THE NUMBERS DON’T LIE

Tomorrow, July 27, we’ll present our forecast of the E&S market for 2012 and beyond at our annual President’s Preview forecast meeting in Evanston, Ill. We won’t share the hard numbers with you; you have to pay for them this early. (I’m always surprised more dealers don’t spend the dime and come to the meeting. It’s an interesting day with great interchange.) But I will share some of what’s happened in the recent past and give you an idea of what we think the future will look like.

One thing that’s become clear as we claw our way out of The Great Foodservice Recession is that, while its effect on the E&S market was very bad, it wasn’t quite as bad as we feared. And it also surprises us how quickly and strongly the market has recovered. Not that it’ll get back to its 2006-’07 heights any time soon. But a year in, this is beginning to have the look of a normal v-shaped recovery.

At its bottom in’09, we estimate the market declined 13.8% in current dollars, following a 2.6% drop in ’08, when the E&S downturn began. We don’t just make up these numbers. The seven public E&S companies we follow, which represent about 40% of the total market, saw sales decline for six consecutive quarters from the fourth quarter ’08 until the first quarter ’10. In four of those quarters, their blended sales were off at least 12%, bottoming in the third quarter ’09 at -18.9%. The MAFSI Barometer was off an average 12% every quarter in ’09 and had an even longer run of negatives, from the first quarter ’08 through the third quarter last year. That’s 11 quarters of declining sales. Between ’08 and’09, we estimate the market fell more than 16%.

But what’s surprising is how fast it recovered. The public companies, led by the more chain-oriented equipment companies, went strongly positive in the second quarter ’10. The five equipment companies reported sales rose 7.6%. And since then their gains have been 8.1% third quarter, 11.2% fourth quarter and 8.1% again first quarter this year. The MAFSI Barometer went positive fourth quarter last year, rising 5%. And it was up 4% in the first quarter ’11.

These are real numbers and they don’t lie. So John Muldowney, my forecasting partner and v.p.-marketing at Alto-Shaam, and I have revised our estimate of E&S manufacturer sales in ’10 into positive territory. We now say the market rose 1.4% instead of the nearly 6% decline we expected for ’10 at this time last year.

And we believe the market will continue to grow at a moderate rate, in both real and nominal terms, during the next four years, too. Foodservice is a mature market in the U.S. and Canada, but it’s huge. There’s a lot of equipment and supplies in the existing base of about 1.5 million kitchens. It all needs to be replaced sometime.

If you’d like to buy the complete FER forecast, seven PowerPoint decks in all, drop me an e-mail.    

Cheers,

Robin Ashton

Publisher

rashton@fermag.com

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