C-Store Operators Mixed Feelings On Minimum Wage, Colorado’s Hiring Boom and Much More

New data on a minimum wage increase. Consumer prices for restaurants continue to climb but less than at supermarkets. Colorado is the tops in restaurant hiring. C-store consolidation picks up.

There are a lot of predictions about what will — or will not — happen if the minimum wage is increased. So CSP.net did a survey of 200 C-store operators. Whether this is a projectable sample or whether operators in other foodservice segments would answer the same way is anyone’s guess, but there were some interesting results.

First, 49.3 percent of those surveyed supported the concept of a minimum wage while 43.6 percent opposed the concept. Curiously, a greater number — 59.2 percent — supported an increase in the federal minimum wage now with 36 percent opposed.

Among supporters of the minimum wage, 41.9 percent said it should be no more than $9.00 an hour and just 10.8 percent said it should be more than $10.00 an hour. A modest 4.1 percent thought it should be less than $8.00 an hour.

Of those who opposed a minimum wage increase, two thirds thought it would force them to raise prices and it would be bad for the economy.

When asked how they would compensate for the additional cost of increased wages, 28.4 percent said they would raise prices, 5.2 percent would reduce employees’ hours, 5.2 percent would eat the cost, 2.4 percent would reduce hiring, 1.9 percent would lay off employees, and 34.6 percent would do all of the above.

In states where the minimum wage has already been increased, 30.9 percent said it had hurt profits, 17.3 percent said it impacted staffing, 9.9 percent said it impacted hiring plans, 1.2 percent said it increased sales and 18.5 percent said all of the above.

There were two more findings of some interest. In response to the question on actions taken if the minimum wage was increased, 19.9 percent said they would make no changes as they are currently paying above minimum wage. And, in those states that recently increased the minimum wage, 22.2 percent of those surveyed said it had no or negligible impact.

Economic News This Week

  • Initial jobless claims rose 17,000 to 283,000 for the week ending October 18, but this was coming off a 14-year low for claims the previous week. First-time jobless claims below 300,000 is a sign of healthy job market. The 4-week moving average for initial claims declined by 3,000 to 281,000, which is the lowest average since the week of May 6, 2000.
  • The Consumer Price Index rose 0.1 percent in September. Energy prices fell 0.7 percent but food prices increased 0.3 percent. “Core” prices — which don’t include the volatile food and energy segments — were also up 0.1 percent. In the last 12 months the total CPI is up 1.7 percent. This is below the Federal Reserve’s target of 2.0 percent for the inflation rate.
  • Existing home sales rebounded a bit in September rising 2.4 percent over August to a seasonally adjusted annual rate of 5.17 million. But, the National Association of Realtors noted that sales were down 1.7 percent from September 2013. The average price for homes sold in September were up 5.6 percent over last year while distressed home sales accounted for 10 percent of sales. This is down from 14 percent of the homes sold in September 2013.
  • September new home sales increased 0.2 percent over August to 467,000 on a seasonally adjusted annual basis. The Census Bureau said that September new home sales were up 17 percent over September 2013.
  • Gallup reports Christmas spending is looking up. Consumer spending this Christmas projects to be $781, a 4 percent increase over 2013 and the highest since 2007.
  • Leading economic indicators increased 0.8 percent in September to 104.4. A spokesman for the Conference Board stated that strength in the components was widespread and this should indicate moderate growth in the U.S. economy.
  • Gallup’s US Economic Confidence inched up to minus 14 for the week ending September 28. The index has been in a very narrow range since June and, in fact, for most of 2014. As pointed out occasionally, since its inception in 2008, this Gallup index has never been in positive territory; month after month more Americans have been more negative about the economy than positive.

Foodservice News This Week

  • Consumer prices for food away from home rose 0.3 percent in September and are up 2.7 percent in the past 12 months. Grocery store prices rose 3.2 percent in the past 12 months.
  • Colorado is number one in new restaurant jobs so far this year with the state’s 6.3 percent increase roughly double the national rate. In 9 months Colorado has added 12,700 jobs at restaurants.
  • Convenience store consolidation grew in the third quarter of this year and observers believe the rate of mergers and acquisitions will continue to accelerate.
  • Transparency results in better, faster food. In a study reported in the Harvard Business Review, satisfaction with the food rose 10 percent if the cooks in cafeterias could see the customers. When cooks and customers could see one another, food satisfaction increased by 17.3 percent and service was 13.2 percent faster.
  • Corporate Stirrings: Wingstop Restaurants, Inc. is exploring the possibility of an initial public stock offering according to the Wall Street Journal.
  • New York City had 160 restaurants opens so far this year according to the Zagat Survey. This is the largest increase since 2007. But 82 restaurants closed compared to 42 last year, with higher rents getting the blame.
  • Captain D’s has opened the company’s first new corporate store in several years in Birmingham, Ala. The store features a costal theme and includes new menu boards, new dinner ware and a newly reformulated equipment line.
  • Growth Chains: Blaze Fast-Fired Pizza will open 7 locations in San Francisco and Sacramento by 2015 and has also signed an agreement with Levy Family Partners to open 15 restaurants in the Chicago area. Auntie Anne’s has announced entry into Aruba and Israel as well as plans to open units in Brazil, Mexico, Singapore and Taiwan. Chipotle Mexican Grill opened 132 restaurants in the first 9 months of this year and plans to open 180 to 205 in 2015. Barberito’s Southwest Grill and Cantina has 38 restaurants open and secured commitments for 53 more. Planet Smoothie plans to open 8 locations in Florida in the next 3 years. Uncle Maddio’s Pizza Joint has signed an agreement for 5 restaurants in Pittsburgh. Sonic plans to open 50 to 60 new drive-ins in the company’s new fiscal year.
  • Comparable Store Sales Reports: Baskin Robbins (up 5.8 percent), B.J.’s Restaurants (up 0.3 percent), Brinker International (Chilli’s up 2.6 percent and Maggiano’s up 0.6 percent), Cheesecake Factory (up 2.1 percent), Chipotle (up 19.8 percent), Dunkin’ Donuts (up 2 percent), Grand Lux (down 2 percent), and Sonic Drive Ins (system up 4.6 percent, company-owned up 4.9 percent, and franchised up 4.5 percent.)

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

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