Published on Tuesday, 29 November 2016
Written by Jerry Stiegler
Stories worth another look: Consumers ate out on Thanksgiving and Black Friday. The Department of Labor’s new rules on overtime pay were put on hold by a federal judge. Dunkin’ Donuts to de-emphasize food sales and push beverages.
Americans opened their wallets on Thanksgiving and Black Friday, according to the International Council of Shopping Centers (ICSC). A survey run for the Council by Opinion Research Corporation found more than 75 percent of consumers spent the same or more than in 2015. The National Restaurant Association found that 10 percent of Americans ate out on Thanksgiving.
ICSC research reported that consumers spent $373 on the 2 days, with 13 percent of the expenditures, or $48.20, of the total going toward dining. The ICSC believes the strong sales results are a positive indicator for Christmas season sales. Further, while online sales were — and will likely remain — an important factor in holiday sales volume, Opinion Research noted that 80 percent of the spending was in brick-and-mortar stores. The survey also found that 64 percent of those ordering online and picking up in the store (click and collect) made an additional store purchase.
Previous research has shown that eating at a restaurant is part of the shopping trip for many, so a good Christmas buying season could be a shot in the arm for restaurants, particularly in or near malls.
Economic News This Week
- Initial jobless claims rose by 18,000 for a total of 251,000 for the week ending Nov. 19. This increase does not seem to be significant since last week’s number of claims hit a 40-year low. This makes the 90th week in a row claims have stayed at less than 300,000 — the longest stretch since 1970. The less volatile 4-week moving average fell 2,000 for a total of 251, 000.
- Existing home sales grew 2.0 percent in October from September, an increase of 5.9 percent compared to October 2015. This marks the second consecutive month of strong sales. October’s annualized sales rate of 5.60 million homes represents the highest level since the annualized rate 5.79 million homes in February 2007. The National Association of Realtors sees the sales results as very encouraging given the limited number of homes available for sale and swiftly rising prices in some markets.
- New home sales fell in October to a seasonally adjusted annual rate of 563,000. This was a decline of 1.9 percent from September but an increase of 17.8 percent from October 2015. The U.S. Census Bureau also reported that the average sales price in October was $354,900, while the median price was $304,500.
- Durable goods orders jumped 4.8 percent in October, according to the for the month. Transportation equipment led the increase, rising 12.0 percent. Without transportation equipment, durable goods orders rose 1.0 percent. Durable goods shipments rose 0.1 percent while unfilled orders increased 0.7 percent. Non-defense new orders for capital goods — those goods used to produce other goods — increased 14.5 percent.
- The University of Michigan’s Index of Consumer Sentiment rose 6.6 points from 87.2 in October to 93.8 in the final study for November. The Current Economic Conditions Index increased from 103.2 in October to 93.8 in November while the Index of Consumer Expectations was up 8.4 to 85.2 from 76.8 in October. A spokesperson for the University said the gains were recorded among all income and age groups as well as in all areas of the country. It is uncertain if the post-election boost in confidence is due to the election results or just a sense of relief the election was over.
Foodservice News This Week
- New overtime rules put on hold. A federal judge has issued a preliminary injunction to stop the implementation of the much discussed and much maligned new overtime rules. Critics of the rules called them “dramatic government overreach,” holding that the overtime policies and pay should be controlled by congress. The hope of the foodservice industry and other industries is that the ruling will give the U.S. Congress a chance to permanently cancel or at least substantially modify the rules.
- Dunkin’ Donuts “streamlines” food menu to stress beverage sales. The chain hopes to build on the success of its “cold brewed” coffee. The reduction in food offerings will take place gradually. The announcement did not indicate if the shift in strategy will require changes in equipment.
- Breakfast meals continue to grow, with 93 percent of operators reporting breakfast sales have increased or at least stayed the same. And, as observers have noted for decades, breakfast remains the meal least eaten away from home, giving plenty of potential to foodservice operators. One approach to breakfast volume growth is by offering inexpensive hand-held menu items (i.e., Taco Bell). Another strategy is to offer non-traditional breakfast choices.
- Chipotle customers sue, claiming the chain posted deceiving calorie counts. The controversy revolves around a chorizo burrito that was shown as containing 300 calories on the menu board. Chipotle said the calorie count was just for the chorizo and did not include the wrapper, rice, beans and other ingredients. The calorie count with all ingredients totals about 1,350. The three customers claim the burrito made them too full. It’s not as if Chipotle doesn’t have other problems.
- Growth Chains: Sweetgreen is searching for small to medium size farms that can meet the company’s supplier requirements so the restaurant chain can double its current number of units to more than 100 next year. Buffalo Wings & Rings’ franchisees in Cincinnati have two restaurants under construction and plan to open two to four more. Your Pie plans to open 12 restaurants in the Orlando area. Raising Cane’s Chicken Fingers plans to double its current size to 600 restaurants by 2020, including adding 50 locations in Los Angeles and Orange Counties, Calif.
- Comparable Store Sales Reports: Cracker Barrel up 1.3 percent, Jack in the Box (system up 2.0 percent, company owned up 0.5 percent and franchised up 2.4 percent), Luby’s (all concepts up 0.7 percent, Luby’s Cafeteria up 1.1 percent, Fuddruckers flat, Cheeseburger in Paradise up 0.8 percent, and combo units down 1.4 percent), One Hospitality Group (owned STK down 9.2 percent and owned and operated STK down 4.2 percent), and Qdoba (system up 0.8 percent, company owned up 1.2 percent and franchised up 0.4 percent.)
For details and same-store sales of other chains, see the Green Sheet.
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