November 2005
SHOW REPORT:
The NAFEM Show Delivers
by The Editors

Buyers and suppliers made every moment count when this year’s NAFEM event turned out its newest equipment and supplies. And that was after the associations maximized their pre-show time with educational events.

When we got to the inside doors of the Anaheim Convention Center and found we had to push our way through a sizeable crowd to reach the show floor, we knew things were going to be good.

How good? When the North American Association of Food Equipment Manufacturers brought its big event, The NAFEM Show, to Anaheim, Calif., Sept. 23-25, more than 650 exhibitors and nearly 20,000 buyer attendees came along for the ride.

More importantly, those buyers were ready to, well, buy. Really ready. “We wrote more orders in one day than we do at the whole run of most other shows,” one supplier told us after the show.

Suppliers delivered the goods, too, everything from high-design warewashers and unique new ovens to super-efficient steamers and even a machine to tumble stir-fry foods. For highlights of the most interesting equipment we saw on the show floor, turn to page 40 in this issue.

And for association meeting coverage, read on. Plus, mark your calendars for the next NAFEM Show, slated for Oct. 11-13, 2007, at the Georgia World Congress Center in Atlanta.

MAECO Examines Makeup Air, ADAAG

As usual, the show-related action began well before the convention center opened its doors. For members of the Multi-Unit Architects, Engineers and Construction Officers, things got going Sept. 21-23 with meeting topics such as new approaches to makeup air, an innovative program to deliver critical equipment fast, and a projected time line for changes to the Americans with Disabilities Act.

Jeff Lynch, engineer associate for the White Castle chain, took the floor the first day to review his company’s makeup air efforts. Speaking to a crowd of nearly 40 MAECO members and sponsors at the Sheraton Anaheim, Lynch walked listeners through the chain’s goal of trying to achieve balanced air and ideal humidity in stores.

Lynch explained that the White Castle system switched from using three, eight-ton air conditioners to two air conditioners paired with a Commander Model CMDXP air handler, which takes in and tempers all restaurant air before it’s fed to the air conditioners and then into the space.

The other key component of the system is an APR Control from Rawal Devices that eliminates the constant and too-quick cycling on and off of thermostats. “The result,” said Lynch, “is ideally balanced air, comfortable temperatures throughout the store and energy savings.”

Next up, Ralph Coldiron, v.p. of development services for Thomas King, a franchisee of 83 Applebee’s restaurants and three Johnny Carino’s, and Jim Hanson, president of Best Restaurant & Equipment Design, presented a Critical Kitchen Equipment Program that ensures units can get a replacement piece of equipment within 48 hours.

“We started out by asking all our regional vice presidents to identify the most critical equipment in the kitchen, the pieces that would disable the store if they went down,” Coldiron said. “Thirteen pieces were identified.”

Thomas King and Best then partnered to set up two warehousing units, one in Arizona, one in Ohio, each holding spares of the 13 key pieces. If a restaurant exhausts all servicing options on a failed piece of equipment and faces waits of four to six weeks for a replacement, the program guarantees the manager will receive a spare from the Thomas King/Best warehouses. It’s a program that’s saved franchisees a lot of time and money and helped to guarantee uninterrupted service to customers.

“Let me give you just one scenario,” Coldiron said. “A double ice machine can cost us up to $26,000, start to finish, to replace. But if we have to wait four to six weeks for the replacement and we’re spending $400 a day on ice, we’ve spent up to $16,800 waiting for the new machine to come in. With our 48-hour replacement guarantee, we’re saving a lot of money.” 

Moving on to the Americans with Disabilities Act, Carolyn Doppelt Gray, attorney with Barnes & Thornburg of Washington, D.C., was on hand to update attendees on what’s coming down the pike concerning ADA compliance.

The U.S. Department of Justice is currently working on the next Notice of Proposed Rule Making for the ADA Accessibility Guidelines, also called the ADAAG. The notice is expected June 2006, with a comment period and final rulings on some proposed changes to follow.

Some of the proposed guidelines include increasing accessible entrances to commercial properties from 50% to 60% of all entrances; making common-use circulation routes in employee work areas accessible; and making 5% of all seating and standing spaces accessible. Those accessible spaces must be spread throughout the facility and each must have an accessible route to get to it. Gray reminded listeners that until the DOJ’s final rulings, the guidelines to follow remain those set in the early 1990s.

FCSI Considers Branding, Lifecycle Costing

Just up the street from the Anaheim Convention Center, nearly 400 Foodservice Consultants Society Int’l. members convened at the Anaheim Marriott Hotel for three days of meetings and networking. And fun too, starting with an unforgettable opening party Sept. 21 at the Mission San Juan Capistrano, a piece of living history filled with gardens, fountains, adobe walls and a more than 200-year-old chapel.

“Delivering ROI: Relationships, Opportunities, Information” was the theme of the meeting, and deliver it did. To begin, there was a big-picture look at brand building by keynote speaker Adrienne Weiss, principal of Adrienne Weiss Corp., Chicago.

“Think of your brand as a club that people want to belong to, complete with its own language, rituals and customs,” said Weiss, whose client roster includes Chili’s, Church’s Chicken, Lettuce Entertain You and McDonald’s, to name a few.

“You can never stop telling your brand’s story,” Weiss continued. “A brand is a process, a journey, not a single point. The story will change over time to fit the situation or the audience, but the core story—the filter—must always be kept intact.”

Things took a pragmatic turn at the well-attended session on lifecycle costing, presented by Richard Young and David Zabrowski of the Food Service Technology Center, San Ramon, Calif.

Lifecycle cost analysis, which involves cradle-to-grave cost estimates, is not an easy path to follow, as it requires tracking key expenses and working them into useable models. But as Young explained, “The process helps you make the most cost-effective choices, reduces the long-term cost of ownership, encourages the use of more energy- efficient equipment, and acts as a tool to ‘hold spec’ when the budget ax comes out.”

Zabrowski handled the second half of the presentation, offering an in-depth look at how to go about tracking lifecycle costing data. The FSTC posts several lifecycle costing calculators in the Tools section of its Web site, www.fishnick.com.

Holding to proprietary specs is a hot topic, judging by the animated discussion generated in the session “Food Equipment Specifications: An All-Industry Guide to Best Practices.” John Cornyn, Cornyn Fasano Group, moderated with input from Harry Schildkraut, S3 Consultants, and Pepe Griffo, Hobart/Traulsen Corp.

How often have you been victim to what some might call the old bait and switch? You make the effort to hire a professional facilities design consultant, who works long hours specifying the best equipment he or she can find for your job, only to have cheaper substitutions arrive on site. “A lot of kitchen equipment contractors like to refer to it as ‘value engineering,’” said Schildkraut, “but it’s more akin to profit engineering; with very little savings getting back to the client.”

FCSI is now proposing the adoption of an industry-approved set of best practices and communication protocols to be followed by all parties in the design, spec, bid and construction processes. (See www.fcsi.org for the full document link.)

“Consultants don’t necessarily like to hear this, but we need to do a much better job of documenting our specs and, more importantly, communicating the reasons for our choices to the clients and end users,” said Cornyn. “Someone needs to very clearly convey to them the consequences of substandard substitutions on their operations and bottom lines.”

On day two of the FCSI conference, compliance with the Americans with Disabilities Act got another once-over during the panel session called “Best Practices for Design.” While reviewing the new ADA Accessibility Guidelines, Mary Adams of the U.S. Department of Justice explained that until the DOJ endorses the new ADAAG, its precepts are not enforceable.

Thus, in the meantime designers should follow state and local codes in addition to ADA standards when planning restaurants. Of the codes, she said, designers “should use the provision that provides the greatest access” to people with disabilities.

CFESA Studies Profitability

Meanwhile, over at the Anaheim Crowne Plaza, some 160 attendees at the Commercial Food Equipment Service Association gathered Sept. 20-22 for committee and board meetings and two solid days of educational sessions.

In “How To Make Your Company Profitable,” Dr. Al Bates of Profit Planning Group did for CFESA what he has long done for the Foodservice Equipment Distributors Association—crunch association survey data and make recommendations for boosting company profitability.

“Only two things matter” in the service agents’ business, Bates asserted. “It’s about gross margin and payroll benefits,” he said, suggesting other components in the profit equation generally are not out of line and don’t lend themselves to adjustment.

In a workbook-styled approach, Bates started with a data profile of a “typical” CFESA service agency, a statistical mean of respondents. Net sales (including technician labor) of $4 million were typical, he said, and he crunched numbers down through cost of goods sold, gross margin, payroll, etc. The typical example showed a profit before taxes of just $108,000. “A gross profit of 2.7% is the best it’s been in five years,” he granted. “But it should be better.”

Survey respondents in the top quartile scored gross profit in the 8% to 9% range, he noted, and suggested that range as a goal. He then began adjusting the mean figures, step by step, to show how the goal might be achieved through improvements in purchasing, slight reductions in payroll and benefits, etc., to get gross profit up to target.

One of the many highlights was an analysis of how 1% improvements in various expense categories would impact gross profit. For the typical mean profile, he said, a 1% improvement in pricing would improve gross profit by more than a third, while a 1% improvement in purchasing would yield a 21% improvement in gross profit. After that, his list began petering out—similar improvements in unit sales or fixed costs would yield significantly less. For service agents, tinkering with inventory had almost no effect.

A key item, and a key challenge, he said, is getting support labor (admin, management, warehouse personnel, etc.) out of the equation as much as possible. That component accounts for 58.8% of gross margin dollars for the mean profile among respondents, he said. Getting it down is crucial but difficult, he admitted.

HSM Wrestles With Lifecycle Costing

Just down the hall, the Hospitality Supply Management group, an Institute for Supply Management Forum, hosted nearly a hundred attendees for its own fall meeting Sept. 21-23. The heavy two-day agenda covered a broad spectrum from commodities pricing to government regulatory trends, and a breakout session Sept. 22 turned to lifecycle costing for equipment.

“How many of you know what you’re paying for a kilowatt hour?” FER Chief Editor Brian Ward asked the breakout group. Not a single hand raised. “See, that makes it hard to weigh those factors, doesn’t it? They’re intangible until you can sit and actually look at the bills.

“Now, everybody understands that a dollar saved now, in capital expense, sometimes might be more appealing than a dollar and a half saved a few years down the road in operating expense,” he continued. “But costs are changing rapidly. Energy is going nowhere but up. Now you’re comparing a dollar saved now with three or four saved in just a short time. The math has changed.”

Ward then pointed out that lifecycle costing is not a conservation topic but a financial topic driven by large corporate operators looking to improve their return on assets and return on investment ratios.

In a rangy 90-minute session, Ward offered a brief overview of energy pressures around the world on both the demand and supply side, with a smattering of global politics mixed in. He then showed slides from PG&E’s Food Service Technology Center comparing initial costs with five-year operating costs in a variety of equipment categories.

In many cases, he showed, energy consumption costs exceeded initial purchase price in just the first few years. In some examples, more efficient models cost little or no more than competing pieces that used twice as much energy or more. “And these slides are from a few years ago, predicated on 8 cents a kilowatt hour and 60 cents a therm,” he said. “What are you paying now? What has happened in the past few years, while nobody was telling you?

“I think you’re paying about 11 cents for a kilowatt hour in California now, and a dollar a therm is pretty typical all around the country today,” Ward said. He then reworked the slide data at 10, 12 and 15 cents a kilowatt hour, and 80 cents, $1 and $1.25 a therm. The disparities between more efficient and less efficient pieces of equipment suddenly swelled accordingly. "There are no shortcuts," he told the group. "You have to sit down and do the math, one piece at a time. If you do, you'll be glad you did."