The industry has experienced growth since the recession; going forward, however, it is expected to experience increased competition from imports. For these reasons, industry research firm IBISWorld has added a report on the Commercial Cooking Equipment Manufacturing industry to its growing industry report collection.
New York, NY (PRWEB) April 03, 2014
The Commercial Cooking Equipment Manufacturing industry has been heating up over the five years to 2014, with industry revenue growing 2.6% per year on average. Over this five-year period, industry operators have been able to recover from the lows they hit during the recession, when demand for industry products plummeted. In 2009, demand for commercial cooking equipment tanked as consumer spending contracted, corporate profit declined and food-service establishments reduced their capital spending on cooking equipment. However, since 2009, the nation’s thousands of restaurant operators have begun reinvesting in upgrading their kitchens. According to a survey of food-service enterprises by Foodservice Equipment and Supplies magazine, 85.0% of establishments either purchased a piece of equipment in 2013 or plan to do so in 2014. Industry revenue is expected to grow 0.8% in 2014, making commercial cooking equipment manufacturing in the United States a $3.0-billion industry.
Despite overall growth in industry revenue, the number of enterprises manufacturing commercial cooking equipment has remained flat over the past five years. The industry is consolidating as large, publicly listed manufacturers purchase smaller operators to gain access to new technology or to acquire reputable brands. The top four industry players now represent an estimated 70.2% of the industry’s total revenue. The industry has also had to contend with growing competition from more affordable imports from Mexico and Asia, as well as from high-end manufacturers in Europe and Canada. To counteract flat demand, higher competition and rising cost pressures, some industry operators have offshored or outsourced part of their production.
Industry operators will continue to face many of the same challenges over the next five years as import competition continues to limit the industry’s growth. In particular, a strengthening US dollar will make imports relatively less expensive. The broader economy is expected to continue to improve, facilitating higher consumer spending at food service establishments and greater capital investment by restaurants in equipment. New restaurant concepts in the United States and the rapid expansion of US and foreign chains in international markets will also lead to the replacement and upgrade of existing equipment. IBISWorld forecasts that industry revenue will increase over the next five years.
The Commercial Cooking Equipment Manufacturing industry has a high level of concentration. The top players are Middleby Corporation, Illinois Tool Works and The Manitowoc Company Inc. The industry, once highly fragmented, has contracted over the past few decades as family-run manufacturing operations slowly merged into larger companies. Since then, larger operators have used their size to dominate the industry by integrating their value chains, opening warehouses and distribution centers to market and sell their own manufacturing wares. Over time, this strategy has allowed them to sell their products at extremely competitive prices compared with those offered by smaller producers. These companies are increasingly engaged in a process known as wholesale bypass (in which manufacturers bypass wholesalers and sell directly to retailers), an increasingly popular method used by large manufacturers to increase their revenue and margins. Unable to obtain these advantages, smaller operators have been forced to either tailor their products to niche markets or merge with larger companies to survive.
The Commercial Cooking Equipment Manufacturing industry manufactures commercial cooking equipment for end consumers such as restaurants, hotels and military establishments. Products the industry manufactures include coffee makers, fryers, microwaves, ovens and ranges, corn poppers, stoves, warmers, hot plates, steamers and water heaters. Enterprises that manufacture commercial dishwashers, refrigerators, laundry dryers and washing machines are not included in this industry.
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.
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