Foodservice operators' brightened their outlook and U.S. manufacturers got a boost by companies replenishing their inventories. Despite this good news, the U.S. jobs situation remains muddled. Take it all and mix it together and you have This Week in Foodservice. 

The Restaurant Performance Index rose 1.0 percent in January moving back into positive growth territory at 100.6. Most of the increase was driven by a 1.3 percent leap in the Expectations Index, which is now at an 8-month high. Overall, the Restaurant Index is at 5-month high.

The Current Situation Index also rose 0.6 percent. However, the Current Situation component remains less than 100 at 99.7. More operators reported same-store sales were up in January (44 percent) than said they were down (37 percent) but 33 percent of those surveyed said customer traffic was higher while 40 percent said traffic declined.

As for investments in expansion, remodeling and/or equipment purchases, 52 percent of the operators said they had done so in the last 3 months. For the December report, only 45 percent indicated they had done so. As for the future, 59 percent said they were planning on make a capital expenditure in the next 6 months vs. 50 percent of those responding in December.

Economic News This Week:

  • Gross domestic product grew a scant 0.1 percent in the Commerce Department's second estimate for the fourth quarter of last year. Or, as some observers state it, GDP was virtually flat. The only silver lining that some economists could come up with is that a decrease in business inventories pulled the GDP down. As companies rebuild their inventories, GDP will strengthen in the first quarter of this year.
  • Personal income and personal spending moved in opposite directions in January. The U.S. Bureau of Labor Statistics said while personal spending rose 0.2 percent, the third straight month of increases, personal income dropped 3.5 percent, the biggest decline in 20 years. Needless to say, economists state this is an unsustainable model.
  • First-time jobless claims fell by 22,000 to 344,000 for the week ending Feb. 22, allowing the roller coaster ride to continue. The 4-week average, which tends to smooth out the extremes, dropped to 355,000.
  • The U.S. housing market continued to show improvement. New home sales shot up 15.6 percent in January to an annual rate of 437,000. This is the highest level in four and a half years and biggest monthly jump since 1993, according to the U.S. Department of Commerce. The U.S. Department of Commerce also revised new home sales in December up to 378,000 from 369,000 annualized. The National Association of Realtors reported that pending home sales rose 4.5 percent in January, which is the highest in two and a half years.
  • Durable goods orders fell by 5.2 percent in January but a closer look at the details actually shows a decent picture for manufacturers. Driving orders down was a big drop in defense spending and a decline in commercial aircraft orders. Excluding these 2 categories, capital goods orders increased by 6.3 percent. This indicates that companies are investing in the products that make other products and is a good sign for the economy.
  • U.S. auto and light truck sales were strong in February, maintaining an annual rate of over 15 million. All three of the Detroit "Big 3" had single-digit sales growth as did Toyota. Honda and Nissan sales were off slightly.
  • The Chicago Federal Reserve's Production Manufacturing Index increased in February to 56.8 over the 55.6 reported in January. The new orders component of the survey was 60.2. Overall the Chicago PMI was the best since March of last year.
  • The Institute for Supply Management's Production Manufacturing Index improved 1.1 points in February to 54.2. Fifteen of the eighteen industries covered by the study increased while all five of the sub-indices including production and new orders also increased.
  • Consumer confidence continues to ebb and flow. Two of the heavy hitters in measuring consumer sentiment reported positive movement with the Conference Board saying that their February reading jumped to 69.6 from 58.6 in January while the Reuters/University of Michigan survey reported a final February result of 77.6, which is the highest since November last year and an increase over the preliminary reading of 76.3. On the flip side, Gallup stated their U.S. Economic Confidence was "wobbly" as they reported a minus 13, which is the second decline in 2 weeks since the index hit a 5-year high at minus 8. And, NACS Consumer Fuels Survey found 23 percent of people who buy gasoline were "very pessimistic" about the economy in February. This is a significant increase over the 18 percent of very pessimistic consumers in January.

Foodservice News This Week:

  • Of the Top 10 U.S. restaurants, 6 are in New York City. But, according to a poll of 150 food critics, writers and bloggers as reported by Reuters, the best restaurant is The French Laundry in Yountville, Calif.
  • Top coffee sellers in the U.S. are McDonald's (14.82 percent market share), Dunkin' Donuts (13.73 percent), Starbucks (11.8 percent) and 7-Eleven (6.84 percent). This is based on research by StudyLogic and is determined by number of servings.
  • Darden's Olive Garden announced the chain will cut back on expansion plans, opening about 15 new restaurants a year. But, that number could reduce further depending on business conditions according to the chain's CFO. Olive Garden is also putting its remodeling program on hold, according to the Orlando Sentinel, because the chain wants a less traditional look and may go to a more modern design.
  • Remodeling continues unabated at Tim Horton's, at least in part, according to an article in the Toronto Globe & Mail, because the chain wants to stay competitive with McDonald's extensive makeover program in Canada. Both companies are going upscale with wide screen TVs, upscale furnishings and more comfortable seating in order to attract and hold consumers. And, based on a report from Yahoo News, Wendy's and Subway are following similar paths.
  • A National Hiring Day was announced by Jamba Juice for March 5. Last year the chain committed to hiring 2,500 new employees and ended up with 6,000.
  • Holiday Inn has announced that demand is outstripping the supply of rooms and the chain will open 25,500 rooms in the Americas this year after opening 17,000 additional rooms in the Americas in 2012.
  • And the second largest burger chain is... Scott Hume, publisher of Burger Business has analyzed the sales numbers for the US and Canada and thinks, while it is really close, that BK will finish #2 behind (of course) McDonald's.
  • Growth chains: Blaze Fast Fired Pizza will open 10 stores in the Greater New York City and Connecticut areas. Dunkin' Donuts has signed franchise agreements that will result in 13 new locations in the Dayton, Ohio, area and an addition 12 units in Cincinnati. A McAlister's Deli franchisee will open 5 new delis in Cincinnati and also made a commitment to bring McAlister's to Pittsburgh. Round Table Pizza has signed an agreement to develop 50 restaurants in India. Smashburger will be opening 15 restaurants in Calgary area of Canada. Schlotzky's has announced plans for franchisees to open 170 stores in California.
  • Comparable Store Sales Reports: AFC-Popeye's (domestic up 6.4 percent, company-owned up 7.8 percent, and franchised up 6.3 percent), Applebee's (up 0.9 percent), Brinker International (Chili's up 1.0 percent; Maggiano's up 0.6 percent), Carrol's (up 7.3 percent), Chuy's (up 5.2 percent), Cracker Barrel (up 3.3 percent), Domino's (up 4.7 percent), Einstein Noah (up 1.4 percent), Fiesta Restaurant Group (Pollo Tropical up 8.3 percent and Taco Cabana up 6.8 percent), IHOP (down 2.6 percent), and Papa John's (up 4.9 percent, company owned down 6.9 percent, and franchised up 4.6 percent.)

For details and comparable store sales reports on other chains, please click for the Green Sheet.

Equipment Supplier Financial Data has a report on the Middleby Corporation. Please click here for financial data report.