Industry Sector NAICS Code 2008 U.S. Exports
Hotel & Restaurant Equipment various $1.8 billion
The Hotel and Restaurant Equipment industry manufactures specialized equipment for use in commercial and institutional kitchens and residential accommodations, including hotels, restaurants, resorts, catering businesses, schools and colleges, hospitals, nursing homes and assisted living facilities, and similar settings. Major product categories include: ovens, stoves, ranges and other devices for heating food or keeping it warm; refrigerators, freezers and other devices for keeping food cold, including refrigerated and freezer-type display cases, and refrigerated equipment for dispensing beer and carbonated beverages; ice-making machines, dishwashers; vacuum cleaners; washing and drying machines for clothes, table and bed linens, etc., porcelain and other ware for serving food; and specialized furniture for hotel, restaurant, and other commercial applications. Also covered in this category, but difficult to document statistically are small commercial kitchen appliances, hair dryers, clothes irons, cutlery, and similar products.
Industry Overview and Competitiveness
More than 500 companies of all sizes manufacture hotel and restaurant equipment in the United States. Many of the leading brands of high-value product types are concentrated in the hands of large corporate manufacturers with multiple brands and subsidiaries, such as Illinois Tool Works, Manitowoc Company, Inc., and True Food Service Equipment. Frequently, these and other large manufacturers produce equipment for preparing hot foods and beverages, or for storing and displaying cold foods and beverages, as well as dishwashers, vacuum cleaners, and other motor-driven devices. There are also numerous small and medium-sized manufacturers, frequently offering innovative products or serving particular market niches.
Major end-users of hotel and restaurant equipment include restaurant and hotel chains, schools and colleges, hospitals and other residential health-care providers, commercial caterers, and other institutional customers. Franchise restaurant chains, especially in the fast-food sector, are especially important for large-scale sales and repeat business. Because the hotel and restaurant markets depend heavily on discretionary spending, the market for equipment is especially sensitive to economic downturns. State and local government end-users, such as schools and colleges, are also sensitive to economic conditions that reduce tax revenues on which their budgets depend, although other institutional end-users may not be quite so vulnerable.
The hotel and restaurant equipment industry is a mature and highly competitive global business. Major markets for hotel restaurant equipment include North America, the European Union, East Asia, and the Middle East. U.S. exports grew steadily between 2004 and 2008, totaling $1.8 billion last year. International competition is strong in this industry sector, however, and imports in 2009 were worth $2.1 billion.
Leading U.S. manufacturers compete with counterparts from Italy, Germany, Sweden, Japan, and other developed industrialized nations. Conditions in more populous and affluent markets often lead manufacturers to localize manufacturing. Both the volume of local sales and specific national standards and other requirements for electric current, natural gas connections, food safety and so on are some of the reasons for localizing production.
With its large and affluent population, the United States has tens of thousands of hotels, restaurants, and other commercial and institutional end-users of hotel and restaurant equipment. Hundreds of domestic and international firms serve this market, both from domestic manufacturing operations and with imports. Major U.S. manufacturers include Illinois Tool Works, Inc., Manitowoc Company, Inc., True Food Service Equipment, Cambroon Manufacturing Company, and the NACCO Housewares Group, to name a few. Leading foreign manufacturers doing business in the United States include ALI SpA (Italy), AB Electrolux (Sweden), Franke Holding AG (Switzerland), Hoshizaki Electric Company, Ltd. (Japan), Meiko Maschinenebau GmbH (Germany).
The hotel and restaurant industries have been negatively affected by the economic downturn that began in late 2007. The recession has cut Americans’ discretionary spending on restaurant meals and hotel stays significantly. Business travel has also declined, adding to the drop in business for commercial end-users of hotel and restaurant equipment.
Food safety remains a key issue for all commercial and institutional restaurant and catering businesses. Ensuring that their products are designed to meet high standards of safety and sanitation is essential for companies in the hotel and restaurant equipment industry.
Sustainability is also a growing concern for U.S. manufacturers. Hotel and restaurant operations necessarily involve extensive consumption of energy and water and produce significant volumes of solid and liquid waste. Individual manufacturers increasingly design their products to make more efficient use of energy and water and reduce their customers’ output of waste.
The leading U.S. trade association for manufacturers of hotel and restaurant equipment is the North American Association of Food Equipment Manufacturers (NAFEM). With more than 600 members, NAFEM represents foodservice equipment and supply manufacturers “that provide products for food preparation, cooking, storage and table service.” The biennial NAFEM Show, held in odd-numbered years in cities throughout the United States, attracts as many 20,000 foodservice professionals and more than 600 exhibitors. NAFEM has participated in the International Buyer Program in the past, most recently in 2004.
The National Restaurant Association also offers membership to manufacturers of equipment and supplies for the restaurant and food service industry. The National Restaurant Association is a long-time participant in the International Buyer Program.
This industry’s relationship with the Department of Commerce goes back decades. In the early days of Federal Government trade promotion, DIBA (ITA’s predecessor) worked closely with the Barbecue King Co. and literally put the company into the export market. For many years, the company was the “poster child” success story demonstrating how exporting using Commerce services could be profitable for the small and medium size U.S. company (unfortunately, Barbecue King today is a British company). Later, DOC worked closely with the industry to help the Germans prepare for the ill-fated Munich Olympics. Still later, DOC worked with the industry to help a wide variety of U.S. companies penetrate the Japanese market. In recent years, the relationship has been limited to the industry’s participation in the International Buyer Program.