Casual Dining’s Same-Store Sales Increase, Chili’s Reduced Menu Working, Comparable Store Sales from 20 Chains, and More

Same-store sales increase at casual dining chains, per a Knapp Track report. Virtual restaurants are a big thing. Chili’s says the reduced menu is working. More than 20 chains report comparable store sales. These stories and a whole lot more This Week in Foodservice.

Same-store sales increased 1.4 percent in October for the more than 50 casual dining chains that participate in the Knapp Track study of the segment.

Guest counts declined 1.5 percent, while check averages increased 2.9 percent. All four weeks in October had positive comps and negative traffic. Driving sales were strong comps from Florida and Texas, bouncing back from hurricane-impacted volume losses. Pent up consumer demand led to a 5.9 percent sales increase in Florida and 4.0 percent in Texas. Combined, the two states account for 23 percent of restaurant sales so it is possible that same-store sales were up only slightly in other states.

 The Knapp Track data is provided as a courtesy of Bank of America Merrill Lynch.

Economic News This Week

  • Initial jobless claims hit 239,000, an increase of 10,000 for the week ending Nov. 4. The 4-week moving was 231,250, a decline of 1,250. This is the lowest the 4-week moving average has been since March 31, 1973. The Department of Labor reported that jobless claims being filed in the Virgin Islands are still disrupted by damages from the hurricanes. But, claims processing in Puerto Rico have picked up and officials are now working on the backlog.
  • The International Council of Shopping Centers looks for active Christmas spending over the 4-day Thanksgiving holiday weekend thanks to 62 percent of consumers surveyed planning to visit a shopping center during that timeframe. This is up from 57 percent indicating the same intentions last year. Supposedly the heaviest internet shoppers, 77 percent of the Millennials plan to visit a shopping center this Thanksgiving weekend.
  • Consumer credit increased 6.6 percent in September, according to the U.S. Federal Reserve. Revolving credit (mostly consisting of credit card debt) rose 7.7 percent while non-revolving credit (car loans, student loans, etc.) increased 6.3 percent.
  • Orders for manufactured durable goods increased 2.0 percent in September according to the U.S. Census Bureau’s full report. Shipments increased 0.9 percent and unfilled orders rose 0.2 percent.
  • The Gallup Organization’s U.S. Economic Confidence Index increased to +7 in the first week of November, its highest reading since August. The Index averaged +3 in October. The index measures the difference between consumers who are positive about the economy vs. those with negative feelings. Thus, in early November, 7.0 percent more Americans were optimistic about the economy than were negative. Perhaps the most interesting thing about this survey was from its initiation in 2008 through 2016, when it reported almost entirely negative readings.
  • The preliminary results of the University of Michigan Index of Consumer Sentiment showed a decline. The University’s chief economist, however, characterized the changes as “quite small” and noted the index remained at its second highest level since January. The Index fell to 97.8 from 100.7 in October. The Current Economic Conditions Index declined to 113.6 from 116.5 in October while the Index of Consumer Expectations fell to 87.6 from 85.2. 

 Foodservice News This Week

 

  • The three largest foodservice distributors reported dollar sales and case volume increases in the last quarter. Some view the sales performance of this trio as sort of an index of foodservice operators’ volume. If so, the foodservice industry performed well. A counter argument could be made that if operators are struggling, these distributors could have increased sales by taking market share from smaller competitors. Here are links to the most recent financial results for Sysco, US Foods and Performance Food Group.
  • Virtual restaurants are on the rise. Actually, there is nothing virtual about them. They are just as real as any other restaurant kitchen. What they don’t have is a dining room. These restaurants only offer food for delivery. In some instances, as many as 10 different restaurants may use 1 kitchen. The consolidated operation keeps costs low and efficiency high. Online services like GrubHub and DoorDash have invested heavily in these kitchens.
  • Chili’s smaller menu is working. The casual dining chain chopped the number of menu items by 40 percent and has seen serving times drop by 12 percent. The company believes this will increase restaurant traffic and sales significantly.
  • Bruegger’s Bagels will remain a separate brand. One theory was that Caribou Coffees would fold Bruegger’s into the Caribou brand when Caribou announced plans to buy Bruegger’s earlier this year. JAB Holdings owns Caribou and Einstein Bros. Bagels. The two run some co-branded stores.
  • Bloomin’ Brands marries two concepts. Opening in January in South Tampa, Fla., will be an operation called Outback & Carabba’s Express. The new restaurant will focus on delivery, takeout, and catering.
  • Starbucks opened the first Princi Bakery in the U.S. in the coffee giant’s Reserve Roastery store in Seattle. Princi will be the exclusive food offering in all of the Starbucks Reserve Roastery concepts.
  • Kellogg’s will open its second Cereal Café in December. Like the first store, customers will be able to create their own unique combinations of cereals and flavors. The new store will be five times the size of the original one.
  • Panera Bread Company will buy Au Bon Pain. Panera Bread’s CEO, Ron Shaich, co-founded Au Bon Pain in 1981. The company acquired Saint Louis Brad Company, parent of Panera Bread in 1993. Au Bon Pain was sold in 1999, so this latest move reunites the two brands. Purchase price was not disclosed.
  • Not just another restaurant failure. Unsuccessful restaurants are practically a cliché in the business. Too often the failed operation leaves unpaid suppliers, landlords, utilities, taxes and, worst of all, unpaid employees. But, the story of Toby Keith’s I Love This Bar and Grill was an especially nasty one. It’s not clear if any of the chain’s locations remain open but there is no question that restaurants were suffering from the beginning with late payments and slow payments. Court-ordered judgements were simply ignored. When the Cincinnati location closed, employees’ final paychecks bounced. It turns out that the Toby Keith debacle was run by a man called Frank Capri. His real name was Frank Gioia Jr., who showed up in Phoenix courtesy of the federal government’s witness protection program. Mr. Gioia was a member of New York’s Lucchese crime family who was let out of prison for testifying against his former employer. Somehow he kept his background hidden long enough to fleece a bunch of honest folks. (Toby Keith was neither an investor nor in management capacity with the company. He received a fee for the use of his name.)
  • Papa John’s CEO is displeased with the NFL. John Schnatter blamed the National Football League for what he sees as the organization’s failure to deal with the pregame protest controversy. He claims that this has caused a dip in pizza sales. Papa John’s is a major advertiser on NFL games and is said to be examining its commitment to spending on NFL advertising. Mr. Schnatter’s statements brought a comment from Pizza Hut that its sales are up and the chain’s leadership believe sports are good for the company’s business.
  • Growth Chains: Dunkin’ Donuts will open four locations in Raleigh, N.C. Zoe’s Kitchen will open 25 restaurants in 2018 after opening 38 this year. Tropical Smoothie Café will open eight cafes in the Dallas-Ft Worth area. Grown, a healthy foods chain that has 6 restaurants in the Miami area, plans to open as many as 15 units next year.
  • Comparable Store Sales Reports for October: Applebee’s down 7.7 percent, Fogo De Chao down 5.1 percent, Carrols Restaurant Group up 7.5 percent, CEC Entertainment down 6.9 percent, Fiesta Restaurant Group (Pollo Tropcal down 10.9 percent and Taco Cabana down 12.6 percent), IHOP down 3.2 percent, J. Alexander’s (J. Alexander’s / Redlands up 1.4 percent and Stony River Steak House up 3.7 percent), Kona Grill down 7.2 percent, Luby’s (All concepts down 5.1 percent, Luby’s Cafeteria down 4.5 percent, Fuddrucker’s down 3.6 percent, Cheeseburger in Paradise down 15.4 percent, and combo units down 7.2 percent), Noodles & Company (System down 3.5 percent, company owned down 3.8 percent, and franchised down 16 percent, Papa John’s (North America up 1.0 percent, company owned up 1.7 percent and franchised up 0.7 percent) Papa Murphy’s (domestic down 4.1 percent, company owned down 2.7 percent and franchised down 4.2 percent), Rave Restaurant Group (Pie Five Pizza down 17.3 percent and Pizza Inn up 1.4 percent), Red Robin down 0.1 percent, and Wendy’s up 2.0 percent.

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

 

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