Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
August 22, 2006

Regulatory Report:
Sponsored by:
Franke Foodservice Systems
Energy Star Drafts Criteria For LED Lighting
CSA's FOG Standard Under Task Force Review
Junk Fax Law Finally Kicks In
Scots Shows Brits Stubbing Out Butts Won't Hurt Biz

Industry Report:
Sponsored by:
Server Products
Manitowoc, Enodis Call Off Acquisition Talks
Fisher Wins ACEEE Energy Champion Award
NRA, Healthy Dining Build Web Guide To Better Eating
Aramark Agrees To Private Buyout
NRA Opens 2007 Kitchen Innovations Awards

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In This Section:
FER Forecast Meeting Will Focus On Health Of Channels
Customer Traffic Counts Mixed As Inflation Hurts Some Concepts More Than Others
Blue Chip Consensus Trims Macroeconomic Forecasts Again As Inflation Reports Calm Markets

This issue's Regulatory ReportSponsor: Franke Foodservice Systems
Industry Report
Sponsor: Server Products
Economic Report Electrolux Professional

FER Forecast Meeting Will Focus On Health Of Channels
Is your crystal ball a little foggy? If so, you might want to get yourself to the Hilton Pittsburgh hotel, Wed., Oct. 4.

That's the where and when for Foodservice Equipment Reports' 2007 Equipment & Supplies Market Forecast/Focus on Channels meeting.

Sign up and you'll find you get not only grist for planning and budgeting, but you'll also get insight into the health of the market channel functions, from dealer distribution to rep, consultant and service functions. The meeting is timed for the day before the Allied Buying Corp. Fall Convention opens at the same location.

Among special program features: A panel of leading chain operators—Mike Gainsley from Arby's, Andy Dunmire from Eat'n Park, Rob Foraker from Red Robin Gourmet Burgers and Roy Hook from Wendy's—will discuss how they evaluate and select dealers and other function providers. Also of note, the meeting opens with an open-forum discussion with representatives of each major channel-related function.

The core of the program will focus on detailed analyses of general economic, operator, materials and E&S pricing trends and conclude with FER's exclusive hard-number forecasts of E&S sales growth and pricing changes for '06 and '07. The material will include regional foodservice growth data useful to function providers and manufacturers planning their growth.

Registration is $695 through Sept. 15 and $795 after. This fee includes all incidentals and complete program materials in print and digital forms. Room, if you need one, is separate.

While the meeting is designed so many attendees from the East Coast and Midwest can fly in the day of the meeting, a limited number of rooms are available for Tues., Oct. 3, at the Hilton Pittsburgh

For registration and hotel information, click here.


Section sponsored by Electrolux Professional

Customer Traffic Counts Mixed As Inflation Hurts Some Concepts More Than Others
Maybe we should call the phenomenon Ponderosa's Revenge: While midscale casual dining concepts such as Applebee's, Outback Steakhouse and Red Lobster are seeing pronounced drops in customer counts and same-store sales, many quick-service, fast-casual and high-end casual dining concepts continue to report traffic and sales gains.

Even apart from the current inflation effect, a similar pattern has affected true midscale chains for years—the loss of customers to both higher and lower-end concepts.

What's become clear as summer has worn on and average gasoline prices remain above $3 a gallon is that two distinct, and contradictory, trends are emerging. The widely reported "trading down" pattern noted by NPD Foodworld, Technomic and others, is being counterbalanced by a "buying-up" phenomenon, as Nation's Restaurant News dubbed it in its Aug. 7 issue.

Same store-sales and traffic have risen strongly at concepts such as Landry's, Fleming's Prime and Capital Grill, even while other lower-check concepts owned by the same companies record traffic and sales declines.

In truth, traffic and comparable sales trends are quite mixed. McDonald's continues to report strong sales U.S. and worldwide gains, and a number of fast-casual players, including Panera's, are showing strong traffic and same-store sales increases.

But other quick-service and fast-casual concepts are seeing less rosy trends. Wendy's has seen months of declines, Yum! Brands reported blended same-store sales for its five concepts fell 3% for the weeks ended July 15.

Most of the leading midscale fast causal concepts have been taking it on the chin, including, in addition to those mentioned above, Chili's, Cheesecake Factory, Joe's Crab Shack and Tony Roma's. But again, not all are suffering. Darden's Olive Garden continue to shows gains even as its corporate brethren Red Lobster and Smokey Bones contract.

Still, on the whole, the growing evidence indicates an overall slowing in operator traffic and comparable sales is underway.

Section sponsored by Electrolux Professional

Blue Chip Consensus Trims Macroeconomic Forecasts Again As Inflation Reports Calm Markets
At our President's Preview forecast meeting in late July, we urged attendees to keep an eye on two key data points: operator traffic and inflation measures.

Last week brought reasonably good news on the inflation front. Releasing the Producer Price Index, Wholesale Price Index and the Consumer Price Index, the Federal Labor Department reported that while high energy prices continue to drive the indices, the so-called "core" rates of inflation appear, for the moment, to be returning to moderate growth. This news greatly cheered the stock markets last week.

The news came too late for the most recent survey of more than 50 leading econometric forecasting organizations polled by Blue Chip Economic Indicators. The consensus forecasts of growth in 2006 and '07 slipped again in the survey conducted in early August. The economists were particularly concerned about the effects of inflation, as they noted consistent increases in the "core" inflation rate.

The economists cut their consensus forecast for '06 real growth of gross domestic product to 3.4%, down 0.1 point from last month. They also cut the consensus forecast for GDP growth in '07 to 2.7%

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