Published on Tuesday, July 24, 2012
Written by Jerry Stiegler
Is the number of restaurants growing or contracting? The National Restaurant Association says yes while other data says no. You decide.
Using data from the Bureau of Labor Statistics to build its case, the National Restaurant Association states that 2011 was the best year for restaurant unit growth since 2007. Texas and New York both added more than 1,400 restaurants while only seven states lost restaurant locations.
In contrast, NPD's ReCount project, a bi-annual restaurant census, issued a press release in February that said the number of chain-owned restaurants grew but the increase was more than offset by a drop in independent restaurants.
Economic News This Week
- Initial jobless claims jumped to 386,000 for the week ending June 13. The previous week, initial jobless claims had fallen to a more comfortable 352,000.
- Gallup reported unemployment declined by 0.1 percent in mid-July. Seasonally unadjusted unemployment was 7.9 percent while the research company's seasonally adjusted number was 7.7 percent.
- As frequently happens, there were contradictory trends in the housing market. Housing starts rose 6.9 percent to an annualized rate of 760,000. This is the strongest showing for new home building since October 2008. However, building permits issued declined in June by 3.7 percent, which projects to be an annual rate of 755,000. Existing home sales in June fell 5.4 percent to 4.37 million from an annual rate of 4.55 million in May.
- Also providing somewhat contradictory data about consumer confidence were two Gallup studies. The researcher said that U.S. consumers' economic confidence for the week ending July 15 fell to the lowest level since January. But the firm's survey of Americans' satisfaction with the way the country is going showed more people were happy. Although just 28 percent of those surveyed said they were satisfied with the country's direction, this is the highest score since 2009.
- The Chicago Federal Reserve National Activity Index stayed in the negative range at minus 0.15 in June but this was an improvement from minus 0.48 in May.
- The Philadelphia Federal Reserve Business Outlook Survey was deeply negative at a minus 12.9 for July but nevertheless up from minus 16.6 in June.
- The Federal Reserve used the words "modest to moderate" to describe growth rates over the last month and half. Three of the regions reported slowing growth.
- The Conference Board's Leading Economic Indicators fell 0.3 percent with 6 indicators down and 4 up.
Foodservice News This Week
- McDonald's quarterly results came in softer than at least some industry watchers' expected. For the first time in a long time McD's earnings per share missed estimates. Still, June same-store sales increased 4.4 percent worldwide, with U.S. comps up 2.9 percent. Given the economic turmoil in Europe it was somewhat surprising to see McD's report June same-store store sales in the region increase by 5.1 percent. The company said the stronger dollar contributed declining profitability.
- Restaurant financial reports are, in fact, somewhat controversial so far this earnings season. For example, Yum's operating profits were flat in China and Chipotle Mexican Grill's comp store sales increase of "only" 8 percent disappointed some investors.
- Obesity continues to worry more Americans. According to Gallup, 81 percent of those surveyed said obesity is an extremely or very serious problem. This is up from approximately 56 percent who felt this strongly in 2004. The research found obesity is a bigger problem than cigarettes (67 percent) or alcohol (47 percent).
- Five Guys Burgers is America's fastest-growing restaurant chain according to a story in Forbes.
- Buffets, Inc., owner 357 restaurants including Old Country Buffet, Home Town Buffet, Ryan's, Fire Mountain, and Tahoe Joe's, has emerged from their pre-negotiated Chapter 11 reorganization.
- Growth Chains. Papa John's plans on having 200 operations in the UK by the end of the year. CKE will develop 59 new units in the Minneapolis area in addition to the 21 the chain has there now. Burger 21 that currently has 10 restaurants has signed four agreements to open six units in Atlanta, Orlando, and Vorhees, N.J. Starbucks will open three new juice stores in addition to the one the chain now operates. Jamba Juice opened a unit in the Philippines, marking the company's 30th international location. Jamba plans for 320 stores outside the U.S. in the next 10 years.
- Comps: Chains reporting comparable store sales this week include Chipotle (up 8 percent), McDonald's (up 2.9 percent) and Yum! (blended up 7 percent, KFC up 1 percent, Pizza Hut up 4 percent, Taco Bell up 13 percent).
For details and complete reports on comparable store sales, click here for the Green Sheet