Foodservice Equipment Reports Fortnightly
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Welcome to FER Fortnightly Online Newsletter
November 17, 2009








Regulatory Report:
Sponsored by:
Manitowoc Foodservice
Illinois Requires New Fire Suppression Jan. 1
Houston's Franchisee Wins Fight Against Calories
More Towns Legislate Their Way Out Of FOG
San Jose Getting Serious About Banning Plastics

Industry Report:
Sponsored by:
Hotelex 2010
Unified Brands Buys A La Cart
New York Show Honors Top New Products
First Call For NSF Safety Leadership Awards
FEDA Readies For 2010 Convention



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In This Section:
MAFSI Reps Report Sales Declined 11.5% In Q3, Slightly Better Than Q2
Sales For Public E&S Companies Slide Nearly 19% In Q3
Macro Forecasts Improve Again, But Not For Income, Spending Or Employment
More Than 80% Of Schools Applied For Stimulus Equipment Grants
Revised FER E&S Market Forecast Webinar Tomorrow

This issue's Regulatory ReportSponsor: Manitowoc Foodservice
Industry ReportSponsor: Hotelex 2010
Economic Report Integrated Control Corp.

By Robin Ashton

MAFSI Reps Report Sales Declined 11.5% In Q3, Slightly Better Than Q2

The depth of the recession in the foodservice equipment and supplies market is becoming apparent with the release of third-quarter data from the Business Barometer maintained by the Manufacturers' Agents Association for the Foodservice Industry and data from the large publicly traded E&S companies. Fortunately the picture's not quite as bad as we expected this summer.

The reps surveyed for the MAFSI Barometer indicated overall sales for like lines fell 11.5% in the quarter compared with the third quarter of 2008. That's not good, but it's slightly less bad than the 12.6% drop in the second quarter. Sales fell 11% in the first quarter and have been negative for seven consecutive quarters. The trend's been negative, in fact, for 11 quarters since peaking at positive 4.5% in fourth-quarter '06. All MAFSI percentage changes are in current dollars.

Among the product categories, sales of equipment fell 12.5%, durable supplies 5.7%, tabletop 8.2% and furnishings 11.5%. All numbers were improvements over second-quarter results except tabletop sales, which fell 0.3 point more this quarter.

A great deal of variation among the regions remains. In the West region, overall sales plunged 22% on top of a 22.6% drop in the previous quarter Sales trends in Canada continued to be less negative than the other regions. Reps up north reported sales fell 4.9%. Sales fell 8.7% in the South, 11.3% in the Midwest and 12.7% in the Northeast regions.

The surveyed reps forecast sales will decline 10.4% in the coming quarter. While we at FER Fortnightly have heard anecdotal reports of continuing softness in October and into November so far, comparisons with year-ago levels will start easing in the fourth quarter.

 

Section sponsored by Integrated Control Corp.

Sales For Public E&S Companies Slide Nearly 19% In Q3
As reported in the story above, reps' sales trends may have been a bit less negative in the third quarter than in the second, but the trends for the large publicly traded equipment and supplies companies worsened in the period. Blended sales for the seven companies tracked by John Muldowney, principal at Clarity Marketing, Tipp City, Ohio, fell a whopping 18.9% compared to year-earlier levels.

Both equipment-oriented and supplies-oriented companies felt the pain, and only one company saw sales rise. Equipment companies saw blended sales fall 19.1%; the supplies companies reported an 18.3% decline.

The results are quite a bit worse than those of the previous three quarters, though the publics have seen double-digit drops for all four, following a very slight 0.3% increase in third-quarter 2008. Equipment-oriented companies have seen quarterly declines range from 13% to 15% since fourth-quarter '08. Supplies companies have been reporting declines in the 10% to 12 % range.

For the first nine months of '09, blended sales of the equipment companies are down 15.5% and the supplies companies 13.7%. Overall sales for the seven companies have fallen 15.2% for the nine months.

While the trend for the publics appears dire, sales to date are not off as much as our print-magazine sister, Foodservice Equipment Reports, forecast in August this year. We expected nominal sales industry-wide to fall more than 21%, six points worse than what appears to be coming in for the publics. While these public companies traditionally outperform the industry, a six-point gap is unlikely. The implication is that the market's doing somewhat better than projected. And as we mentioned above with the reps, comparisons will improve in the fourth quarter.


Section sponsored by Integrated Control Corp.

Macro Forecasts Improve Again, But Not For Income, Spending Or Employment
Is it just us, or have you heard this song before? The U.S. economy does appear to be pulling its way out of the Great Recession, but the indicators that drive foodservice remain very restrained or downright negative.

The consensus forecasts for real growth of U.S. gross domestic product, as tracked by the Blue Chip Economic Indicators newsletter, improved again in the survey released early November. Real GDP is now forecast to grow 2.7% in 2010, up from the 2.5% forecast last month.

But projections for growth of real disposable personal income, personal consumption expenditures and unemployment remain very muted. The forecast for DPI growth fell for both '09 and '10. The PCE forecasts improved very slightly, but real PCE growth is now expected to be only 1.8% next year, well below trend. The forecast for average unemployment next year also worsened, to 9.9%.


Section sponsored by Integrated Control Corp.

More Than 80% Of Schools Applied For Stimulus Equipment Grants
Over the summer, there were questions about how many school districts were able to get in applications for a piece of the $100 million in foodservice-equipment assistance budgeted in the federal stimulus program passed last February. A study from Y-Pulse LLC, released in October, now reports 82% of the school districts surveyed did in fact apply. And that was nearly all that were eligible, as 15% of the respondents said they were not eligible. The program targeted districts with a significant number of free or reduced-price meals under the National School Lunch program.

The study also probed the functions and types of equipment the districts were looking to purchase. Cooking, refrigeration and serving equipment were the main needs, with many citing a desire to buy steamers and combi ovens, walk-ins and serving equipment.

"The results of this survey underscore the fact that there is a real need and interest in new equipment for foodservice operations and, at the same time, that school foodservice directors want equipment that is efficient, more versatile and durable," said Sharon Olson, a partner in Y-Pulse.

For further information on the study and Y-Pulse, a research and consulting firm that tracks youth food and foodservice trends including school foodservice, e-mail info@ypulse.org or call 312/280-9061.


Section sponsored by Integrated Control Corp.

Revised FER E&S Market Forecast Webinar Tomorrow
Tomorrow's the day, and 1 p.m. Central Daylight Savings Time is the time. That's when FER Publisher Robin Ashton and forecasting partner John Muldowney, principal of Clarity Marketing Inc., Tipp City, Ohio, will host the magazine's annual Forecast Webinar, a presentation of the revised FER equipment and supplies market forecast for 2010 and beyond. If you will miss the Webinar (you needed to be registered by last Friday), you can still purchase the revised forecast.

In addition to the 75-min. Webinar's Executive Summary presentation, all participants will receive an updated version of the entire six-section forecast in easy-to-share PowerPoint format, including an overview of the Top 150 E&S Manufacturers from Muldowney.

The seminar fee is $349. Those who have attended the FER forecast or other FER meetings, or have purchased the forecast in the past, will receive a $50 discount. Those who attended the forecast seminar in August this year can attend the seminar and receive the updates for no charge. For more information, e-mail Robin Ashton at rashton@fermag.com or Chris Palmer at cpalmer@fermag.com, or call the magazine's office at 800/986-9616.


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