U.S. retail sales were soft for the third month but restaurants continue to move ahead. The NPD Group says foodservice did well in many countries this summer. Dave Anderson has returned to Famous Dave’s. The fast-casual segment remains hot. These stories and a lot more This Week in Foodservice.
Retail sales increased just 0.1 percent over September according to the U.S. Census Bureau’s advance data for October. Total sales without automobiles and parts rose 0.2 percent. Compared to October 2014 total sales were up 1.7 percent.
One of the few bright spots in the October report was the data for restaurants and drinking places, which saw sales rise 0.5 percent from September and increase 5.5 percent over October 2014. In the first 10 months of this year restaurants and bars have chalked up sales growth of 8.2 percent while total retail sales are up 2.1 percent. Restaurants continue to outperform overall retail sales, albeit at a slower rate.
Government numbers are considered the gold standard but they come with some limitations and considerations. The “advance” report is based on a limited sample. Thus, the sales numbers are open to revisions. The Census Bureau surveys only restaurants and bars. Not surveyed are segments that make up roughly one third of the foodservice business such as hotels, retailers, clubs, employee feeding, schools, colleges and healthcare. Some but not all of the data is adjusted for seasonal variations, holidays,= and weekends but not for menu price changes.
Economic News This Week
- Initial jobless claims for the week ending November 7 were identical with the previous week at 276,000. The 4-week moving average was 267,750, an increase of 5,000. The claims remain low by historical numbers so there doesn’t appear to be any cause for concern as far as layoffs go.
- The Producer Price Index declined 0.4 percent in October. Final demand goods were down 0.4 percent. Final demand foods were down 0.8 percent and final demand energy prices were flat. Final demand services were down 0.3 percent. Total final demand prices are down 1.6 percent in the last 12 months.
- A bill advanced in the Massachusetts Legislature to raise the minimum wage to $15 an hour by January 2018. The bill only covers fast food workers and some large retailers.
- The November Empire State Manufacturing Survey showed business activity declined for the fourth consecutive month in the New York Federal Reserve region. The Index reading was minus 10.74 compared to minus 11.36 in October.
- The University of Michigan Index of Consumer Sentiment Index rose 3.1 points to 93.1 in the preliminary November survey. The Current Economic Conditions Index was up to 104.8 from 102.3 in the final October study while the Index of Consumer Expectations was 85.6 vs. 79.9 in November.
- The Gallup Organization’s U.S. Economic Confidence Index “remains stalled” between minus 11 to minus 17 since July. The most recent reading was minus 13 indicating more Americans view the economy negatively than view it positively.
Foodservice News This Week
- The NPD Group reported the summer quarter was a good one for foodservice in a number of countries. The NPD CREST study finds higher traffic and average eater check gains in China, Germany, Great Britain, and the U.S. Foodservice spending and visits were flat to slightly down in France and Japan. Canada experienced a traffic decline while Russia’s foodservice market is suffering with high inflation and lower demand.
- “Famous Dave” returned to the company that he founded. Dave Anderson was asked to return to Famous Dave’s Barbecue by the company’s interim CEO “to rebuild our company culture, restart our competition barbecue team, innovate our menu, and market our restaurants.” The possibility of a fast-casual concept was raised.
- Fast-casual restaurants remain the hot segment, according to Technomic’s Top 100 Franchisor Restaurant Benchmarking Report. Fast casual led all segments in revenue per square foot and have the best sales to investment ratio.
- Fatburger signed on with GrubHub to provide delivery service. The fast-casual burger chain has more than 75 locations nationwide.
- Amazon launched its Prime Now Delivery Service in Los Angeles, which includes restaurant delivery. A press release touts delivery from “many” local restaurants with the delivery time being one hour or less.
- In-N-Out Burger filed suit against DoorDash Delivery claiming trademark infringement and “false designation of origin.” The suit contends consumers are confused and that In-N-Out cannot control food temperature or food safety of the product. The suit seeks to have DoorDash cease delivering In-N-Out menu items. DoorDash says they have “innovative logistics technology” in their delivery process.
- KFC plans to test delivery service with DoorDash in California’s Los Angeles and Orange Counties as well as the San Francisco Bay Area.
- McDonald’s is installing digital menu boards that make recommendations based on the weather. In cold weather the boards will highlight hot drinks and cold drinks in hot weather.
- The Corner Store Convenience Chain will expand its menu of prepared foods and down playing fuel sales. CST Brands, Inc., Corner Store’s parent, will open 55 to 65 new stores in 2016 and maintain new openings at that pace through 2020.
- The Middleby Corporation’s Commercial Foodservice Equipment Group reported a 10.7 percent sales increase for the quarter ending October 3. When the effects of recent acquisitions are excluded sales were up 6.5 percent.
- Corporate Stirrings: McDonald’s will increase its refranchising rate and plans for franchisees to operate 93 percent of its locations by the end of 2018. However, McDonald’s will not spin off its real estate holdings into a separate company. Wendy’s franchisee Hamra Enterprises purchased 30 Boston area Wendy’s corporate stores. Hamara, headquartered in Springfield, Mo., now operates 65 Wendy’s as well as owning and operating Panera Bread, Noodles & Co., and Holiday Inn Express units.
- Growth Chains: Newk’s Eatery will open 10 restaurants in Florida’s Palm Beach and Broward counties. Huddle House has opened 12 restaurants in the first 9 months of this year and has 34 more in the development pipeline. Cheeseburger Bobby’s, which has 10 locations in Georgia, plans to open 65 restaurants in the next 5 years. The Wawa c-store chain plans on opening 120 more stores in Southern Florida between 2017 and 2022. Blaze Fast Fir’d Pizza plans to expand into Canada, opening its first location in Toronto. Blaze has two restaurants planned for Calgary. Chicken Salad Chick has committed to open its third location in Central Florida. Pie Five Pizza will open up to 20 restaurants in the Tampa area.
- Comparable Store Sales Reports: El Pollo Loco (System up 0.6 percent, Company owned flat, & Franchised up 1.1 percent), Jamba, Inc. (System up 5.6 percent, Company owned up 6.6 percent, & Franchised up 5.3 percent), NPC International (Pizza Hut down 0.9 percent & Wendy’s up 3.1 percent). Peter Piper Pizza up 5.0 percent and Rave Restaurant Group (Pie Five Pizza up 6.7 percent & Pizza Inn down 1.1 percent).
For details and same-store sales of other chains, please click here for the Green Sheet.