While the housing market continues to be an anchor in the U.S. economy, Inc. Magazine recognizes a handful of foodservice operators for their rapid growth in recent years.
Inc. Magazine's list of the 5,000 fastest-growing companies includes 27 foodservice operators. While most are restaurant chains, the list also includes contract feeders and home meal replacement companies. Of course, rate of growth, which is based on a company's increased sales by percent for the past three years, can be misleading when the total sales base is equal to the volume of a McDonald's or two. For example the Heirloom Restaurant Group had total sales last year of just $2.4 million.
Here are the fastest-growing foodservice operators and their overall ranking according to the Inc. list (space limitations requires just providing the top ten): Plan B Burger Bar (#370), Smashburger (#405), Meatheads (#604), The Fresh Diet (#736), Servomation (#904), Costal Luxury Management (#1072), Heirloom Restaurant Group (#1094), Patxi's Pizza (#1161), Bikini's Sports Bar & Grill (#1209) and The Tilted Kilt (#1215).
Economic News This Week
- Initial jobless claims for the week ending August 17 rose to 372,000. The four week average of first time claims rose 3,750 to 368,000. It is interesting to note the New York Times stated in their coverage of this topic that 375,000 is considered the acceptable norm for claims, not the 350,000 that it seems most experts seem to use.
- Is a recession near? The non-partisan Congressional Budget Office warned of a "significant recession" if Congress doesn't act to avert tax increases and spending cuts due to go into effect in January. The nasty flip side is another $1 trillion deficit if Congress does keep taxes steady and keeps spending.
- The housing market appears to be having what the New York Times calls "a slight but sure revival." Existing home sales rose 2.3 percent in July over June, which translates to an annualized sales rate of 447 million. Compared to July of last year, 2012 July sales were up 10.4 percent. Year-to-date existing home sales are up 8.6 percent. Existing home sales inventory now stands at 6.4 months and real estate agents complain that a lack of choice continues to limit sales. Further, some experts wonder if the much-feared glut of foreclosed homes that have been delayed hitting the market due to both administrative and legal difficulties will be a major problem. The theory is that many foreclosed homes are in too bad a shape to sell and others are in neighborhoods that are less than desirable. This past week also bought the news that new home sales enjoyed a robust 3.6 percent increase in July for a seasonally adjusted annual rate of 372,000. Meanwhile, the Census Bureau said that new homes available for sale fell to 142,000, the lowest recorded level since the government started that statistic since in 1963. This may lead to increased building in the future. There was also good news from a number of sources that home prices are finally on the rise.
- Durable goods orders took a major jump up, increasing by 4.2 percent in July, according to the U.S. Commerce Department. Unfortunately, a closer look at the data shows growth in civilian aircraft sales (essentially Boeing) was the sole reason behind the increase. Excluding the transportation segment, durable goods orders declined 0.2 percent.
- Consumer confidence took a major hit. The Conference Board reported a drop in its index to 60.6 in this month from 65.9 in July. This is a nine-month low. The Gallup Poll's U.S. Economic Confidence Index, which improved earlier this year, has remained steadily depressed since June.
Foodservice News This Week
- The impact of what some are calling the worst drought in 50 years hasn't hit consumers yet but many economists believe higher prices are definitely on the way. For example, record feed prices cattle herds have been reduced to the smallest since at least 1973. Probably the first hit that buyers will take is on chicken prices but numerous other commodity prices will follow. One prediction calls for food prices to rise 4 percent in the next year with an overall increase of 0.3 percent in the cost of living. Droughts and typhoons and other disasters are effecting crops around the world so there doesn't seem to be any chance of rescue from abroad.
- C-Store visits remained stable and total channel sales were up in the second quarter this year according to The NPD Group. There were 2.2 billion visits to C-Stores and sales rose 5.9 percent. C-Store chains that made the Inc. 5000 this year (see first item above) include Lightening Quick Gas N Go, Parker's, Lehigh Gas, Superior Petroleum, Kum & Go and Plaid Pantry.
- Food trucks are becoming more common on college campuses. According to the Wall Street Journal more than 100 college feeding operators run campus food trucks today compared to only a dozen or so five years ago. Columbus, Ohio, has a Food Truck & Cart Fest that attracts more than 50 vendors. Brewer Dos Equis is hitting the streets in seven different cities with food trucks featuring the offerings of local chefs.
- Healthy eating is not a priority of most consumers when choosing a restaurant, according to Technomic. Only 21 percent of Gen Xers and 18 percent of Baby Boomers said they choose a restaurant "often" or "very often" based on the healthfulness of the menu.
- Fast food is big in Iraq. While the few American chains in Iraq closed their stores when most of the U.S. troops left, local entrepreneurs have successfully adapted pizza, burger, chicken and other foodservice formats to local tastes.
- Growth chains: Krispy Kreme says its franchisee in India will open 80 stores in the next five years. Pizza Patron has an agreement that will add eight more stores in San Antonio and another contract to open the chain's first Chicago restaurant in September. Pizza Patron's goal is to open 30 units in the Chicago area. Thornton's c-store chain will enter the Florida market with 15 to 20 stores in the Tampa area in the next three years. Garlic Jim's Pizza plans on expanding in the Portland, Ore., area by opening as many as 15 units in the next three years. The U Food Group has announced their first entry into military feeding with the opening of three restaurants at the Aberdeen Proving Ground in Maryland. Caribou Coffee Company has an agreement to open three locations soon in Jewell-Osco stores in the Chicago area with an additional five more in 2013.
- Comparable Store Sales were reported this past week for just one chain, Krispy Kreme (up 5.4 percent).
To access the Green Sheet for more info on chain same store sales, click here.