Consumers’ Outlook Uncertain, Merger and Acquisition Speculation Heats Up and Much More!

This week we take a closer look at the National Restaurant Association’s July Restaurant Performance Index, the Burger King/Tim Hortons deal and the flurry of speculation it triggered about other possible acquisitions and the latest economic numbers.

The National Restaurant Association’s Restaurant Performance Index edged down in July, the second consecutive month the overall index declined. The Index dropped 0.3 percent to an even 101 but for the 17th consecutive month it stayed above 100, which indicates the restaurant industry remains in expansion mode.

While same store sales and traffic remained strong, it was the Expectations Index that took a hit in July, declining 0.5 percent to 101.2. Still, the Expectations Index remains above the critical 100 level. The pattern of people seeing the present as being ok but worrying about the future repeats in the Reuters/University of Michigan Study and the Conference Board Consumer Confidence study reported on below.

Economic News This Week

Foodservice News This Week

  • Speculation on other takeover targets has been rampant since the Burger King/Tim Horton’s deal was made public. One observer’s list of potential acquisition targets included Chipotle, Buffalo Wild Wings, Chuy’s, Panera Bread, Papa John’s, Popeye’s, Texas Roadhouse, and Cheesecake Factory. Perhaps his most fascinating scenario was McDonald’s buying Chipotle. http://www.marketwatch.com/story/10-restaurant-chains-targeted-for-takeout-2014-08-25?siteID=mktw
  • Think fast-casual pizza continues to grow quickly? The segment’s rise to success may continue for some time, according to a Fortune article. Riding the efficiency of rapid cook ovens that can turn out a pizza in as little as 5 minutes, some project the segment could add as many as 2,000 locations in the next five years. http://fortune.com/2014/08/25/fast-casual-pizza/
  • The Bureau of Labor Statistics Worker Displacement Study shows foodservice employees at the top of the list when it comes to finding new employment after losing their jobs. The Bureau studied people more than 20 years of age and who had 3 or more years on the job when they were terminated between January 2009 and December 2011 and what their employment status was in January 2014. Overall, 61.3 percent were employed, 20.8 percent were unemployed, and 17.9 percent were not in the workforce. Foodservice workers ranked right at the top with 72.1 percent employed virtually tied with educational services where 72.5 percent of the workers were employed. The only other industry above 70 percent employed was insurance at 70.9 percent. Perhaps the data reflects the growth in the foodservice industry or that foodservice has younger workers who can adapt to other types of work.  http://www.bls.gov/news.release/pdf/disp.pdf
  • The California Supreme Court rules franchisors are not responsible for the actions of their franchisees’ employees. In a four to three decision the court said that Dominos could not be held liable for a franchisee’s supervisor accused of sexual harassment. The ruling is directly contrary to a recent decision of the National Labor Relations Board. http://www.forbes.com/sites/danielfisher/2014/08/28/california-supreme-court-rejects-obama-administration-theory-on-franchise-employees/
  • Food trucks keep rolling. The National Restaurant Association places food trucks at 1.0 percent of industry sales and counts them as one of the fastest growing operator segments. There is now a national organization – National Food Truck Association – to coordinate with the local groups. Further, some major chains, including Chick-fil-A, Starbucks, Taco Bell and TGI Friday’s have joined the movement with their own trucks. Emergent Research predicts that food truck sales will hit $2.7 billion by 2017. http://nextcity.org/daily/entry/food-trucks-laws-zoning-regulations-dc-philadelphia-new-york-los-angeles
  • A “healthful” fast food chain is about to launch in California. Operating under the name “Loco’l” the concept’s founders are Los Angeles-based chef Roy Choi and San Francisco-based chef Daniel Patterson. No menu items were mentioned but the first unit will open in San Francisco in the spring of next year followed by a second unit in Los Angeles a few months later. http://www.latimes.com/food/dailydish/la-dd-roy-choi-launch-locol-20140825-story.html
  • Denny’s opened an upscale concept in New York City featuring copper-stamped ceilings, wood paneling and leather booths. One unique menu item is a $300 brunch that includes a bottle of Dom Perignon champagne. http://www.businessweek.com/news/2014-08-28/denny-s-goes-upscale-with-300-champagne-brunch-in-nyc
  • Standex International reported the company’s foodservice group experienced an 11.1 percent increase in sales in the last fiscal period. http://ir.standex.com/press-release/earnings/standex-reports-fourth-quarter-and-fiscal-2014-financial-results
  • Growth Chains: Kono Pizza signed a multi-unit franchise agreement for three units in Charlotte. Boston Restaurant & Sports Bar signed an agreement for five restaurants in Baltimore. Bob Evans will open up to 10 new restaurants in the company’s current fiscal year. Muscle Maker Grill has plans to open 22 units across the country. BURGERFi, which currently has 54 restaurants, plans to double in size by the end of 2015. KFC has re-entered Zimbabwe with one store now open and plans to add 25 more.
  • Comparable Store Sales Reports: Bob Evans (down 2.5 percent) and Zoe’s Kitchen (up 7.5 percent.)
    For details and the same-store sales of other chains, please click here for the latest Green Sheet.
  • Foodservice Industry Equipment Suppliers Financial Data: Report on Standex International
    For the report on Standex and other suppliers, please click here .