This week we provide an update on September retail sales, review the delayed employment figures provided by the government, look at lingering effects of the government shutdown, report on Panera Bread's equipment buying plans, and much more.


September's total retail sales grew 3.2 percent compared to the same period in 2012. Thanks to stalling auto sales, which experienced a 2.4 percent decline, retail sales for September 2013 were 0.1 percent less than in August.

Restaurant and bar sales increased 0.9 percent over August on an adjusted basis. In fact, this increase was the best performance of the major segments tracked by the Census Bureau. Food and Beverage stores also reported a 0.9 percent sales increase last month. For September 2013, restaurant and bar sales experienced a 3.1 percent increase compared to the same month in 2012. Restaurants and bars are up 3.8 percent for the first 9 months of the year on an unadjusted basis.

The usual cautions apply. The figures above are advance numbers based on a small sample and remain subject to frequent revisions. Adjusted numbers take into account seasonal differences, holidays, weekends, etc. but not inflation. Sales figures are bars and restaurants only. Hotels, resorts, clubs, and institutional feeding are not included in the survey.

Economic News This Week:

  • Disappointing, lackluster and weak were some of the adjectives used to describe the Bureau of Labor Statistics' September jobs report. The data was delayed by the government shutdown and one economist quipped that it wasn't worth the wait. The number of people employed increased by 148,000, much less than forecast, and the private sector added only 126,000 jobs. The government generated the remaining 22,000 jobs. In this year's third quarter, new jobs have averaged 143,000 each month, down substantially from the average of 182,000 in the second quarter. And the second quarter was down from the 207,000 monthly average in the first quarter. As if that's not bad enough, the number of foodservice workers declined by 7,000. While not statistically significant, it is discouraging since foodservice hiring has been a bright spot all year.
  • First-time jobless claims for the week ending October 19 totaled 350,000, a decline of 12,000. The more reliable 4-week moving average hit 348,250, an increase of 10,750. California's continuing technical problems, along with the furloughing of some government employees and contractors, will affect unemployment insurance claims but it is impossible to quantify the impact, as the next item points out.
  • Measuring the country's economic performance is going to be tough for a while says an article in the New York Times. The government employees that were let go and then subsequently called back will wreak havoc on the October and November unemployment and job creation figures. Economists project that it will take until at least December before the data becomes reliable enough for decision making. The Federal Reserve continues to watch the labor markets closely to determine when to cut back on the central bank's stimulus efforts.
  • The polarization of the U.S. population theory, as referred to by Malcolm Knapp of Knapp-Track, has received some confirmation with the Wall Street Journal reporting that the top 20 percent of earners have had their income rise 6 percent since 2008 and the top 5 percent of households have experienced an 8 percent increase. Meanwhile, households in the middle of the income distribution have seen just a 2 percent gain and income levels have yet to reach their pre-recession peak for the poorest Americans. The result is that Harley Davidson motorcycles, Polaris all-terrain vehicles, Winnebago motor homes and high-end pleasure boats are enjoying good sales volume. Luxury car sales are up 12 percent from a year earlier while economy cars are up 6 percent. One economist put it this way: "The nerds and geeks are making tons of money" as the typical American suffers through stagnant income and fear of layoffs.
  • Holiday spending will match last year's levels, based on data from The Gallup Organization. Average Americans think they will spend $786 on gifts this year, close to the $770 reported last year. Christmas spending hit a per person average of $866 in 2007 and fell to $616 in 2008.
  • September's existing home sales declined 1.9 percent to an annualized rate of 5.29 million compared to August's annualized rate of 5.39 million. The National Association of Realtors noted that last month's existing home sales were up 10.7 percent over September 2012 while home prices were up 11.7 percent over the same period. The Mortgage Bankers Association said that mortgage applications fell 0.6 percent for the week ending October 18 from the previous week.
  • Consumer's technology spending intentions jumped 9.5 points to 90.2 in October, the highest the index has been since 2007.
  • Durable goods orders soared 3.7 percent in September largely due to orders for commercial and military aircraft, according to the U.S. Department of Commerce. Aircraft orders tend to be erratic. Factoring out the transportation segment, durable goods orders declined 0.1 percent for the month.
  • Consumer confidence retreated, not surprisingly, given the chaos in Washington, D.C. The final October Reuters/University of Michigan Consumer Index was 73.2, down from the preliminary October number of 75.2 and less than September's 77.5. The current economic condition index reached 89.9, down from September's 92.6 level. The economic outlook index fell to 62.5 from 67.8. The Gallup Poll's U.S. Economic Confidence Index rose to minus 36 from minus 39 the previous week but this is still the second lowest reading of the year.

Foodservice News This Week:

  • Panera Bread is in the market for new equipment. Possibly as a result of rather weak comparable store sales, the chain has announced a multi-step program to improve service by cutting wait times and reducing wrong orders. The seven-step plan includes putting in more production equipment and adding technology to improve labor scheduling. The chain will also create catering hubs that will serve two to five cafes so individual restaurants can focus on the retail business and not get tied up with catering orders.
  • Theft monitoring software can cut restaurant losses by reporting an excessive number of voided sales. This could indicate servers are pocketing cash. A study of 392 restaurants indicated a 22 percent drop in server theft. Drink sales rose 10 percent, which led the system's manufacturer to conclude the staff is working harder, as reported by the Wall Street Journal.
  • The Manitowoc Company reported a 2.4 percent increase in foodservice sales for the manufacturer's most recent fiscal quarter.
  • Canadian restaurant sales are projected to grow by 4.7 percent, according to Canadian Restaurant and Foodservices Association. The association's first forecast called for a 3.6 percent increase.
  • Chili's adds delivery. Casual dining chain Chili's will begin offering delivery service in about a month at roughly a quarter of its 450 restaurants.
  • YUM! will make a major investment in emerging markets. Along with their partners they will commit a total of $10 billion dollars to expansion in India, China, Africa, Russia, Indonesia, Vietnam, Brazil and other countries with a goal to increase the number of units in the multi-concept operator's portfolio to 20,000 in the next 7 years.
  • Pizza Hut United Kingdom, which is owned by a private equity group, plans to invest 60 million British pounds to revive the 330-unit chain in the U.K.
  • The ShopHouse Southeast Asian Kitchen, Chipotle Mexican Grill's fast-casual Asian concept, opened its fourth restaurant, this one in Santa Monica, Calif. Early reports seem to indicate that the experiment of adapting Chipotle's system to Asian food is working.
  • Mama Fu's new prototype focuses on takeout, delivery and catering. A 1,500-square-foot version has 20 to 30 seats.
  • Growth chains: Hardee's plans to open 35 restaurants in the Chicago area in the next 7 years. The Cheesecake Factory has opened four locations so far this year and will open five more by the end of 2013. Peet's Coffee & Tea will open four new stores in the Pittsburgh area by the end of this month. Jake's Wayback Burgers signed a franchise deal to open 30 locations in Argentina. Lyfe Kitchen has 3 operations in California and 1 in Chicago and has announced a goal of 250 stores by 2017. With the signing of franchise agreements in Tempe, Ariz., and Pompano Beach, Fla., Burger 21 now has 18 restaurants in development. Firebirds Wood Fired Grill opened its 26th restaurant in October and expects to have a total of 30 locations by the end of the year. The 12-unit Protein Bar received $22 million in private equity funding and plans to grow to 300 restaurants. Quaker Steak & Lube is looking for franchisees to open 3 to 5 restaurants in the Orlando area.
  • Comparable store sales reports: Baskin Robbins (up 3.2 percent), BJ's Restaurants (down 2.2 percent), Brinker (Chili's down 1.9 percent and Maggiano's up 0.6 percent), Burger King (down 0.3 percent), Cheesecake Factory (up 1.0 percent), Dunkin' Donuts (up 4.2 percent), Famous Dave's (company-owned down 0.8 percent and franchised down 2.3 percent), Grand Lux (down 2.6 percent), Luby's (Luby's Cafeteria up 1.0 percent, Fuddrucker's down 0.4 percent, and Koo Koo Roo down 15.1 percent), Panera Bread (system up 1.3 percent, company-owned up 1.7 percent and franchised up 0.9 percent), Smoothie King (up 10.3 percent) and Sonic Drive Ins (system up 5.9 percent, company-owned up 5.2 percent and franchised up 6.0 percent).

For details and same-store sales for other chains, check out this week's Green Sheet.