Foodservice Equipment Reports Fortnightly
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Welcome to FER Fortnightly Online Newsletter
November 23, 2004








Industry Report:
Sponsored by: Atlas Metal Industries Inc.

Oneida, Anchor Hocking To Co-Brand Glassware
Church’s Chicken To Run With The Caribou
Garvin Appointed New President At Prince Castle
Editor-Judges At IH/M&RS Make ‘Rational’ Choice
Ellingson First Inductee to WRA’s Supplier Hall of Fame
‘All Together Now,’ As Steel Makers And Distributors Consolidate In Two Separate Deals


Regulatory Report:
Sponsored by: Hatco Corp.

K.C., Mo., Might Ban Smoking—If ’Burbs Do
Spokane Java Stands Face Tempest In Espresso Cup
If You’re Too Drunk To Read, You’re Too Drunk To Drive
Drive-Through Regs Loom For Massachusetts Towns
S.C. Voters Order Liquor Law Shaken And Stirred




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In This Section:
E&S Market Grows In 3Q, But More Moderately
Big Chains, Quick-Service And Casual Dining Gain In NPD 3Q Data
Economic News From Past Two Weeks Good For Foodservice


This issue's Industry Report
Sponsor: Atlas Metal Industries Inc. |  Regulatory ReportSponsor: Hatco Corp.


Economic ReportSponsored by ES3

E&S Market Grows In 3Q, But More Moderately
The MAFSI Business Barometer and reports from public E&S companies show the E&S market continued to grow in the third quarter of 2004. But growth moderated from the robust rates seen in the second quarter, as operators appeared to control purchases as their own sales and traffic growth also moderated.

The overall MAFSI Barometer, which tracks like-line sales from rep firms across the U.S. and Canada, grew 1.9% in the third quarter ended in September vs. the third quarter ’03. This compares with overall growth of 2.9% in the second quarter and 1.2% in the first quarter this year.

All regions of the U.S. and Canada and all product categories grew in the third quarter. Canada continued to show the strongest overall growth, up 4.2%, but the Midwest was a surprising second-best, showing 2.3% overall growth. The Midwest has lagged the other regions during the last two years. The complete MAFSI report is available at the association’s Web site, www.mafsi.org.

The performance of public E&S companies that have reported third quarter results shows a similar pattern: slowing though still quite positive rates of growth. The numbers are compiled and analyzed by John Muldowney, president of Clarity Marketing, who says several companies have yet to report. "Of the eight companies that have reported, six show slower growth than that reported in the second quarter and first half," he says. But as has been true all year, the rates are quite a bit higher than the MAFSI numbers, which are broader. "This is still quite robust growth, especially given that operator sales slowed somewhat."

Muldowney’s analyses of E&S public company performance can be obtained at jmuldowney@claritymarketing.com.



Section sponsored by ES3

Big Chains, Quick-Service And Casual Dining Gain In NPD 3Q Data
Overall restaurant traffic for the third quarter ended in August was up 1.2% vs. the same quarter in 2003, according to NPD Foodworld, the Chicago-based research and consulting firm. The latest report, just released, follows preliminary data reported by Fortnightly two weeks ago

The latest figures signify the fourth consecutive quarter of growth, but the rate is down from the 2.2% rate seen in the second quarter.

As has been true throughout this recovery, major chains, particularly the big quick-service and casual dining brands, are leading the market. Their traffic grew 4% in the summer quarter vs. same period ’03 , which marked the beginning of the recovery. Smaller chains did show growth for the second consecutive quarter, registering a 3% gain. But independents, which appeared to be recovering in the second quarter, turned back negative, with a 2% slippage in traffic in the most recent period.

Quick service and casual dining also scored gains across all restaurants. Both segments saw traffic rise 2%, while the midscale segment reported a 2% decline in traffic. Fine dining, only 1% of the total market, had flat traffic.

Information on NPD Foodworld research is available at www.npdfoodworld.com.



Section sponsored by ES3

Economic News From Past Two Weeks Good For Foodservice
Much stronger than expected jobs growth, moderating oil prices and improved consumer sentiment are among the positive indicators reported during the past two weeks. The Federal Reserve also raised key interest rates another quarter point Nov. 10 as expected. And the Producer Price Index came in surprisingly high, heightening speculation the Fed may make another quarter-point move in December.

The preliminary October jobs growth number from the Department of Labor came in at 337,000, taking nearly everyone by surprise. Jobs numbers are often revised substantially later, but after five straight months of mediocre growth, the gains were a pleasant surprise. Strong job growth usually boosts consumer spending, including foodservice purchases.

The jobs numbers, plus moderating oil and gas prices and the resolved election have boosted consumers’ short-term feelings about the economy, according to the mid-month Consumer Sentiment Index report from the University of Michigan. Richard Curtin, executive director of surveys, says the preliminary report, based on surveys taken after the Nov. 2 election, shows a jump in sentiment of nearly four points, indicating consumers remain in a spending mood.

The jump in the Producer Price Index for October surprised almost no one in foodservice equipment and supplies, but it did surprise Wall Street. Investors had expected a relatively moderate increase, but the indicator came in up 1.7%, the biggest monthly jump in 14 years. Still, the Index does not reflect the dramatic increases in material costs seen in our industry. The core rate rose only 0.3%, higher than expected but still reasonably moderate.




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