Foodservice Equipment Reports

The Good Times Keep Rolling; Can It Last?

We hope everyone had a good Thanksgiving. We have much to be thankful for. One of those is the continuing strength of the foodservice and equipment and supplies markets. The positive numbers just keep coming.

As we report in this issue of FER Dealer Report, the current capital spending indicator in the National Restaurant Association’s  Restaurant Performance Index hit another record in October. Of those surveyed, more than three-quarters said they had a made a capital buy. That’s a remarkable number.

We also report on the latest MAFSI Barometer. Sales of like lines rose 5% in the third quarter versus year prior, following a 5.1% gain the second quarter and a 4.7% increase in the first quarter. I went back through the entire history of the Barometer, which started in the second quarter 2002 and can’t find another time when we had two 5% quarters in a row. Equipment sales have exceeded 5% gains every quarter this year.

Our friend John Muldowney, principal at Clairty Marketing, is still tweaking the numbers from the eight public companies we follow, but it looks like the six equipment-oriented companies also saw 5%+ gains.

So in the E&S market, times are really, really good. This will be, unquestionably, the best year for the market since 2004, when real growth also reached 2.5%, though thanks to price increases, nominal sales grew 6.4%. This year we forecast 4.8% nominal growth.

But the key question as we enter 2016 is, can the good times last? We think so, though we expect a little softening as the year wears on. Technomic is forecasting another strong year for operator sales growth. Nearly all the 20 segments it tracks are posting good numbers. The general economy is also doing well, after a soft patch late summer and early this fall. Jobs gains rebounded in October. We’ll see if that trend continues this Friday when the November employment report is released. The outlook for gasoline prices remains very positive for foodservice. Wholesale food prices are down more than 5% the past 12 months, which helps operator margins and cash flow, the source of most capital spending.

So, I think you can expect another very good year in 2016. We continue to forecast 4.6% nominal sales growth for E&S, with another year of 2.5% real growth. Enjoy it while it lasts.



Cheers,



Robin Ashton

Publisher

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