Middelby 4Q14 Earnings Call Notes

the mood in food service is strong

” the mood, the mood for the commercial foodservice is very strong. In fact restaurant sales especially in certain categories which are the sweet spot for Middleby continues to do well. Casual pizza chains are doing very, very well so I think that we will continue seeing foodservice doing extremely well.”

Expanding budgets

“31% of all foodservice operators according to F&S report and research are expecting to increase their budget for equipment by renovating their kitchen which is roughly in line with what we’ve seen in 2014. So in general, the commercial foodservice will be very, very strong.”

Didn’t realize how big the quality issues were at Viking

“We need to be honest with everybody, we did not expect the quality issues to be as big as we saw, even though we did the due diligence, I don’t think we expected the quality issues to be pervasive as much as it’s been on almost every product line, So we’ve turned the corner by introducing all those new products.

We’re basically starting to win over dealers, to come back to Viking and we’ve started to win builders.”

Everyone is getting into fast casual

“Today everyone wants to be the [indiscernible] the Five Guys or the Pot Bellies, even star chefs like David Chang, Roy Choi’s, Danny Meyers are joining the fray by opening fast casual. A friend of mine and one of the most respected chefs in Chicago, Paul Kahan has also started opening fast casual stores. Those concepts have capital to grow; they can open a lot of stores.”

Restaurants are focused on waste management

“The final trend in restaurant is waste Management. It is now at the forefront of most restaurant operators. Legislation in Massachusetts, in California and ultimately in New York is driving the implementation of food and solid waste solution ”

Value, speed and nimble menus

“When I look at the casual dining and I look at the customers that have been succeeding in the last two years is casual dining. I talk about Buffalo Wild Wings, Cheesecake Factory, Darden, Bloomin brands which is Outback, Carrabba’s and Bonefish, Brinker with Chili’s, they offering this on it well with their customers which is value, speed, nimble menus that keep on changing and they all have something in common, they are big users of Middleby equipment.”

Americans love pizza

“If Americans would choose to eat only one food for the remainder of their lives, I will assure you it has to be pizza. Americans eat an average 100 acres of pizza daily or 350 slice per second and this is happening now and all over the world in China, in India. Just to give you a perspective, pizza is a $40 billion industry in the U.S. and it makes up approximately 17% of all restaurants in the nation”

Pizza has been the first to innovate in social media

“the pizza business and the segment has been the first to innovate in social media, to place order online, document that there’s many articles on Dominos, Papa John’s, Pizza Hut what they’ve done and even Little Caesars. They have been very, very strong in outdoing their marketing strategies for website and e-commerce.”