Foodservice Equipment Reports

It’ll Be A Bumpy Few Months

We now have seen all the third-quarter equipment and supplies market data, as well as the October Restaurant Performance Index, the November consumer confidence measures, and the like. The pols are in full strutting posture as they peer over the fiscal cliff or slope or whatever you call it. It all adds up to a mixed outlook for the E&S market during the next few months. But we still think the fundamentals will lead to reasonable growth for the market in the coming year.

One clear trend, from NRA’s RPI (see article in this FER Dealer Report), is that restaurant operators are starting to worry about the next six months. A lot of it is probably the constant barrage about the fiscal impasse, but operators also know they are going to get slammed with higher costs for proteins, thanks to the ongoing drought. And they also report a slowdown in customer traffic.

The manufacturers’ reps seem to have picked up this worrisome mood. They reported a big drop in quoting activity and forecast slowing sales gains in the fourth quarter in the just-released third-quarter MAFSI Business Barometer, detailed above.

In response to all this, our forecasting partner John Muldowney, v.p.-marketing, and we have cut our estimates for growth this year by a point—both nominal and real—and pared back the forecast for 2013 about a half point. But we’re still looking at current dollar growth rates in the 3.5% range and real growth of 1.5% to 2%. Which isn’t too bad, really.

The next few months will almost certainly see some slowing in market activity, thanks to all the uncertainties. But we remain reasonably optimistic for several reasons. The general economy and the employment situation continue to gradually improve. Consumer confidence is running well ahead of nearly all the past four years. Hudson Riehle, senior v.p. at the NRA told our Founding Editor Brian Ward a few weeks ago that the group’s research continues to show lots of pent-up demand for foodservice from frugality-weary consumers. And there is still plenty of pent-up demand for E&S, as operators continue to renovate and replace. The one good number in the NRA’s recent RPI report? Fifty percent of those surveyed said they planned a capital purchase in the next six months, up from 44% in September.

So call your customers, sympathize with their margin pressures, and invite them to join you at The NAFEM Show in a couple months. As they say, “Make it happen.”

Cheers,

 

Robin Ashton

Publisher

rashton@fermag.com