Foodservice Equipment Reports

Mulling FER’s 2015 E&S Market Forecast

As we wrote after our annual FER President’s Preview E&S Market Forecast meeting in late July, we are quite optimistic about growth of the foodservice equipment and supplies market next year. John Muldowney (our forecasting partner and a marketing executive at The Boelter Cos.) and I forecast current dollar growth of 4.8% for the E&S market at the manufacturer level in 2015, with real growth of 2.5%. Our current call for 2014 is 4.4% nominal growth with 2.3% real growth.

What we’ve now seen from third-quarter reports from the MAFSI Business Barometer and the big publicly reporting E&S companies hasn’t changed our minds. The MAFSI Business Barometer improved to 3.8% sales growth from 3.1% in the second quarter. The public companies have reported revenue gains of 6.5% for the first nine months of 2014; the five equipment-oriented companies are up nearly 8% for that period.

The trends at the macroeconomic level are as strong as they’ve been since 2007. Employment is up and wages and hours worked finally are starting to rise. Disposable personal income and consumer spending are forecast by the Blue Chip Economic Indicators to near 3% in real terms next year. Consumer confidence hit a post-recession high in November.

A big positive is the drop in the price of gasoline. This helps households in the bottom half of the income spread spend more on things like foodservice. You can see the effect in the National Restaurant Association’s Restaurant Performance Index in October, which spurted 1.8 point to reach 102.8, the highest level since December 2004. Current customer traffic jumped 3.2 points.

And the other big impact on the market is the recovery of the noncommercial and spec markets. Reps tell MAFSI that quotation and consultant activity are very, very strong. Spec-oriented manufacturers and bid dealers tell us the market is strong. Because the spec markets can be as much as a third or more of the E&S market, this bodes well for next year.

Put this all together, and John and I believe 2015 will be the best year for E&S market growth in the current cycle. If anything, we’re probably being conservative, as we like to be.

This is our last FER Fortnightly of 2014, so all of us at FER and Gill Ashton Foodservice Media Group wish all of you a fun, healthy and wildly successful 2015. Have a great holiday, too. Cheers. —Robin

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