Published on Tuesday, 11 November 2014
Written by The Editors
New sales data from Knapp Track indicates casual restaurants may have turned the corner. Most of last week’s employment reports are positive while restaurant hiring comes on strong. Of the couple dozen chains reporting same-store sales, most are looking good. All this and more in This Week In Foodservice.
Knapp-Track reported that October same-store sales climbed 1.9 percent making the third straight month the 50-plus chains in Malcolm Knapp’s database saw an improving sales picture. Also encouraging was a 0.2 percent increase in guest counts. This is only the eigth month in the past 7 years with positive same-store guest counts.
The 1.9 percent increase in comparable store sales coupled with the 0.2 percent increase in comparable store guest counts would indicate a 1.7 percent increase in check averages.
Speculation is that falling gasoline prices may be freeing up disposable income for consumers. It will be interesting to see if casual restaurant chains can continue to build on their three-month comp store sales performance.
Malcolm Knapp’s data is provided courtesy of Bank of America Merrill Lynch.
Economic News This Week
- The ADP National Employment Report for October estimated that private sector employment increased by 230,000. ADP reported small businesses accounted for 102,000 of the new jobs, medium size businesses for 122,000 but large businesses for just 5,000 of the new positions. Starting in April of this year, ADP has projected new jobs have grown over 200,000 every month since April except in August. ADP, a major payroll processing company, bases their calculations on their customers’ hiring. The ADP numbers do not always mirror those of the U.S. Department of Labor.
- Employment rose by 214,000 In October according to the U.S. Bureau of Labor Statistics, with private sector jobs increasing by 209,000. Government jobs grew by 5,000. Unemployment fell from 5.9 percent in September to 5.8 percent, which is the lowest since 2008. Behind these generally good numbers are some facts indicating the labor market has a way to go. The number of long-term unemployed stayed about the same at 2.9 million, and the labor force participation rate has stayed virtually unchanged since April. Including the “involuntary” part-time workers and “discouraged” workers — those who want a job but have given up looking — the unemployment rate is 11.5 percent. This has dropped considerably since the end of the recession but remains high by historical standards.
- Initial jobless claims fell by 10,000 to 278,000 for the week ending November 1. The 4-week moving average was 279,000, showing very little volatility in the number of claims being filed in recent weeks. The relatively low number of claims is considered a positive sign of a heathy job market.
- The Institute For Supply Management’s Manufacturing Index rose 2.4-percentage points in October to 59 marking the 17th straight month activity has risen. (Any reading over 50 indicates expanding activity.) The new orders index rose by 5.8 points to 64.8. The production index inched up by 0.2 points to 64.8, while the employment index rose 0.9 points to 55.5. Of the 18 manufacturing industries the Institute covers, 16 reported increased growth.
- The Institute For Supply Management’s Non-Manufacturing Index fell 1.5 percent in October but stayed in an expansion mode at 57.1 percent. October is the 57th straight month of expansion for service industries. The employment index rose 1.1 percent, an important factor since roughly 80 percent of the jobs in the U.S. are in service related positions. The Institute said that 16 of the 18 non-manufacturing industries grew in October.
- September Factory Orders fell 0.6 percent largely as a result of a 3.5 percent decline in the transportation segment. Without transportation, new orders “decreased slightly” according to the Census Bureau. Durable goods orders fell 1.1 percent while nondurable goods increased slightly. Shipments of both durable and nondurable goods increased slightly. Finally, the Census Bureau’s full report said unfilled orders increased.
- Productivity increased 2 percent in the third quarter this year while Unit Labor Cost increased 0.3 percent according to the Bureau of Labor Statistics first estimate for quarter.
Foodservice News This Week
- Foodservice employment racked up a stellar month in October with the Bureau of Labor Statistics reporting the industry added a whopping 41,800 jobs. This means foodservice hired more people than any other industry last month. The Bureau estimates foodservice now employs 10,772,000 workers in the U.S.
- McDonald’s continued to struggle in October with the giant chain reporting that comparable store sales decreasing 0.5 percent worldwide, falling 1.0 percent in the U.S. Comp store sales declined 0.7 percent in Europe and were down 4.2 percent outside of the U.S. and Europe. The press release stated that the same store drop in the U.S. was due to “strong competitive activity.” System wide actual sales for the month dropped 3.4 percent with the U.S. dropping 0.1 percent. Adjusting for currency fluctuations brought actual worldwide sales in the positive territory of 1.9 percent. For the first 10 months of the year, McDonald’s comp sales are down 1 percent with total sales up 1.5 percent in constant currency.
- Romano’s Macaroni Grill has expanded their “Kitchen Counter” fast-casual concept to over 130 of their full-service restaurants. The Kitchen Counter walk up operation offers meals for $7.00 in 7 minutes or it’s free.
- Middleby Corporation announced that their commercial foodservice equipment sales rose 13.9 percent in the fiscal quarter ending September 27. Excluding acquisitions during the current fiscal year, Middleby’s foodservice equipment sales rose 7.5 percent.
- SONIC Drive-In has opened a “Culinary Innovation Center” to test new equipment as well recipes, products and other ideas.
- Sysco acquired a 50 percent interest in Pacific Star, a distributor to chain restaurants in Mexico.
- Growth Chains: Burger 21 has signed franchise agreements to open locations in Chicago and Dallas. Smoothie Factory Juice Bar has awarded an expansion agreement to an existing franchisee for seven more locations in Arizona. Krispy Kreme announced the signing of a development agreement for 20 stores in Bangladesh over the next 5 years. Noble Roman has entered into agreements for 68 standalone take-and-bake pizza locations and 161 take-and-bake units in grocery stores. McAlister’s Deli franchisee, the Jaxton Group, plans to add five new locations in the Austin area in the next few years.
- Comparable Store Sales Reports: Arcos Dorados (up 7.4 percent), Bloomin’ Brands (Blended up 3.3 percent, Outback up 4.8 percent, Carrabba’s down 1.2 percent, Bonefish up 2.6 percent and Flemming’s up 4.8 percent), Bravo Brio Restaurant Group (total down 5.8 percent, Bravo down 6.7 percent, and Brio down 5.2 percent), Burger King (up 3.6 percent), Carrols Restaurant Group (up 3.3 percent), Chuy’s (up 3.0 percent), El Pollo Loco (system up 7.9 percent, company-owned up 6.4 percent and franchised up 9.1 percent,) Famous Dave’s (company-owned down 5.7 percent and franchised down 2.3 percent), Fiesta Restaurant Group (Pollo Tropical up 5.9 percent and Taco Cabana up 3.5 percent), Frisch’s (Up 2.2 percent), Jamba Juice (system up 3.8 percent, company-owned up 3.7 percent and franchised up 3.9 percent), McDonald’s (down 1.0 percent), Mitchell’s Fish Market (down 2.8 percent), Noodles & Co. (system up 1.7 percent, company-owned 1.6 percent, and franchised Up 2.0 percent), Papa John’s (total North America up 7.4 percent, company-owned up 8.3 percent, and franchised up 7.1 percent), Pot Belly Sandwiches (up 0.5 percent), Red Robin (up 0.9 percent), Ruth Chris Steakhouse (up 4.8 percent), Texas Roadhouse (company-owned up 5.9 percent and franchised up 5.2 percent), Tim Horton’s (up 6.8 percent), and Wendy’s (company-owned up 2.0 percent and franchised up 0.5 percent)
For details and same-store sales of other chains, please click here for the Green Sheet
Latest Quarterly Financials For Equipment Suppliers has the recent data for the Middleby Corporation. For latest financial reports on foodservice equipment suppliers please click here.