Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
December 18, 2007

Regulatory Report:
Sponsored by:
Bay Area Charbroiler Rules Declared Done
Big Apple Fat Fight: Round 2
NYC Invites Comments On Proposed IFC-Based Fire Code
Anaheim Utilities Offers Rebate On Thermal Storage Units
Miami Beach To Place Limits On Restaurant Seating

Industry Report:
Sponsored by:
Server Products
Middleby Acquires New Star Holdings
'Last Ride' To NAFEM Show Raises $60,000 For America's Second Harvest
Towns Talk Turkey About Recycling Holiday Turkey Grease
DQ CEO Says Chain Plans 500 More Stores In China
Denny's Does Drive-Through
New Brain Foods: Chocolate, Meat, Sex

FER QuickLinks Menu
Subscribe to FER
FER Buyer's Guide
FER Services Guide
FER Calendar

FER Media Kit

Advertise with FER, contact Robin Ashton

To subscribe to this newsletter, click:
Subscribe FER Fortnightly

To unsubscribe from this newsletter, click:
Unsubscribe FER Fortnightly

To view archived issues of Fortnightly, click here.

This e-mail was brought to you by the folks at:
Foodservice Equipment Reports
8001 N. Lincoln Ave.
Skokie, IL 60077
Fax: 847/673.8679

In This Section:
NRA Forecasts 4.4% Restaurant Industry Growth In 2008
Blue Chip Economic Forecast Continues To Deteriorate
Fed Cuts Key Rates Quarter Point; Wall Street Wanted More
We Still Forecast 1.5% Real E&S Market Growth In 2008

This issue's Regulatory ReportSponsor: Enodis
Industry ReportSponsor: Server Products
Economic Report Manitowoc Foodservice Group

NRA Forecasts 4.4% Restaurant Industry Growth In 2008
The National Restaurant Association doesn't think the current general economic slowdown will have too much impact on restaurant industry growth in 2008. The organization released its annual forecast last Wednesday and predicts foodservice operators will see 4.4% nominal growth next year. With forecast menu-price inflation of 3.5%, real industry growth is expected to be 0.9%.

" The restaurant industry will enter its 17th consecutive year of real growth next year, according to our 2008 Restaurant Industry Forecast.," Hudson Riehle, NRA's senior v.p. of research and information services, told Foodservice Equipment Reports Executive Editor Jennifer Hicks. "We expect to see sales in the nation's 945,000 restaurant and foodservice locations reach $558 billion. & This more modest growth compared to earlier years is due to a number of factors, including higher food and energy prices. The industry's workforce will grow to 13.1 million employees, and the industry accounted for one out of every five jobs created in the economy in '07."

NRA's revised estimate of '07 sales was not available last week. The association originally forecast real growth of 2.1%, with 5% nominal growth, though those numbers were probably revised downward in the current forecast.

The NRA forecast compares with Technomic's projection of 5% nominal growth and 1.1% real growth for '08. Normally NRA is slightly more optimistic in its forecasts than Technomic, so the fact the two groups arrive at similar numbers suggests negative economic events of the past several months apparently weighed on the slightly lower real growth projection. Technomic predicts menu-price inflation of 4%, a half-point higher than NRA's estimate.

The association forecasts full-service restaurants will grow 4.3% and quick service restaurants 4.4% nominal.

The complete '07 forecast, including detailed segment and state-by-state forecasts, as well as a wealth of trends data, is available from NRA for a nominal fee by calling 800/482-9122 or by going to NRA's Web site We'll look at the state-by-state and trends forecasts in the next edition of FER Fortnightly after the New Year.


Section sponsored by Manitowoc Foodservice Group

Blue Chip Economic Forecast Continues To Deteriorate
We can all hope foodservice sales growth chugs along next year, as both the National Restaurant Association and Technomic predict, but economists who forecast the general economy are worried about prospects for growth late this year and most of next.

The consensus forecasts of economists polled by Blue Chip Economic Indicators fell again in the early December survey, with lowered predictions for nearly every major general economic indicator. One sample: The forecast for annualized real growth of gross domestic product was slashed 0.9 point, to 0.8%, for fourth-quarter 2007 and half a point, to 1.4%, for first-quarter '08. Changes in the consensus forecasts are usually more incremental.

The economists think the odds of a recession beginning during the next 12 months are now 4:10, up from 1:3 in the November survey.

The forecast for year-over-year growth of GDP in '08 was cut to 2.2%, down 0.2 point from the November survey. The economists' '08 GDP forecast has fallen 0.8 point since January '07.

Perhaps most worrisome, the consensus forecasts for real disposable personal income growth and personal consumption expenditure growth were also cut again. Real PCE growth is forecast at only 2% in '08, its slowest growth in 17 years. The real DPI forecast was cut 0.3 point to only 2.5%.

Traditionally, DPI and PCE growth have been good indicators of foodservice sales growth. We'll have to see if slower growth of these key markers has an impact on foodservice, particularly early in the year.

Section sponsored by Manitowoc Foodservice Group

Fed Cuts Key Rates Quarter Point; Wall Street Wanted More
Poor Ben Bernacke and his fellow governors of the Federal Reserve Bank can't win for losing. They give America and financial markets another quarter-point cut of key interest rates, and investors thumb their noses and drive the Dow Jones Industrials down nearly 300 points, or more than 2%.

The bank cut the federal-funds rate target, the rate at which banks lend to each other, to 4.25%. It also cut the discount rate, at which the Fed makes direct loan to banks, to 4.75%

It's the third time the Fed has cut rates since August. The first cut was a half-point, so overall these key rates are a full point lower than they were this summer, before the credit crunch and sub-prime problems became apparent.

The stock and other financial markets aside, the cut does make borrowing money cheaper, for those who can find someone to sell them a loan. One of the current problems of the so-called "credit crunch" is that major banks and other financial institutions are holding on to their money to shore up their own capital positions.

Economists, including those surveyed by Blue Chip Economic Indicators, and financial markets believe the Fed will have to continue to cut rates going forward as the economy slows.

Section sponsored by Manitowoc Foodservice Group

We Still Forecast 1.5% Real E&S Market Growth In 2008
Despite the economic uncertainties and very real slowdown in the general economy, we are holding with our revised 2008 forecast of 1.5% real growth of manufacturers' sales of foodservice equipment and supplies.

All the reasons for this prediction are included in our 2008 Equipment & Supplies Market Forecast, available from our sister print publication, Foodservice Equipment Reports, for $249. The forecast includes detailed current data and analysis of the general economy, the operator market, materials pricing and historical E&S price data from AutoQuotes, as well as detailed forecasts of growth and price changes for nine categories of equipment and supplies. To order the forecast or for more information, contact Jessica Scurlock at or call 800/986-9616.

© Copyright 1996-2007. Foodservice Equipment Reports. All rights reserved.