Sysco Acquires Supplies on the Fly, Casual Restaurant Sales Weak in June and More

The number of new jobs came back strong in June but restaurant hiring slowed. Sysco bought Supplies on the Fly. The NPD Group says many countries saw traffic gains in the first quarter. Casual restaurant sales were weak in June. The fast-casual segment continued to post strong growth numbers last year, per Technomic. McDonald’s will spend big to modernize its German restaurants. These stories and a whole lot more This Week in Foodservice.

Hiring in the U.S. bounced back in June with the economy grinding out 287,000 new jobs, the highest number in 9 months, according to the Bureau of Labor Statistics. This followed an increase of only 38,000 new jobs created in May. Contributing to the rise was 35,000 striking Verizon employees returning to work last month as well as an unusually large jump in government hiring — 22,000. Local government hiring accounted for most of the increase.

On the flip side, unemployment rose 0.2 percent to 4.9 percent as the number of unemployed increased by 347,000 to 7.8 million.

While the large number of employees hired in June is certainly a positive factor, in the last 3 months new jobs averaged 147,000 vs. an average of 282,000 in the last 3 months of 2015. Foodservice hiring also slowed as the industry added 21,900 jobs or about 8.0 percent of the total private sector new hires.

Taking the long view, foodservice has added 265,000 jobs in the past 12 months.

Economic News This Week

  • ADP reported the employment in the U.S. increased by 172,000 in June. Small companies – those with fewer than 50 employees – accounted for 95,000, or 55 percent, of the new jobs. ADP bases its numbers on actual payroll data seasonally adjusted.
  • Initial jobless claims totaled 254,000, a decrease of 16,000 for the week ending July 2. The 4-week moving average was 264,750, a decline of 2,500. The relatively low number of layoffs remains a positive factor in the employment picture and the overall economy.
  • New orders for manufactured durable goods declined 2.2 percent in May, according to the advance report from the U.S. Census Bureau. Transportation equipment led the decrease with orders falling 5.6 percent. Shipments of manufactured durable goods fell 0.2 percent and unfilled orders rose 0.2 percent. Orders for capital goods – those goods used to manufacture other goods – fell 0.8 percent not counting defense orders. Capital goods shipments increased 1.2 percent with unfilled orders rising 0.2 percent.
  • The Institute for Supply Management’s Non-Manufacturing Index hit 56.5, an increase of 3.6 percentage points, in June. Any reading that exceeds 50 means expanding activity. This is the 77th straight month of growth for the services segment. The New Orders Index rose 5.7 percentage points to 59.9 while the Employment Index grew by 3.0 percentage points to 52.7 percent. Of the 15 non-manufacturing industries surveyed by the Institute, 12 of them reported expansion including Accommodations & Foodservices. 

Foodservice News This Week

  • Sysco has acquired Supplies on the Fly, an e-commerce platform that sells foodservice equipment and supplies to foodservice operators. Supplies on the Fly offers 170,000 products online or by phone. A 2009 deal between Sysco and Supplies on the Fly’s parent company, Instaware Holdings, a foodservice equipment and supplies dealership, included an option that allowed the broadline distributor to purchase all of the equity in Supplies on the Fly.
  • The NPD Group’s Global CREST Data shows customer traffic gains by Australia, Canada, China, Germany, Great Britain, Japan and Spain while visits in France, Italy and the U.S. were flat in the first quarter of this year. Russia saw customer visits decline by 2.0 percent. Quick-service restaurant visits were up or flat in every country studied by NPD. European market traffic was also driven by an increase in full service visits which NPD notes is a major shift from recent years.
  • Casual-restaurant chains experienced a same-store sales decline of 2.3 percent in June, according to data from Knapp-Track. The 50-plus participating chains reported guest counts were down 4.8 percent, too. These results are the weakest since January 2014. Merrill Lynch stock analysts believe that the performance numbers are “a worry point” for investors. Knapp-Track information is courtesy of Bank of America Merrill Lynch.
  • Fast-casual restaurants continued to roar in 2015. Technomic, Inc. reports the top 250 fast-casual chains increased their sales by 11.6 percent last year. While that represents a moderate decline for the 13.5 percent increase in 2014, at 9.6 percent unit growth was virtually identical with the previous year. Further, more than 90 of the fast-casual chains had double-digit increases in both year over year sales and unit growth. Technomic noted that build-your-own pizza concepts had particularly strong sales performance.
  • McDonald’s will spend $557 million to modernize its restaurants in Germany. The chain says that most of its 1,472 units in Germany will be remodeled by the end of 2019.
  • The Food Institute Report counts 30 foodservice mergers and acquisitions in the first 6 months of this year. Through June of 2015 there were 18.
  • Pizza Hut will expand its Plano, Texas, campus to include an innovation center, essentially a concept restaurant that will test engineering as well as restaurant flow and interior design. Also included in the 120,000-square-foot expansion will be a 450-seat meeting hall and a larger daycare facility.
  • Chipotle released a short film taking issue with processed ingredients used by competitors. Posted on Chipotle’s website as well as YouTube, Hulu and other outlets, the video features two entrepreneurs who see the error of their ways and switch to fresh ingredients.
  • Growth Chains: Bloomin’ Brands signed two agreements to expand in the Middle East, the first agreement for a total of eight Outback Steakhouses and seven Abbraccio restaurants in Kuwait, Jordon and Saudi Arabia. (Abbraccio is Bloomin’ Brands name for Carrabba’s outside the U.S.) The second agreement is for 11 Outback Steakhouses in the United Arab Emirates, Bahrain, Oman and Qatar. Newk’s Eatery signed a franchise agreement for six restaurants in Atlanta in the next four years. Topper’s Pizza signed a deal for three restaurants in Colorado and Wyoming. Red Robin will open restaurants in Arizona, Florida and Oregon. Marco’s Pizza will open 6 units in Virginia in the next 6 months and projects having a total 1,000 locations by 2017.
  • Comparable-Store Sales Reports: Bad Daddy Hamburgers up 3.6 percent, COSI down 1.6 percent, Good Times Burgers down 2.0 percent, and Luby’s (all concepts down 0.6 percent, Luby’s Cafeteria down 0.2 percent, Fuddrucker’s down 1.0 percent and Cheeseburger in Paradise down 0.6 percent.)

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

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