Foodservice Equipment Reports

Don’t Panic Yet

Many of you have asked us recently whether, in light of the current economic turmoil, we are reconsidering our equipment and supplies market forecasts. We currently call for 4% nominal sales growth this year and 4.7% next. We’re waivering, but the answer still is “Not yet.”

Don’t think I’m Pollyannish. I know jobs growth has stalled. The debt crisis in Europe is a constant worry for the markets. And Washington seems no closer to getting anything done than it did over the summer. This constant drumbeat of gloom has consumer confidence bumping along at recessionary levels.

But we’re still not panicking, and we have reasons for a little optimism. First, this year’s forecast is just about a lock. Growth in the first half of the year was so robust, it would take a plunge like that seen at the end of 2008 for us to miss our forecast targets. The MAFSI Barometer was up 4% in the first quarter and 5.7% in the second. The seven public E&S companies we follow were up 7.7% in the first half. The group grew blended revenues a very strong 8.5% in the second quarter. And those seven companies account for more than $3.5 billion in E&S sales a year. So even if things soften in the third and fourth quarters, our 4% forecast appears safe.

Next year is more problematic. Forecasting today, we might cut a point or two from the 4.7% we predicted back in July. Manufacturers and dealers tell us operators are definitely getting nervous. The National Restaurant Association’s Restaurant Performance Index tanked in July and August with operator business expectations and capital spending plans taking big hits.

Still, this has been a very unusual recovery for the equipment and supplies industry. E&S sales bounced back strongly last year even before some operators were showing better numbers, particularly on the full-service side. The only reason we can find for this phenomenon is that the foodservice recession has lasted so long—more than five years for some full-service segments—the pent-up demand to replace aged equipment and refresh tattered interiors in a highly competitive environment is overwhelming any caution operators may have. We have a feeling this reality will carry into the new year. Let’s hope so.


Robin Ashton

Robin Ashton


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