Restaurants Lacking Appetite For Expensive Equipment
May 18 2009 - 10:56PM
Dow Jones News
Recession-battered restaurants are looking for new menu items to
attract customers, but don't have much appetite for big investments
in equipment, executives for commercial kitchen equipment makers
said Monday.
Relatively inexpensive types of equipment such as panini grills
are drawing interest from cost-conscious restaurant operators
searching for menu ideas at this week's National Restaurant
Association trade show in Chicago.
"They're looking at ways to conserve cash and they want to have
menus that allow them to make money," said Selim Bassoul, chairman
and chief executive of Middleby Corp. (MIDD), which makes ovens,
ranges, grills and other cooking equipment.
Sales of commercial food equipment in North America, a $9
billion a year industry, are expected to contract about 6% this
year as consumers opt to dine at home more often to save money. The
pullback in spending has exposed years of excess expansion by
restaurant chains that has left the industry bloated with
locations, particularly in the sit-down casual category.
Nevertheless, Bassoul said casual restaurant chains remain
interested in adding food items to boost sales as long as they can
be prepared with a minimal amount of new equipment.
Middleby's recent acquisitions have targeted companies with
unconventional cooking technologies that Bassoul believes will
become more popular with restaurants in the coming years. Last
year, the Illinois-based company acquired TurboChef Technologies,
which manufactures ovens that require no special venting. In April,
Middleby bought CookTek, maker of cook tops that generate heat
through an electromagnetic reaction with metal pots and pans.
Other equipment makers also have been adjusting their product
lines for a less robust restaurant industry. Illinois Tool Works
(ITW) food equipment group is offering smaller-size models of its
ovens for space-constrained restaurant kitchens.
"We're certainly not in the typical position we'd like to be
in," said food group President John McDonough, adding that food
equipment has traditionally been one of the ITW's most profitable
businesses with operating margins near 20%.
Restaurant owners at the show said the reduction in customer
traffic is forcing them to try new approaches to their
businesses.
Melanie Briscoe, owner of a pizza restaurant in Homer, Penn.,
for the past 20 years came to the show to learn about offering more
dessert items at her restaurant.
"I don't want to compromise food quality," she said about one of
her options for raising profits. "I'd rather have something new to
offer."
-By Bob Tita, Dow Jones Newswires; 312-750-4129;
robert.tita@dowjones.com