Foodservice Equipment Reports

Special Report: FER Revises 2012 and '13 E&S Market Forecasts

Better than expected fourth-quarter 2012 results and a distinct softening of foodservice operator sales in the first quarter of 2013 has prompted Foodservice Equipment Reports to revise its forecasts of the foodservice equipment and supplies market.

With the seven publicly reporting E&S companies posting 3% sales growth in the fourth quarter and the MAFSI Barometer, which reflects manufacturers’ reps’ sales, rising 3.8%, FER has boosted its estimate of growth for the total industry in 2012 to 3.8% in current dollars and 1.8% in real terms for E&S sales at the manufacturers’ level. This compares with the November revision of 3.7% nominal growth and the July forecast of 4.7%. The new estimate has the seven equipment categories up 3.8% and supplies and tabletop growing 3.9%.The magazine let stand its 2% estimate of price changes in ’12.

For 2013, FER cut forecast nominal growth to 3.3% from November’s 3.6% and last July’s initial 4.3% forecast. With prices forecast to increase only 1.6% in ’13, real growth is pegged at 1.7%. Equipment sales are forecast to gain 3.2% and supplies and tabletop 3.4%.

“There is little question that the end of the federal payroll tax holiday and the unexpected spike in gasoline prices have hurt operators and slowed capital spending,” said FER Publisher Robin Ashton, who with John Muldowney, v.p.-marketing at Alto-Shaam, prepares the forecasts. Ashton noted that operators were already cautious as they anticipate price increases for most proteins this year and healthcare cost increases as the Affordable Care Act takes effect.

“A number of manufacturers and dealers have told us sales have been soft so far this year,” Ashton said. “John and I just want to make sure our forecast reflects this environment.”

Ashton pointed out that there also are positive forces driving the marketplace. Accelerated depreciation for capital spending on equipment and facilities was made permanent as part of the federal tax package passed at the beginning of the year. State and local tax receipts are beginning to recover. And employment trends remain positive.

“Not least,” said Ashton, “Congress and the administration seem to be avoiding the kind of confrontation that could knock the recovery off track. I think once we get past the first half of the year, the market will improve.”

To download the current forecast—which incorporates new market numbers from NAFEM’s biennial “Size & Shape of the Industry” study—click here.

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