Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
November 30, 2006

Regulatory Report:
Sponsored by:
Franke Foodservice Systems
DOE Finally Moves On New Appliance Efficiency Standards
More Cities, Chains Jump On Trans Fat Bandwagon
Philly Health Commish Says City Short Inspectors

Industry Report:
Sponsored by:
Wood Stone Corp.
Enodis Board Again Rejects Aga Proposal, Announces Strong Sales And Profits
Reports Shows Schools Save Big By Going Green
RFID Gets Boosts From Spinach Scare
NAFEM Announces Foodservice POS Technical Specs

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In This Section:
Consumer Confidence, Expectations Hold Up In November
Maybe Things Weren't Quite So Tough This Summer
China GDP Growth Expected To Top 9% Again; European Outlooks Improve

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

Consumer Confidence, Expectations Hold Up In November
Consumers remained reasonably confident about current conditions and their longer-term prospects in November, according to the latest data from the University of Michigan's Surveys of Consumers. The indexes for consumer sentiment and consumer expectations both fell slightly from the robust October bounce-back levels, but remained well above readings over the summer that were dampened by high gasoline prices. The current readings also are higher than those of last year, when consumers had post-hurricane blues. Higher consumer confidence levels usually translate into high foodservice operator sales.

Still, Richard Curtin, director of the surveys, noted gas prices continue to have an effect on consumer behavior. The repeated gas-price spikes "have left consumers with more debt and less savings than ever before, with much greater financial stress expressed by lower income households," he said.

He added more consumers said they would be shopping for discounts this holiday season than ever before in the survey's 50-plus-year history.

For the numbers crunchers: The Index of Consumer Sentiment fell slightly, to 92.1, in November compared to 93.6 in October and 81.6 in November 2005. The Expectations Index, dipped similarly, to 83.2 in November, down from 84.8 in October but well ahead of the 69.6 reading a year ago. Curtin estimated the readings forecast real personal consumption expenditures of 3% in '07, slightly higher than November's 2.8% consensus forecast for real PCE by Blue Chip Economic Indicators.


Section sponsored by Delfield Co./Enodis

Maybe Things Weren't Quite So Tough This Summer
Higher gasoline prices did whack full-service traffic counts over the summer, but the CREST Executive Top Line report from NPD Group for June through August shows overall customer traffic continued to grow during the period.

Overall traffic rose 0.9% for the three-month period compared to the same months the year prior. While this is the slowest traffic growth since summer 2004 and the second slowest growth since the current expansion began in summer '03, the reality is traffic continued to expand, despite record gasoline prices. Traffic counts grew in all three months of the period.

Nearly all the growth can be attributed to morning meal and snacking business, NPD said, driven in part by new quick service and gourmet coffee concept offerings. Growth in lunch and supper business declined across the board. And all the growth, such as it was, came through the drive-through in both quick-service and casual dining.

Among the segments, quick-service traffic rose 2%, while casual dining saw a one-point decline and mid-scale was off a whopping 4%. Fine dining, only 1% of industry traffic, was off 2%. The decline in traffic counts for casual dining was the first since the spring of '04.

All the declines were at the expense of independents, who lost 3% of traffic. Large chains saw traffic rise 2% while smaller chains registered a 3% traffic gain.

Section sponsored by Delfield Co./Enodis

China GDP Growth Expected To Top 9% Again; European Outlooks Improve
China may be trying to slow down its torrid economic expansion, but it's not having much luck. The latest consensus forecast from economists polled by Blue Chip Economic Indicators predicts China real gross domestic product will rise 9.2% in 2007, just slightly below this year's estimated 10.4% gain. GDP growth exceeded 10% in '04 and '05 as well.

Other major Asian economies are also humming. GDP growth is forecast at 4.9% in South Korea in '07, versus 5.1% this year; 4.6% in Hong Kong, compared with 5.7% in '06; and 5.3% in Singapore, compared with 7.1% this year. Japan seems to have finally shaken its decade-long decline. Its growth is estimated at 2.7% in '06 and 2.2% next year.

The outlooks in Europe have improved a bit recently. Overall growth for the Eurozone is forecast at 2% in '07 compared with this year's estimate of 2.5% growth, the best growth rates in recent years. Growth in the United Kingdom is expected to slow only slightly to 2.4% in '07 versus this year's 2.6%.

The current Blue Chip GDP forecast for the U.S. is 2.5% in '07.

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