Published on Tuesday, 29 April 2014
Written by Jerry Stiegler
This Week in Foodservice looks at which regions offer the most potential for restaurant growth, gives a report from the breakfast wars, gives the latest comparable store sales for more than a dozen chains and a whole lot more.
Buxton, a real estate consultant for restaurants and other retailers, crunched some numbers from the research firm IBISWorld and came up with 2014’s “hot” markets for retail growth. The metro areas where Buxton expects the most growth are Dallas/Ft. Worth, Houston, Austin, Los Angeles, San Francisco, Phoenix, Seattle, Chicago, Atlanta, and the Northeast Corridor, which includes New York, Boston, etc.
Other large markets of interest include Minneapolis; Milwaukee; Portland, Ore.; Denver; Salt Lake City; St. Louis; Kansas City, Mo. and Nashville. North Carolina continues to grow due to activity in Charlotte, Raleigh and their surrounding areas. Also, Buxton reported that a number of retailers are looking at sites in beleaguered Detroit.
The National Restaurant Association took a different angle when looking at growth when it examined regional hiring patterns. Using Bureau of Labor Statistics data, the NRA’s chief economist determined that while all 50 states experienced foodservice job increases last year, Nevada led the way with 6.3 percent more foodservice hiring. Texas and the District of Columbia tied for second with a 5.3 percent increase in hiring. Following closely were California, which increased hiring by 5.1 percent, and Utah and Georgia, which each saw job growth increase by 5 percent.
In terms of actual number of foodservice employees hired, California led the way with 58,000, followed by Texas (45,800), Florida (31,300), New York (22,900), Georgia (15,700), North Carolina (12,700) and Ohio (10,700).
Economic News This Week
- First-time jobless claims totaled 329,000, a sharp increase of 24,000, for the week ending April 19. The moving 4-week average was 316,700, an increase of 4,750. Labor Department officials said there were no special factors accounting for the rise in initial claims.
- Durable goods orders jumped nicely in March, increasing 2.6 percent following a 2.1 percent rise in February. Transportation equipment orders led the way, growing 4 percent last month. Without transportation, durable goods orders rose 2 percent. Excluding defense orders, durable goods orders were up 1.8 percent. Shipments increased 1.1 percent while unfilled orders increased 0.6 percent. Orders for capital goods — those goods used to manufacture other goods — were up a strong 7.1 percent.
- March existing home sales fell 0.2 percent from February to a seasonally adjusted annual rate of 4.59 million. This is the slowest sales rate since June 2012. Existing home prices increased 7.9 percent over March of last year. The National Association of Realtors believes that the larger than normal price increases are the result of the low number of homes on the market. The association also reported that distressed sales (foreclosures, short sales, etc.) accounted for 14 percent of sales in March. Distressed sales accounted for 16 percent of February 2014 sales and 21 percent of sales in March 2013.
- New home sales declined 14.5 percent in March, resulting in a seasonally adjusted annual rate of 384,000. New home sales are down 13.3 percent from a seasonally adjusted rate of 443,000 in March of last year.
- Gauging consumer confidence levels remains an interesting exercise. For example, the Gallup Organization’s U.S. Economic Confidence Index has stayed in the same range of minus 15 to minus 16 for 3 weeks. The index reflects the difference between those consumers who say the economy is getting better vs. those who say it is getting worse. The question has been asked since 2008 and has never been in positive territory. In contrast, the Reuters/University of Michigan Consumer Sentiment Index hit 84.1 in April, up from the preliminary reading of 82.6 and March’s reading of 80. Consumer confidence was up in April.
Foodservice News This Week
- The battle for breakfast continues to heat up. Taco Bell’s assault on the breakfast market has provoked a response from McDonald’s. Mickey D’s CEO said that his chain has dominated the fast food breakfast business for 35 years and “we don’t plan to give that up.” McDonald’s plan seems to be a communications program stressing that McDonald’s eggs, bacon and sausage are made fresh and are not “a microwave deal.”
- Price, taste and service matter the most to quick-service and casual-dining customers but other factors count, too, according to research from Deloitte & Touche. For example, customers who join loyalty programs are in fact more brand loyal. Click here to learn more about the study.
- Taco Bell will target a different consumer set when it begins testing a new concept. Called the US Taco Company, the fast-casual restaurant will offer higher quality ingredients and a better atmosphere to lure consumers who are willing to spend a little more. The restaurant will open in Huntington Beach, Calif. in a few months.
- Corporate Stirrings: Brazil-based International Meal Co. purchased 12 Magaritaville restaurants and plans to grow the chain. Carrols Restaurant Group, Burger King’s largest franchisee, announced an initial public offering of 10 million shares at $6.20 per share. McDonald’s plans to sell more company-owned units outside the U.S. to franchisees.
- Pizza Hut plans to test an in-store coffee cafe In India. The chain hopes to drive sales by offering more variety and adding a different daypart for the brand. The test concept may be available in as many as 10 stores by the end of the year.
- The QuickTrip C-store chain is rolling out a new kitchen and menu featuring made to order hot foods including flatbreads, toasted sandwiches and soft pretzels. The menu will also include shakes, real fruit smoothies, and specialty coffee drinks. A VP said that with falling tobacco sales, foodservice is a way of attracting more traffic.
- Growth Chains:Arby’s will open 38 restaurants in Colorado in the next 7 years. Togo’s Eatery will open 5 locations in Eastern Idaho and 8 units in Salt Lake City. Dunkin’ Donuts will open between 380 and 410 restaurants in the U.S. and 685 to 800 more outside the country this year. PizzaRev, with 8 stores currently, plans to expand to 65 by the end of 2015. Village Inn has signed 12 new franchisees who will open a total of 12 new locations. KFC plans o opening 30 new stores a year for the next 5 years in England and Ireland.
- Comparable Store Sales Reports: Baskin Robins (up 0.5 percent), Brinker (Chili’s up 0.5 percent and Maggiano’s up 0.2 percent), Buffalo Wild Wings (company-owned locations were up 6.6 percent and franchised locations were up 5.0 percent), Burger King (up 0.1 percent), Cheesecake Factory (up 1.2 percent), Denny’s (system up 1.8 percent, company-owned locations were up 1.8 percent and franchised locations were up 1.5 percent), Famous Dave’s (company-owned locations saw a 4.9 percent decrease in sales and franchised locations experienced a 3.3 percent decline in sales), Grand Lux (down 2.9 percent), Mitchell’s Fish Market (down 4.3 percent), Ruth’s Chris Steakhouse (up 2.6 percent) and YUM (KFC down 3 percent, Pizza Hut down 5 percent and Taco Bell down 1 percent).
For details and same-store sales of other chains click here for the Green Sheet.
- A Caring Culture
A bout ten years ago our company, Taziki’s Mediterranean Café — ...