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Special Focus: FER Forecasts E&S Sales Growth, Big Price Increases
Manufacturers’ sales of foodservice equipment, supplies and furnishings are forecast to grow 3.3% in real terms in 2005, according to Foodservice Equipment Reports’ exclusive annual forecast. The forecast was presented Oct. 26 by FER Publisher Robin Ashton and John Muldowney, president of Clarity Marketing , at the Equipment & Supplies Strategic Summit held in Las Vegas.

"We expect a moderate increase in the rate of manufacturers’ E&S growth in 2005," Ashton said, citing "decent" general economic and foodservice operator environments. Revised growth for ’04 is pegged at 2.4% after price increases. Real sales declined an estimated 1.9% in 2003.

Ashton and Muldowney also warned operators in the audience to expect manufacturers to post the "largest price increases in years" as they try to cover soaring costs for basic materials and components. Steel price increases of 50% to 100%, and increases of 20% to 50% for many other commodities are forcing most manufacturers to plan price increases of 5% to 15% Jan. 1, Ashton said. "Manufacturers, who put through price increases of only 3% to 5% on average in 2004, have seen their margins crash," he said. They have no choice but to cover the spread of costs to prices."

But Ashton and Muldowney also noted operators are getting hit with a similar lag between cost increases and their ability to post menu price increases. "Food and labor costs have jumped substantially for operators still living in a very competitive environment that restricts their ability to raise prices," Ashton said. "E&S cost increases are another factor, and suppliers can expect operators to push back for these reasons.

FER’s ’05 forecast, including hard-number overviews of general economic and operator environments, detailed tracking and forecasts of materials and component costs, new historical pricing data from AutoQuotes and detailed forecasts of product category real growth and pricing forecasts, is available for purchase as part of the Equipment & Supplies Strategic Summit package, in print or electronic forms. Current customers and qualified subscribers of the magazine are eligible for discounts off the list price. For information, e-mail forecast05@fermag.com.