In This Section:
FER Adjusts 2009 Forecast Up, 2010 Down
E&S List-Price Increases Moderating, AutoQuotes Says
McDonald's Same-Store Sales Gains End In October
QSR Grows Units In U.K.; Ireland Forecast Bleak
This issue's Regulatory Report Sponsor: Manitowoc Foodservice
Industry ReportSponsor: Server Products
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By Robin Ashton
FER Adjusts 2009 Forecast Up, 2010 Down
This year will turn out to be the worst year for the foodservice equipment and supplies market in decades, but the decline in sales at the manufacturer level will not be as deep as first forecast last summer by our sister publication, Foodservice Equipment Reports magazine. Unfortunately, the reforecast indicates sales next year will decline slightly more than originally projected.
So stated FER Publisher Robin Ashton and forecasting partner John Muldowney, principal of Clarity Marketing Inc., Tipp City, Ohio, as they presented their revised E&S Market Forecast for 2009, '10 and beyond during the magazine's annual forecast Webinar Nov. 18.
The revised forecast now calls for a 15.9% decline in current, nominal dollars during '09 and a 13.5% drop in real terms. The nominal percentage is deeper as the magazine estimates prices on the street fell 2.3% this year. The original forecast had nominal sales dropping 21.1%, with a 18.6% real decline.
Ashton and Muldowney said slower-than-anticipated operator recovery and very weak spec markets caused the lowered projections. The revised '10 forecast is for a 5.1% nominal and a 4.5% real decline. The original estimate had the market off 1.5% nominal and 1.4% real.
"It's clear from the Manufacturers' Agents Association for the Foodservice Industry's Business Barometer and John's analyses of the public E&S companies that things haven't turned out quite as badly as we feared last summer," Ashton said. "But next year, I'm afraid, we will continue to see further drops in sales, though nowhere nearly as steep as this year's."
The revised E&S Market Forecast is available for $349. In addition to the Webinar's Executive Summary presentation, those purchasing the updated forecast will receive the information in PowerPoint format to allow easy sharing. The forecast package includes macroeconomic, operator, materials-pricing and E&S-sales trends, an overview of the Top 150 E&S Manufacturers from Muldowney and historical data on E&S pricing from AutoQuotes Inc.
Those who have attended FER forecasts or other FER meetings, or have purchased the forecast in the past, will receive a $50 discount. Those who attended the President's Preview Forecast Seminar in August this year will receive the updates for no charge. For 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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Section sponsored by Internorga 2010
E&S List-Price Increases Moderating, AutoQuotes Says
Sales declines in the foodservice equipment and supplies market are inhibiting the number and size of manufacturers' list-price increases, according to new data from AutoQuotes Inc.
Writing in the November issue of AutoQuotes e-News, CEO Kent Motes stated list prices for more than 300,000 products from 375 manufacturers rose only 2.2% for the 12 months ending in October. This is a dramatic slowing of E&S list-price inflation compared with recent years. In numbers provided by AutoQuotes for FER's E&S Market Forecast, prices rose an average 3.4% for the year ending June '09, 6.1% for the year ending June '08 and a whopping 9.6% for the '07 period.
Motes also reported fewer manufacturers are raising prices. For the first 10 months of '09, AutoQuotes listed 124 price changes from the 375 manufacturers, compared with 353 price changes in the first 10 months of '08. Thus, 251 manufacturers in the database have had no price increase at all this year. A few have actually reduced list prices.
A huge decline in the price of many metals and materials late in '08 through the first half of '09 (see FER Fortnightly Oct. 20, www.fermag.com/fortnightly/10.20.09/economic/home.htm#purchasing, has helped many manufacturers avoid raising prices.
But things may be shifting again. A recent rise in 304 stainless prices, according to Purchasing magazine's transaction price data, has suppliers concerned they might get caught between rising materials costs and weak E&S demand.
And those fears might be well founded. The big declines in sales and materials prices this year have actually led to price deflation for many E&S products. FER estimates real prices have fallen an average 2.3% in '09, and forecasts another 0.6% decline in '10.
For information on AutoQuotes products and data, go to www.aqnet.com or call 866/352-7638.
Section sponsored by Internorga 2010
McDonald's Same-Store Sales Gains End In October
We would be remiss if we didn't note that McDonald's amazing record of comparable same-store sales gains in the U.S. market came to an end in October, the company announced Nov. 9.
Sales in October were off a mere 0.1% versus year-earlier levels. That ends a streak of six years, three months during which comparable sales in the U.S. rose every single month in year-over-year measurements. The streak dates back to July '03, the time many date the beginning of the last foodservice expansion cycle. It was certainly one of the most remarkable positive runs in U.S. foodservice history.
Systemwide sales rose 1% for the month. Comp sales were up 3.3% worldwide, and systemwide worldwide sales rose 5.2% even adjusting for currency fluctuations. Comp sales in Europe rose 6.4% in October, those in Asia/Pacific, the Middle East and Australia were up 4.7%. And through the first 10 months of '09, comp sales worldwide are up 4.2% and in the U.S. 3.1% versus the first 10 months of '08.
Section sponsored by Internorga 2010
QSR Grows Units In U.K.; Ireland Forecast Bleak
Quick-service restaurant operators in the United Kingdom are aggressively opening new units as the economic downturn lowers rents for prime locations and consumers flee to value, according to separate reports from Technomic Inc. and The Financial Times.
A new report from Technomic analyzing the top 100 U.K. chains notes the group grew units 7.6% in 2008 and now controls some 16,000 units in the country. Sales for the 100 organizations grew 3.4% in '08. Information on the new report is available at www.foodpubs.com.
Separately, an article in The Financial Times, noted by Scott Hume in his www.BurgerBusiness.com blog, reported the QSR-unit boom has continued this year. FT, citing information from the Local Data Company, said QSR chains grew units 8.2% in the first 10 months of '09 in the top 10 U.K cities, on top of a 6.6% gain during the same period in'08. Central London, Manchester and Glasgow have seen particularly aggressive growth, the report stated.
While at least some operators are using the downturn as an opportunity in the U.K., the very severe economic recession in Ireland is leading to restaurant closures, according to the Irish newspaper The Independent, cited by the Foodservice.com e-newsletter. The Restaurants Association of Ireland fears as many as a third of Irish restaurants and 21,000 jobs out of a total employment base of 64,000 could be lost as the recession devastates the industry. The RAI reports 80% of Irish restaurants are currently running at a loss and nearly all operators are having trouble obtaining credit. Irish restaurateurs suffer some of the highest tax burdens in Europe, but the real problem is the collapse of consumer incomes in Ireland as a result of the recession, the RAI notes.
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