U.S. retail sales down a bit in February while restaurant sales inched up for the month. Food-away-from-home prices continue to advance faster than grocery store prices. Robotic hamburger flipper too slow. Use of mobile apps continue to grow for restaurants. These stories and a whole lot more This Week in Foodservice.
The Census Bureau’s advance report on retail sales for February shows a 0.1 percent decline from March. Compared to February 2017, retail sales rose 4.0 percent. The advance report for January sales figures was revised upward to minus 0.1 from minus 0.3.
Foodservice and drinking place sales outperformed the total retail market in February, rising 0.2 percent from January. February 2018 restaurant and bar sales increased 2.7 percent compared to February last year. Foodservice and drinking place sales for January were revised up 0.1 percent from the flat sales results initially given in the advance report.
While restaurant sales results are not setting the world on fire this year, a slight increase beats none.
There are a number of factors to consider when looking at the data. The advance sales numbers are based on a small sample and are subject to revision. The sales data is for restaurants and bars only. The Census Bureau does not survey hotels, resorts, clubs, employee feeding, healthcare, schools and colleges, and military feeding. Some sales statistics are adjusted for calendar changes, holidays, weekends but not for menu price changes.
Economic News This Week
- The Producer Price Index for final demand rose 0.2 percent in February. The Index for final demand goods fell 0.1 percent. The index for food fell 0.4 percent and the index for energy fell 0.5 percent. The index for final demand goods without food and energy rose 0.2 percent. The index for final demand services rose 0.3 percent. The index for final demand goods and services is up 2.8 percent in the last 12 months.
- The consumer price index increased 0.2 percent in February after rising 0.5 percent in January. Some feared the jump in January indicated serious inflation. In the last 12 months the CPI is up 2.2 percent, which is just about where the Federal Reserve Board wants it. (For data on February food prices, please see the Foodservice News This Week section below.)
- Initial jobless claims fell 4,000 to 226,000 for the week ending March 10. The 4-week moving average fell 750 to 221,500. This report provides another piece of evidence that the U.S. employment picture remains strong.
- Industrial production increased 1.1 percent in February after declining 0.3 percent in February. Manufacturing production rose 1.2 percent. Mining jumped 4.3 percent, reflecting strong gains in gas and oil extraction. The utilities index fell 4.7percent due to warmer than normal weather. Capacity utilization rose 0.7 percent to 78.1, its highest reading since January 2015 but is still 1.7 percentage points below its long-run (1972-2017) average.
- The Empire State Manufacturing Survey showed activity “grew robustly” in March according to the survey’s sponsor, the Federal Reserve Bank of New York. The index rose 9.4 points to 22.5. (Any reading over zero indicates increasing activity.) The New Orders Index increased 3.3 points to 16.8. Shipments rose 14.5 points to 27. The Unfilled Orders Index increased 7.8 points to 12.7. The Average Work Week Index rose 1.3 points to 5.9. The only indicator that declined was the Number of Employees Index, which dropped 1.5 points to 9.4.
- The Philadelphia Federal Reserve Bank Index declined to 22.3 in March from 25.8 in February. (Any number over zero indicates increasing activity.) The New Orders Index rose to 35.7 from 24.5 in February. The Shipments Index increased to 32.4 from 15.5. The Unfilled Orders Index rose to 20.1 from 14.5 in February. Both employment indexes increased slightly.
- Privately owned housing starts fell 7.0 percent in February from January and fell 4.0 percent from February 2017. Single family housing starts increased 2.9percent over January in February. The number of Building Permits Issued in February fell 5.7percent from January but rose 6.5percent from February last year. Single family building permits fell 6.0 percent from January.
- The University of Michigan preliminary March Index of Consumer Sentiment shows a “favorable assessment” of the economy. The index rose to 102, the highest reading since 2004. This was due primarily to an all-time record high for the Current Economic Conditions Index of 122.8. However, the Index of Consumer Expectations fell slightly to 88.6 from 90 in February.
Foodservice News This Week
- The Consumer Price Index for February showed food prices were unchanged from January. In the last 12 months food prices increased 1.4 percent or less the total for all items in the CPI. Prices for food at home fell 0.2 percent but prices for food away from home rose 0.2 percent. In the last 12 months food at home prices have risen 0.5 percent while food away from home prices increased 2.6 percent. Some industry watchers believe this disparity is hurting restaurant sales.
- Hamburger-flipping robot too slow. A robot named “Flippy” couldn’t keep up with demand when customers stormed the Caliburger restaurant in Pasadena, Calif., to see him. The burger operation said they will retrain the human staff to work more efficiently with the robot and it will be back cooking “soon.” In the last 40 years or so various types of hamburger flippers have come out but to date none have really proved themselves yet.
- Usage of mobile apps to order and/or pay increased 50 percent at restaurants last year according to a recent study by The NPD Group. The conclusion of the study was that mobile apps are not just nice to have but something restaurants need to have. Consumers’ reasons for not using mobile apps to order or pay are that some simply prefer to use cash or do not wish to pay service fees or are afraid of identity theft.
- A future Kansas City food hall will accommodate up to seven concepts. Called the Palor KC, the facility will enable chefs to test their ideas for an investment of $10,000 to $15,000. The food hall, which is set to open this fall, will offer a state-of-the-art kitchen.
- Meal kit sales rose 26 percent last year according to Nielsen. While just 9 percent of consumers have tried a meal kit, 25 percent said they would consider doing so. Nielsen also reported that meal kits particularly appeal to “foodies,” with 26 percent of meal kit buyers considering themselves gourmet chefs.
- Blue Apron wants to start selling meal kits in stores. The number of subscribers to Blue Apron’s service had dropped by 120,000 at the end of last year. The company’s press release seems to indicate that it has not signed an agreement with any retailers yet.
- Electric car manufacturer to enter restaurant business. Tesla founder and CEO Elton Musk has tweeted about opening an electric vehicle charging station that would include a retro-style restaurant with car hops and a drive-in movie theater. According to a news report from Eater Los Angeles, a building permit application lists an address in Santa Monica, Calif.
- A new report looks at the quick-service market in the U.S. between 2017 and 2021. ResearchAndMarkets.com predicts fast feeders will have a compound annual growth rate of 3.03 percent during the 5-year period from 2017 to 2021. The report says the industry will innovate food packaging to be more environmentally friendly. Quick-service operators are focusing on developing fresh flavors for their menus. The report also sees a rising preference for home-cooked meals as hindering growth for fast-food operations.
- Corporate Stirrings: The Sullivan’s Steakhouse chain may be up for sale. The chain’s owner, Del Frisco’s Restaurant Group, said its other brands, Del Frisco Grille and Del Frisco Double Eagle, offer “far greater opportunities for expansion.”
- Growth Chains: Dunkin’ Donuts will open 3 locations in Kansas City, Mo. Duffy’s Sports Grille, with 34 locations currently, plans on growing “opportunistically” at 1 to 4 units a year. MOD Pizza added 100 locations in 2017, and plans on opening another 100 this year for a total of 400.
- Comparable Store Sales Reports: Del Taco up 2.4 percent, El Pollo Loco (system up 1.4 percent, company owned up 0.9 percent and franchised up 1.9 percent), Noodles & Company (system up 0.9 percent, company owned up 0.9 percent and franchised up 0.9 percent), and Papa Murphy’s (domestic down 2.6 percent, company owned down 2.3 percent and franchised down 2.6 percent.)
For details and same-store sales of other chains, please click here for the Green Sheet.