- Published on Tuesday, 27 November 2012
- Written by Jerry Stiegler
Customer visits are up but check averages are down at casual dining establishments. So what does this all mean for the foodservice industry? This Week In Foodservice tries to make sense of it all.
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According to the Knapp-Track Survey of roughly 60 casual restaurant chains, same-store sales declined 0.9 percent in October. Same-store guest counts were down 2.8 percent but check averages rose 1.9 percent. Both figures are vs. October 2011. The fall was not totally unexpected given previous announcements regarding sluggish sales.
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Merrill Lynch, which provides Mr. Knapp's data, noted that there has also been a slowdown in limited service restaurant sales although their comparable store sales have remained positive. The investment company also stated there has been "some signs of slowing in the quick casual sector."
Earlier this month an article in Forbes predicted that falling work hours and hourly wages have forced a change in the dining out patterns of Millennials (those individuals between 18 and 34 years old) that has resulted in the number of their eating out occasions dropping to 202 times this year from 252 in 2007. It is possible, depending on how the questions are asked, that drop is overstated in that certain consumers don't consider going through a restaurant drive-thru window or ordering a pizza to be "eating out."
Economic News This Week
- The Christmas buying season got off to a rousing start this past weekend, according to the National Retail Federation. The NRF reports sales increased 12.8 percent on 247 million shopping trips (up 9 percent over last year) and spending per person climbed by 6 percent. Online shopping also enjoyed double digit sales growth. Another industry watcher, ShopperTalk, said that despite traffic being up 3.5 percent on Black Friday, sales actually declined 1.8 percent. A number of sources felt that the decision by some retailers to open Thursday evening stole sales from Friday. An analyst at Deustche Bank said their survey of WalMart, Target and 1,000 shoppers indicates that "volume is getting shifted with the pie not necessarily growing." Even with a strong start to the holiday season, some merchants fear that sales will tail off later this year.
- Initial jobless claims for the week ending Nov. 16 fell by 41,000 but stayed above 400,000 at 410,000. Average 4 week claims came in at 386,000. As pointed out last week, a number of factors including Hurricane Sandy may be distorting the figures and disguising the direction of the employment market.
- Seasonally adjusted unemployment in November rose to 7.9 percent from 7.4 percent in October based on the Gallup Poll. Please note this is not the U.S. government unemployment number, which will not be out until December.
- Small business creation fell in October for the fifth straight month according to Intuit's Small Business Employment Index. The research company also reported that the number of hours worked has been on steady decline over the year. Depending on the source, small business may or may not be the creator of jobs but in either case this does not bode well.
- The housing market showed some improvement with the National Association of Realtors reporting October existing home sales rose 2.1 percent over September to an annualized rate of 4.79 million. Building permits dropped 2.7 percent in October over September and ran at an annualized rate of 866,000. Housing starts were a brighter spot in October. The US Commerce Department said housing starts rose 3.6 percent to an annualize rate of 894,000, which is a 4-year high. But, this remains far below the 2.7 million housing starts in January, 2006.
- The Conference Board's leading economic indicators for October were up 0.2 percent. Four of the indicators were up, 4 were down and 2 were the same.
- Consumer confidence as measured by Reuters/University of Michigan fell from November's preliminary finding of 84.9 to 82.7, which is virtually flat from the final October report of 82.6. Gallup's Economic Confidence Index fell from a minus 11 two weeks ago to minus 15. This is still one of the best readings of the year for this particular study.
Foodservice News This Week
- A number of new concepts are being developed by existing restaurants, according to Forbes. Starbucks purchased fruit drink maker Evolution Fresh last year and has expanded the company's grocery products into a 4 store operation. Starbucks has just bought 300 store shopping mall chain Teavana. White Castle is working on two ideas it developed in house — Laughing Noodle and sandwich concept Deckers. Famous Dave's and Red Robin are developing down sized versions of their parent companies.
- Finding healthy foods in airports can be a challenge but the Physicians Committee for Responsible Medicine has developed a formula that they applied to 18 major airports. According to the organization, Newark Liberty International Airport serves the healthiest food and Hartsfield-Jackson Atlanta International Airport offered the least healthy fare.
- The GetGo C-store chain, owned by Giant Eagle, has opened a new unit in a suburb of Pittsburgh. In addition to gas and a car wash the 5,500-square-foot store offers subs, breakfast sandwiches, sushi, Angus burgers, salads and wraps. The store has seating for 25 foodservice patrons.
- Burger King's home delivery test program, which recently expanded to Miami and Houston, will be available in New York City. The test areas offer delivery from a dozen or fewer units.
- Growth chains: Chop't Creative Salad Company will expand their restaurants in the DC area to around 16 with plans to eventually have 75 stores on the East Coast. Jamba Juice has plans to add 120 locations in their home state of California. Papa John's expansion plans may add as many as 200 new franchisees in the coming year. Dickey's Barbecue, which added 80 new restaurants in 2011 will add 100 more this year.
- Comparable store sales reports: COSI (down 0.7 percent), Krispy Kreme (up 6.8 percent), and Pizza Inn (down 6.8 percent).
For details as well as Comparable Store Sales for other chains, click here for the Green Sheet.