The U.S. Census Bureau’s advance monthly retail sales report showed a 0.5 percent increase in June. This was slightly less than the 0.8 percent increase originally forecasted for the month. Sales increased 6.6 percent compared to June of last year. The Bureau revised the advance sales figure for May to 1.3 percent from the 0.8 percent initially reported. In the first 6 months of this year total U.S. retail sales increased 5.5 percent.

Foodservice and drinking places outperformed the retail market as whole with sales rising 1.5 percent in June compared to May and up 8.0 percent compared to June 2017. May sales were revised to a very strong 2.6 percent, up from the 1.3 percent originally reported. For the first half of 2018, the Census Bureau puts restaurant and bar sales at +4.8 percent.

After declining in April, restaurants and drinking places have now put together two consecutive months with sales growth of more than 1.0 percent.

The Census Bureau labels the data as an “advance” report as it is based on a small initial response. When analyzing a larger sample, the findings maybe revised. The Census Bureau only surveys restaurants and drinking places. A significant part of the foodservice industry is not included. Not surveyed are hotels, motels, resorts, retailers (supermarkets, convenience stores, etc.) employee feeding, healthcare, colleges, K-12 schools and military feeding. Some of the sales figures are adjusted for holidays, weekends and other seasonal variations but none of the data is adjusted for menu price changes.

Economic News This Week

  • Consumers took on more debt in May with outstanding credit rising 7.6 percent on a seasonally adjusted annual rate. This represents the largest increase in six months. Revolving credit — mostly credit card debt — jumped 11.4 percent. Non-revolving credit (auto loans, tuition loans, etc.) rose 6.2 percent. It appears that consumers loosened their purse strings in the middle of the second quarter.
  • Initial-jobless claims totaled 214,000, a decline of 18,000 for the week ending July 7. The 4-week moving average was 223,000, a decline of 1,750. New claims for unemployment insurance remain low, signaling a healthy labor market.
  • The Producer Price Index for Final Demand increased 0.3 percent in June. Final demand goods increased 0.1 percent and final demand services grew 0.4 percent. The index for the core goods — without food and energy — was up 0.3 percent. Food prices declined 1.1 percent for the month. Overall, the Producer Price Index increased 2.7 percent in the past 12 months.
  • The Consumer Price Index increased 0.1 percent in June and is now up 2.9 percent in the 12-month period ending in June. The core index, which excludes food and energy, rose 0.2 percent for the month and has risen 2.3 percent in the last 12 months.
  • The University of Michigan’s Preliminary July Index of Consumer Sentiment retreated but stayed fairly close to the average for the last 12 months. The index declined to 97.1 from 98.2 in June. The Index of Current Economic Conditions hit 113.9, down from 116.5 in June. The Index of Consumer Expectations was virtually flat, coming in at 86.4 this month compared to 86.3 in June. A spokesman for the university stated that it appears that consumers are being influenced more by positive factors like a healthy jobs picture and rising incomes than by negative ones such as rising inflation and interest rates.

Foodservice News This Week

  • Prices for food at home and food away from home increased an identical 0.2 percent in June. In the last 12 months food prices rose 1.4 percent with food at home up 0.4 percent and food away from home prices up 2.8 percent.
  • Famous Dave’s redesign pays off. The Famous Dave’s new design in Coon Rapids, Iowa, “far exceeded” the company’s goal with a 21 percent increase in traffic and a 16 percent increase in sales according to the chain’s CEO. The makeover was described as a “Titanic shift” which included 23 new menu items in addition to brighter, lighter decor.
  • Drive-thru windows fit consumers’ desire for convenience, speed and low prices. Operators now build restaurants with smaller dining space but more room for drive-thru customers to line up. Operations with two or even three drive-thru windows are becoming more common, as is the case with two-lane drive thrus. Faster ordering technology is part of the thrust as well. Cook-to-order chains like Habit Burger face challenges given the waiting time but still find drive-thru a necessity.
  • Late night business seems to work for full-service restaurants. Some operators serve customers as late as 4:00 a.m. or even 5:00 a.m. And rather than trim back on menu offerings, some operators now offer late-night specials.
  • Corporate Stirrings: Oprah Winfrey will take an equity position in the healthy food chain True Food Kitchen. The chain has 23 restaurants in 10 states and will open locations in Nashville and Jacksonville, Fla., this year. The amount Ms. Winfrey invested was not revealed.
  • Growth Chains: IHOP will open 25 restaurants in Peru in the next 10 years. Central BBQ plans to open more locations in Memphis, Tenn., and Nashville with eventual expansion in cities from Knoxville, Tenn., to Dallas. Tim Hortons has signed an exclusive master franchise agreement for 1,500 restaurants in China in the next 10 years.
  • Comparable Store Sales Reports: Luby’s (All concepts down 0.9 percent, Luby’s Cafeterias up 2.4 percent, Fuddrucker’s down 5.8 percent, Cheeseburger in Paradise down 11.7 percent and combo units down 3.3 percent.)

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