Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
October 31, 2006

Regulatory Report:
Sponsored by:
Franke Foodservice Systems
Public Comment Needed Now On Controversial Bay Area Exhaust Proposal
Trans Fat's In The Chicago Fire, Again
California Offers Incentives For Solar Power
Hong Kong Promotes New Rule With 'Smoke-Free' Days

Industry Report:
Sponsored by:
Server Products
Somat Buys Red Goat Disposers
Wendy's Sells Baja Fresh, Goes Back To Burgers
Big New Digs For Detroit's AR Repairs/Baker's Needs
Ozone-Infused Water Rinses Away Bacteria
Starwood Plans To Open Green Hotel Chain

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In This Section:
NAFEM Releases Latest 'Size & Shape' Study; 2005 E&S Manufacturers' Sales Reached Nearly $9.1 billion
MAFSI Barometer Records Booming Third Quarter E&S Sales
Canadian Foodservice Sales Growth To Moderate In 2007
Blue Chip Consensus Drops 2006 and 2007 GDP Forecasts
2007 Foodservice Equipment Reports Forecast Hits Market

This issue's Regulatory ReportSponsor: Franke Foodservice Systems
Industry Report
Sponsor: Wood Stone Corp.
Economic Report Scotsman Ice Systems/Enodis

NAFEM Releases Latest 'Size & Shape' Study; 2005 E&S Manufacturers' Sales Reached Nearly $9.1 billion
Wondering just how big the equipment, supplies and furnishings market is? The North American Association of Food Equipment Manufacturers has something for you.

NAFEM'S 2006 edition of "The Size & Shape of the Industry" is now available to the industry at large.

According to the biennial study, undertaken three times since '02, total manufacturers' sales including exports reached $9.1 billion in '05, the new benchmark year. Sales in North America totaled $8.3 billion; export sales were $745 million.

More than 41% of NAFEM members participated in the study, the highest number since the study's inception. According to the Executive Summary, participants also supplied more detailed information than in past versions. The authors—the study was conducted for NAFEM by Fryett Consulting Group and the University of Nevada Las Vegas' College of Hotel Administration—state that these factors, along with some tweaking of the methodology, should increase the validity of the numbers.

The study is available for purchase by both NAFEM members and the industry at large. NAFEM members that participated in the study should have already received a copy of the complete report without charge.

All reports are being distributed electronically (in .pdf and/or Microsoft Word formats); no print version is available. NAFEM members who did not participate in the study may purchase the report for $250/volume or $995/set. Channel partners (consultants, dealers, reps, service agents) can purchase the study for $495/volume or $3,395/set; and the general public/industry at large can purchase the study for $995/volume or $6,500/set.

To order, contact Vonceil Roberts at 312/821-0216, by e-mail at, or by accessing the NAFEM Web site at


Section sponsored by Scotsman Ice Systems/Enodis

MAFSI Barometer Records Booming Third Quarter E&S Sales
The quarterly Business Barometer fielded by the Manufacturers' Agents Association For The Foodservice Industry posted 4.5% nominal sales growth for equipment and supplies in third quarter 2006 compared to sales of like lines the same quarter the previous year. The number is the largest quarterly gain since MAFSI began fielding the study in '02. The data suggest overall E&S sales were not affected by the slowdown in sales and traffic experienced by many operators during the period.

Sales of equipment led the surge, rising 4.8%, also a record. Supplies and tabletop sales rose 3.8% each, while furniture sales lagged at a still respectable 2.5% growth.

Among the regions, overall sales jumped a whopping 6.2% in the West, yet another record. Sales rose 4.6% in the Midwest, which until recently was the lagging region. Sales were up 4.4% in the Northeast, 4% in the South and 3% in Canada.

Some of the gains are certainly a result of price increases, as manufacturers have been aggressively raising prices to try to cover extreme cost run-ups in core materials. But the numbers also may be a result of the typical lag effect on E&S purchases. Many operators did very well in the first and second quarters of '06 and apparently spent some of their profit on capital upgrades.

The full MAFSI Business Barometer can be viewed at

Section sponsored by Scotsman Ice Systems/Enodis

Canadian Foodservice Sales Growth To Moderate In 2007
Canadian foodservice operators are having a boffo 2006, according to market estimates by the Canadian Restaurant & Foodservices Association. But slower growth in disposal income and sluggish job gains are forecast to slow growth in '07, though real sales growth should still hit 1.1%, the organization predicts. Total industry sales are expected to reach the equivalent of nearly $47.4 billion.

Solid employment growth, particularly in the booming Western provinces, has helped total industry sales grow 5.2% this year, states CRFA. With menu inflation pegged at 2.7%, real growth is estimated to reach a very healthy 2.5%.

Nominal sales are forecast to slow to 3.4% growth next year, with menu inflation of 2.3%. Real sales grew 1% last year, CRFA estimates.

The 1.1% real growth forecast for '07 is slightly higher than the 1.0% forecast for the U.S. market by Technomic Inc. But the 2.7% real growth in '06 is substantially above Technomic's '06 U.S. estimate of 1.1% real.

Full service is forecast to outperform limited service slightly in '07, with 1.3% real growth vs. 1.0% respectively. Lodging foodservice is predicted to show strong real growth of 3.8%, mostly driven by robust internal domestic travel.

Among the provinces, Alberta, experiencing an oil boom, is forecast to show robust real growth of 2.4%, following by British Columbia at 1.7% real growth.

The Maritime Provinces are expected to show the slowest growth. For complete details on CRFA's annual forecast, contact Jill Holroyd, v.p., research and communications, at 416/649-4217 or through the group's Web site at

Section sponsored by Scotsman Ice Systems/Enodis

Blue Chip Consensus Drops 2006 and 2007 GDP Forecasts
While sales of foodservice equipment and supplies appear to be holding up quite nicely in 2006, the general economy has entered a distinct slowdown. The more than 50 leading economists polled monthly by Blue Chip Economic Indicators dropped their consensus forecasts of U.S. growth in real gross domestic product for both '06 and '07 in the latest survey, taken at the beginning of October.

The pronounced slowdown in residential construction and sales of large-ticket items such as cars and other durable goods is cutting into overall growth—even as consumer spending in other categories is rebounding thanks to easing gasoline and energy prices.

The Blue Chip consensus dropped its forecast for both calendar years '06 and '07 by 0.1 point, to 3.4% and 2.6% respectively. The '06 forecast was pushed lower mainly by a 0.4 point reduction in third-quarter estimated growth, to 2.3%. The forecast for the fourth quarter is 2.4%. The economists expect GDP growth to remain below 3% through most of '07.

The forecast for '07 real disposable income fell 0.1 point to 3.1% growth, while the forecast for personal consumption expenditures rose by the same amount, to 2.8%.

The economists were more optimistic about the inflationary outlook, though like the Federal Reserve Bank, are still cautious that the trend in energy prices will hold.

Section sponsored by Scotsman Ice Systems/Enodis

2007 Foodservice Equipment Reports Forecast Hits Market
Want something tangible, in your hand (okay, on your screen), for planning how you tackle the coming year? The complete Foodservice Equipment Reports 2007 Equipment & Supplies Market Forecast presentation is available for purchase for $249.

It includes detailed trends analysis and forecasts of general economic indicators that affect foodservice; of operator sales and unit growth; materials pricing; detailed analysis of historical list price increases from AutoQuotes, overall and by product category; as well as forecasts of growth and price change forecasts for individual E&S product categories and the industry as a whole.

The presentations are available in both print and electronic formats.

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

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