Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
September 14, 2004

Industry Report:
Sponsored by: Vollrath Co.

Nestor Ibrahim Takes Reins At Southbend
McAlister’s Deli Slices New Territory
Walter Simon Wins FEDA's Lifetime Achievement Award
FEDA Signs Agreement With AutoQuotes
A Whole Lotta Moxie Outta Idaho

Regulatory Report:
Sponsored by: ES3

Chicago To Streamline Inspections
Proposed Alaska Code Big On Training
Illinois’ St. Clair County Posts Inspection Scores Online
NSF Lists Food-Safe Compounds Online
UL To Update Fire Extinguisher Test Standard

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In This Section:
Most QSR Chains, Casual Dining, Continue Strong Growth
NAFEM Industry Index Shows Strong Gains
NRA Performance Index Slips Again
Middling Jobs Growth Reported In August, Florida Hurricanes Hurt Local Operators

This issue's Industry Report
Sponsor: Vollrath Co. |  Regulatory ReportSponsor: ES3

Economic ReportSponsored by Atlas Metal Industries Inc.

Most QSR Chains, Casual Dining, Continue Strong Growth
Ah, the beauty of hard numbers. While some are reporting a softening of growth in the operator and equipment and supplies markets, recent SalesTrac and CREST reports from NPD Foodworld show most operators continue to see strong sales growth. The NPD research relies on broad-based consumer panels.

Same-store sales for the more than 50 quick-service and mid-scale chains followed by SalesTrac grew a robust 4.5% during the last week of August, according to NPD V.P. Michele Schmal, who called the results "not too shabby." She further noted that same-store sales for these large chains have now been positive for 62 consecutive weeks, beginning late June 2003. The QSR segment has been growing faster than mid-scale, and the latter has shown a bit of softening in growth rates recently, but overall sales for these chains are very healthy.

Casual dining, followed in the broader-based CREST study, continues to show "the strongest performance in the industry," according to Schmal. With the casual dining segment still dominated by smaller chains and independents, results suggest commercial operator strength is quite broadly based.

Section sponsored by Atlas Metal Industries Inc.

NAFEM Industry Index Shows Strong Gains More evidence that the second quarter of 2004 was very good for many foodservice equipment and supplies manufacturers: The NAFEM Industry Index, tracked by the North American Association of Food Equipment Manufacturers, posted very strong gains in the second quarter.

North American sales grew a robust 13.3% versus the first quarter; export sales rose 6.1%. The strong second quarter performance comes on the heels of a moderate 2.5% sales gain in the first quarter. Export sales were off 6.8% during that period. All changes are compared with the previous quarter.

The second quarter report, which is preliminary, represents the first time both North American and export components have simultaneously registered gains. North American sales were negative every quarter last year except the second. Export sales were positive during the third and fourth quarters of 2003.

While some manufacturers have informally reported more sluggish sales so far during the third quarter, the strong second quarter performance supports our upward revision in July of the FER forecast. The 2004 E&S Manufacturers Sales Forecast now stands at 4.2% nominal growth, 2.5% real.

Section sponsored by Atlas Metal Industries Inc..

NRA Performance Index Slips Again
Fueled in part by a moderate decline in future expectations, the National Restaurant Association’s Restaurant Performance Index registered another slight drop in July. Overall, the index decline 0.6 points 102.9. This compares with a reading above 105 in February.

All eight components of the combined index, four for the Current Situation Index and four for the Expectations Index, registered declines. The Current Situation Index was off .04 points, the Expectations Index by 0.8 points.

Respondents, a broad-based group participating in the association’s Restaurant Industry Tracking Survey, seemed especially concerned about future general business conditions. The Business Conditions component of the Expectations Index dropped 1.1 points. Only 36% think conditions will be better in the next six months. This compares with 63% expecting better conditions in the December 2003 through February 2004 surveys.

The components following capital expenditures during the past three months and during the next both declined, but only 0.3 points in both cases.

Section sponsored by Atlas Metal Industries Inc..

Middling Jobs Growth Reported In August, Florida Hurricanes Hurt Local Operators

Job growth was slightly stronger in August than it was earlier this summer, with employers adding 144,000 jobs during the month. But the numbers are still less than robust and less than the 150,000 many economists had forecast. "Not a very exciting report," was how one economist, cited in the Chicago Tribune, characterized the numbers.

The Labor Department reported the figures Friday, Sept. 3, and also revised up the very weak figures from June and July by 59,000 total jobs. But many economists benchmark good jobs growth as 200,000 a month or more. While jobs have grown for 12 straight months, only three months this spring reached those levels. And the total economy remains 900,000 jobs below where it was when President Bush took office.

Though foodservice industry numbers continue quite robust, the relatively slow macro expansion is not likely to drive much foodservice growth. Retail sales generally have been quite slow this summer.

And a recent study of 1,076 restaurant customers, reported in Investor’s Business Daily, found a quarter had decreased frequency at casual restaurants because of higher gas prices.

Meanwhile, Hurricanes Charlie and Frances have wreaked havoc on operators throughout Florida. Not only have chains such as Outback reported serious disruptions and lost sales, leisure operators such as Disney and Six Flags lost the entire Labor Day weekend as Frances roared through the state.

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