Foodservice Equipment Reports Fortnightly
www.fermag.com

Welcome to FER Fortnightly Online Newsletter
August 25, 2009








Regulatory Report:
Sponsored by:
Manitowoc Foodservice
California Sets New Standards For Green Buildings
Chains Push Back Against Calorie-Posting Laws
Tougher Rules On Signs A Sign Of The Times?
Teaspoons Of Grease Add Up To FOG Ordinance
No More Turkish Blend In Turkey Or Gauloises In Galveston

Industry Report:
Sponsored by:
MUFES 2010
Panera Rolls Along
Sodexo To Debut Burger Concept On Campuses
Western Sizzlin, Steak N Shake To Merge
Taco Maker Plans NYC Debut
M. Tucker Helps Sharpen Foodservice Focus at IHM&R Show



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In This Section:
Economists Become More Optimistic, Consumers Less So
Food Prices Fall, Though Not At Restaurants
Only Big Chains Grew Units During 2009, Says NPD
Traffic Falls Again In May
In Times Such As These, You Need FER E&S Market Forecast

This issue's Regulatory ReportSponsor: Manitowoc Foodservice
Industry ReportSponsor: MUFES 2010
Economic Report Food & Hotel Vietnam 2009

By Robin Ashton

Economists Become More Optimistic, Consumers Less So

After a better-than-expected advance report of second-quarter U.S. gross domestic product and slower-than-expected job losses in July, the leading economists polled monthly by Blue Chip Economic Indicators "revealed increased optimism...about prospects for economic growth in the second half of this year and 2010," Executive Editor Randall Moore wrote in the August newsletter. They raised their forecast for real GDP for the last two quarters of '09 and all of '10

Blue Chip economists raised their consensus forecasts of real annualized GDP growth to 2.2% for the third quarter and 2.3% for the fourth quarter of '09. The previous forecasts had been for growth of only 1% and 1.9% respectively. The group also raised its forecast for '10 to 2.3%, up from
2%.

But tellingly for foodservice and other retail businesses, the economists actually lowered their forecasts for this year's annual disposable personal income and personal consumption expenditures, though the quarterly forecasts for the third and fourth quarters did improve. The economists kept the '10 forecasts constant at 1.7% for both key indicators.

Still, some positive news. But apparently no one has told American consumers.. The preliminary August read of the Consumer Sentiment Index showed confidence falling for the second straight month after rising to 70.8 in June. The Index, maintained by the University of Michigan Surveys of Consumers, fell to 63.2 in the preliminary August scoring and is now back at its March level.

"Consumers are very negative about their personal finance situation—the most negative since we started recording (in 1956). ... They are just so uncertain about the future and the job climate," Surveys Director Richard Curtin wrote in a comment posted to a Reuters story about the Index.

The Expectations Index also fell again in the August preliminary, the third monthly drop since May.

Wall Street is feeling some of the uncertainty following a worse than expected weekly jobs report last Thursday. Initial claims for unemployment benefits rose 15,000 to a seasonally adjusted 576,000, surprising most observers. Stocks fell on the news.

 

Section sponsored by Food & Hotel Vietnam 2009

Food Prices Fall, Though Not At Restaurants
After troubling increases in two of the past three months, wholesale food prices fell in July, down 1.5% for "finished" foods, according to the latest Producer Price Index from the U.S. Department of Labor's Bureau of Labor Statistics.

Energy prices also fell, by 2.4%, and "core" finished goods, which exclude food and energy, fell 0.1%. The overall Finished Goods Index declined 0.9% in July, seasonally adjusted.

In the past 12 months, wholesale food prices have fallen 4.2%. The declines have helped foodservice operators maintain profit margins and feature loss-leader specials while sales and traffic have fallen.

Food prices all fell on the consumer level in July, according to BLS. The overall decline for foods was 0.3%. But all the decline was in the food-at-home component, which fell half a percent. It was the seventh monthly decline in in the past eight months for food-at-home prices. In contrast, food-away-from-home continued its rise over the past several months, up 0.1% in July. The beverages index also rose 0.3%.


Section sponsored by Food & Hotel Vietnam 2009

Only Big Chains Grew Units During 2009, Says NPD
As reported recently FER Fortnightly, total restaurant units in the United States declined by 4,000 in the period from April 2008 through March '09, according to The NPD Group's ReCount restaurant census. The total fell 1% to 577,178.

But more detailed information released by NPD shows the largest chains, those with more than 500 units, continued to add units in both quick-service, and surprisingly perhaps, casual dining segments. The biggest QSR chains grew units 1% while casual dining chains with more than 500 units expanded by 2%.

Smaller chains, those with fewer than 100 units, and independents bore the brunt of closings, losing total units in every segment except fine dining. Independent units in that segment fell by a whopping 7%, and overall, fine dining units fell 4%. Family-dining concepts also have been severally affected, with total units down 2%. And midsize and minor chains, those with units from 100 to 499 and 50 to 99, lost 5% and 6% of total units respectively.

"It's clear that independent and smaller chains have been most impacted by the slower economy," said Susan Kleutsch, director of product development-foodservice for NPD.


Section sponsored by Food & Hotel Vietnam 2009

Traffic Falls Again In May
Traffic fell 3% in May, according to data from The NPD Group reported in Nation's Restaurant News Aug. 10. It was the sixth consecutive monthly traffic decline and the eighth in nine months. Data from June and July were not yet available.

The May decline was steeper than the 2.2% fall in March and the 2.8% decline in April. NPD earlier said traffic fell 2.6% for the March through May quarterly period.


Section sponsored by Food & Hotel Vietnam 2009

In Times Such As These, You Need FER E&S Market Forecast
There's no question these are grim times for those selling foodservice equipment and supplies. But grim is less grim when you're armed with information.

Foodservice Equipment Reports' annual E&S market forecast predicts sales at the manufacturer level will decline 18.6% in real terms in 2009, and will fall 21.1% in current dollars.

FER Publisher Robin Ashton and forecasting partner John Muldowney, principal of Clarity Marketing Inc., Tipp City, Ohio, also forecast another down year next year, though with a much more moderate real decline of 1.4% and a nominal fall of 1.5%. The two presented detailed forecast data at the FER President's Preview E&S Market Forecast meeting earlier this month at the Orrington Hotel in Evanston, Ill.

The team also provided hard number forecasts for the period '11 through'13, the first time they have made extended forecasts.

If you'd like to see all the details as you plan for next year and beyond, the entire forecast package is available for $449. The package includes six PowerPoint decks that include detailed data, forecasts and analysis of general economic, operator and materials pricing trends, and the magazine's hard-number forecasts of nine separate E&S product categories. Also included are market projections out through '13.

In addition, anyone purchasing the package will also receive an overview of growth by the top equipment and supplies manufacturers from Muldowney and historical data on E&S price increases from AutoQuotes Inc. Those who have attended FER forecast or other meetings, or have purchased the forecast in the past, will receive a discount.

Ashton and Muldowney will present the forecast again through an online webinar scheduled Nov. 4. This update will include revisions of the forecasts based on the latest data. Participants will also receive an updated version of the entire six-section forecast. Those who attended the August meeting can attend the webinar and receive the updates for no charge.

To order or for information on participating in the forecast webinar, e-mail Robin Ashton at rashton@fermag.com or Chris Palmer at cpalmer@fermag.com, or call 800/986-9616.


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