Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
October 17, 2006

Regulatory Report:
Sponsored by:
Franke Foodservice Systems
California Ends Meat Recall Secrecy Agreement
Camden, Lawrence Rethinking Restaurant Curfews
More Smoking Bans In The Works
Sacrebleu! French PM To Decree Ban On Public Smoking
AFAQ AFNOR Offers ISO 22000 Certification In U.S.

Industry Report:
Sponsored by:
Server Products
Scotsman/Enodis Facility Earns IndustryWeek Top 10 Plant Award
FCSI Honors 10 New Innovative Products
Five Food Firms Agree To Healthier School Snacks
Company Helps Consumers Find Restaurant Inspection Scores Online
Foodborne Illnesses Decline Despite E. Coli Outbreak

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In This Section:
FER Magazine Forecasts E&S Manufacturer Sales To Grow 5.7% In 2007
Purchasing Magazine Says Materials Prices Are Rising Again; AutoQuotes Says So Are E&S Prices
NRA's Performance Index Declines, But Hope Peeks From Edges
Macroeconomic Indicators Look Up, Slightly

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

FER Magazine Forecasts E&S Manufacturer Sales To Grow 5.7% In 2007
The foodservice equipment and supplies market should experience its fourth consecutive year of real growth in 2007, though rising materials costs will mean higher prices for buyers and squeezed margins for manufacturers.

These were among the predictions made by Foodservice Equipment Reports Publisher Robin Ashton as he co-presented the magazine's annual forecast for nearly 50 attendees during the FER E&S Market Forecast Focus on Channels seminar, held Oct. 4 in Pittsburgh.

FER projects real growth of E&S manufacturer sales, including exports, will slow slightly in '07 to 1.9% from estimated real growth of 2.3% in '06. Nominal growth is estimated at 6% in '06. This follows real growth of 2.3% in '05 and 2.6% in '04, according to FER estimates.

Ashton and forecasting partner John Muldowney, principal of Clarity Marketing in Tipp City, Ohio, also predicted that manufacturers will continue to aggressively raise prices in late '06 and into '07, as they attempt to close the margin gaps caused by another round of steep price increases for core materials including stainless steel, aluminum and copper. FER forecasts overall E&S industry prices will rise 3.8% in '07, slightly higher than in '06 and '05.

Ashton and Muldowney weighed declining growth rates for many operators over the summer, suddenly falling gasoline prices in September and the continually increasing materials costs. In the end, they did not change the '07 forecast from the preliminary version presented during the magazine's earlier E&S Market Forecast President's Preview seminar in late July.

The complete FER E&S Market Forecast presentation is available for purchase at $249. It includes detailed trends analysis and forecasts of general economic indicators that affect foodservice, operator sales and unit growth, materials pricing, detailed analysis of historical list price increases from AutoQuotes, as well as forecasts of growth and price changes for individual E&S product categories and the industry as a whole. The presentations will be delivered in both print and electronic formats.

For information, e-mail Jessica Scurlock at or call her at 800/986-9616.


Section sponsored by Electrolux Professional

Purchasing Magazine Says Materials Prices Are Rising Again; AutoQuotes Says So Are E&S Prices
Transaction prices for 304 stainless steel sheet reached a new historical high of $3,051 a ton in the third quarter of 2006, according to Purchasing magazine. The publication forecasts prices for the key material will continue to soar through the first quarter of '07 before gradually declining through the remainder of the year.

This was among the bad news for equipment and supplies buyers, specifiers and manufacturers contained in Purchasing's latest quarterly materials and commodities forecasts, released Oct. 2. The magazine, which tracks actual transaction prices and forecasts prices for 122 materials and commodities, also says prices for aluminum, copper and most plastic resins will remain at very high historical levels, as strong worldwide demand and restricted supply affect many of the materials used widely in E&S.

Not surprisingly, Kent Motes, president of AutoQuotes, Jacksonville Fla., which publishes list prices for more than 300 E&S manufacturers, says manufacturers are responding to the materials increases with aggressive price increases of their own.

Motes presented new data at the FER E&S Market Forecast seminar Oct. 4 showing that a record number of manufacturers have submitted price increases beginning Oct. 1. Traditionally, most manufacturers have raised prices in the first quarter. Midyear and other additional increases have become increasingly common, Motes showed, as manufacturers attempt to close the margin gaps caused by the materials run-ups and anticipate the lag between posting increases and receiving them from customers.

Purchasing's detailed materials forecasts, now extending out through '08, can be purchased at AutoQuotes' presentation of historical list-price-increase trends, including increases by product categories, is available as part of the FER 2007 E&S Market Forecast (see above story).

Subscribers and participants in AutoQuotes can obtain the presentation directly by e-mailing Kent Motes at

Section sponsored by Electrolux Professional

NRA's Performance Index Declines, But Hope Peeks From Edges
The National Restaurant Association's Restaurant Performance Index declined again in the August survey, falling to a level equal with the beginning of the current expansion in July 2003. But three key indicators within the Index hint things might be looking up for restaurant operators.

The overall Index fell to 100.7, just above the 100 tipping point the Index uses to signal expansion versus contraction. The two major components that make up the overall Index—the Current Situations Index and the Expectations Index—also fell, to 100.3 and 100.9 respectively.

The two capital expenditure components, which measure purchases made during the past three months and those anticipated during the next six months, took strong hits. The former fell a full point to 99.5. Anticipated purchases fell 0.8 point to 100.3.

But the survey was mostly fielded before the rapid decline in gasoline prices. Sustained high prices had clearly cut into restaurant traffic and same-store sales growth. Even so, both the indexes for traffic and same-store sales rose in the August survey, the latter a robust 1.1 point.

Expectations of future business conditions rose 0.7 point to creep back up to 100.3 With the dramatic decline in gasoline prices, the September survey due out the end of the month should prove very interesting.

Section sponsored by Electrolux Professional

Macroeconomic Indicators Look Up, Slightly
Tumbling gasoline prices are not just improving the prospects for foodservice. They are also having a pronounced effect on consumers' mood and attitude, and by extension on the stock markets.

Crediting falling gas prices, the University of Michigan Surveys of Consumers reported at the end of September that consumer sentiment and expectations roared back during the month. Its Expectations Index, a component of the Economic Leading Indicators Index, showed its sixth largest monthly gain in history.

During the same period, the Dow Jones Industrial average has hit sustained record highs, as investors factor in lower energy costs and the likelihood that the declines will take pressure off the Federal Reserve to raise interest rates to stem inflationary pressures.

And another, unrelated sign of strength: Although non-farm jobs growth in September was estimated at a paltry 51,000, strong upward revisions to the payroll growth numbers for both August and the entire year cheered the markets.

This doesn't mean most economists don't still expect real gross domestic product growth to remain below the 3% "trend" rate through the third quarter next year. But the short-term data are mostly positive for foodservice.

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