U.S. retail sales rose in March as did restaurant sales. The price for food away from home has increased six times compared to food at home. Convenience stores saw sales and profits rise in 2017. Shopping mall owners now eagerly pursue foodservice operators. These stories and a whole lot more This Week in Foodservice.
The U.S. Census Bureau reported total retail sales increased 0.6 percent in March compared to February. Compared to March of last year, sales were up 4.5 percent. In the first 3 months of this year, retail sales are up 4.8 percent.
Foodservice and drinking place sales grew 0.4 percent in March vs. February. Foodservice sales increased 3.1 percent in March 2018 compared to March 2017. In the first 3 months of the year, foodservice and bars had a 2.8 percent rise in sales. The Census Bureau says the previously announced +0.2 percent increase in foodservice sales in February over January has been revised to +0.4 percent. So according to the government calculations, restaurants and bars continue to post positive numbers in the first quarter of the year.
As we point out every month, there are important factors to consider when reviewing the Census Bureau’s report. Due to a small initial sample, the numbers are classified as “advance sales.” As it gathers more responses, the government can, and frequently does, revise the data.
The Census Bureau only surveys restaurants and drinking places. Excluded are hotels, motels, resorts, clubs, retailers, employee feeders, K-12 schools, colleges, healthcare and military. Thus, this data does not includes 30 percent to 40 percent of the foodservice industry.
Finally, some of the numbers are adjusted for weekends, holidays and seasonal changes but there is no adjustment for menu priced changes.
- Initial jobless claims declined 9,000 to a final level of 233,000 for the week-ending April 7. The less volatile 4-week moving average increased 1,750 to a final level of 230,000. This week’s report marks the 162nd week with claims at less than 300,000. The previous streak of less than 300,000 claims goes back to the 1960’s when the labor force was half the size it is now.
- The Producer Price Index for Final Demand increased 0.3 percent March. The core index – without foods and energy – was also up 0.3 percent as a decrease in energy prices offset an increase in the price of foods. Final demand prices increased 3.0 percent in the past 12 months.
- The Consumer Price Index fell 0.1 percent in March.In the last 12 months the index for all items grew by 2.4 percent. The core index, that is without food and energy prices, was up 0.2 percent in March.
- Small business operators remain optimistic. The National Federation of Independent Businesses reports that the NFIB Small Business Economic Trends Survey is in the 16th consecutive month of historically high readings. While the March reading dropped to 104.7 from 107.6 in February, it remains among the highest in survey history.
- The preliminary April University of Michigan Index of Consumer Sentiment fell to 97.8 from 101.4. The Current Economic Conditions Index dropped to 115.0 from 121.2 last month. The Index of Consumer Expectations declined from 88.8 in March to 86.8. A spokesman for the University stated the significant drop in the Current Economic Conditions was due in large part to concern over trade policy.
Foodservice News This Week
- The March Consumer Price Index showed a 0.1 percent increase in The Food Index.Prices for both food at home and food away from home grew by 0.1 percent. In the last 12 months food prices are up 1.3 percent but there is a significant difference between food at home which is up 0.4 percent and food away from which is up 2.5 percent.
- U.S. convenience stores continue to grow sales and profits. The National Association of Convenience Stores (NACS) reports that c-store sales grew 9.3 percent to $601.1 billion in 2017. C-stores now account for 3.2 percent of U.S. gross domestic product. Gasoline accounted for most of the sales increase, but foodservice sales also performed well, racking up sales of $53.3 billion. Foodservice sales accounted for 22.5 percent of instore sales and 33.9 percent of gross profit dollars.
- Mall owners continue to pursue foodservice operators. A trend that started several years ago is picking up momentum. Originally, shopping malls went after foodservice operators to replace retail shops that bailed out due to competition from internet firms. Now, commercial real estate advisory firm Jones Lang LaSalle reports 40 percent of consumers will pick a mall based on the restaurants located there. And, shoppers who eat at the mall spend more time and more money at mall stores. The latest trends in mall foodservice favor food halls and local restaurant operators.
- The top 500 restaurant chains saw sales growth slow in 2017. Technomic reports the 500 largest restaurant chains had cumulative sales growth of 3.1 percent last year, down from 3.8 percent in 2016. Also, Technomic found that the Top 500 were about evenly split between limited and full-service operations. For chains 501 to 1,500, 65 percent of the operations were limited service.
- Foodservice delivery shows a double digit increase in the past five years. The NPD Group reports delivery service is up 20 percent in sales and 10 percent in visits. Further, digital ordering now accounts for more than half of delivery visits while phone orders make up 49 percent. An NPD spokesperson previously stated that delivery service had gone from something nice to have to something operators need to have. He added that convenience is one of the most important reasons why consumers eat out and delivery raises the level of convenience.
- Domino’s will deliver to 150,000 designated “hot spots.” These could be any place from an airport to a dog park to a beach. Essentially the pizza chain is adjusting by reaching out to customers at locations without a street address.
- The Sheetz c-store chain initiated a major hiring program. The company plans to hire more than 2,500 new employees, a 14 percent increase from its current staffing level. Sheetz operates 568 stores in 6 states and has long had a major commitment to foodservice.
- Robots won’t replace workers but enable them to interact more effectively with customers. An executive with a foodservice robotics manufacturer states that a server may have to deal with six or more different tasks but robots can help them shed layers of responsibilities.
- The city of Miami Beach passed a law requiring restaurants to post accurate menu prices. The city was getting complaints from tourists that they were being charged $50 for cocktails and hundreds of dollars for food items.
- Bertucci’s, a 59-unit chain headquartered in Northborough, Mass., has voluntarily filed for Chapter 11 bankruptcy. A company called Right Lane Dough Acquisitions LLC has agreed to purchase substantially all of Bertucci’s assets, subject to better offers.
- Growth Chains: Texas Roadhouse will open 30 restaurants in the U.S. this year and as many as 6 in international markets. Cuban Manna plans to open 26 Sergio’s Cuban Restaurants in Florida. Capriotti’s Sandwich Shop will open three locations in Los Angeles County, California. Starbucks will open 10 stores in Uruguay by 2020. Dunkin’ Donuts will open five restaurants in North Carolina. Fazoli’s opened 5 restaurants so far this year and plans to add 7 more by the end of 2018.
(No Green Sheet this week).