
McDonald's Fry Grease Fuels Manila Cop Cars
Ruby Tuesday Dynamites Old Image

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In This Section:
FER Forecasts E&S Market To Shrink
MAFSI Business Barometer Improves Slightly
NRA Restaurant Performance Index Falls Back In June

This issue's Regulatory ReportSponsor: Enodis
Industry ReportSponsor: The NAFEM Show '09
Economic Report Manitowoc Foodservice Group

FER Forecasts E&S Market To Shrink
A real decline in operator sales, very challenging general economic conditions and a host of other factors will push sales growth of equipment and supplies into negative territory for the next 12 to 18 months, according to Foodservice Equipment Reports' new forecast of the E&S market for 2008 and '09.

These predictions were presented July 30 at the magazine's annual President's Preview E&S Market Forecast meeting, held at the Eaglewood Resort & Spa in Itasca, Ill.

But while the forecast is for a 2.7% real decline in E&S sales at the manufacturers' level this year and a slightly steeper drop of 3.4% in '09, the combined decline is not expected to be as severe as the last downturn the market experienced, Publisher Robin Ashton noted. Real sales declined an estimated 7% to 9% in the years '01 to '03.

"Despite economic and operator indicators as negative as we've seen them in a long time, we believe the amplitude of cyclical swings in this market continues to flatten as the market become more mature and more global," he said.

But Ashton, and his forecasting partner John Muldowney, principal of Clarity Marketing, Tipp City, Ohio, cautioned that the environment holds much downside risk, given the very battered consumer, the volatility of commodity prices and other factors.

Ashton and Muldowney will present the forecast again, with updates, through an online webinar scheduled Oct. 28. The presentation will include revisions of the forecasts based on new data as well as recalculations of market estimates using new data from the soon to be released "NAFEM Size & Shape of the Industry" market numbers. Webinar participants will also receive in print and CD the entire six-section forecast.

Material will include detailed data; forecasts and analysis of general economic, operator and materials pricing trends; as well as a hard-number forecast of nine separate E&S product categories. Also included: Muldowney will present Clarity's overview of growth by the Top 150 equipment and supplies manufacturers. E&S pricing increases, as recorded by AutoQuotes Inc. will also be reviewed.

In the meantime, the entire package is available for $449. Past attendees of FER forecast seminars or other meetings qualify for a discount. To order or for information on participating in the forecast webinar, e-mail Robin Ashton at or call the magazine's office at 800/986-9616.


Section sponsored by Manitowoc Foodservice Group

MAFSI Business Barometer Improves Slightly
It's hard to call a negative number an improvement, but the quarterly Business Barometer compiled by the Manufacturers' Agents Association for the Foodservice Industry came in better than expected. Sales of like lines of equipment, supplies and furnishings by reps were off only 0.6% in the second quarter of 2008, an improvement over the first quarter's 1.2% decline. The comparisons are versus year-earlier periods. The numbers are in current dollars, which given continuing price increases for many E&S products, means real sales and unit trends are slightly more negative than the face-value numbers suggest.

Overall sales were positive, if only slightly, in three of the five regions tracked by the survey—Canada, the Midwest and the Northeast. Last quarter, all four U.S. regions saw declining sales. The West and the South continue to struggle most, with sales in the South off 3.4%. The West's decline was a more modest 0.7%. Both regions have been more affected by the housing downturn than other regions and are more dependent on cars for transportation.

Two of the four product categories experienced declines for the period. Sales of equipment were off 0.3% while furnishings sales, more dependent on new-unit construction, which has slowed, fell 1.6%. Sales of durable supplies were flat, and tabletop sales rose for a second straight quarter, this time a modest 0.3%.

While things may have been a bit better in the second quarter than in the first, reps still believe more declines are on the horizon. The forecast for sales in the third quarter is for a 1.1% decline.

Section sponsored by Manitowoc Foodservice Group

NRA Restaurant Performance Index Falls Back In June
We were hoping the uptick in the National Restaurant Association's Restaurant Performance Index in the May survey was a sign commercial operator fortunes had hit bottom. But no, the Index fell back again in June, on significant declines in current same-store sales and traffic. The only real positives in the survey were improvements in the two capital spending indicators and the outlook for business conditions during the next six months.

The overall Index fell 0.3 point to 98.3. This was higher than the record low 97.9 in March 2008, but still the second-lowest reading since the Index was launched in '02. And the overall Index has now been below the 100-point level that signals expansion and contraction for eight consecutive months.

The four-component Current Situations Index fell one point as same-store sales and customer traffic dropped 2.2 and 2.5 points respectively. The labor component fell 0.2 point. Only the indicator tracking capital expenditures in the past three months rose, up a full point.

The Expectations Index crept up 0.3 point, above the record low of 98.3 in May. The component that tracks expected business conditions during the next six months rose 0.5 point. The indicator for expected capital expenditures during the next six months rose 0.9 point.

While the improvement in the capital expenditure indicators and business expectations provides some hope, it is clear many operators continue to experience a tough operating environment.

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