Foodservice Forecasts, Wall Street Likes Fast Feeders, Consumers Using Delivery and Drive-Thru

Here’s a quick look at 2017 forecasts for foodservice. The NPD Group describes foodservice performance as “steady.” Wall Street likes fast feeders. The Labor Department reverses rules on who controls employees. These stories and a whole lot more This Week in Foodservice.

The National Restaurant Association now estimates industry retail sales will total $798.7 billion this year. Technomic forecasts restaurant industry sales will total $769 billion in 2017. The International Foodservice Manufacturers’ Association put sales much lower at $639 billion for this year.

Total industry sales is not the only data point that these three industry organizations view differently. Technomic counts more than 1.3 million foodservice operations in the U.S., while IFMA puts the universe at 1.2 million locations. The NRA simply says there are a million-plus locations.

The one area where the three organizations generally agree, at least for 2017, is their projections for real growth or the dollar sales growth adjusted for menu price changes. IFMA places real growth at +1.9 percent while both the NRA and Technomic project it will be 1.7 percent compared to 2016. 

Economic News This Week

  • April job openings hit an all-time high, rising to 6.04 million from 5.79 million in March according to the Job Openings and Labor Turnover (JOLT) report. The number of jobs available in the accommodations and foodservice segment rose by 118,000. The number of hires in April fell by 253,000 to a level of 5.1 million. The number of separations fell by 225,000 to a level of 5.0 million. The number of people voluntarily leaving their jobs (quits) fell by 111,000 for a total of 3.0 million. The April JOLT report seems to support the view that employers continue to have difficulty finding qualified workers.
  • Initial-jobless claims totaled 245,000, a decline of 10,000 for the week ending June 3. The 4-week moving average was 242,000, an increase of 2,250. As has been the case for months, jobless claims remain quite benign.
  • New orders for manufactured goods decreased 0.2 percent in April after 4 consecutive monthly increases. New orders for manufactured durable goods declined by 0.8 percent. Transportation equipment orders led the decrease with a decline of 1.4 percent. Shipments of manufactured durable goods fell 0.4 while backorders for manufactured durable goods rose 0.2 percent.
  • Non-farm business sector labor productivity was unchanged in the first quarter. Both output and hours worked increased 1.7 percent from the fourth quarter of last year. Compared to the first quarter of 2016, productivity increased 1.2 percent with a 2.5 percent increase in output and a 1.3 percent increase in hours worked. Unit labor costs increased 2.2 percent in the first quarter, reflecting a 2.2 percent increase in hourly compensation and unchanged productivity.
  •  Consumer borrowing increased 2.6 percent in April on an annual rate basis. Revolving credit (mostly credit card borrowing) grew 1.8 percent on an annual basis while non-revolving credit (auto loans, student loans, etc.) was up 2.9 percent on an annual basis. These are small increases historically and could indicate that consumers are getting nervous about the future. 

Foodservice News This Week

  • “Steady as She Goes” is how The NPD Group describes the restaurant industry’s first quarter performance. Consumer spending at restaurants rose 1.3 percent while the number of visits to restaurants held steady. Consumer orders for delivery increased 2.0 percent while drive-thru service rose 3.0 percent. Breakfast grew 1.0 percent but dinner traffic fell by 2.0 percent. Lunch visits, which had been declining in previous quarters, were flat. Visits to casual dining restaurants fell by 4.0 percent and visits to mid-scale/family dining declined by 3.0 percent.
  • Wall Street says fast feeders look good in the second quarter. The burger segment may see the best same-store sales since the first quarter of 2016. Value promotions and new menu items are driving sales plus the comparisons are easier due to a weak second quarter last year. But the pizza category may not do as well because of a 25 percent increase in cheese prices.
  • The U.S. Department of Labor retracted its joint employment standard. Issued under the Obama administration, the ruling said franchisors are responsible for employees’ wages and working conditions. In the past, only franchisees were held to control pay and conditions. Supporters of the ruling wanted to hold the franchisors liable since they have deeper pockets. In theory, the initial ruling also made unionization easier. Also cancelled was the ruling regarding the classification of workers as employees as opposed to independent contractors.
  • Consumers may not be eating at restaurants as much but they are spending more. A joint Acosta and Technomic research program found U.S. diners spend $144 a month on food prepared outside the home, up $25 compared to 2 years ago. The report says consumers continue to extensively use delivery and drive-thru. Millennials and GenXers are big users of food away from home. More than 60 percent of those surveyed see mealtime as a valuable way to connect with family and friends. They also love to try new restaurants and see restaurants are a form of entertainment.
  • Papa Murphy’s will upgrade its online sales efforts. The take and bake chain is working with a technology company so its online and mobile ordering program can be linked with third party delivery services such as UberEats and Postmates. Papa Murphy also closed 16 company-owned stores.
  • The United Nations’ Food Price Index increased 10 percent in May compared to May 2016. The increase followed three consecutive months of declines. With the exception of sugar, the price of every commodity in the index rose in May.
  • Corporate Stirrings: The Ignite Restaurant Group has an agreement to sell its chains Joe’s Crab Shack and Brick House Tavern & Tap to an affiliate of Kelly Companies, a San Diego private equity firm.
  • Growth Chains: Dunkin’ Brands will open eight Dunkin’ Donuts restaurants and one co-branded Dunkin’ Donuts/Baskin Robins in the St. Louis area. The first unit is scheduled to open in 2018. Dave & Buster’s plans to open 12 locations this year, which will bring the chain to more than 100 units. The company’s goal is to open 200 locations. Blaze Fast-Fire’d Pizza will open restaurants in Glendale, Scottsdale and Tucson, Ariz. Casey’s General Store plans to open or buy 80 to 120 new stores, replace 30 existing stores and remodel at least 75 more. The Papa John’s franchisee in Chile has signed an agreement to open an additional 45 restaurants. Blue Bottle Café will open a total of 12 restaurants in Boston, Miami and Washington, D.C. Metro Diner, which has 30 units, plans to open 35 more this year. 7-Eleven plans to open about 250 stores on Okinawa in the next 5 years.
  • Comparable Store Sales Reports: Captain D’s up 2.3 percent, Casey’s General Store up 3.2 percent and Dave’s & Buster’s up 2.2 percent.

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

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