Restaurant Sales Outpace the Retail Market, New Concept for Rita’s Italian Ice and More

Government research shows restaurant sales increased in February. Quick-serve restaurant traffic was up in most countries in the fourth quarter. Prices for food away from home continued to rise in February. These stories and a whole lot more This Week in Foodservice.

U.S. retail sales fell 0.1 percent in February from January but were up 3.1 percent over February 2015. Restaurants and drinking place sales outpaced the total retail market, rising 1.0 percent from January and 6.4 percent over February last year.

There are some limitations and cautions regarding this U.S. Census Bureau report. The figures are based on a small initial sample and thus considered advance in nature. As such the report is subject to revision and is, in fact, frequently revised. The sample is limited to restaurants and bars, so a good portion of the foodservice industry is not included. Segments excluded from the research are hotels, resorts, clubs, employee feeding, schools, colleges, military feeding, retailers, and healthcare operations.

Some, but not all, of the data is adjusted for calendar, weekends, holidays and seasonal changes. None of the data is adjusted for menu price changes.

Economic News This Week

  • The Producer Price Index for final demand fell 0.2 percent on a seasonally adjusted basis with final demand goods down 0.6 percent and final demand services unchanged. In the past 12 months the producer price index is unchanged on an adjusted basis.
  • The Consumer Price Index declined 0.2 percent in February, pushed down by a 0.6 percent drop in energy prices. The core CPI, that is, the index for prices without food and energy prices, rose 0.3 percent.
  • Initial jobless claims totaled 265,000, an increase of 7,000 for the week ending March 12. The steadier 4-week moving average was 268,000, an increase of 750. This weekly data indicates that the labor market is not experiencing any exceptional problems.
  • Small business optimism declined in February. The National Federation of Independent Business’ small business index dropped 1 point to 92.9. This reading is less than the 42-year average of index of 98. Job creation, job openings, capital spending all fell while inventory investment plans were even with January findings at -1 percent.
  • Industrial production declined in February 0.5 percent. The Federal Reserve report noted manufacturing rose 0.2 percent but the increase was offset by declines in utilities and mining, which includes petroleum production. Capacity utilization for the industrial sector fell 0.4 percentage points in February, a rate which is 3.3 percentage points less than the long-run (1972-2015) average.
  • The Empire State Manufacturing Survey steadied in March. The N.Y. Federal Reserve’s index edged into the positive area with a reading of 0.6, a 17 point increase from February. This marks the first reading of greater than 0 since July of last year. The new orders index increased 21 points for a reading of 9.6 while the shipments index rose 25 points to 13.9. The unfilled orders index increased by 3 points to minus 4. The employment index was steady at +3.0.
  • The Philadelphia Federal Reserve’s Manufacturing Business Outlook Survey for March showed improved business conditions with the index rising to 12.4 from minus 2.4 in February. This was the index’s first positive reading in 7 months. The new orders index jumped 21 points to 15.7 with the shipments index rising 20 points to 22.1. Unfilled orders index rose 11 points but was still slightly negative.
  • Housing starts rose 5.2 percent in February to a seasonally adjusted annual rate of 1,178,000. This is 16.3 percent more than February 2015. Single family housing starts increased 7.2 percent over January. Building permits issued fell 3.1 percent in February to a seasonally adjusted annual rate of 1,167,000. However, permits issued were up 6.3 percent over February of 2015.
  • Home builders’ confidence remained steady in March. The National Association of Homebuilders/Wells Fargo Housing Market Index hit 58, indicating more builders were confident than were negative about the market for single family homes.
  • Consumer confidence “eased” in March, according to data from the University of Michigan. The preliminary reading from The Index of Consumer Expectations dropped to 90.0 from February’s final reading of 91.7. The Current Economic Conditions Index declined to 105.6 from 106.89 in February. The Index of Consumer Expectations fell to 80.0 from 81.9 in February.

Foodservice News This Week

  • Consumers around the world continued to eat out in the fourth quarter of 2105 according to the NPD Group’s CREST study. Australia, China, Great Britain, Italy, Spain, and the U.S. posted gains in customer traffic, while Canada, France, Japan and Russia saw guest counts decline. Nearly all the countries saw traffic at quick-service restaurants increase with Japan being an exception. Traffic at full-service restaurants declined in Australia, Canada, China, Italy, Japan, Russia and the U.S.
  • The Consumer Price Index for Food rose 0.2 percent on an adjusted basis. Prices for food prepared at home rose 0.2 percent while food away from home prices rose 0.1 percent. In the past 12 months, prices for food at home fell 0.3 percent and prices for food away from home increased 2.6 percent on an unadjusted basis.
  • Rita’s Italian Ice plans to test the custom donut and coffee business. The chain will open a new concept in Albuquerque with other test stores to follow in Ammon, Idaho; Bloomington, Minn.; and Scott’s Valley, Calif. The chain expects to open all of these stores in the first half of this year.
  • Starbucks goes kid friendly in the United Kingdom. The chain is training its staff to warm milk bottles, help nursing moms find private space and assist families in finding open tables and high chairs. Parents can also order and pay from their table using Starbucks’ app.
  • McDonald’s has a registered trademark for “Simpler The Better”. Scott Hume, publisher of BurgerBusiness, reports that McD’s did not reveal if this is an ad slogan or if it is to be used for internal operations or both -- or something else entirely.
  • Growth Chains: Dairy Queen plans to open 60 franchised locations in Massachusetts in the next 5 years. Newk’s Eatery plans to add 15 to 20 restaurants in the St. Louis region over the next 5 to 6 years. Carl’s Jr. plans to open 150 restaurants in Japan in the next 10 years. Arby’s, which added 61 restaurants and remodeled 179 in 2015, has signed franchise agreements for 138 units so far this year. MOD Pizza plans to double its store base to more than 200 locations this year. Checker’s is looking to expand in South Carolina and may add 10 locations in the Grand Strand area in the next few years. Qdoba opened 3 restaurants in the Detroit area in March. Pizza Rev will open a restaurant on Long Island, NY with 13 more to follow. Sonic plans to open 7 drive-ins in Hawaii.
  • Comparable Store Sales Reports: Fogo De Chao up 3.5 percent and Jamba, Inc. (System up 3.9 percent, Company owned up 5.4 percent and franchised up 3.7 percent.)

For details and same-store sales of other chains Please Click Here for the Green Sheet. 

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