Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
November 4, 2008

Regulatory Report:
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More Towns Say Grease Traps The Way Out Of FOG
Arches On Archer Okay, But Not Big Boy
Calorie-Posting Spreading To Nation's Midsection
Burbank Bandies Bag Ban If Education Fails
Pasadena Takes Smoking Ban Outdoors

Industry Report:
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The NAFEM Show '09
Feeling Innovative? NRA Accepting KI Award Entries
Cool Dudes Ben & Jerry Test New Way To Chill
AWE Opens Faucet On Water-Resource Library
FER Magazine Expands Smallwares Awards Coverage On Web

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In This Section:
FER Revises 2008, '09 Forecasts
NRA Performance Index Hits Record Low
Consumer Concerns About The Financial Crisis Could Cut Foodservice Spending, Technomic Study Shows
NPD Says Traffic Actually Rose Over Summer
Why Do NRA And NPD Traffic Numbers Differ?
GDP Declines In Third Quarter, While Consumer Confidence Tanks In The U.S. And Europe

This issue's Regulatory ReportSponsor: Enodis
Industry ReportSponsor: The NAFEM Show '09
Economic Report Manitowoc Foodservice Group

By Robin Ashton

FER Revises 2008, '09 Forecasts

Foodservice Equipment Reports has revised its exclusive forecasts of the equipment and supplies market downward this year and next. The new predictions are for a real decline of 3.5% of North American manufacturers' sales this year and an additional 3.8% decline next. The magazine's previous forecasts were for a 2.7% real contraction in '08 and a 3.4% drop in '09. The revised numbers were released during a Webinar featuring Robin Ashton, FER Publisher, and John Muldowney, principal of Clarity Marketing, Tipp City, Ohio.

"The financial meltdown has spooked consumers, making a bad situation worse," said Ashton. "The credit crunch is affecting the availability of bridge loans not only for commercial operators, but for noncommercial operators too. This will slow spending for equipment and supplies in the fourth quarter and well into '09," he explained.

The complete FER forecast, featuring detailed data and analysis of general economic, operator and materials trends, data on E&S pricing trends from AutoQuotes, as well as an analysis of performance of the Top 150 E&S manufacturers, is available for $349. For information on the forecast, contact Jessica Scurlock at or by calling 800-986-9616.


Section sponsored by Manitowoc Foodservice Group

NRA Performance Index Hits Record Low
The economic downturn is catching up with the restaurant industry. The National Restaurant Association's Restaurant Performance Index fell a whopping 1.7 point in September, reaching a record low of 96.7. Both the Current Situation Index and the Expectations Index also reached their lowest levels since NRA began the survey in the spring of '02. It is the 11th consecutive month that the overall index has been below 100, the tipping point for contraction versus expansion.

Same-store sales and customer traffic, components of the Current Situation Index, were off substantially, down 2.4 and 2.3 point respectively. And the restaurateurs surveyed ere not optimistic about the future. The outlook for same-store sales and business conditions during the next six months were down 3.2 and 2.7 points.

The only good news, as such, in the survey, was that the two components for capital expenditures, those made during the past three months and those expected during the next six, were off far less than the other components. The past cap ex spending measure fell 0.2 point and that for future spending 0.3 point.

 Section sponsored by
Manitowoc Foodservice Group

Consumers Could Cut Foodservice Spending, Report Says
The current financial crisis has American consumers worried about their personal financial situation. And they say they will cut back spending on and visits to restaurants as one way of responding.

The Chicago-based research firm polled 1,005 consumers aged 18 and older Oct. 8 through 10. Nearly 90% said they were concerned about the meltdown in financial markets; 62% said they were very concerned.

Most worrisome was the finding that higher income respondents were among those most concerned. Previous Technomic research has shown households with incomes exceeding $70,000 account for nearly half of foodservice spending. Other groups showing relatively more concern about the troubles include older Americans and African-Americans

More than 70% of those surveyed indicated they will respond in part by visiting restaurants less frequently, spending less when they do eat out or both. But restaurant spending is only one area on which consumers plan to cut back: vacations and purchases of electronic, clothing and household goods will also take hits.

Information on Technomic research products is available at or by calling 312-876-0004.

 Section sponsored by
Manitowoc Foodservice Group

NPD Says Traffic Actually Rose Over Summer
One of the most surprisingly aspects of the current economic downturn is that overall restaurant traffic has not fallen, at least through August. The NPD Group, which tracks foodservice traffic, spending and other indicators for chains and other foodservice operators through household panel surveys, reports traffic at commercial operations continued to rise over the summer, even as gasoline prices soared.

Overall restaurant traffic rose 1% during the June through August period, though the research firm notes a significantly larger number of restaurant visits were driven by promotions and deals. According to Bonnie Riggs, a restaurant industry analyst at NPD, 23% of all visits to restaurants involved deals, including value meals, a 9% increase compared to the quarter last year. Hamburger and other sandwich chains found traffic particularly deal-based, Riggs added.

Information on the report and other NPD products are available at or by calling 1-866-444-1411.

Section sponsored by
Manitowoc Foodservice Group

Why Do NRA And NPD Traffic Numbers Differ?
You might ask why the indexes and data for customer traffic from the NRA and NPD seem to differ. The NRA traffic component of the Restaurant Performance Index has been negative for 10 of the past 12 surveys. Meanwhile, through August, NPD data show traffic growing slightly through most of the period.

The NRA data is based on surveys of a broad cross-section of restaurant operators. The NPD data comes from consumer household panels. Thus, NRA most likely underreports traffic at big QSRs. Most of the large quick-service chains continue to reports positive same-store sales. While some of those gains are from menu-price increases, traffic has also been moderately positive. Since big QSR accounts for so much of overall traffic, NRA probably undercounts that effect.

Section sponsored by
Manitowoc Foodservice Group

GDP Declines In Third Quarter, While Consumer Confidence Tanks In The U.S. And Europe
As most economists had expected, real gross domestic product declined in the U.S. during the third quarter ended September. The advance report from the U.S. Department of Commerce said the key indicator fell 0.3% on an annualized basis in the period. This follows a gain of 2.8% in the second quarter, driven by the Federal economic stimulus plan, and a paltry 0.9% in the first quarter.

Many economists, including those polled monthly by Blue Chip Economic Indicators, expect two more quarters of negative GDP to come. The Blue Chip forecasts call for a decline of 1.1% in the fourth quarter and 0.1% in the first quarter '09.

Meanwhile, measures of consumer and business confidence in the U.S. and Europe dropped precipitously in October. The Consumer Confidence Index maintained by The Conference Board dropped a whopping 23.4 point in the month to 38, an all-time low. "The impact of the financial crisis over the last several weeks has clearly taken a toll on consumers' confidence,"said Lynn Franco, director of the Conference Board Consumer Research Center.

A measure of consumer and business confidence fielded by the European Commission and covering the 15 countries that use the Euro, also fell sharply in October, to its lowest level in 15 years.

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