Casual dining chains saw sales uptick in March, per Knapp-Track. Some chefs find small kitchens work well. Some Tim Hortons franchisees in Ontario are not getting their shipments of supplies, which is widening their rift with corporate management. These stories and a whole lot more This Week in Foodservice.

Same-store sales at casual restaurants increased 1 percent in March, according to Malcolm Knapp’s Knapp-Track Report, which tracks more than 50 casual dining chains. Sales increased despite guest counts dipping 1.9 percent. Check averages increased 2.9 percent. Knapp attributes the rise to easing of winter weather, Easter and spring break and many consumers paying lower taxes.

Looking ahead, Knapp thinks April and May sales will play a critical role in determining how much of the increase was due to “pull forward” due to the timing change and how much was “structural.” The timing change refers to the fact that Easter was earlier this year than last year, which moves the key spring break vacation period — and related foodservice sales — forward, too). If that theory holds true, what looks like a sales increase now may in face simply be that sales moved into a different period.

Knapp added that comparisons will be easier due to weaker performance last year in April through September.

Other key observations from Knapp include:

  • Casual-dining check averages are up around 3.0 percent as some chains cut back on discounting.
  • California, Florida and Texas continue to outperform the rest of the country.
  • High-end steakhouse comps were up strongly at +4.7 percent.

Fast-casual chains saw a 1.4 percent sales decline, per Knapp. This data does not, however, include Chipotle and Panera, which do not participate in the program. He also noted fast-casual unit growth was down “meaningfully.”

Knapp’s information is courtesy of Bank of America Merrill Lynch.

Economic News This Week

  • Initial unemployment claims changed little for the week ending April 14 from the previous week. The Department of Labor reported the number of claims fell 1,000 to a final reading of 232,000. The 4-week moving average also didn’t change much, rising 1,250 to a final level of 231,250.
  • The Conference Board’s Leading Economic Index increased 0.3 percent in March. This follows an increase of 0.7 percent in February and 0.8 percent increase in January. Even though the percentage of the increase was lower than the previous months, the Conference Board anticipates solid growth in the economy in the next six months.
  • Industrial production grew by 0.5 percent in March. The index increased 4.5 percent in the first quarter this year. The manufacturing sector crept up 0.1 percent. Mining output (mostly gains in oil and gas extraction) rose 1.0 percent. Utilities jumped 3.0 percent but this was mostly due to slow February activity caused by warmer than normal temperatures. Capacity Utilization for the industrial sector moved up 0.3 percent in March to 78.0 percent, a rate that is 1.8 percent below the long run (1972-2017) average.
  • The Empire State Manufacturing Survey Index retreated in April. The New York Federal Reserve reported a decline in most current indicators but most of the indicators stayed well within the expansion mode. (Any number greater than zero indicates expansion.) The General Business Conditions Index fell 6.7 points from March but still stayed well within the positive zone at 15.8. The New Orders Index fell to 9.0 from 16.8. The Shipments Index fell to 17.5 from 27.0. The Unfilled Orders Index fell to 3.7 from 12.7. The Fed states the numbers show continuing growth but at a slower pace.
  • The Philadelphia Federal Reserve Manufacturing Business Outlook Index increased by 1 point in April to 23.2. (Any reading greater than zero indicates increasing activity.) Other indicators — New Orders, Shipments and Unfilled Orders Indexes — all fell in April while staying well within expansion territory. Both employment indexes rose. A spokesman for the Philadelphia Federal Reserve said the results of the survey shows continuing growth in manufacturing sector in the region.
  • Privately owned housing starts increased 1.9 percent in March compared to February and 10.9 percent over March 2017. Single-family housing starts dropped 3.7 percent from February. Building permits for privately owned housing increased 2.5 percent in March over February and increased 7.5 percent from March 2017. The number of building permits issued for single family homes fell 5.5 percent from February.

Foodservice News This Week

  • Does a smaller kitchen mean a smarter kitchen? One chef says yes. Chef Chris Ono in Santa Monica, Calif., says turning out 100 dinners a night from his 170-square-foot kitchen is not an obstacle but an opportunity. Ono adds that a smaller kitchen means more room for tables and more profit potential. HGTV brought us tiny houses. Are tiny kitchens the wave of the future?
  • Some Tim Hortons franchisees in Ontario experienced delays in supply deliveries. Tim Hortons’ CEO said upgrades and changes in its distribution center were responsible for 45 products, including food items and sanitation supplies, not being available. The company gave franchisees who were experiencing shortages permission to buy products from other sources. The supply problems follow a series of incidents that caused tension between Tim Hortons and its franchisees.
  • Tim Hortons will relocate its headquarters. The chain will move from its Oakville, Ontario, building to a 65,000-square-foot space in Toronto’s financial district by the end of the year. But, the restaurant chain’s training facility — Tim’s University — will remain in Oakville.
  • Famous Dave’s unveiled a new interior. The new brighter design features the bar in the center of the restaurant and also introduces a new menu. Company founder Dave Anderson played a key role in the new design and menu changes and Famous Dave’s may expand the new design to other locations.
  • Corporate Stirrings: The Roark Capital Group LLC has raised more than $3 billion toward its goal of creating a $5 billion fund for more acquisitions. Roark currently owns 20 foodservice operations. Its most recent acquisitions include Buffalo Wild Wings and the Jimmy John’s Sandwich chain. The Speedway convenience store chain will purchase 78 Express Mart stores primarily in the Buffalo, Rochester and Syracuse, N.Y., markets. Speedway is a wholly owned subsidiary of Marathon Petroleum Corporation and the Express Mart stores are owned by Petr-All Petroleum Consulting Corporation. The price of the deal was not provided.
  • Growth Chains: Dunkin’ Donuts will open seven restaurants in Montgomery, Ala. Black Bear Diner will open a total of 12 restaurants in Hawaii, Missouri, Oklahoma and Texas. Teriyaki Madness will open restaurants in Madison, Ala., and Atlanta. Muscle Maker Grill will open about 36 locations in Hawaii, Texas and Virginia. Wendy’s plans to open 600 restaurants worldwide by 2020, many of which will utilize the chain’s the new, smaller 2.0 design.
  • Comparable Store Sales Report: Fiesta Restaurant Group (Pollo Tropical up 1.1 percent and Taco Cabana down 1.7 percent.)

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