Published on Tuesday, 14 July 2015
Written by Jerry Stiegler
U.S. retail sales unexpectedly fall in June. The NPD Group reports more patrons are choosing to eat in restaurants. The FDA has postponed menu nutritional data posting requirements until December next year. Meals served at full-service restaurants are no healthier than those served at fast food operations. These stories and a whole lot more This Week In Foodservice.
The Commerce Department’s advance sales numbers for June declined by 0.3 percent over May on a seasonally adjusted basis. The consensus forecast was for a 0.2 percent gain and the report gathered comments such as “shock” and “troublesome.”
Total retail sales are up 1.4 percent over June 2014 and are up 2 percent in the first 6 months of this year. Excluding motor vehicles and parts sales, which had already been reported as down in June after strong May sales, total retail sales were down 0.1 percent on a seasonally adjusted basis.
Restaurant and drinking place sale were also down, falling 0.2 percent from May but were up 7.7 percent over June last year. In the first 6 months of this year restaurants and bars have recorded an 8.8 percent increase over the same time period of 2014. (This number is unadjusted.)
As we repeat every month, there are some caveats and limitations to this report. The sales figures are based on a small preliminary sample and are subject to revision. Only restaurants and bars are included in the sample. Roughly one third of the foodservice industry — hotels, resorts, clubs, retailer foodservices, employee feeding, schools, colleges, healthcare, etc. — are not counted. And, the numbers are adjusted for seasonal differences, weekends, holidays, etc. but not for menu price changes.
Economic News This Week
- Initial jobless claims jumped by 15,000 to 297,000 for the week ending July 4. This is the highest number of claims since February. The 4-week moving average climbed by 4,500 to 279,500. Last week’s sharp increase was not expected and the Department of Labor said there were not any special factors that would affect the number of claims. It will be interesting to see what happens in the next couple of weeks.
- The Department of Labor JOLT study for May found job openings at 5.4 million, which is the same record level as in April. The number of separations was 4.7 million, the quits rate was 1.9 percent and the layoffs and discharges rate was 1.2 percent. All of these findings were roughly the same as in April.
- U.S. home prices rose in May for the 39th consecutive month according to CoreLogic. Prices rose 1.7 percent over April and increased 6.3 percent over May 2014. While the rate of increase varied across the country, most states prices rise. Increased prices cuts two ways. It is a good thing for homeowners but a negative for homebuyers, particularly young, first time buyers.
- Consumers increased their borrowing by 5.75 percent in May, according to the Federal Reserve. Revolving Credit — essentially credit card debt — rose 2 percent on an annual rate. Non-revolving credit — such as car loans, tuition loans, etc. — rose 7 percent on an annual basis.
- World food prices fell 0.9 percent in May according to the UN’s Food & Agriculture Association.
Foodservice News This Week
- Consumers are choosing to eat in restaurants more often rather than using takeout or delivery. The NPD Group says on-premises restaurant visits rose 2 percent last year while off-premise traffic declined 1 percent. Quick-service restaurants increased dine-in visits by 5 percent last year. Generally, dine-in customers tend to have higher check averages and buy more high-profit menu items such as appetizers, deserts and beverages.
- The Food & Drug Administration has postponed the implementation of menu labeling rules. The compliance rule for chains has been moved to December 1, 2016, one year later than the original deadline. The FDA said the change was made because of requests from restaurants and other retailers who raised questions about such things as salad bars and menu items that are shared. Backers of the measure were critical of the FDA’s move claiming foot dragging on the part of those affected by the law. But it may be more of a “devil is in the details” situation.
- Full-service restaurant meals are no healthier than fast food, according to a study from the University of Illinois. An analysis of actual consumers’ meals found full-service meals contained more sodium than fast food meals and that saturated fat intake was almost as high in the full-service restaurants. The study indicates that full-service restaurant patrons tend to order more food so as to enjoy the occasion. Both full-service and fast food meals were higher in calories, saturated fats and sodium than home prepared meals.
- There Were 18 Restaurant Mergers And Acquisitions in the first 6 months of this year according to the Food Institute. The Institute reports this is down from 28 mergers and acquisitions in the first 6 months of 2014.
- Salad chains are coming on strong with sales over $300 million. There are no national salad chains and it will be interesting to see which one gets national coverage first. Saladworks, Sweetgreen, Just Salad, and Fresh & Co. are all planning for major expansions.
- Upscale steak restaurants are finding tough going this year even though Knapp-Track states steakhouse sales are “running a little bit ahead of last year.” One possible explanation for the slowdown is businesses cutting back on expense account spending.
- The number of restaurants in Britain has increased 17 percent in the last 5 years as consumers in the UK have made dining out a key part of their lifestyle. May restaurant sales in Britain rose 8.8 percent over May 2014.
- Taco Bell announced more details about its delivery program. The fast food chain will launch delivery service in 200 restaurants in the Orange County and Bay area in California as well as select areas around Dallas. Taco Bell delivery service will be offered between 10:00 a.m. and 11:00 p.m.
- Avanti Food & Beverage is a Denver food hall that enables chefs to try their concept “with minimal financial risk.” The facility has a kitchen already built so there is no equipment investment and the food hall manages the front end. Chef’s can sign a one- or a two-year lease.
- Growth Chains: Bojangles’ plans to open 50 to 57 restaurants this year. Dairy Queen’s franchisee in the United Arab Emirates plans to open 20 locations in the next 5 years. Wahlburger’s will open a restaurant in Orlando, its first of 20 planned for Florida. Dog Haus signed a 20-unit franchise deal for Texas. Jamba Juice has signed a master development agreement for 30 stores in Thailand over the next 10 years. Corner Bakery Café has 390 commitments in their development pipeline. Dunkin’ Donuts has development agreements with 7 franchise groups for a total of 51 locations in Virginia and West Virginia over the next several years. Chipotle Mexican Grill plans on opening 200 restaurants in the next year. Sonic Drive-In plans to add 8 stores in the San Francisco area. Crème cupcakes and deserts has just one location now but hopes to add 60 franchise shops in the next 5 years. Smoothie King plans on opening 45 stores in the Middle East in the next 5 years.
- Comparable Store Sales Reports: Good Times Burgers up 4.8 percent.
For details and same-store sales of other chains, please click here for the Green Sheet.