Foodservice Equipment Reports

Behind The FER 2013 Forecast

I hope you’ve seen that we are forecasting another good year for the foodservice equipment and supplies industry in 2013 (see article this issue). We’re forecasting current dollar growth of 4.3% and real growth of 2.5% for next year. It’s pretty close to where we think this year will end up and just a bit less than ’11, which turns out to have been the best year for the E&S market since ’04.

All this may surprise you. If you look at the larger economic picture in the U.S. and the world, there are plenty of negatives and dangers. There are worries about Europe, the U.S. election, the “fiscal cliff” if Congress doesn’t pass some kind of tax bill and slowing growth in Asia. If you look at some general economic fundamentals that generally drive foodservice, like disposable income, consumer spending and jobs growth, the outlook is weak.

But if you look at just the performance of the foodservice industry and particularly the E&S side of the business, things are really quite good. Most restaurant operators see rising same-store sales. NPD Group says traffic rose in the first part of this year. Many operators have been able to raise menu prices moderately, while food price increases have moderated, at least in the short term. (The drought in the Midwest will change that.) Technomic, at least so far, is forecasting increased operator sales this year and next. They raised their forecast for this year more than full point in May.

As a result of the improving conditions of their business, operators nearly everywhere are on a renovation and replacement binge. Many held off fixing up their units and facilities during the Great Foodservice Recession. Now they are anxious to redo at least the public spaces. And equipment and supplies sales are the result.

The E&S market recovered from the recession sooner than the operator base it relies on and has grown more quickly every year since 2010.  My forecasting partner John Muldowney, v.p.-marketing at Alto-Shaam, and I believe this dynamic will continue for several years to come. After all, the noncommercial and other spec segments are just beginning to recover. And there are still thousands of commercial units to re-equip. This is a very big market with lots of opportunity. Go take advantage of it, please.



Robin Ashton

Publisher

rashton@fermag.com

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