Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
September 7, 2006

Regulatory Report:
Sponsored by:
Franke Foodservice Systems
Massachusetts Puts Equipment Makers On Notice
Florida Counties Push Posting Of Inspections
Ontario: Don't Let Waste Go To Waste
FDA Okays Germ Warfare To Fight Foodborne Illness

Industry Report:
Sponsored by:
Hotelex Shanghai,
April 4-7, 2007
Henny Penny Acquires Refcon
Middleby Buys Danish Combi-Oven Maker
States Say Beware Of Poster-Selling Scheme
More Companies Intro Biodegradable Cup
First Food Safety Supply Chain Conference Coming In October
Turner Helps NRA Lead Industry Sustainability Program
Alliance Approves Online HACCP Training Course

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In This Section:
More Shameless Promotion: Take Advantage Of Early Bird Fee At FER Forecast Meeting
Most Public E&S Companies Report Strong Second Quarter Though Supplies Trend Troubling
Pricey Gas, Softer Economy Bites Into Operator Sales And Prospects, Says NRA
General Economic News Mostly Comforting Last Week

This issue's Regulatory ReportSponsor: Franke Foodservice Systems
Industry Report
Sponsor: Hotelex Shanghai, April 4-7, 2007
Economic Report Enodis

More Shameless Promotion: Take Advantage Of Early Bird Fee At FER Forecast Meeting
You only have a week remaining to qualify for the early bird fee at the Foodservice Equipment Reports 2007 Equipment & Supplies Market Forecast "Focus on Channels" meeting. The Wed., Oct. 4, day-long meeting at the Hilton Pittsburgh, in Pittsburgh, is planned to precede the Allied Buying Corp. Fall Convention at the same location.

The program will provide comprehensive trend and market data that foodservice equipment and supplies executives can use for planning and budgeting. Special program features will also offer insight into the health of market channel function providers such as dealers, reps, consultants and service agents.

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.

The core of the program will focus on detailed analyses of general economic, operator, materials and E&S pricing trends. The program will 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.

Special program features will include a panel of leading chain operators discussing how they evaluate and choose dealers and other function providers. The program kicks off with an open forum with representatives of each of the major E&S functions/channels.

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 is available for Tues., Oct. 3, at the Hilton Pittsburgh.

For registration and hotel information on FER's 2007 E&S Market Forecast "Focus on Channels," click here.


Section sponsored by Enodis

Most Public E&S Companies Report Strong Second Quarter Though Supplies Trend Troubling
Led by the equipment-oriented companies, seven of nine large public foodservice equipment and supplies companies are reporting healthy revenue gains in the second quarter of 2006, according to John Muldowney, principal at Clarity Marketing. But declining sales at two of the three supplies-oriented publics in that nine-company group may indicate that sinking operator traffic and sales are beginning to have an effect on the E&S market.

Combined sales of the nine companies rose 7.7% over the same quarter a year ago. Sales for the first half of '06 are 5.8% higher.

Blended sales gains of the six equipment companies reporting—Standex and Aga Foodservice had not yet reported—rose 10.6% in the quarter. This comes after first quarter sales showed some moderation of the strong gains registered most of '05. Sales of the six for the first half rose 6.6%.

While one of the three supplies companies saw sales rise 5%, the two others were negative in the 3% to 5% range. Overall, blended sales of the three rose 1% in the quarter and are 3.8% higher for the half.

Supplies sales are usually more sensitive to changes in current operator fortunes. The negative traffic and same-stores sales figures at many casual dining and other full service concepts may be cutting into supplies sales.

Section sponsored by Enodis

Pricey Gas, Softer Economy Bites Into Operator Sales And Prospects, Says NRA
The evidence is mounting that sustained high gasoline prices and a general softening in the economy are having negative effects on restaurant operators. The latest data comes from the National Restaurant Association's July Restaurant Performance Index. The full index fell nearly a point to 100.9 as seven of the eight components registered declines.

Both the Current Situation Index and the Expectations Index fell 0.9 point in the July survey, though both remain slightly above the 100 level, which in this Index signifies "flat" or "no change." Above 100 marks growth; below 100 indicates contraction.

Same-store sales and traffic took 1.5-point hits each. NRA reported that full-service operators were seeing stronger negative effects from the current economic conditions than quick-service operators. Eighteen percent of the total sample said high gas and other energy prices were the biggest current challenge to their businesses.

In the Expectations Index, operators' perception of business conditions during the next six months fell 1.8 points, and at 99.6, edged under the 100-point tipping point between growth and contraction.

Both capital expenditure components—purchases made within the past three months and anticipated within the next six—declined. The percent planning expenditures fell to 56% in August, down from 65% in February.

Section sponsored by Enodis

General Economic News Mostly Comforting Last Week
The economic data released last week mostly countered recent fears that the U.S. economy might be augering into the dirt. An upward revision of second quarter gross domestic product growth, moderate job growth with minimal wage inflation and a slight rebound in consumer confidence had many economists breathing a sigh of relief before heading off for the Labor Day weekend.

The Department of Commerce said real GDP growth in the second quarter was 2.9%, not the 2.5% originally estimated. The Labor Department reported Friday that 128,000 new non-farm jobs came into the U.S. economy in August. While this is below the 146,000 trend for the first half of the year, it does seem to indicate that while the economy is certainly slowing, it is not crashing. Even construction, which has been hard hit by the housing slowdown, added new jobs.

Perhaps more important for the Wall Street types who live and die on interest rates, the growth in wage rates crept up only 0.1% in the August reading, significantly below the increases in June and July that had many worrying that inflation pressure would spur the Federal Reserve to raise interest rates. Most economists now believe the Fed will leave rates alone at its next meeting.

Also on Friday, the University of Michigan Surveys of Consumers released its latest data. Surveys Director Richard Curtain said consumers actually became a bit more confident in the second half of August, as gasoline prices began to moderate, though the Consumer Sentiment Index nonetheless fell back to 82.9 from 84.7 in July. The reading in August '05 was 89.1.

The closely watched Expectations Index fell to 68.0 in August from 72.5 in July and 76.9 last August.

Curtain said consumers appear on a trend of cautious spending, not a precipitous cutback, as many have feared.

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