Fast-Casual Continues to Lead the Way, Mixed News for McDonald’s and Much More

The U.S. employment picture brightens as foodservice continues to be a big factor in job growth. Other news this week in foodservice includes questions about the Sysco/US Foods deal, fast-casual continues to lead the way in traffic growth, and despite a rough January some bright spots may be starting to emerge for McDonald’s. 

The U.S. added 257,000 new jobs in January, according to the Bureau of Labor Statistics. The private sector added 267,000 new jobs while government entities lost 10,000 employees. The job gains included increases in construction and manufacturing jobs. More good news was the labor department substantially revised upward November and December hiring to a total of 147,000 new jobs.

Still more good news was that average hourly wages grew by 0.5 percent. There has been much concern voiced over a lack of growth in wages.

January unemployment rose to 5.7 percent from 5.6 percent in December but this was the result of more people entering the labor force and looking for work.

The foodservice industry also performed well in January with 34,600 new positions created. This represents 13 percent of all private sector hiring last month. The Bureau of Labor Statistics pointed out that foodservice averaged 33,000 new jobs every month last year. It is probably safe to assume that foodservice managers hire for current needs, not for future expectations. Thus, strong hiring is a good sign that restaurant sales are doing well.

Economic News This Week

Foodservice News This Week

  • Has the Sysco/US Foods merger reached a stalemate? The Wall Street Journal reports that the Federal Trade Commission seems to be opposed to the deal even though Sysco has offered to divest the company of numerous US Foods locations.
  • Fast-casual restaurants lead the way in traffic growth at 9 percent based on research from Technomic. Supermarket foodservice is second in traffic growth at 6 percent followed by quick-service restaurants (3 percent), casual dining (2.5 percent) and c-stores (2 percent).
  • McDonald’s January comparable sales were a mild surprise. Global comp store sales declined 1.8 percent, which was worse than forecast. But, U.S. comparable store sales were up 0.4 percent following a similar increase in December. Comps in Europe rose 0.5 percent for the month while Asia/Pacific, Middle East and Africa were down 12.6 percent. Total sales were down 7.9 percent as a result of the company getting hammered by the strong U.S. dollar. Without the currency situation global sales were up 0.3 percent.
  • Cracker Barrel is working on a fast-casual concept, with the goal of developing a format that will work in dense urban areas. The name and menu have yet to be determined but the chain wants to have “a few” opened by fall of 2016.
  • C-store chain Wawa plans to remodel its older stores starting with 40 locations this year in order to expand their food and beverage operations.
  • Multi-line equipment manufacturer Standex International Corporation reported its foodservice group’s sales rose 12.8 percent in the company’s last quarter.
  • Corporate Stirrings: RPM Pizza LLC, the largest Domino’s franchisee in the U.S., has purchased 45 Domino’s stores in Indiana from another Domino’s franchisee. Wendy’s plans to sell 500 company-owned units to franchisees in the next 18 months with a goal of having 5 percent of the entire chain’s stores company owned. Buffalo Wild Wings cited consumers’ strong interest in college football and the NFL playoffs as part of the reason for the chain’s strong performance in the fourth quarter of 2014 and strong start to 2015. Menu price increases also contributed to increased sales. The Manitowoc Company announced a settlement agreement with activist investor Carl Ichan. Frisch’s Restaurants is under fire from the NY Stock Exchange for failure to file required financial forms. The chain had announced recently they were the victim of a major embezzlement scheme by a former employer. Kono Pizza has developed a mobile cart, a kiosk, and an in-line store prototype aimed at non-traditional locations such as malls, colleges, hospitals and amusement parks.
  • Growth Chains: Mooyah Burgers plan on opening 20 locations in North Carolina over the next decade. McDonald’s will open 50 new units in Russia this year compared to 73 in 2014. Rita’s Italian Ice will open 46 stores in the Middle East in the next decade. Crushed Red has signed a franchise development agreement to open 6 restaurants in Denver in the next 5 years. Wendy’s plans on opening 1,000 new restaurants in the next 5 years. Chipotle opened 162 restaurants in 2014 and projects the chain will open 190 to 205 this year. Wayback Burger has signed a franchise agreement for 4 new restaurants in South Texas. Subway has opened their 30,000th location in North America and now has a total of 43,500 units in 43 countries. The company plans on adding 2,500 more locations this year.
  • Comparable Store Sales Reports: Baskin Robins (up 7.9 percent), Buffalo Wild Wings (company-owned up 5.9 percent and franchised up 5.1 percent), Captain D’s (up 5.7 percent), Chipotle (up 16.1 percent), Dunkin’ Donuts (up 1.4 percent), McDonald’s (up 0.4 percent), Wendy’s (company-owned up 1.9 percent and franchised up 1.6 percent) and YUM! (KFC up 1 percent, Pizza Hut even and Taco Bell up 7 percent.)

For details and same-store sales of other chains, please click here for the Green Sheet.

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