On Target

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mar april 2008.pub - CFESA

On Target

The Official Publication of

The Commercial Food Equipment Service Association

March/April 2008

CFESA ANNUAL SPRING CONFERENCE

MAY 14-16, 16, 2008

IN THIS ISSUE

• Spring Conference Agenda

• Fact-Based Decision Making

• A Day in the Life of a Warranty Administrator

• Voice of the Industry

• What is Additional Insured?

• Profit Survey Update

Online Certification—A Breeze!

• Strategies are Different than Tactics

• Certified Company Spotlight—Eichenauer Services Inc

www.cfesa.com


ON THE MENU

President’s Gavel 4

Fact-Based Decision-Making 5

On Target is the official publication of the Commercial Food

Equipment Service Association. On Target is published on a bimonthly

basis. Current advertising prices in On Target are available

now through the end of 2008. Lock in your price and lock out your

competition. If you have any questions regarding advertising, content

or need further information you may contact Lauri Smith at

CFESA Headquarters: Toll Free 877-414-4127 or via email

lsmith@cfesa.com.

Executive Director’s Message 6

Email Chronicles—A Tale of Woe 7

Industry News 8

Headquarters News 11

Spring Conference Agenda 14

A Day in the Life of a Warranty

Administrator

16

Voice of the Industry—Article III 18

Advertisers Index

Busboy 19

Everpure 20

Insinkerator 12

Salvajor 2

T&S Brass 21

Tomlinson Industries 19

Vulcan/Wolf 28

CFESA 2008 Training Classes 19

What is Additional Insured? 20

NAFEM Show Makes Important Shifts 23

Identify your Organization's

Strengths, Weaknesses and Identity

24

Commercial Food

Equipment Service Association

2216 West Meadowview Road, Suite 100

Greensboro, NC 27407

P: 336-346-4700

F: 336-346-4745

www.cfesa.com

3


The President’s Gavel—Jean Choquette

LAST CALL!

In just a couple of weeks CFESA will host its annual conference

in Chicago. That would also mark the end of my

term as president of the association. It has been a very

interesting two years and I am very upbeat by the projects

our committees are currently focusing on.

As you may know by now, the Marketing Committee, led

by John Swanson and Tina Reese, assisted by Lauri

Smith at our headquarters office, have created a great

DVD that you can obtain from headquarters. This DVD

can be accessed on the CFESA website’s homepage and

is currently featured on youtube.com – Foodservice Careers

– A Solid Choice. It is designed to help our members

go into their communities and encourage young talent

to join our industry. One of our directors, Wayne

Stoutner, reported to the Board that he had given the

DVD to his intern, coming from the local HVAC trade

school. In turn, the intern used the DVD in a presentation

to his class about his internship with A.I.S. Out of 20 students

he had presented the DVD to, three or four students

came to Wayne expressing an interest in a career

with our Industry. Wayne referred them to local CFESA

members in upstate New York. The class instructor also

informed Wayne that he would present the video to his

future classes. If each of our members would visit their

respective local HVAC trade schools with the DVD, think

of the impact and the positive results this might achieve.

In line with our Marketing Committee work, our Ad Hoc

Training and Education Committee, composed of David

Hahn, Scott Hester, Tina Reese, John Schwindt and supported

by Carla Strickland and Heather Price, has done

great work and introduced the Board to M3, a company

specializing in technical writing and training programs. We

have entered into an agreement with M3 to write a 200-

page curriculum for distribution to various colleges and

training institutions such as CTI. Career Technical Institute,

located in Huntsville, Alabama, is just one such institution

interested in offering a “hot side” to potential students

but did not have the proper curriculum. The majority

of CTI’s students are comprised of adults either seeking

alternative careers or those experiencing major layoffs.

Potential students come from across the United

States. Our hope is to see more of these schools embark

in the training of students for possible entry into the

foodservice industry. The foodservice equipment repair

industry is a great trade and we need to keep promoting

4

it. Our members are certainly the best ones to reach out

to our communities and do just that. We encourage the

manufacturers and their service personnel to promote the

trade in their own environment as well. They too, have a

lot to offer students who want an interesting career.

Manufacturers have always generated good resource

people with the great technical knowledge that have been

an indispensable resource to our industry. Attracting new

blood in their realm is certainly a plus for us all.

The Ad Hoc Training and

Education Committee

are continuing the

evaluation of a dedicated

regional trainer program.

M3 has offered their services

for such a program;

however, the

Committee will first deal

with the production of

the curriculum and then

a dedicated regional

trainer. M3 is widely

known for their production

of many manufacturers’ technical information. They

have produced information for such companies as Montague,

Enodis, Turbo Chef and many others. You may view

their information at www.m3com.us. M3 has created 3D

animation film illustrating repairs and operating processes

for different type of products along with a good understanding

of our industry.

Our Membership Services Committee is also working on

a very interesting project: a parts catalogue. Mark Le-

Berte who co-chairs that committee, is preparing a fantastic

tool for our membership. This catalogue will allow all

members a tool to offer to their local customers. In addition

to being a benefit for the service companies, it will

promote the use of OEM parts – a benefit to the manufacturers

as well. The NAFEM/CFESA Liaison Committee

has already had several meetings about their support of

this project. Inevitably, this project will be incorporated

into a global strategy to continue promoting such parts

throughout the Industry. I personally hope to be able to

join Mark and help him complete this project once our

new president takes over in May. This is a project I value

tremendously and I am very appreciative of the great

Continued on page 23


“Fact-Based Decision-Making”

Bruce Hodge, General Parts LLC

I have often been asked how we manage the labor rates

that manufacturers pay us for warranty service. My standard

reply is that we don’t! We manage the manufacturer

relationship and negotiate rates based on our business

needs and financial goals. Over the years our company

has developed a larger broad based approach to manufacturers

that looks at the entire block of business that is

driven by the relationship with that manufacturer. By taking

this approach, we are better able to measure the entire

relationship and the overall effect on our bottom line.

Today as it stands in our industry, warranty labor rates

are reviewed and adjusted only on an annual basis. In

some extreme cases, the review can stretch out two

years or more. This annual adjustment of rates would not

be so bad if the adjustments were substantial enough to

keep up with the spiraling costs of running a quality service

company. The fact of the matter is that these adjustments

do not keep pace. Currently, warranty labor rates

hover at levels from 15% to 35% below the rates we

charge our best end user customers and the gap is widening.

Many of us remember when that difference was no

more than 15%.

Additionally, the discussion centered on warranty service

rates is often one sided. Most manufacturers state what

they are willing to pay (either in dollars or a range) and

service companies, for the most part agree. There doesn’t

seem to be any real discussion involved or any substantive

exchange of ideas.

I don’t know whether this annual rate dance we do is a

hard and fast rule or done just for expediency, but I do

know that all businesses should have the ability to adjust

their pricing when significant changes in costs drastically

alter their bottom line.

In an effort to help us better understand what our warranty

rate should be for each manufacturer, we decided a

few years ago to take a different approach. First, we developed

a financial matrix that measures the amount of

overall business that the manufacturer brings to our bottom

line. This includes parts sales, non warranty service

labor and parts as well as warranty labor and parts. We

feel it is important to look at the whole picture.

Secondly, we divide the amount of money we were paid

for our labor by the total hours invoiced to determine our

“effective” billing rate. In every case this will be lower that

your contracted rate because of write offs, credits and

invoice adjustments. This effective billing rate is the core

measurement for warranty labor rates.

Third, we recently developed a manufacturer evaluation

that considers the other factors in the relationship such as

accounts receivable, parts policies, training and overall

support. The program assigns each component a numeric

grade. This scorecard is tabulated and measured against

a maximum score. The financial components of the

scorecard are weighted more heavily than the other sections.

After reviewing these three components, we have a realistic

idea where our warranty labor rates should be for

each manufacturer.

While the above calculations are necessary and helpful,

the process still leaves some wiggle room. To assist us

further in determining a walk away point, we developed

another financial matrix that measures fully our cost to put

a trained technician in the field in a properly equipped

vehicle. This model takes into account wages, training,

benefits and management oversight and distills it down to

an hourly rate. The hourly rate we are paid from any

manufacturer has to exceed that number in raw form and

also exceed the actual effective billing rate once all the

adjustments are made. Additionally, we have established

a combined overall gross margin of 45% or more for the

entire block of business that a manufacturer brings to us.

We have found it to be a poor business decision to represent

any manufacturer that fails to meet these basic criteria.

The determination to continue a relationship with a

manufacturer or to end it is then a business decision

based on empirical data instead of emotion.

Throughout the years, I have cancelled numerous manufacturers

based on their warranty rates. I continue that

practice today. Some of these were very large, high profile

companies. The difference is that today I have good

information to make an informed decision. In the past,

dropping a manufacturer had mixed results at best. While

our overall service margins did increase, sales in some

product lines decreased and our cost of parts for those

manufacturers increased as well. We also lost out on the

revenue that “special programs” such as installs, retrofits

and scheduled maintenance programs delivered that are

driven exclusively by the manufacturer. The real positive

that came out of it was that in future discussions with

these same manufacturers, they knew we were prepared

to enter into a more equitable relationship. By taking that

firm historical stance along with having hard data that we

share openly with them, we have managed to improve our

warranty compensation and forge stronger business relationships.

Continued on page 21

5


Executive Director’s Message—Carla Strickland

Allied Association Meetings Are Always Interesting

As is customary, your CFESA president and I attend the

allied association conferences. This year is no different.

Jean and I first attended the NAFEM Executive Conference

in February. Equipment operators are paying close

attention to their energy consumption. As a result,

NAFEM focused their Conference on “Going Green.”

Their keynote speaker was Joel Makower, chairman and

executive editor of Greener World Media. Makower has

helped a variety of companies develop and implement

business strategies including GE, IBM, Hewlett Packard

and Nike. Each presenter followed the same theme including

the wrap-up, which featured a representative from

Fast Company Magazine leading a panel of restaurant

and foodservice people who are leading the green revolution.

In March, Jean and I attended the FEDA Convention in

Tucson, Arizona. The highlight of my time there, other

than visiting with industry friends, was hearing Herman

Cain speak. You may remember him from years ago

when he spoke for CFESA as a favor to his friend, Frank

Burns. Mr. Cain is the former chairman of Godfather’s

Pizza and past president of the National Restaurant Association.

In his presentation, titled Leadership is Common Sense,

he began with the statement, “you can’t motivate people –

people motivate themselves. Leaders must identify and

remove the obstacles that keep people from being selfmotivated.”

How do you work with your employees? Do

you say they work with you or for you? My staff, albeit

small, works with me. That is, I would never ask them to

do something I wouldn’t do myself.

Mr. Cain says there are three critical qualities that a

leader must possess. They are:

• The ability to recognize that people must motivate

themselves

• The ability to take risks and make the tough decisions

• The ability to block out the unnecessary and concentrate

on the necessary

He says you need to ask your employees the right questions,

such as “do you know what is expected of you and

do you have the right tools to do your job.” If the answer

to either of these questions is “no,” then, as the employer,

you must first identify and focus on correcting the problem.

Secondly, you must ask the right questions to correcting

the problem. And finally, in order to keep the employee

motivated, you must remove the barriers that prevent

the employee from doing

his or her job.

Mr. Cain suggested praising

each employee at least once

per week. He further suggested

asking these three

questions during each employee

review – not requiring

the answers – but asking the

employee to think about the

answers to themselves: (This

is Mr. Cain’s definition for happiness)

1. Do you like what you do professionally?

2. Do you have a goal to strive for both personally and

professionally?

3. Do you have support for your goals both personally

and professionally?

Now, although these questions sound pretty elementary.

But, in reality we all should ask and answer these questions

for ourselves.

Here is a bit about Mr. Cain’s background directly from his

website. “He is the USAmerican Dream. A Horatio Alger

Award Recipient, Herman grew up in Georgia with wonderful

parents and little else. Herman's father worked

three jobs - a chauffeur, barber and janitor because he

wanted his sons to have "a little better start in life." As a

result of his dad's encouragement, Herman earned a

bachelor's degree and master's degree and would succeed

at the highest levels of corporate America.

On another note, I would like to thank Jean Choquette for

all the time and effort he has put into CFESA. I have to

admit being a bit “gun shy” about this very vocal French

Canadian. However, it has been a most enjoyable experience,

including translating his articles from what Jean

calls “Frenglish” to “English!” We will have a new president

in May and I hope you will all provide the support

and energy needed to further advance CFESA.

See you in Chicago. ■

6


Email Chronicles - A Tale of Woe

Lauri Smith, Marketing Director

Email is great. It keeps us in touch with each other no

matter where we are or what time it is. A recent study

found that In 1999 the USPS was delivering over 600 million

pieces of mail per day but by 2007 electronic mail

outnumbered postal mail by 1000 to 1. The study also

revealed that email is much older than the Internet. It was

never invented; it evolved from very simple beginnings.

Ray Tomlinson is credited with inventing email in 1972.

Like many of the Internet inventors, Tomlinson worked for

Bolt Beranek and Newman as an ARPANET contractor.

He picked the @ symbol from the computer keyboard to

denote sending messages from one computer to another.

Now more than 700 million people internationally use

email.

However, email can wreak havoc and crash your PC. All

sorts of viruses can be attached to email by masquerading

as love letters, photos of family and friends, security

passwords, program updates, and almost anything else

you can think of. These viruses bring chaos to many users

of the internet every single day.

One of the most popular email programs used in offices

today is Microsoft Outlook. Countless people rely on this

program every day. While it is not perfect, Microsoft Outlook

is fairly reliable as an email client with great potential

for organizing—virtual folders, fast search, solid spam

and phishing filters, and seamless integration with to-do

lists and scheduling. While Outlook is a fairly stable program

and has a multitude of features and functions, it's

cousin, Outlook Express, is a loose cannon. In my opinion,

Outlook Express is miserable and needs to be exterminated.

The question on my mind is how Microsoft could

let this program fester like an open sore and not do anything

about it. Outlook Express also has a nasty history of

security problems.

A friend of mine, Carl, uses Outlook Express as his primary

email program at work. Recently a box appeared

while using his email prompting him to "compress files to

save space." His choices were; yes, no or cancel. Carl

thought this sounded like a good idea, so he clicked yes. I

mean who doesn't want to save space, right? The program

started to run and the familiar hum of the hard drive

was beginning to perform it's command, when another

box appeared showing Carl his progress in compacting

his email files. The box let Carl know that in about four

minutes his email would be all bundled up - saving him

some much needed space. After about one minute, the

time changed to 20 minutes for the process to be complete.

Carl was not happy with this, as he is a very impatient

man. So he decided not to wait for the process to

finish and attempted to cancel the operation. Outlook Express

didn't like this command and refused this latest request.

He tried again but to no avail. Carl figured he'd

just shut his computer off and be done with it until he had

more time to sit and wait. Since the cancel option wasn’t

working for him, Carl decided he would try a different way

7

so he hit the power button on his tower to perform a hard

shut-down. That is the WORST way to shut down a computer

but as I said Carl is very impatient and didn’t realize

the repercussions of such an act.

The next day Carl came to work and as usual, the first

thing he did was open his email. He began receiving

email much like any other day. Carl then decided to

browse a folder that he created a couple of years ago to

locate a file for someone. He opened one of the email

folders, but to his horror all of the saved emails were

missing. Carl opened other folders to find his saved

emails but they were all gone! He began to panic and with

good reason. He could not locate the past four years

worth of stored emails. These were not just chatty office

and personal correspondence but projects, documents,

notes, agendas—in short, irreplaceable work. I gave him

some assistance in locating the files but we could not import

them. So we decided it was time to give in and call

Microsoft. After jumping through the many hoops to get to

an actual human voice, Shawn offered to assist me with

Carl's problem. After several wasted minutes of trying to

understand what he was saying, he asked “Can I hold

you?” Of course he meant put me on hold. Fast-forward

one hour—Microsoft could not fix the problem with THEIR

program. They determined that the email was on the

hard drive (I already knew that), but it was corrupted.

Their advice—contact an outside computer repair company.

Thankfully, they did not charge me for the support

call.

I contacted a computer repair company and they came to

Carl’s office to evaluate his email situation. After about

90 minutes they advised me they would have to download

a program, OE Recovery Tool, that would be able to repair

the corrupted emails. The technician downloaded the

software and attempted to recover the corrupted files. No

such luck! I asked him if we could get a refund and he

said “Nope, it’s just a crap shoot anyway.” So here we

are almost $300 into this process and Carl still did not

have any way to open or view his stored emails. He’s

pretty much resigned to the fact that the emails are lost

but I have not given up. I can see that the files are on the

hard drive so there has to be a way!

The moral of the story—Outlook Express should be

avoided at all costs. If you must use Microsoft email, use

Outlook and DO NOT COMPRESS OR COMPACT! But

just remember Outlook Express enjoys a 75-80% share of

the corporate email market, which is similar to Internet

Explorer’s share of the browser market—they make the

rules. Unless of course, you change them, or Microsoft’s

competitors force them to change by offering alternatives

to Microsoft’s often bloated, buggy software. Remember

you have a choice.

To be continued…. ■


Industry News

McDonald’s Partners with Enodis to Introduce New

Low Oil Volume Fryer System

Enodis is pleased to announce that Frymaster has been

selected by McDonald’s as one of the suppliers of their

new Low Oil Volume - LOV fryer systems to its

restaurants. Frymaster worked with McDonald’s on the

development of the fryer and worldwide field testing to

validate the benefits of this system for over two years.

The new frying system uses 40% less oil than the

previous models and includes an automated vat “top off”

feature and automated filtration technology, making the

fryer easier to use for the restaurant staff.

The electric models are now available to the McDonald’s

System world wide, and gas models will be offered later

this spring. ■

Steak n Shake Announces Management Changes

The Steak n Shake Co. announced several changes in its

management structure. Wayne Kelley was appointed

interim chairman and chief executive officer, replacing

Alan Gilman.

The company also promoted Jeffrey Blade to interim

president, from executive vice president, chief financial

and administrative officer. Steak n Shake said the

company is continuing its search for a permanent CEO. ■

Blodgett Names New Sales Director

Blodgett named Chris Brinkerhoff director of sales. Most

recently, Brinkerhoff served as regional vice president of

sales for Pitco/MagiKitch’n.

Prior to that, Brinkerhoff spent seven years at Blodgett,

starting in 1998 as the national account manager for the

company’s combi product, as well as director of sales in

the worldwide chain group. He also served as director of

sales for North America. ■

Enodis News

Peter MacFarland has been named president of MERCO

SAVOY/ENODIS. MacFarland will oversee development

of the Merco brand and its products, which include countertop,

holding, warming and display equipment. ■

Officers and Directors Elected

NAFEM announces the following new officers, who

began two-year terms (2008-2010) during the Annual

Business Meeting, Saturday, February 9, in San

Diego, Calif.:

• President: Paul K. Angrick, CFSP, president,

Wells/Bloomfield LLC, Verdi, Nev.

• President-Elect: Steven R. Follett, CFSP,

president, CEO & chairman, Follett Corporation,

Easton, Penn.

• Secretary/Treasurer: Tom Campion, CFSP,

president, Franke Foodservice Systems, Inc., La

Vergne, Tenn.

The results of the recent director elections include

these incumbents, serving three-year terms:

• Tom Campion, CFSP, president, Franke

Foodservice Systems, Inc., La Vergne, Tenn.

• Mike McNeel, CFSP, president, Berkel Company,

South Bend, Ind.

• David Wasserman, CFSP, president, Focus

Foodservice LLC, Vernon Hills, Ill.

• Mark Whalen, CFSP, president, AFE Group Inc./

Victory Refrigeration Company, Cherry Hill, N.J.

In addition, Joe Carlson, CFSP, president, Lakeside

Manufacturing Inc., West Milwaukee, Wisc., was

appointed to fill the director position vacated by Tom

Campion who ascended to the secretary/treasurer

role. ■

QualServ Names Heller CEO

Richard Heller has become president and chief

executive officer of QualServ Corp., a provider of

custom and standard kitchen equipment, furnishings

and smallwares to the foodservice industry, based in

Kansas City, Mo. Heller replaces interim CEO

Laurance Nowak, who will continue to serve on the

company’s board of directors.

An industry veteran with more than 25 years of

experience in sales and marketing, Heller previously

served as CEO of The Steak-Umm Co.; vice president

of marketing for ConAgra Foods; chief operations

officer for Lea & Perrins; and has held other senior

marketing and sales positions at Frito-Lay and

Richardson Vicks, a division of Proctor and Gamble. ■

8


Industry News

Manitowoc Ice Machines Earn the ENERGY STAR®

Manitowoc Ice and the ENERGY STAR® program share

a common passion. For Manitowoc Ice it’s the desire to

provide energy efficient products to

their customers and for ENERGY

STAR, it’s promoting those energy

efficient products to their customers.

In January of 2008, the EPA’s EN-

ERGY STAR program announced

that ice machines that meet maximum

potable water and energy

consumption limits would become eligible for ENERGY

STAR recognition in its commercial kitchen equipment

category. Manitowoc ice machines that have earned the

ENERGY STAR are up to 15 % more energy and water

efficient than standard models.

According to John Sara, senior product manager for

Manitowoc Ice, “Our ice machines have always been

known for their low operating costs. Now, with ice machines

being included in the ENERGY STAR program, it

will be even easier for customers to quickly identify the

most energy efficient models.” By May 2008, over 97% of

Manitowoc’s cube ice machines will meet or exceed stringent

Energy Star and CEE performance criteria. To view

the most recent list of qualified ice machines visit:

www.manitowocice.com/energystar. ■

Industry Mourns Tomlinson’s Chernak

John Chernak, past-president of both Tomlinson Industries

and NAFEM lost his long time battle with diabetes in

January. He was 78. Chernak joined Tomlinson in 1957

and became president of the organization in 1994. He

was an active NAFEM member for more than three decades.

John is survived by his wife Arlene and four daughters.


Rational USA

Rational USA has appointed David Krites to serve as its

new president. His responsibilities include increasing

sales of the SelfCooking Center, creating operational efficiencies

and building relationships with consultants and

dealers. ■

Giles Foodservice Equipment Annnoucement

Giles Foodservice Equipment has appointed David Byrd

as company president. In his new role, Byrd will apply his

extensive industry experience to continue to grow the

company as the brand expands its network. ■

Carlisle Acquires Dinex

Carlisle Cos., parent company of Carlisle FoodService

Products, has acquired Dinex International. The purchase

will help Carlisle levergage its product and

manufacturering capabilities in the healthcare segment. ■

Bargreen-Ellingson Named 2008 Dealer of the Year

FES has named Bargreen-Ellingson the magazine’s 2008

Dealer of the Year. The award will be presented druing

FE&S’ annual Dealer of the Year & Industry Awards Gala,

which takes place May 17 at Chicago’s Four Season

Hotel.

In addition to Bargreen-Ellingson, FES will recognize a

dealer, consultant, service agent and manufacturer’s rep

with the Top Achievers Awards. ■

Enodis plc Acquired by Manitowoc

We're very pleased to share with you the news that Manitowoc

Foodservice Group has reached an agreement to

acquire Enodis plc, subject to regulatory clearances.

As you know, we've seen the potential benefits of a combined

company for some time both for our shareholders

and for customers such as you. Among the many market

benefits of the combined company are:

• Providing enhanced solutions to customers around

the globe

• Offering a broader product portfolio to meet customer

needs

• Accelerated and improved innovation in equipment,

solutions and service

• Global, regional and local support teams, facilities

and infrastructure

Bringing together two of the industry's leading suppliers

will create one great company.

We'll share additional details of this exciting combination

in the coming months.

Manitowoc Foodservice Group will have a major presence

at the upcoming National Restaurant Association trade

show in Chicago, May 17-20. We invite you to schedule

in advance an appointment with one of our management

team during the show, or to drop by the exhibit for an informal

conversation. View the entire press release here:

www.manitowocfsg.com/news/anitowoctoacquireenodis.■

9


Member News

Malachy Mechanical Sponsors Booth at Local College

Malachy Mechanical, Bayonne, NJ, sponsored a booth at

Hudson County Community College in April, 2008 for the

Culinary Arts & Hospitality Open House & Food Service

Market Place. Located in Jersey City, NJ, Hudson County

Community College offers associate degrees in a variety

of certificate programs including culinary arts.

The attendance for the event was very good. There was a

diverse group of visitors such as restaurant owners,

foodservice partners, chefs and culinary students. There

were demonstrations and sessions that provided a

wonderful oppurtunity to gain industry information and

network with peers. Enodis provided literature for their

new equipment and preventive maintenance programs. ■

“Texas Size Service” - Available throughout East

Texas

On March 3, 2008 RSI, a CFESA Certified Company,

opened in Tyler, Texas to provide 24-hour service (903-

287-2004) to the booming East Texas communities

included in zip codes 750-758. George Carr, CFESA

Master Technician (11 years with RSI in D/FW) takes on

duties of Regional Manager and Mike Via will support

market & client development. “Our focus will continue to

build success by working closely in our role as a key

member of the supply channel to the food equipment

industry” said Scott Hester, Partner. Services include

Deliver-Installation-Start-Up (DIS), Ongoing Performance

Maintenance (OPM) & Break-Fix services for hot & cold

food storage, ice, soda, beer & frozen beverage systems

as well as stainless welding, hardware & gaskets. We are

very excited to bring our valued premium service levels to

this market. ■

Congratulations

Gary’s East Coast Service, Inc of Shelton, CT has

achieved CFESA Company Re-

Certification status. Gary Petitti, is

pictured (right) with the re-certification

plaque. Gary has been a member of

CFESA since 1998. Gary and his staff

remain very active members of

CFESA by attending conferences, training classes, and

participating on committees.

A-Tech Commercial Parts & Service, Inc. Opens New

Branch Location

A-Tech Commercial Parts & Service, Inc. opened its new

Medway, MA office this winter to support Boston area

technicians. The new location is headed up by Bill Davock.

“All our technicians have over ten years experience,”

notes General Manager Alan Basch. “We’ve got two

CFESA Master Technicians and another four with CFESA

Gas Certification.”

According to Wes Tyler, President of North American;

“When we purchased A-Tech, we bought a successful

business. We’ve just tried to improve their model.” Enhancements

have included a new computer system and a

significant increase in truck inventory to improve the rate

of first call completions. In addition, A-Tech now provides

refrigeration service. “We always had a good company”

says Service Manager Ed Dorey. “And I’ve enjoyed helping

make it more professional.”

A-Tech’s growth has come from a focus on serving chain

restaurants. “Selling parts in New England is very competitive.

Service is our best opportunity” Says Basch. “By

focusing on multi-unit operators we have the greatest opportunity

to have the right parts on the truck and techs

with the right training. When we fix it on the first call, everybody’s

happy.”

The branch location address is:

A-Tech Commercial Parts & Service, Inc.

165 Main Street, Suite 303

Medway, MA 02053

800-832-8324 or 860-925-6272 ■

CFESA DVD—Foodservice Careers—A Solid Choice

Response

AIS of Buffalo received three resumes after service technicians

attended BOCES HVAC Service Technician Program.

Wayne Stoutner forwarded the resumes to CFESA

Headquarters. He also passed them along to CFESA

members in the area due to the fact that his company is

fully staffed. This is a wonderful example of the new DVD

generating a genuine interest in the foodservice industry.

If you would like a copy of the CFESA DVD—please contact

CFESA Headquarters at 336.346.4700 or

lsmith@cfesa.com. ■

CFESA Headquarters congratulations Gary’s East Coast

Service for their acheivement. ■

10


Headquarters News

ATTENTION VOTING MEMBERS OF CFESA!

On April 15, 2008, the annual CFESA Profit Survey, conducted

by the Profit Planning Group, was mailed to all

Voting Members of CFESA. If you did not receive your

survey to be completed and returned, please call CFESA

Headquarters. If your company either has completed or

is trying to complete the requirements for becoming a

CFESA Certified Company, points are awarded for your

participation in this survey. In addition, this survey is the

best source for financial benchmarking information within

the service segment of the foodservice industry. The information

in the report – on gross margin, operating expenses,

average collection period and the like – is arranged

to provide direct comparisons with your firm. A

special Microsoft Excel-based tutorial will be designed,

using your particular company information, to compare

your figures to those of the average CFESA member, in

terms of sales size, line of business, etc. However, the

information is available only to those firms that participate

in the study.

Please note that only the employees of Profit Planning

Group will ever see your individual data. In over 20

years of conducting benchmarking surveys, the Profit

Planning Group has an unblemished record of maintaining

confidentiality.

Once receiving the survey, you will have two options:

• Complete the balance sheet and income statement

on the survey, or

• Attach your latest full-year balance sheet and income

statement. Detailed financial statements are required

so that the Profit Planning Group can complete the

survey for you.

Do not delay completing the questionnaire. The deadline

for submission is July 15, 2008. As an added bonus,

CFESA has arranged for Dr. Al Bates, president of the

Profit Planning Group, to present the information to the

membership at the Fall Conference in Vancouver this August.

In addition to discussing this information, Dr. Bates

will discuss the issue of warranty rates and how they affect

your bottom line. Don’t wait. Return your information

before the July 15, 2008 deadline. ■

NRA Booth

CFESA will exhibit at the upcoming NRA Show in

Chicago, May 17-20, 2008. The booth number is 5332

which is located in the North Hall. We will share booth

space with MAFSI again this year and the booth will be

very similar to the one last year. Be sure to stop by and

pick up a copy of the new membership directory. The

CFESA booth will offer show visitors a relaxing place to

have a cool glass of water as well as a bag of popcorn

thanks to Everpure and Star Manufacturing. If you would

like more details regarding CFESA and the NRA show

you may contact Lauri Smith at CFESA Headquarters;

336.346.4700 or via email: lsmith@cfesa.com.

New Logo

The CFESA Marketing Committee was recently tasked

with a “re-branding CFESA” project. The first step in the

re-branding process was to create a new logo. As you

may have noticed this issue of On Target features the

new logo and it will soon appear on the CFESA website.

The official logo is the “Four as One Sphere.” The four

elements represent our industry usages. IE: Gas, Steam,

Electric, and Refrigeration. The logo is the formal identifier

for the Association. The official colors are Pantone

293 (blue), Pantone 187 (red), Pantone 123 (yellow), and

Pantone 422 (gray). The logo may be printed in either

four color or black and white depending on budget restraints.

The logo may be embossed, embroidered, engraved,

foil-stamped, etched in glass, etched in metal, or

carved on wood. Electronic files are available for all of the

approved logo marks. When reproducing the logo for any

purpose it is essential that you use only the authorized

electronic files.

If you will be attending the CFESA Spring Conference,

May 14-16, 2008 in Chicago, you will receive a disk with

the electronic files of the new logo, as well as a handbook

which details the new logo and it’s proper usages. If you

would like more information regarding the new logo

please contact Lauri Smith at CFESA Headquarters at

336.346.4700 or lsmith@cfesa.com. ■

CFESA Membership Directory

The CFESA 2008-2009 Membership Directory will be distributed

at the upcoming NRA Show in Chicago, May 17-

20, 2008. In addition, all CFESA members will receive a

copy of the directory which will be mailed the first week of

June, 2008. If you would like to purchase additional copies

of the directory you may do so for $10 per copy.

Please contact CFESA Headquarters for more information

at 336.346.4700. ■

11


Certified Company Spotlight

EICHENAUER SERVICES, INC.

If you’ve eaten in an area McDonald’s, Taco Bell or

Cracker Barrel you can thank the

technicians at Eichenauer Services,

Inc. (ESI) for keeping the

grills hot, the ovens baking and

the dishwashers humming. In

fact, ESI provides “after-market”

installation and technical repair

services to commercial kitchens

throughout Illinois. The company

also distributes parts and supplies

globally, providing crucial

replacements to keep restaurants, universities, and Army

mess halls operational from central Illinois to the Middle

East. Recognizing that commercial food services are not

productive unless equipment is functioning properly, ESI

embraces the motto: “We do not succeed unless our customers

succeed.”

Three generations share common bond of exceptional

service founded by Harold Eichenauer in 1946 as Eichenauer

Electric. The company provided electrical services

and operated a hardware store as a sideline. The company

moved into servicing commercial food equipment in

the late 1960s. Harold’s son, William “Bill” Eichenauer,

purchased the company in 1972, incorporating it as Eichenauer

Services, Inc. Bill’s involvement with the Commercial

Food Equipment Service Agencies of America (C-

FESA), an association he helped establish, boosted ESI’s

industry profile nationwide. Bill’s sons, Tom and Lee,

joined ESI in the early 1980s. Armed with business degrees

and competitive spirits, they expanded repair services

throughout Illinois and led the company into global

parts distribution. Splitting ESI into two divisions, Tom

presided over service operations and Lee took charge of

parts. Although they are identical twins, the brothers employed

distinct management styles. Tom focused on expanding

branches, while Lee focused on cost control and

automation. Their dual approaches quadrupled ESI’s

revenues and earned Tom and Lee the 1992 Foodservice

Equipment and Supply Industry’s “Young Lions Award.”

This award is just one of many accolades earned over the

years. In 1988, ESI was the only company in the nation to

receive the Vulcan Hart National Outstanding Performance

Award, followed by the Vulcan Hart National Outstanding

Service Award in 1989. These awards started a

chain of national recognition, including numerous Best

Value awards presented by the Defense Supply Center

for superior efficiency in meeting delivery schedules.

Continued on page 24

12


Not So Helpful

Wes Tyler, North American Commercial Parts & Service,

Inc.

We’ve received requests from end user customers, and a

National Service Manager, to allow them to provide a

helper for installations that require two technicians. This

is, obviously, a way for the customer to lower their costs.

It is also a way to increase our costs.

First having someone who does not possess the training

and experience assisting our technicians on the job increases

the risk of injury to our employee. Second, if the

helper is injured on the job we will likely have an increase

in worker’s compensation cost.

Let’s say the helper works for the restaurant. If he is injured,

he will then file a worker’s compensation claim with

his employer stating he was injured performing an appliance

installation under our supervision. The restaurant’s

worker’s comp carrier will contact our insurance carrier

and seek to share the costs. Even worse, if the restaurant

has provided us with a day laborer, the entire worker’s

compensation burden would be on us.

When we hire and train our technicians, we are working to

create a safe environment for good people. When we

allow a helper, about whom we know nothing, on one of

our jobs, we put our reputation and money at risk.

Finally, in our business, the greatest challenge we face is

having enough technicians to do the work. We cannot

afford to lose a skilled technician to an injury. We also

can’t insult them by asking them to work with inexperienced

helpers. ■

NRA Forecasts 4.4% Restaurant Industry Growth In

2008

The National Restaurant Association doesn't think the

current general economic slowdown will have too much

impact on restaurant industry growth in 2008. The organization

released its annual forecast last Wednesday and

predicts foodservice operators will see 4.4% nominal

growth next year. With forecast menu-price inflation of

3.5%, real industry growth is expected to be 0.9%.

" The restaurant industry will enter its 17th consecutive

year of real growth next year, according to our 2008 Restaurant

Industry Forecast.," Hudson Riehle, NRA's senior

v.p. of research and information services, told Foodservice

Equipment Reports Executive Editor Jennifer Hicks.

"We expect to see sales in the nation's 945,000 restaurant

and foodservice locations reach $558 billion. & This

more modest growth compared to earlier years is due to a

number of factors, including higher food and energy

prices. The industry's workforce will grow to 13.1 million

employees, and the industry accounted for one out of

every five jobs created in the economy in '07."

NRA's revised estimate of '07 sales was not available last

week. The association originally forecast real growth of

2.1%, with 5% nominal growth, though those numbers

were probably revised downward in the current forecast.

The NRA forecast compares with Technomic's projection

of 5% nominal growth and 1.1% real growth for '08. Normally

NRA is slightly more optimistic in its forecasts than

Technomic, so the fact the two groups arrive at similar

numbers suggests negative economic events of the past

several months apparently weighed on the slightly lower

real growth projection. Technomic predicts menu-price

inflation of 4%, a half-point higher than NRA's estimate.

The association forecasts full-service restaurants will

grow 4.3% and quick service restaurants 4.4% nominal.

The complete '07 forecast, including detailed segment

and state-by-state forecasts, as well as a wealth of trends

data, is available from NRA for a nominal fee by calling

800/482-9122 or by going to NRA's Web site

www.restaurant.org/forecast. ■

13


Wednesday—May 14

8:30 a.m.—11:30 a.m. Conference Registration is open.

2:00 p.m. — 4:00 p.m. CFESA Board Meeting—As is customary, the CFESA Board of Directors meeting is open to all Voting

Members to attend. This will be a business meeting.

7:00 p.m.—10:00 p.m. Opening Dinner and Casino Night—Kick back and enjoy a casual, networking dinner with industry partners

and try your luck at one of the tables.

Thursday—May 15

8:00 a.m.—9:00 a.m. Buffet Breakfast—Join other attendees over breakfast and plan your day … truly the best part of waking

up!

9:15 a.m.—12:00 Noon CFESA Committee Meetings—Select a CFESA Committee and jump right in! You’ll hear about existing

projects and help shape future activities. CFESA Committees include:

• Business Technology

• Education/Training

• Marketing

• Membership Services

12:00 Noon—1:00 p.m. Luncheon with presentations—Lunch is served. Take a break from learning and enjoy lunch with your

fellow attendees.

1:00 p.m.—3:00 p.m. CFESA Membership Meeting-All attendees are invited to join CFESA’s membership meeting to hear the

latest committee reports and learn what activities are on the horizon.

3:00 p.m.—4:30 p.m. Rotating Workshops :

Friday—May 16

• CFESA Website Tutorial—Wayne Stoutner; This tutorial will teach you how to navigate the newly

designed website along with all the membership benefits that are available for you. Bring your laptop

computers to this session to participate in a guided tour of the CFESA website.

• Capitalizing on your Membership– Dan Farmer; Use the tools available to you through CFESA to

sell the value of your association membership to your customers. Take ideas back with you that are

easy to implement and will provide an instant return on your investment. Define to your customers

what service excellence is and then charge your customers for it.

• Membership Involvement—Gary Potvin & Carla Strickland; Learn how to get involved and make your

association work for you! Educate your staff about who and what CFESA is.

8:00 a.m.—9:30 a.m. Breakfast with guest speaker David Starkey, SOI, from Professional Employer Organization (PEO) Insurance

provides broad, general and professional liability protection for the alternative staffing industry including

administration service organizations and temporary staffing firms.

9:30 a.m.—12:00 Noon Strategic Planning & Implementation Workshop—Guest speaker, Kim Cheskey. Whether you own a

business or manage a service department, this workshop is a must! All personal must be involved with the

planning process. The overall process must be probing and inclusive to get the ideas flowing and the buy-in

for later implementation. This workshop will train you how to strategically plan for the future of your company

and the implementation of your overall plan.

12:00 Noon—1:30 p.m. Luncheon—Lunch is served with passing of the gavel. Seating will be by CFESA regions. Be sure to find

your region number located on each table.

1:30 p.m.—2:30 p.m. Strategic Planning & Implementation Workshop— Wrap up

2:40 p.m.—4:00 p.m. When to Sell your Business—with guest speaker Gary Moore. This seminar includes topics such as the

risks of selling your business as well as not selling.

14


A Day in the Life of a Warranty Administrator

John Sappo, Daubers, Inc.

Allow me to introduce “Sue” to you. She is an all around

nice person. That is, she is known as someone who

never has a bad word for anyone as well as being known

for getting the job done. She has been with our company

for eight years. The story opens as it does each and

every day. Sue arrives to work happy and refreshed, she

sits at her desk and turns on her computer. While it’s

booting up she stops by the coffee pot and enjoys some

lighthearted conversation with her fellow employees.

From my desk, I then see Sue walk slowly back to her

desk and, with that, the transformation begins. With each

step she takes, she is moving slower and slower, her

shoulders start to sink and she starts to shake her head

slowly back and forth. The happy face is gone and the

look of dread has replaced it. As she sits down you can

hear her sigh from across the room. One may think this

person is in charge of death row or maybe the county

morgue. But you would be wrong; she is our company’s

warranty administrator.

This may seem a little over the top but it is based on reality.

Each day Sue is confronted with a different set of policies

for each manufacturer. It is then her responsibility to

make sure the others in our company know the everchanging

policies. As an example, (we will use the manufacturer’s

name as ABC), whenever a warranty service

call is made for ABC, the technician must first receive an

authorization number from ABC’s third-party administrator,

Warranty Central. These types of policies become

overwhelming not only for the technician but also for the

claims processor. Knowing each manufacturer’s nuances

becomes a terrible burden. These policies change constantly

thus resulting in rejections and drag receivables

out 60, 90 and even 120 days. The return of defective

parts in no different. Some manufacturers want only certain

parts returned while others do not require any parts to

be returned. The research to know exactly what to do for

each manufacturer requires time = money.

Each day, every warranty submission is reviewed and,

based on the specific manufacturer’s requirements is

processed and submitted to the factory either online or by

mail. When filed on-line, you at least know within a few

hours that your claim has been rejected for some reason

or another.

As an example of the complexity when filing a warranty

claim, allow me to provide another example. (We will use

the manufacturer’s name as XYZ) XYZ rejected a claim

because when we provided a replacement disposal and

entered the replacement unit part number. We were told

that you must enter the replacement unit part number in

the “notes” filed and specify an authorization number from

the manufacturer’s warranty administrator. This, in turn,

flags the manufacturer to send a no-charge replacement

unit.

In another situation, the same manufacturer, XYZ, rejected

warranty claim for a replacement housing that had

a hole blown through the side, which had been hooked up

by an installer to the incorrect voltage. The reason for

rejection - the part number for the replaced housing is an

“accessory part number” vs. a “replacement part number.”

Please keep in mind that there is no difference in this

manufacturer’s part numbers for accessory parts and replacement

parts. How would one know the difference?

To clarify this we contacted the manufacturer’s warranty

processor about the rejection. We were told that the IT

person established all electronic procedures with the third

party claims processor. We were then forwarded to their

IT person, who, by the way, has nothing to do with warranty

policies. When we asked if this “filing rule” had

been in any written bulletin form to follow, the response

was, “nope, that would be the warranty department’s job.

We just put in what they request.” When we asked the

same question of the warranty department, their response

was “I don’t have time to do that and besides I’m only a

phone call away.” We now not only have to guess what

parts are valid, we now have to call the factory each time

to confirm this. Again, time = money.

Our warranty administrator maintains six-inch, three ring

binders for all manufacturer’s warranty filing procedures

that change very frequently and are very difficult and

costly to implement. Free start-ups, extended warranties,

one-year, two-year or more warranty (special customer

policies) are all very costly to implement accurately and

timely to get reimbursed at half the rate of our nondiscounted

field labor rate.

These are only some of the reasons why warranty rates

are just not keeping up with our field labor costs.

Recently, we conducted research on exactly how much,

per hour, it costs our company to provide a professional

field service technician. Very conservatively, the figure is

$62.00 per hour to employ a two-year technician and approximately

$70.00 per hour to employ a certified senior

field technician. Armed with this information, we approached

this manufacturer and requested an increase in

our warranty rate. The conversation went as follows:

Service Manager: “Is this call all about your warranty

rate? Why don’t you just ask for a raise? The policies

and rates are controlled by corporate and accounting, not

the service department. I don’t even oversee warranty

here anymore. You were eligible for an increase in September

of ‘07. Rate increase requests must be in a letterform

for us to have on-file for our auditors.”

It’s pretty simple—ask and you shall receive. If you don’t

ask, you won’t “automatically” be given an increase. As a

service company, take the time to ask!

NOTE: Jean Choquette was recently quoted from a

manufacturer that only 35% to 40% of ASAs actually do a

formal annual request. Only those get an increase in

most cases. ■

16


EGS TRAINING AT AN ALL-TIME HIGH

The first CFESA EGS (Electric, Gas and Steam) fundamentals

training course of 2008 was held March 3-8, at

the Duke Power Resource Center in Charlotte, NC.

The class attendance was at an all-time high, with 59 attendees

representing 39 service companies, thus proving

once again that the need for fundamental training is

greater than ever. The trainers continue to improve upon

course work as each session unfolds. In addition, the

trainers strive to incorporate as much hands on training

as possible, utilizing training modules. As is customary,

Reggie Medlin, Everpure, conducted Customer Service

Training. And, in another “first,” for EGS, First Aid and

CPR Certification was added to the course.

There has recently been a trend for First Aid and CPR

training in the service field. As a result, the Education/

Training Committee decided to make this addition to the

EGS course. One of our own CFESA members, Lynn

Norwood, who owns a service company, Norwood’s Commercial

Appliances Inc, Banner Elk, NC, with her husband

Chip Norwood, taught the new session. Lynn is the Director

of the Health & Safety Services for the Watauga

County Red Cross in Boone, NC. She has been an Emergency

Medical Technician for 20 years, a CPR and First

Aid Instructor for 17 years and is an Instructor Trainer for

the Red Cross.

Our faithful trainers included Bill Findlay, Frymaster, who

taught basic gas, Frank Gorman, Cleveland Range, who

taught basic steam and John Schwindt, Hawkins Commercial

Appliance Service, Inc., who taught basic electricity.

We wish to thank the trainers and all those responsible

for allowing the trainers to take the time and provide

this training.

As is customary, the students were given a pretest on day

one and a final test on the last day of the course. Company

owners received the results of both tests, along with

a Certificate of Completion, for each student. These

scores indicate their marked improvement during the

week of training.

Below is a sampling of quotes from technicians who attended

the course:

• Class helped me to understand what I was being told

at work. The hands-on portion is great – 7months in

the industry

• Was a great refresher, had forgotten some of the basics

I need to use everyday – 20 years in the industry

• Great class, instructors really helped me to understand

the basics. Was able to ask any question and

get an answer without being made to feel like it was a

dumb question – 1 year in the industry

• Awesome class, every technician should attend,

hands-on is great, helped me to understand the written

material – 4 years in the industry

CFESA has scheduled two more training classes for

2008. The upcoming class information is as follows:

Management Training Class

Management personnel, within the CFESA service

agency, are responsible for “keeping operations moving.”

That is, they are responsible for the tracking and sales of

manufacturer’s parts, as well as service situations, which

develop with the manufacturer’s equipment. The CFESA

Management Training Class is a three-day classroom

course specifically designed to assist managers in doing

their jobs better. This unique three-day workshop is designed

to provide vital development for newer managers

while filling in the gaps and adding additional management

and leadership learning for seasoned managers.

Class Dates: Monday, October 20—Wednesday, October

22

Class Times: 8 am - 5 pm each day

Class Location and Hotel: The Platinum Hotel, 211 E.

Flamingo Road, Las Vegas, NV 89169, 702-365-5000.

Class will be held in the Pearl Room.

Refrigeration Training

Refrigeration Training Class is a four day course specifically

designed to cover the basic principles of refrigeration.

The course focuses on introductory concepts including

the basic operation of domestic refrigerators, freezers,

defrost mechanisms, and electrical circuits. Topics covered

include the laws of refrigeration, compression cycle,

latent and sensible heat, methods of heat transfer, and

methods of cutting, bending, and torching tubing.

Class Dates: Monday, November 3—Thursday, November

6

Class Times: 8 am - 5 pm each day

Training Location: RSI, 3040 E Meadows Blvd, Mesquite

(Dallas/Fort Worth), TX 75150, 972-279-3800

Hotel: Fairfield Inn Dallas/Mesquite, 4020 Town Crossing

Blvd, Mesquite, TX 75150, 972-686-8286

Once again we want to thank all of you who continue to

support the CFESA Education Training programs! If you

have any questions in reference to the training course, or

would be interested in sending a technician to a potential

EGS course this Fall, please contact Heather Price at

hprice@cfesa.com. ■

17


“VOICE OF THE INDUSTRY” - (Article III)

As you may recall, the CFESA Board of Directors appointed

Patrick Duffy to contact up to 10 service company

members at random and ask for concrete facts and information

about decisions made, at the manufacturing level,

which may be detrimental to a service company’s profits,

operations and the services they provide. In addition,

members will be asked, at random, for decisions being

made, at the manufacturing level, which demonstrate a

true partnership. As outlined by CFESA’s counsel, specific

manufacturers’ policies may be outlined within the

article providing the policies are public knowledge. The

editorial below is the third in a series of articles titled

“Voice of the Industry.” Any topic suggestions and/or rebuttals

may be emailed to CFESA Headquarters at

cstrickland@cfesa.com.

Warranty Rates We Can Live With

Our costs for fuel, employee benefits and inventory continue

to increase at rates that we have no control over.

As mentioned in previous On Target articles our average

rate of return was most recently at 3.4% profit. Given the

lopsidedness of these statistics many CFESA members

have been forced to take a close look at our weakest link

in the income chain. That is, warranty rates, something

else most of us has no control over. Historically our options

have been accepting the rate or dropping the line.

We still have those options today but is there also a third

option? Are there manufacturers who understand our

predicament and offer warranty rates we can work with?

Are there any who base their warranty rates on our costs

instead of a figure based on some national formula?

Here is what we heard.

How often do you request a warranty rate increase?

The consensus was that most service companies ask for

an increase once each year. With the emphasis on the

word “ask.” Many reported going years without receiving

an adjustment. One respondent stated “I automatically

ask for an increase every July across the board.

How is your warranty rate calculated?

Here, we had many different responses. Some use their

street rate and try for a 10% to 15% discount. Others

have simple and complex formulas and matrixes for arriving

at their target number. When doing these calculations,

some take into account the true costs of having a

trained technician in a well-equipped truck, cell phone and

insurance costs. Still others look at potential parts sales

after the warranty period, including extended warranties,

as well as the timeliness in which warranty claims are

paid and how often they are adjusted. These factors and

many more are crunched and processed along with the

gross margin desired to determine what rate they would

like to get for each manufacturer. It is important to note

that these calculations often produce different rates for

different manufacturers. Most respondents did not use

the “one rate fits all” method. Another requested a 5%

increase knowing they would be allocated less.

18

How do you determine your “line in the sand” for warranty

rates?

Some servicers simply have a pass/fail mentality. If the

offered rate does not match their calculated target rate

they refuse to do business with that manufacturer. Others

take the calculated rate and use it as one factor in the

decision making process. Many service companies will

weigh their relationship with the manufacturer’s representative

heavily in their final decision. A good rep group and

local representation, which favors service, seem to play a

big part in the intangibles. After warranty profits, parts

discounts and overall factory support were also mentioned.

Another factor taken into consideration was if one

manufacturer was associated with others. That is, some

service companies were willing to do business with a loss

leader if it meant they would maintain a relationship with a

more profitable sister company by doing so. One servicer

stated that small manufacturers must pay their street

rates for warranty service. Another incentive was if a

manufacturer provided an exclusive territory. Still another

respondent “draws the line depending on how many warranties

I do per year and the amount of parts sales I get

from the factory as well as the discount I receive.”

Have you ever dropped a manufacturer because of

their warranty rates? How did this affect your bottom

line?

Almost everyone responded, “yes” to this question. The

reactions were varied. Some reported that there were no

adverse affects after dropping a line due to insufficient

warranty rates. Others reported increased profit margins.

There were those who claimed their overall position with

their manufacturers benefited because now the others

knew he was serious. Yet some reported their profits decreased

because of lost margins on parts sales and less

installations. One respondent said he did not provide the

same type of service to one manufacturer after talks

“broke down.” Because of this decline in service quality,

the manufacturer eventually “awarded” the line to another

company in their area. One service company responded

that he has dropped manufacturers and never skipped a

beat. Another manufacturer actually opened their own

service network in response.

Do you have a suggestion for calculation warranty

rates?

Everyone agreed that you must know all the true costs of

doing warranty service for each manufacturer in order to

determine what rate you need to obtain. The 10% to 15%

of street rate scenario is something a manufacturer can

use to get a ballpark figure in each territory. It was unanimous

that “one size cannot fit all” when looking at coverage

for all of North America. Rates must take into account

the cost of doing business in each segment. Another

responded stated that “the calculation should be

25% off your street rates.” Two suggestions for moving

forward were brought up. One suggestion was to have

The Profit Planning Group derive true warranty costs for

the various size CFESA members.

Continued on page 20


What is Additional Insured?

Wes Tyler, North American Commercial Parts & Service,

Inc.

During a recent renewal of our general liability insurance,

our carrier recommended that we begin asking our vendors

to add us as an “additional insured” on their liability

insurance. We chose not to pursue that idea because of

the additional administrative time it would take for us to

write vendors and follow up on our requests.

However, we are increasingly being asked by our vendors

and customers to add them to our policy as an “additional

insured” party.

In the past, it was easiest just to pass the request on to

our insurance agent, as it is part of the service they provide.

Recently, however, we started receiving charges

from our insurance carrier. It turns out that some of the

requests now include language-requesting coverage that

we don’t have; therefore the insurer increases the charge.

In one case, we would have had to pay $1,500.00 in insurance

to keep $3,000.00 of work for a municipality.

In addition, as the requests become more frequent, our

administrative burden is increasing as well. More requests

keep coming in which we have to pass to the insurance

broker. Every year when we renew our policy we

have to review the list to drop those that are longer

needed. Finally, our broker now calls us when we would

have to pay an additional premium for unusual language,

which is required by the customer, or vendor and we have

to review the charge against the value of the work to be

performed.

We have reached the point where we are considering 1.)

Requesting being named as an “additional insured” in

return for doing the same for another company; 2.) Charging

for making someone an additional insured, and; 3.)

Turning away business that doesn’t meet a minimum

value.

I’d be interested in hearing about what other members are

doing.

(Please submit comments to CFESA Headquarters at

cstrickland@cfesa.com for publication) ■

Voice of the Industry continued from page 18

The other suggestion was for the NAFEM/CFESA Liaison

Committee to agree on actual determining factors for

standard warranty rates.

(NOTE: Dr. Al Bates, The Profit Planning Group, is

scheduled to present a session at the CFESA Fall Conference,

in Vancouver, Canada, Thursday, August 21, 2008,

titled “The Impact of Warranty Claims/Rejections.”) ■

20


Warranty Rates continued from page 5

In conclusion I would give the following advice to a service

agent when discussing rates. First, it starts with

knowing your costs. Anyone that tries to tie warranty rates

to their street rate is just kidding themselves. You are tilting

at windmills. All of our street rates have been developed

as a function of the amount of warranty work that we

perform. The more warranty work we do, the higher our

street rates must become to hit our financial targets.

Secondly, both parties must start with the premise that all

companies are not equal. There should not be a

“standard” rate for all companies. Many on both sides use

this model and it is an absurd way to compensate anyone.

Evaluate each one independent of the others and

you’ll be able to see clearly which ones are good partners

and the ones that are not.

Finally, you will always get the best deal if you are willing

to walk away. If both parties complain, it’s probably a fair

arrangement! ■

DID YOU KNOW?

IHOP updates Applebee’s condition, recovery plan

Outlining turnaround plans for the newly acquired

Applebee’s Neighborhood Grill & Bar brand, executives of

IHOP Corp. stressed the opportunities but acknowledged

to a roomful of financial analysts that proceeds from the

sale of company-operated Applebee’s units may fall short

of expectations.

Some 39 of Applebee’s 43 existing franchisees have

expressed interest in buying the company stores, IHOP

chairman and chief executive Julia Stewart said at the

conference. IHOP also is looking to private-equity buyers,

she said. IHOP said at the time of the $2.1 billion deal’s

closing that Stewart would oversee day-to-day operations

of Applebee’s on an interim basis.

With the Applebee’s acquisition last November, IHOP is

now the largest full-service restaurant operator in the

United States with almost 3,300 restaurants. Virtually all

of the IHOP family restaurants in that mix are franchised.


21


NEMCO Promotes Wibel to V.P. Sales & Marketing

“We’ll Stay Close to the Foodservice Trendsetters ”

HICKSVILLE, OHIO—After seeing significant sales

growth, several acquisitions, a multitude of new product

introductions and the successful establishment of a new

international presence—all since bringing her on board 11

years ago—NEMCO Food Equipment has named Michelle

Wibel its vice president of sales & marketing.

In addition to overseeing NEMCO’s domestic sales, while

participating in the development of international sales and

playing a key role in strategic planning, Wibel will continue

to manage all marketing and marketing communications

initiatives with a sharp focus on anticipating market

demand.

“We’ll stay close to the foodservice trendsetters,” says

Wibel, “so they continue to see us as a partner in innovation

for countertop equipment that improves profitability.

Right now, for example, when you consider menu churn,

consumer expectations and labor issues, as well as

‘green’ trends that are shifting from prepackaged to fresh,

NEMCO fits right in with our time- and space-saving designs.”

Wibel also plans to lead NEMCO in its strategy to grow

through nontraditional marketing channels, as they’ve

done in the last few years selling into convenience stores.

It’s one more reason why NEMCO has likewise expanded

its sales & marketing and customer service personnel

during Wibel’s tenure.

Before NEMCO, and while closing in on her bachelor of

science degree in restaurant, hotel and institutional management

from Purdue University, Wibel laid the foundation

for her 25-year resume in foodservice sales and marketing

at Lincoln Foodservice Products.

Wibel became a Certified Foodservice Professional

(CFSP) in 1995, earned the North American Association

of Food Equipment Manufacturers (NAFEM) President’s

Award in 2001 and has served twice on the NAFEM

board.

NEMCO Food Equipment, an innovator of food-prep and

other foodservice equipment, specializes in developing

solutions that actualize new food concepts or address

specific kitchen needs.

Online Certification Testing – A Breath of Fresh Air!

Heather Price, Member Services Director

The Education Training Committee requested two service

member companies to “test” the new online certification

process. Hawkins Commercial Appliance Service Inc of

Colorado and Norwood’s Commercial Appliances Inc of

North Carolina were the participants.

Upon the completion of the test, both members reported

that the process was much easier than they had anticipated

and they liked the instant test results at the end of

the session. They offered a few suggestions that were

incorporated into the process.

Feedback from the online testing has been very positive.

Chip Norwood stated “I had an employee take the new

online test and the instructions for signing in were clear

and easy to follow. It was also nice to be able to get immediate

results about how the student did and what areas

of weakness he or she might have had. The whole testing

process took less than 11/2 hours to complete.” John

Schwindt remarked “We tested the Online gas certification

test and the results were very encouraging. We found

that the format was very user friendly, easy to do, and the

techs really liked not having a separate answer sheet to

fill out. (This tech did the test last time on paper and he

was a row off on the answer key for half the test and

found out at the end of the test). The tech conveyed to me

that since you could not skip a question and go back to it

later, it forced him to read the question carefully and think

hard about the question. He also liked getting both the

results and the areas of weakness report when he was

done. No more stressful weeks after taking the tests wondering

if you passed or not.”

The process for requesting a CFESA Certification test has

not changed. To order a test, visit the CFESA website,

www.cfesa.com, login in to the members only section,

complete the test request form located in the tech testing

section. Be sure to indicate on the form if you wish to

have your technicians take the test using the testing

booklet or online. Once this information is received into

CFESA headquarters, it will be processed and the testing

instructions will be sent directly to the proctor.

For more information or questions please contact Marsha

Cross at CFESA Headquarters, marsha@cfesa.com or

336-346-4700.

For more information, contact NEMCO Food Equipment,

Ltd., 301 Meuse Argonne, Hicksville, Ohio 43526, (800)

782-6761 or (419) 542-7751, fax (419) 542-6690,

www.nemcofoodequip.com/.■

22


The NAFEM Show Makes Important Shifts

In 2009, The NAFEM Show shifts to the beginning of the

year, and makes an important move to Orlando - all to

ensure The NAFEM Show remains the premier equipment

and supplies venue for foodservice professionals.

Why these changes?

Why Q1? Better for Business

Customer research indicates The NAFEM Show attendees

make purchasing decisions early in the calendar

year. And:

As the foodservice industry’s first exhibition of the year,

The NAFEM Show provides an ideal launching pad for

innovation – new year, new products, new budgets.

Owner/operators say the move to Q1 better matches their

planning and buying cycles, so they can implement something

they’ve seen at The NAFEM Show later that same

year.

A consistent date pattern helps create brand recognition

and repeat participation because everyone knows when

the show takes place every two years.

Overall, The NAFEM Show’s move to February helps you

get a jump-start on attendee buying cycles.

Why Orlando? High Ratings, High Accessibility

With its expanding show offerings and a growing attendee

base, there are very few cities with the capabilities of

hosting The NAFEM Show today and in the future. Orlando

is the best choice for NAFEM because it offers:

An excellent infrastructure, both for exhibit and hotel

needs. An extremely attractive destination for The

NAFEM Show’s growing international attendee base.

Easy accessibility for the majority of the foodservice community.

However, The NAFEM Show has no intention of becoming

a regional show with a move to the Southeast. In fact,

research has shown:

Repeat shows in Orlando achieve continued attendance

growth over time.

Why The NAFEM Show? Same Quality, Same One-Stop

Solutions

Most importantly, exhibitors should be confident that The

NAFEM Show continues its tradition of meeting the needs

of the foodservice community by delivering the highest

quality trade show in the marketplace:

More than 20,000 foodservice professionals convene at

The NAFEM Show to see the latest and greatest innovations.

More than 600 exhibitors provide a one-stop marketplace

that offers a complete spectrum of foodservice

equipment, supplies and technology.

The NAFEM Show offers the strongest collection of education,

networking and partnership venues in the industry.

FS/TEC co-locates again with The NAFEM Show in 2009,

providing operators and attendees total solutions for their

foodservice operations – equipment, supplies and foodservice

related technology all under one roof. The

NAFEM Show continues its reputation of creating the #1

foodservice equipment and supplies spend opportunity in

the industry. ■

Last Call continued from page 4

work Mark has accomplished so far in the preparation of

this instrument.

Finally, I would like to thank everyone in the Association

for their great support during the last two years that I was

given the privilege to serve as President of CFESA. Our

Board Members, Tina Reese, John Swanson, Scott Hester,

John Schwindt, Patrick Duffy, Mark LeBerte, Joe

Pierce, David Hahn, Wayne Stoutner, Gary Schermann,

Roger Kauffman, our Executive Director, Carla Strickland

and the staff of Helm and Associates (Carla’s management

firm), Heather Price, Lauri Smith, Karen Afocx and

Marsha Cross have all brought an enormous contribution

to the well being of the Association and undoubtedly we

should all be thankful for that. Without the dedication of

these people we could not keep this great venture going. I

would also like to make a special mention to Todd Maxwell

who has served for many years on our board and

retired from the board at the end of last year. Todd has

been a great supporter and with his great sense of leadership,

helped craft many valuable programs while he was

on the board. ■

The NAFEM Show experienced high exhibitor satisfaction

ratings when held in Orlando previously. Foodservice professionals

indicate they will travel to The NAFEM Show

regardless of location. The NAFEM Show’s move to Orlando

provides an excellent backdrop to ensure exhibitors

and attendees have an outstanding show experience,

while contributing to the show’s growth over time.

23


Strategies are Different than Tactics

Strategic planning is an organization's process of defining

its strategy, or direction, and making decisions on allocating

its resources to pursue this strategy, including its capital

and people. Various business analyzing techniques

can be used in strategic planning, including SWOT analysis

(Strengths, Weaknesses, Opportunities, and Threats )

and PEST analysis (Political, Economic, Social, and

Technological analysis).

Strategies are different from tactics in that:

1. They are proactive and not re-active as tactics are.

2. They are internal in source and the business venture

has absolute control over its application.

3. Strategy can only be applied once; after that it is process

of application with no unique element remaining.

4. The outcome is normally a strategic plan which is used

as guidance to define functional and divisional plans, including

Technology, Marketing, etc.

Strategic Planning is the formal consideration of an organization's

future course. All strategic planning deals

with at least one of three key questions:

• "What do we do?"

• "For whom do we do it?"

• "How do we excel?"

In business strategic planning, the third question is better

phrased "How can we beat or avoid competition?"

In many organizations, this is viewed as a process for

determining where an organization is going over the next

year or, more typically, three to five years, although some

extend their vision to 20 years.

In order to determine where it is going, the organization

needs to know exactly where it stands, then determine

where it wants to go and how it will get there. The resulting

document is called the "strategic plan."

It is also true that strategic planning may be a tool for effectively

plotting the direction of a company; however,

strategic planning itself cannot foretell exactly how the

market will evolve and what issues will surface in the

coming days in order to plan your organizational strategy.

Therefore, strategic innovation and tinkering with the

'strategic plan' have to be a cornerstone strategy for an

organization to survive the turbulent business climate.

The following terms have been used in Strategic Planning:

desired end states, plans, policies, goals, objectives,

strategies, tactics and actions.

Ask yourself this question: when was the last time you

took a long hard look at your own company strategies in

an objective way? Because this topic warrants further discussion,

CFESA will feature guest speaker Kim Chesky at

the upcoming Spring Conference in Chicago. Mr.

Chesky’s presentation will include more information about

strategic planning. Be sure to attend. ■

Eichenauer continued from page 12

In 2002, Loyola University named ESI its “Illinois Small

Business of the Year.” As part of ESI’s continued expansion,

Tom and Lee Eichenauer purchased ESI in 2004,

reuniting the parts and service divisions and reorganizing

the management team. Tom now serves as Chief Executive

Officer and Lee serves as Chief Operating Officer.

The brothers rely on consultants to improve internal communication

techniques and synergize their divergent management

styles. Drafting an aggressive business plan,

they set a five-year goal to double ESI’s business by offering

“cold-side” servicing. Tom and Lee believe in education

– for themselves and their employees. The company

encourages personal growth by offering tuition reimbursement

incentives for higher education.

Within two-and-a-half years, the staff went from 9 percent

college-educated to 30 percent college educated. Valuing

employees’ contributions to the company’s success, Tom

and Lee also instituted a profit-sharing plan to allow employees

to share in ESI’s accomplishments. They also

recognize and reward employees through an annual company

celebration and events such as golf outings and

Texas Hold’em tournaments. Although 80 percent of the

company’s revenue is generated outside Decatur, ESI

recognizes the competitive advantages it gains from

headquartering operations in Decatur. Logistically, Decatur

provides a centralized location for servicing the entire

state and distributing parts across the country. Decatur

also offers favorable costs and tax incentives that enhance

the company's ability for future growth and expansion.


Strategic planning is a very important business activity. It

is also important in the public sector areas such as education.

It is practiced widely informally and formally. Strategic

planning and decision processes should end with

objectives and a roadmap of ways to achieve those objectives.

24


Five Food Trends to Watch This New Year

Amy Culberton

It's that trend-obsessed time of year when everyone's

looking back at the past year and forward to chart the

likely trends of the next. We've been checking out the predictions

of trend spotters like Mintel and Epicurious.com

and consulting our own crystal ball, and here are our

picks for the five food trends that you'll be hearing the

most about in 2008.

• Probiotics - The functional-food trend will probably

continue to run rampant, with producers adding all

kinds of nostrums to all kinds of products and touting

them as formulations for the brain or for the heart, for

older women or for the overstressed. But expect to

hear the most about beneficial bacteria. It's not just

yogurt anymore; bacteria-enriched products are

showing up all over the supermarket, from cereal to

baby food to fizzy kombucha fermented-tea drinks.

Expect, too, to see more "prebiotics" - foods that provide

nourishment for the good-guy bugs in our digestive

system.

• The bottled-water backlash - Once so chic, bottled

water is becoming, as the Philadelphia Inquirer put it,

"the environmentally incorrect Humvee of beverages."

It's under attack for its effects on the environment,

from its depletion of water sources to its carbon footprint

to the problem of all those discarded plastic bottles.

Plus the fact that it costs more than gasoline,

while tap water, which is held to more rigorous contamination

standards than bottled, is basically free.

• Ungobbledygooked labels - Food producers are beginning

to feel pressure to remove the additives - preservatives,

stabilizers, coloring, all those chemicals

and such that you can't pronounce - from their cans

and packages. "In 2008," says Mintel, "we will see

more products with ingredient labels that read like a

home recipe rather than a chemist's shopping list."

• Fair trade - With organic food now solidly ensconced

in the mainstream, look for fair-trade products to become

the next big focus of conscience-driven consumers.

The movement seeks fair wages and treatment

for workers in developing countries.

Industry Calendar

CFESA Spring Conference

May 14-16, 2008

Hotel InterContinental

Chicago, IL

National Restaurant Association Show

May 17-20, 2008

Chicago, IL

School Nutrition Association Conference

July 20-23, 2008

Philadelphia, PA

American Correctional Association Summer Conference

August 8, 2008 -- August 13, 2008

New Orleans, LA

Association of Correctional Food Service Affiliates Conference

August 9-14, 2008

Charleston, SC

CFESA Fall Conference

August 19-21, 2008

Four Seasons Hotel

Vancouver, British Columbia, Canada

ACFSA Annual Conference

August 24, 2008 - August 28, 2008

Embassy Suites Hotel & Convention Center

North Charleston, SC

CFESA Management Training Class

October 20-22, 2008

The Platinum Hotel

Las Vegas, NV

CFESA Refrigeration Training Class

November 3-6, 2008

RSI—Refrigeration Specialist Inc.

Mesquite, TX

You may register for the CFESA Conferences or Training

Classes online at www.cfesa.com.

• Focus on salt - While health activists press for lowersodium

processed foods, upscale "designer" salts are

going mainstream. Black, pink, purple, flavored with

aromatics, from the Himalayas or Peru, fancy salts

are moving from specialty stores to supermarkets. ■

25


Technicians Passing Certification Tests in November & December

American Kitchen Machinery

Philadelphia, PA

Electric 2

Refrig 1

Steam 3

Armstrong Repair

Bellaire, TX

Gas 1

ATECH INC

Nashville, TN

Electric 1

Cardinal Services

Windsor, Ontario, Canada

Gas 2

Refrig 3

Choquette-CKS

Montreal, Quebec, Canada

Electric 1

Commercial Kitchen

San Antonio, TX

Gas 2

Daubers Inc

Springfield, VA

Electric 3

Duffy’s Equipment Services

Sauquoit, NY

Gas 2

Elmer Schultz

Philadelphia, PA

Gas 1

Steam 1

GCS Service, Inc.

St. Paul, MN

Electric 8

Gas 2

Refrig 3

Steam 5

Goodwin Tucker Group

Des Moines, IA

Electric 1

Gas 1

Refrig 1

Steam 1

Hagar Restaurant Service

Oklahoma City, OK

Gas 2

Steam 1

Hawkins Commercial

Englewood, CO

Gas 5

Hi Tech Commercial

Las Vegas, NV

Gas 1

Jay Hill Repairs

Fairfield, NJ

Gas 2

Steam 4

Lehman’s Commercial

Des Moines, IA

Electric 3

Gas 1

Metro Appliance

Denver, CO

Gas 3

Metropolitan Service

Eau Claire, WI

Gas 1

Mid-South Maintenance

Hendersonville, TN

Gas 1

Steam 1

Refrig 1

Refrigerated Specialist INC

Mesquite, TX

Electric 1

Steam 1

Southland Restaurant

Tampa, FL

Gas 1

Steam 1

Superior Kitchen

Everett, MA

Gas 1

Refrig 1

Whaley FoodService Repairs

Lexington, SC

Steam 1

To support quality service, CFESA has a program in which technicians are tested and certified only upon successful

completion of an exam. Our technicians are awarded seals of excellence in electricity, gas, steam or refrigeration and

given certificates noting their CFESA Certified Technician status in that area. Once a technician has passed 3 of 4 tests,

they are awarded a Master Technician Certification. The CFESA Certified Master Technicians are among the most

knowledgeable techs in the industry. Restaurant owners and foodservice managers alike recognize the value of a highly

educated technician when they request a CFESA Certified Technician to perform their maintenance and repairs.

If you are interested in having a technician test in the area of Electric, Gas, Steam or Refrigeration you may visit the

CFESA website and download the CFESA testing forms, proctor guidelines and other important documents that relate to

the CFESA testing programs. You may also contact Marsha Cross, Testing Administrator at CFESA Headquarters at

336.346.4700 or via email to marsha@cfesa.com.

26

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