Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
December 21, 2004

Industry Report:
Sponsored by: Atlas Metal Industries Inc.

Hobart Debuts Incentive Program For Dealers
New Purchasing Group Launches In January
Second Valve Recall From Robertshaw
DI Foodservice Unveils Rep Advisory Council
MAFSI Roadshows—Coming Your Way
New Faces In High Places
Bobby Cox Buys Schlotzsky’s

Regulatory Report:
Sponsored by: APW Wyott Innovations

Tucson Tests Low-Flow Nozzles
Four States and D.C. Mull Menu Nutrition Labels
A/C Efficiency Standards To Limit Patchwork Regs
Newport Beach Requires New FOG Fee
South Carolina To Adopt ICC Codes

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In This Section:

Public E&S Companies Maintain Strong Growth
NRA Forecasts A Year Of ‘Solid’ Real Growth In 2005
Blue Chip Economists Hold GDP Forecast at 3.5% Real
Federal Reserve Raises Key Interest Rate As Expected

This issue's Industry Report
Sponsor: Atlas Metal Industries Inc. |  Regulatory ReportSponsor: APW Wyott Innovations

Economic ReportSponsored by ES3

Public E&S Companies Maintain Strong Growth
Revenues grew a whopping 14.3% in the third quarter of 2004 compared to the year earlier period at six large publicly traded foodservice equipment and supplies companies. The number comes from an exclusive quarterly analysis of E&S public-company performance compiled by John Muldowney at Clarity Marketing. Revenues have grown 11% in the first nine months at the six companies.

Growth slowed at four supplies and tabletop companies tracked by Muldowney, as they mirrored a slowdown in traffic and sales growth rates for most operators in the third quarter. Three of the four companies averaged 2% to 3% third quarter revenue growth, compared to double-digit growth in the first six months. One company recorded an actual decline in sales in the third quarter, pulling the overall supplies growth rate down to 6.2% for the four companies in the first nine months of ’04.

Overall revenue gains for the 10 public companies tracked, representing $2.2 billion in revenues the first nine months, rose 9% in the third quarter vs. the same quarter in ’03 and 9.3% for the nine months.

Muldowney’s complete report, including additional information on specific company performance, earnings and other numbers is available at

Section sponsored by ES3

NRA Forecasts A Year Of ‘Solid’ Real Growth In 2005
The National Restaurant Association predicts restaurants and foodservice will post real growth of 2.1% in 2005, according to the group’s annual Restaurant Industry Forecast, released Dec. 14. Factoring in expected food-away-from-home inflation of 2.8%, the forecast charts nominal growth at 4.9% next year.

The forecast compares with NRA estimated growth of 2.4% real and 4.4% nominal for ’04. Hudson Riehle, NRA’s senior v.p. of research and information services, told FER the slightly lower rate of growth for ’05 reflects more difficult comparisons, particularly in the first half of the year. "After all," he said, "2004 was the best year for restaurants since 2000, and in early 2003, the industry was still quite soft." He added that ’05 appears to be shaping up as "another solid year for foodservice."

The NRA forecast is very much in line with Technomic Inc.’s ’05 forecast of 1.9% real and 4.5% nominal. The Technomic forecast is released much earlier, in September.

Look for a more in-depth review of the NRA forecast, including forecasts by region, in the first Fortnightly after the New Year.

The complete 48-page forecast is available from NRA for a nominal fee by calling 800/482-9122 or by going to NRA’s Web site

Section sponsored by ES3

Blue Chip Economists Hold GDP Forecast at 3.5% Real
Leading economists polled in December by Blue Chip Economic Indicators once again held their forecast for 2005 GDP real growth at 3.5%. It was the third straight month the consensus forecast for real gross domestic product has been 3.5%. The consensus for ’04 GDP growth also stayed steady at 4.4%.

On a quarter-to-quarter basis, the economists predict growth will slow to an annualized rate of 3.3% in the first quarter of ’05 and then improve to 3.5% for all three remaining quarters of ’05. Personal consumption expenditures, an important indicator of foodservice and other retail spending, is forecast at 3.2% in real terms in ’05 compared with an estimate of 3.6% in ’04.

Section sponsored by ES3

Federal Reserve Raises Key Interest Rate As Expected
The Federal Reserve Bank fulfilled nearly everyone’s expectations and raised its federal-funds rate last week by a quarter-point, to 2.25%. It was the fifth consecutive such increase since the Fed began boosting the rate mid-year and came on the heels of a similar quarter-point increase in November.

The Fed has been raising interest rates toward what it has called more historical, "normal" levels as the recovery in the general economy appears well established. And while reports suggest that there is no longer total unanimity in the Fed’s Open Market Committee about whether inflation is "contained," the majority of the group appears to believe the risk of a rapid increase in the inflation rate is fairly low.

Most economists expect the Fed to continue to increase the core rate gradually through 2005.

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