Moderator Joe Carbonara spoke with a pair of foodservice industry experts who offered their perspective on the industry’s performance to date for 2013 and provided a glimpse into operating conditions for 2014 as well as identified industry segments that should continue to excel in the coming years.

1. Foodservice Equipment &
Supplies’
2014 Industry Forecast

2. Today’s Agenda
 Review data from FE&S’ 2014 Foodservice Equipment and
Supplies Industry Forecast.
 Explore the economic issues impacting the foodservice
industry with industry experts Hudson Riehle and Darren
Tristano.
 Forecast the operating environment for 2014.
 Answer your questions.

3. Meet Our Panelists
Darren Tristano
Executive Vice President, Technomic
Twitter: @darrentristano
Hudson Riehle
Sr. VP, Research & Knowledge Group
National Restaurant Association
Twitter: @HudsonRiehle

4. Foodservice Equipment &
Supplies’
2014 Industry Forecast
These slides are part of a free webcast, available until October 2014.
Click to access it here: http://www.fesmag.com/2014forecast

5. 2014 FOODSERVICE
OPERATOR OUTLOOK

6. Operators: 2013 Anticipated Sales Compared to 2012
Net growth rate:
2013: +3.50%
2012: +3.37%
2011: +2.20%
Decrease
20%
Increase
44%
2013 Change by Market Sector
Stay the same
36%
Comm.
Non-comm
Increase
53%
36%
Same
27%
50%
Decrease
20%
14%

7. Operators: Projected Gross Profit for 2013
Net growth rate
Gross Profit:
Decrease
26%
2013: +0.8%
2012: +0.7%
2011: +0.1%
Increase
33%
2013 Change by Market Sector
Comm
Non-comm
Increase
Stay the same
41%
40%
28%
Same
20%
48%
Decrease
40%
24%

8. Operators: Anticipated Sales Growth for 2014
Decrease
11%
Net projected growth
rate 2014: + 3.72%
Increase
49%
2014 Change by Market Sector
Stay the
same 40%
Comm
Non-comm
Increase
63%
40%
Same
27%
48%
Decrease
10%
12%

9. Operators: Projected Gross Profit for 2014
Decrease
16%
Net growth rate 2014
Gross Profit: + 1.23%
Increase
41%
2014 Change by Market Sector
Stay the
same
43%
Comm
Non-comm
Increase
47%
37%
Same
30%
49%
Decrease
23%
14%

10. Operators: 5-Year Gross Profits
60%
50%
40%
30%
20%
10%
0%
2009
2010
Increase
2011
Remain the Same
2012
Decrease
2013

11. OPERATOR PURCHASING
BEHAVIORS

12. Operators: Activities Planned for 2014
60%
Kitchen Equipment Replacement
33%
Kitchen Renovation
Dining Room Renovation
29%
New Construction
20%
Dining Room Replacements
19%
25%
None of these
0%
20%
40%
60%
80%
100%

13. Operators: Percent of 2014 E&S Budget by Activity Type
Green/
Sustainable
Initiatives
6%
New
Construction
11%
Renovations
24%
2014 Change by Market Sector
Replacement
Purchases
59%
Comm
Non-comm
New
Construction
13%
10%
Renovation
30%
21%
Replacement
52%
62%
5%
7%
Green

14. Operators: 2014 E&S Budget
2014 E&S Budget
2014 E&S Budget Growth
9%
Decrease
12%
Increase
43%
19%
$2.5 million or
more
$500K-$2.49
million
30%
$100-$499.9K
Remain
the same
45%
42%
Comm
Non-comm
Increase
40%
44%
Same
47%
44%
Decrease
13%
12%
Under $100K

15. Operators: Percent of E&S Budget by Product Category
2014
2012
2011
13.6%
14.9%
17.6%
11.9%
17.9%
2013
10.9%
5.5%
5.7%
12.4%
9.6%
11.6%
5.0%
9.8%
8.0%
10.8%
4.6%
11.2%
8.0%
8.3%
4.7%
4.5%
6.0%
10.4%
10.0%
11.8%
4.1%
4.4%
5.0%
4.3%
4.0%
3.3%
3.4%
3.8%
14.9%
16.2%
17.1%
14.2%
9.2%
8.3%
8.7%
9.8%
6.8%
6.3%
11.5%
Primary Cooking
Eqpt.
Refrigeration
Warewashing/
Safety
Food Prep Eqpt.
Serving Eqpt.
Storage & Handling
Eqpt.
Smallwares
Tabletop Items
Furnishings
Paper Goods/
Disposables
Jan/San Supplies

16. Operators: Percent of E&S Budget by Product Category
Commercial
Non-Commercial
15.8%
25.8%
10.3%
5.3%
9.9%
13.5%
3.9%
8.4%
5.3%
11.2%
2.6%
3.1%
17.8%
11.5%
6.4%
4.6%
7.3%
3.3%
5.9%
10.9%
10.3%
6.9%
Primary Cooking
Eqpt
Refrigeration
Warewashing/
Safety
Food Prep Eqpt.
Serving Eqpt.
Storage & Handling
Eqpt.
Smallwares
Tabletop Items
Furnishings
Paper Goods/
Disposables
Jan/San Supplies

17. Operators: Percent of E&S Purchases by Channel
Cash & On-line Catalog
Carry/Club
House
Stores
8%
2%
Direct from
MFR
12%
Other
2%
Traditional E&S
Dealers
50%
Change by Market Sector
E&S Dealers
Comm
43%
Non-comm
54%
Broadline DSR
20%
MFR Direct
Broadline
Distributors
26%
35%
10%
14%
1%
2%
Club store/C&C
Online Catalog
Other
11%
0%
4%
6%

18. DEALER OUTLOOK FOR 2014

19. Dealers: 2013 Projected Sales Volume Compared to 2012
Decrease 4%
Stay the same
21%
Increase
75%
Trend:
(% Better)
2014: 35%
2013: 44%
2012: 29%
2011: 36%

20. Dealers: Product Categories Driving 2013 Sales Growth
Primary Cooking Eqpt.
74%
Refrigeration/Ice Machines
72%
Food Prep Eqpt.
54%
Warewashing/Safety Eqpt.
51%
Smallwares
39%
39%
32%
Storage & Handling Eqpt.
Serving Eqpt.
29%
Tabletop Items
Furnishings
27%
12%
Paper Goods/Disposables
Janitorial/Sanitation
7%
Other
3%
0%
10%
Service, Fabrication
20%
30%
40%
50%
60%
70%
80%
90%
100%

21. Dealers: Projected 2013 Gross Profit
Net growth rate
Gross Profit:
Decrease 16%
2013: +1.80%
2012: +3.76%
Increase
45%
Stay the same
39%

22. Dealers: Projected 2014 Sales Growth
Decrease 5%
Stay the
same
15%
Net projected growth rate
2014: + 6.48%
Increase
80%

23. Dealers’ Booked Business:
Next Fiscal Year Compared to This Time Last Year
Net rate ahead
of last year:
Less
11%
Trend:
(% More)
2013: 46%
2012: 49%
2011: 45%
2010: 34%
2013: +3.80%
2012: +2.41%
More
46%
Same
43%

24. Dealers: Product Categories Driving 2014 Sales Growth
77%
Refrigeration/Ice Machines
Primary Cooking Eqpt
70%
Food Prep Eqpt
56%
Warewashing/Safety Eqpt
47%
Smallwares
47%
Storage & Handling eqpt
37%
Serving Eqpt
37%
33%
Tabletop Items
Furnishings
28%
19%
Janitorial/Sanitation
Paper Goods/Disposables
14%
4%
Other
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%

25. QUESTIONS FOR OUR
PANELISTS

26. What impact, if any, did the
government shutdown have
on the foodservice industry?

27. FE&S 2014 Equipment and Supplies Forecast
Assessing the shutdown:
Impact was mostly regional and probably did more
damage to the consumer’s psyche.
21 percent of consumers expect the economy to
be better in 6 months, while 26 percent expect
things to be worse.
Restaurant operators see things in a similar light:
23 percent expect improvement, 22 expect things
to be worse and 55 percent anticipate the status
quo.

28. FE&S 2014 Equipment and Supplies Forecast
Consumers’ mindset:
Consumer confidence has yet to rebound
Slightly more cautious with spending but feel
better about their own situations
Facing a handful of key concerns including gas
prices, grocery prices, their own financial
health, healthcare costs and job security

29. What will 2014 look like for
the foodservice industry?

30. FE&S’ 2014 Equipment and Supplies Forecast
Technomic’s take:
2013 will see industry sales grow by 3.8
percent, down slightly from 2012’s 5.2 percent
In 2014 the industry will experience 4.1 percent
nominal growth, 1 percent real growth
Continued mixed results in the coming year

31. FE&S’ 2014 Equipment and Supplies Forecast
Technomic’s projected growth rate by segment:
Limited-service restaurants will grow by 4 percent
in 2013 and 4.5 percent in 2014
Full-service restaurants will grow by 3.5 percent in
2013 and 2014
Bars and taverns will grow by 4.5 percent in 2013
and 5 percent in 2014
In other words, restaurants will be in a take-share
mode in 2014.

32. What are some industry
bright spots heading into
2014?

33. FE&S’ 2014 Equipment and Supplies Forecast
Three reasons for optimism:
93 percent of consumers say they enjoy going to
restaurants
One out of two consumers say they are not dining
out as often as they would like
Industry hiring up; 294,700 positions over last year
Restaurants report sales and traffic numbers up

34. FE&S’ 2014 Equipment and Supplies Forecast
Fast-casual remains a beacon of hope:
Technomic projects growth rates of up to 10
percent in the next 3 to 5 years
Lots of demand for fast-casual restaurants
Franchising is a key factor in growth
Segment resonates with Millenials, the top dining
out generation

35. What are some reasons for
concern heading into 2014?

36. FE&S’ 2014 Equipment and Supplies Forecast
Three reasons for concern heading into 2014:
1. Potential for more government gridlock after
the first of the year
2. Industry growth rates still below prerecession levels
3. Job creation still slower than previous
recoveries

37. FE&S’ 2014 Equipment and Supplies Forecast
Five Biggest Business Challenges Facing Operators:
1. Increasing food costs
2. Unknown healthcare costs
3. Labor costs
4. Retaining quality employees
5. Energy and other operating costs
Source: FE&S’ 2014 Operator Forecast Study

38. How are operators adapting
to today’s business climate?

39. FE&S’ 2014 Equipment and Supplies Forecast
Ways operators are adapting:
Getting overhead under control, which includes
doing more with less square footage
Developing new prototypes to gain access to new
geographic markets
Continuing to invest in their businesses to serve
other dayparts and take advantage of off-premise
dining opportunities
Driving revenues through sales of menu items
consumed off premise

40. FE&S 2014 Equipment and Supplies Forecast
Ways operators are adapting:
Managing food costs
Looking to drive greater efficiencies into their
businesses

41. Questions?
©2011 Foodservice Equipment & Supplies – 2012 Industry Forecast

42. Key Takeaways
 2013 will be a good year but not as good as 2012
 Uncertainty continues to cloud the industry’s outlook
 2014 will bring minimal growth, resulting in a take-share
environment for restaurants
 Operators have held off as long as they can and need to
start replacing key pieces of equipment
 Margins remain compressed for operators and suppliers
alike

43. Reminders
 You can download today’s slides by clicking on the green
folder below.
 This webcast will be available in archive format shortly via
www.fesmag.com.
 View past FE&S webcasts at:
www.fesmag.com/resources/webcasts
 We are listening, too: send your ideas for future webcasts
to joe@zoombagroup.com.

44. Keep in Touch!
Visit FE&S online at:
www.fesmag.com
Follow us on Twitter:
@FESmagazine, @FES_Editor
©2011 Foodservice Equipment & Supplies – 2012 Industry Forecast