March Tough on Sales, Top Chains Entwined in Customers’ Lives, Restaurants Create Good-Paying Jobs (Really), and More

March was another tough sales month. A survey finds the best restaurant customers are cutting back. The NPD Group shows top chain restaurants are entwined in consumers’ lives. It may be a surprise to some, but restaurants create a lot of good paying jobs. These stories and a whole lot more This Week in Foodservice.

U.S. retail sales fell for the second straight month in March, dropping by 0.2 percent from February. The Census Bureau also revised February sales to minus 0.3 percent after initially reporting sales had increased 0.1 percent. Without automobiles and parts, retail sales were flat in March. Sales were up 5.2 percent over March 2016 and were up 3.9 percent in the first 3 months of this year.

March restaurant and drinking place sales were down 0.6 percent from February and up 2.8 percent compared to March 2016. In addition, February restaurant sales were revised down from minus 0.1 percent to minus 0.3 percent.

Some blamed bad weather in early March. Others noted that Easter is later this year but theoretically the Census Bureau adjusts for holiday shifts.

Unlike some other reports that measure comparable store sales, the Census Bureau measures total dollar sales so this data indicates a more serious sales decline.

There are some limitations and caveats regarding the retail sales report.  The Census Bureau classifies the data as “advance” since it is based on a small preliminary sample. Thus, the sales figures can be and frequently are revised. The survey covers only restaurants and bars so it is only a report on part of the foodservice industry. Excluded are hotels, motels and resorts, clubs, employee feeding, schools K thru 12, colleges and universities, health care operations, and military feeding.

Further, some of the data is adjusted for seasonal variations, holidays and weekends but not for menu price changes.

Economic News This Week

Foodservice News This Week

  • A survey finds frequent diners plan to cut back this year. AlixPartners says its study of 1,000 adults showed consumers who ate twice a week or more planned to cut back by 8.0 percent at fast-food restaurants and by 13 percent at fast-casual restaurants. The most frequent reason given was saving money. However, 57 percent of total respondents did say they plan to eat out the same number of times in the next 12 months. It should be noted that spending per meal in the past 12 months was $15.38, which is the highest level in the survey’s the 9-year history.
  • The March Consumer Price Index showed a 0.3 percent increase in food prices. Food at home prices increased 0.5 percent and food away from home prices increased 0.2 percent. This marks the second consecutive month that grocery prices have increased more than foodservice prices. Still, in the last 12 months food-at-home prices are down 0.9 percent, while food-away-from-home prices are up 2.4 percent. The disparity between the two has been blamed by some on the soft restaurant sales. Now it appears the spread is narrowing.
  • The Check Out Penetration Index, a new study by the NPD Group, is based on analyzing millions of consumers’ receipts and measures the percentage of Americans that visit a given restaurant or retailer at least once a year. Several restaurant concepts cracked the top 25 most visited concepts, including: McDonald’s, which placed No. 2 with 89 percent of consumers visiting at least once a year; Subway, No. 6 with 70 percent; Taco Bell, No. 9 with 62 percent; Burger King, No. 10 with 60 percent; Wendy’s, No. 12, with 58 percent; Starbucks, No. 14, with 48 percent; Chick-fil-A, No. 16 with 47 percent; KFC, No. 18 with 43 percent; Dunkin’ Donuts, No. 20, with 42 percent and Panera Bread, No. 25 with 38 percent. Among the restaurants, Chick-fil-A had the largest increase in penetration, rising 5.0 percent.
  • Restaurant jobs in the U.S. grew 25 percent between March 2010 and February 2017 while total jobs in the U.S. increased 12 percent
  • Could a bidding war ensue for Panera Bread? Brazilian private-equity company 3G has been reported to be considering a bid for Panera. JAB Holdings has bid $7.5 million for the fast-casual chain. What makes the situation even more interesting is that JAB and 3G have been considered allies in the past. And, it has been reported Panera has agreed to pay JAB $215 million if the chain accepts a higher offer.
  • Starbucks is rolling out a grab and go lunch menu in 100 Chicago area locations. The menu includes sandwiches and salads. There was no timetable given for a national roll out and the story did not indicate if a redesign or new equipment would be required.
  • Fast-casual pizza chains are struggling in the Twin Cities area. Buffalo Wild Wings is in the process of closing the company’s two PizzaRev units in the Minneapolis-St. Paul area. When it first opened in 2014, Pizza Rev’s leaders predicted the chain would eventually have about two dozen restaurants in the market. Pie Five closed its two area locations in March. Pieology’s franchisee said he would have 17 units in the area but has not opened a restaurant in the Twin Cities since 2014. But, Punch Pizza, which is locally based, currently has 10 units in the area and plans on opening an 11th location this summer.
  • No tipping policies have stumbled. Some restaurants that eliminated tipping have reverted back to the old approach. In some cases, the customers didn’t like it. Many rebelled when they saw menu prices rise 22 percent to 30 percent. Restaurant operators found the math calculations for raising wait staff’s hourly wages cumbersome and difficult to administer. Then, too, evidently at least some tipped employees objected when they were making less than when they were tipped.
  • DoorDash settles employee claims. The delivery service, which works with many chain and independent restaurants, paid a $5 million settlement to satisfy charges the company misclassified employees as independent contractors.
  • Growth Chains: Papa John’s Mexican franchisee will open 60 restaurants in the next 8 years. Tropical Smoothie Café opened 30 cafes the first quarter of this year and signed agreements for another 30 cafes to open later this year. Boston’s Restaurant & Sports Bar signed a three-store development agreement for California. The chain expects the units to open by 2019 to 2022. Dave Anderson, founder of Famous Dave’s Bar B Q, will open his third Jimmie’s Old Southern BBQ Smokehouse. Fazoli’s has signed an agreement with Travel Centers of America for a total of four restaurants in Connecticut, Michigan, Oklahoma and Texas. Del Taco will open five restaurants in the Atlanta area. Domino’s Pizza’s restaurant in Malaysia was the chain’s 14,000th The pizza chain opened its 13,000th location just 8 months ago. Black Bear Diner plans to open 21 restaurants this year.
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