Total retail sales rose in September, as did restaurant sales, per the U.S. Census Bureau. Pizza Hut has developed an improved pouch for delivery orders. Urbane Cafe has received a strategic investment from the founders of the Panda Restaurant Group. These stories and a whole lot more This Week in Foodservice.
Total retail sales in the U.S. increased 1.6 percent in September compared to August according to the advance report from the U.S. Census Bureau. Sales increased 4.4 percent for September over the same month a year ago. The Bureau revised total retail sales up from minus 0.2 percent in August to minus 0.1 percent. Total retail sales are up 3.8 percent for the first 9 months of this year.
Restaurant and drinking place sales rose 0.8 percent in September over August and were up 2.7 percent over September 2016. Restaurant and bar sales are up 2.9 percent in the first 9 months of this year. Advance restaurant and bar sales for August vs. July, which were originally reported up 0.3 percent, were revised down to up 0.2 percent in the September report.
The report did not indicate what, if any, impact that the recent hurricanes might have had on retail sales this month.
If these advance numbers hold up, the industry continues to have some growth.
Like most studies of this type, there are some cautions and limitations. The Census Bureau labels the data as an advance report since they are based on a small initial sample. When a larger sample is analyzed, the government can, and frequently does, revise the data. The Census Bureau only surveys restaurants and drinking places. A significant part of the foodservice industry is not included. Excluded are hotels, motels, resorts, retailers, employee feeders, healthcare, colleges, schools K-12, and military feeding. Some of the sales figures are adjusted for holidays, weekends and other seasonal variations but there is no adjustment for menu price changes.
Economic News This Week
- Initial jobless claims fell by 15,000 to 243,000 for the week ending Oct. 7. The 4-week moving average fell by 9,500 to 257,500. As the Department of Labor stated in last week’s report, hurricanes Harvey and Irma impacted the initial claims. But also like last week, the report did not provide any specific numbers.
- Job openings and labor turnover were “little changed” in August according to the Bureau of Labor Statistics’ JOLT study. Job openings totaled 6.1 million at the end of the month, which is regarded as very good. The number of people hired was 5.4 million, which is again a fairly strong number. Total separations — quits, layoffs, and discharges — were 5.2 million. The number of quits totaled 3.1 million. Economists watch this number carefully as it is considered a measure of confidence. It would include workers leaving for new jobs as well as those who quit, but feel confident they will be able to find work soon.
- The Producer Price Index rose 0.4 percent in September on a seasonally adjusted basis. The Index for Final Demand Goods rose 0.7 percent while the Core Index (Final Demand Goods without food and energy) increased 0.3 percent. The Producer Price Index for food was flat and the producer price index for energy was up 3.4 percent. The Index for Final Demand service was up 0.4 percent. Total Final Demand prices have risen 2.6 percent (unadjusted) in the past 12 months. The Core Index was up 2.1 percent in the last 12 months.
- The Consumer Price Index increased 0.5 percent in September. Over the last 12 months the index is up 2.2 percent. The Core Index — all items less food and energy — rose 0.1 percent in September. The core index is up 1.7 percent in the last 12 months. For the details on food prices, please see the Foodservice News This Week section below.
- The preliminary October University of Michigan Consumer Sentiment Index hit a 13-year high. The Index rose to 101.1 from 95.1 in September. Both components of the index came on strong with the Current Economic Conditions Index rising 4.2 percent to 116.4 and the Index of Consumer Expectations jumping 8.2 percent from September to 91.3. A spokesperson for the university stated the study indicates “a robust outlook for consumer spending that extends the current expansion to at least mid 2018, which marks the second longest expansion since the mid 1800s.”
Foodservice News This Week
- Ruby Tuesday to be acquired by NPD Capital, a private equity firm. One source put the amount of the deal at $335 million. Ruby Tuesday has been struggling financially for at least four years.
- The Consumer Price Index for food rose 0.1 percent in September. The Index for food at home was flat while the index for food away from home increased 0.3 percent in September. In the last 12 months, the price for food at home has increased 0.4 percent, with the index for food away from home rose 2.4 percent. Some observers believe this variance is contributing to soft restaurant sales. Others point out that while the cost of food commodities has leveled off, foodservice operators are dealing with rising labor costs.
- Pizza Hut introduces a new oven-hot delivery system. An all-new delivery system includes a new delivery pouch that uses a PET Aluminum Radium Barrier, which reflects heat back on the pizza, and a layer of polyester fiber padding to trap heat inside. The company also has improved its pizza box with thicker sides to lock heat in and hold the pizza in place during the delivery process. Boxes will also have a patented crisp sheet insert that will keep the pizza elevated, locking in heat and keeping the crust crisp. A spokesman for Pizza Hut said the new system will keep pizzas up to 15 degrees warmer.
- Urbane Cafe has received a “strategic investment” from the founders of Panda Restaurant Group. The 12-unit California sandwich and salad fast-casual chain was founded in 2003. Privately held Panda Restaurant Group has 1,900 locations and was founded by Peggy and Andrew Cherng. The amount of the investment was not disclosed.
- Shake Shacks will test a variety of ideas in New York City restaurant. Customers will place orders through Shake Shack’s app or with touch-screen kiosks. Cash will not be accepted, only credit cards. Customers can roam outside the restaurant and will be summoned via their various devices. The operation will also offer “high-speed delivery and innovative packaging.” And while there will be no cashiers, “hospitality champs” will guide diners through any “tech glitches.” Employees will be paid a minimum of $15 an hour.
- Aramark makes two acquisitions. Avendra, the leading hospitality procurement service in North America, which handles purchasing for 650 companies, will be purchased by Aramark for $1.35 billion before tax benefits. Aramark also announced a contract to buy uniform and linen rental company AmeriPride for $1.0 billion before tax benefits.
Corporate Stirrings: Lane Enterprises, a McDonald’s franchisee with 27 units, has agreed to acquire 4 restaurants from McD franchisee Shane Spurlock, who is retiring. The price for the deal was not disclosed. Tom and Chee, a Cincinnati-based chain featuring tomato soup and grilled cheese sandwiches is now owned by Gold Star Chili. Tom and Chee had a fast start when the founders appeared on ABC’s “Shark Tank” and were offered $600,000 by Mark Cuban and Barbara Corcoran. But Cuban backed out and Corcoran renegotiated. Tom and Chee ran into more trouble when they expanded very quickly and leased space that was believed by some to be too large for their needs. This saddled the company high lease costs. Unable to pay off a bank loan, the company’s assets were seized by the bank. The iconic Gold Star chain bought the assets from the bank. No purchase amount was given. Uncle Julio’s, a 29-unit casual restaurant chain headquartered in Dallas, has been acquired by L Catterton, a consumer-focused private equity firm. L Catterton plans to open more restaurants in both existing and new markets. Purchase price of the transaction was not disclosed. A coalition of 7-Eleven franchisees in the U.S. have filed suit against the parent company claiming the company’s policies are hurting the franchisees financially. Among the charges is that the franchisees are required to purchase only equipment specified by the corporation.
- Growth Chains: Sbarro’s has signed a new franchisee to open 5 Sbarro’s and 2 Pizza Cucinna’s in Uruguay in the next 5 years. Also, Sbarro’s plans to open 8 stores in Bangladesh. Domino’s Pizza UK will open 90 locations this year. Capriotti’s Sandwich Shop will open 15 locations this year and has a goal of reaching 500 units by 2025. Domino’s Pizza will open 53 stores in the U.S. and 164 stores internationally this year. Dickey’s Barbecue Pit will open 2 restaurants in Houston.
- Comparable Store Sales Reports: Del Frisco Restaurant Group (Del Frisco Grille down 5.4 percent, Double Eagle down 1.1 percent and Sullivan’s down 7.7 percent), Domino’s Pizza up 8.4 percent, and Ruby Tuesday down 5.8 percent.
For details and same-store sales of other chains, please click here for the Green Sheet.