Foodservice Equipment Reports Fortnightly
www.fermag.com

Welcome to FER Fortnightly Online Newsletter
October 12, 2004








Industry Report:
Sponsored by: Lakeside Mfg.

Boelter Buys Assets Of U.S. Foodservice Contract Design
Oneida To Close Last Flatware Factory
Bright Idea: Next-Gen LED Bulbs Even Better
Cunningham Named Interim Pres at DI Foodservice
Oberweis Dairy Chain Moooves To Expand
A Go-Vote Note
Parikh Joins Up Your Stack Team


Regulatory Report:
Sponsored by: ES3

Maryland Calls For Refrigerator Efficiency
Massachusetts Throws Wet Blanket On Nightspots
30-Year-Old Kentucky Food Code Gets Remod
Louisiana Looking For Five-Pelican Restaurants
ADA Measurements Got You Down (On the Floor)?




FER QuickLinks Menu
Subscribe to FER
 
FER Buyer's Guide
 
FER Services Guide
 
FER Calendar/
Associations
 

FER Media Kit


Advertise with FER, contact Robin Ashton

To subscribe to this newsletter, click:
Subscribe FER Fortnightly

To unsubscribe from this newsletter, click:
Unsubscribe FER Fortnightly


This e-mail was brought to you by the folks at:
Foodservice Equipment Reports
8001 N. Lincoln Ave.
Skokie, IL 60077
Fax: 847/673.8679


In This Section:
Technomic Forecasts Improved Operator Sales, Unit Growth For 2005
Macro Indicators Slightly Negative For Foodservice
Major Chains Weather September As Expectations Rise



This issue's Industry Report
Sponsor: Lakeside Mfg. |  Regulatory ReportSponsor: ES3


Economic ReportSponsored by MAECO

Technomic Forecasts Improved Operator Sales, Unit Growth For 2005
Operator sales are expected to grow 1.6% in real terms after menu price increases next year, according to Chicago-based research firm Technomic Inc.

The projection follows estimated real growth of 1.2% this year, according to the firm. The group’s annual "Forecast & Outlook Seminar" report, produced in cooperation with the International Foodservice Manufacturers Association, was presented at a regional series of seminars in September.

Nominal operator sales, including both real growth and price increases, are expected to grow 4.5% next year versus a preliminary 4.4% rate for 2004.

"It will be a better year, but a lot of the projected growth is inflation," Technomic’s Joe Pawlak, a principal at the firm, told Fortnightly. "Operators have been raising menu prices, trying to absorb rapid run-ups in food, energy, health-care costs," he said.

Technomic expects 3.5% inflation this year for commercial operators and 2.0% for noncommercial segments. "It’s how [operators are] trying to protect margins in this environment," he said. Inflation is expected to moderate somewhat next year. Technomic forecasts 3.0% inflation for commercial segments and 1.5% for noncommercial operators in ’05. Pawlak added that energy price increases are also affecting distribution at all levels, from raw materials to finished products to end-user delivery.

But on another issue of import to E&S suppliers and purchasers alike, Pawlak does predict "a little rosier picture on unit growth." He said operators have been sitting on plans for new units and renovations and servicing aged equipment, awaiting better times. Those times are beginning to appear.

The complete report, including detailed segment forecasts and hundreds of pages of background data, can be purchased from Technomic at the firm’s Web site, www.technomic.com or by calling 312/876-0004. Information is also available from IFMA at www.ifmaworld.com.



Section sponsored by MAECO

Macro Indicators Slightly Negative For Foodservice
Oil prices have continued to rise, consumer sentiment fell slightly during August, and the September jobs report, released Oct. 8, failed to meet expectations. All three factors are important indicators for foodservice sales, though the trends are likely to have only slight negative impact.

According to the September jobs report released by the U.S. Labor Department last Friday, jobs grew 96,000, well off the pace of 148,000 that had been expected by a consensus of economists polled by Bloomberg. Many economists generally look for 150,000 new jobs per month as a "break even" to keep pace with population growth.

The Labor Department also revised downward by 16,000 its previous estimate of jobs growth in August, to 128,000. Manufacturing lost jobs in September, and the average manufacturing work week also shrank.

Oil prices continue to surge as strong worldwide demand and strained supply, combined with worries about interruption in supplies, push crude prices higher. In the U.S., the trends are to high gasoline prices and expectations that heating oil costs will also spike. Many Northeast region homes and businesses use heating oil. High prices for both commodities cut into disposable income and personal consumption, undercutting eating-out counts.

Amid such trends, the Consumer Sentiment and Consumer Expectation indexes fielded by the University of Michigan’s Surveys of Consumers were both off very slightly in August. Survey Director Richard Curtain ascribed the "sideward movement" to concern about rising oil prices and limited jobs growth.

The numbers are likely to affect E&S prospects only if major chains see the trends as an indication of possible softening traffic as they make unit and renovation plans for 2005. But as NPD reports, most chains are still recording growth in sales and traffic (see below).



Section sponsored by MAECO

Major Chains Weather September As Expectations Rise

A couple of measures show minor slowing in operator sales and traffic growth, but operators remain optimistic about the next six months.

The National Restaurant Association’s Restaurant Performance Index slid slightly for the sixth month in a row, as the Current Situation Index for August fell 1.3 points to 103.0. Same-store sales and traffic took hits in August. Only capital expenditures during the past three months were positive. But the Expectations Index showed a gain of 1.1 points to 102.4 with gains in all four components, including expected capital expenditures during the next six months. The new reading ends a slow six-month slide in the Expectations Index.

As for the overall impact of hurricanes and other weather factors, Michele Schmal, v.p. at NPD Foodworld reports that the research group’s SalesTrac study of nearly 60 leading quick-service and mid-scale chains shows continuing sales and traffic growth versus last year for all four weeks of September, though "The rate of growth has slowed somewhat," she said. Poor weather has affected a number of chains’ performance in recent weeks, which may account for some of the slow down in growth rates. SalesTrac sales and traffic counts have been consistently positive for more than a year.




© Copyright 1996-2004. Foodservice Equipment Reports. All rights reserved.