Published on Tuesday, May 29, 2012
Written by Jerry Stiegler
Do Americans have an unlimited love for hamburgers?
It appears that a lot of restaurant operators believe this to be the case. In-N-Out Burger continues its methodical expansion, hoping to convert new markets into the chain's cult-like following. Five Guys has approximately 1,000 units open but 1,500 in development.
The Orlando Sentinel reports that South Florida-based BurgerFi will open one of 20 new units in Winter Park, Fla., in June. Maryland-based Boardwalk Burger will come to Orlando as well. Shula Burger, Red Robin and Burger 21 are all examining the area for possible expansion. Two local burger restaurants, Pine 22 and Graffiti Junction, are looking to expand from their current one-unit operations.
Scott Hume of Burger Business says the growth of burger restaurants is not just hope or hype. He points out that the NPD Group found that while the total number of restaurants was decreasing, the count of burger places increased. "Some of the concepts are now at the stage where they're beginning to franchise or at least expand beyond their original territories," he added.
It is a sure bet that not all of the burger operations will grow into national powerhouses; some will fail but, in the meantime, it looks like a wild ride.
Economic News This Week
- Americans seem to be feeling better about their economic situation. The final May Reuters/University of Michigan Index of Consumer Sentiment rose to 79.3 from 76.4 in April, the index's highest level since October 2007. Likewise the Gallup Economic Confidence Index reached its highest level since the poll began in 2008. Finally, Gallup's study of Americans' expectations of where they will be economically in a year has recovered to about what the numbers were in 2002.
- Markit US flash manufacturing purchasing managers index, a new indicator of manufacturing progress, showed May grew at the slowest rate in three months. May showed growth of 53.9 down from 56 in April. A score of more than 50 is considered a positive rating.
- Requests for jobless benefits for the week ending May 19 were 370,000. The weekly number of claims filed have hovered around this same level for the past month. At least one economist feels that 375,000 new claims a week is the new "normal" when in the past normal was considered to be 350,000. Then, too, even a decline in jobless claims doesn't necessarily translate into more people being hired.
- Durable goods orders inched up 0.2 percent in April led by increased demand for cars and car parts. Durable goods orders are up 8.6 percent so far this year. The only area of weakness this year is the defense segment.
- Existing home sales in April grew by 3.4 percent and median home prices increased for the second month in a row. New home sales also grew in April. The rate of increase was 3.3 percent. New home prices increased slightly.
- The Wall Street Journal states that the United States continues to experience one of the weakest recoveries on record. In a separate article, the WSJ notes that while some high-flying economies like those of China and Brazil have stumbled and most of the Euro-based countries are suffering, the U.S. – by comparison – doesn't look too bad.
Foodservice News This Week
- Unilever Food Solutions released a report entitled "Seductive Nutrition." The study found while people want the choice of eating healthier when dining out their intentions don't necessarily translate into action. The solution, according to the report, is to offer healthy menu options that sound, look and taste good. Also, the research found that some diners are normally healthy eaters at home but when eating out they want to kick back and enjoy themselves.
- Millennials – those people between the ages of 19 to 34 years old – eat out a lot. According to Technomic, they not only want good food at a good price but they want to patronize firms that are socially responsible. Among millennials' favorites are Cracker Barrel, McAlister's, In-N-Out, Logan's, Jimmy John's, Red Lobster, Chick-fil-A, Corner Bakery, Chipotle, Five Guys and Jamba Juice.
- There are several firms that try and come up with the value and rank of major brands and, as you might guess, different methodologies result in different results. But studies by CoreBrand Brand Power and Omnicom's Interbrand both place McDonald's in the top 10. When you're selling hamburgers and can compete with the likes of Apple, IBM, Google and Microsoft, you're probably doing something right.
- We all know that drive-thru windows are a boon to limited service restaurants. (In fact, years ago a McDonald's manager told me better that 80 percent of his store's dollar sales came from the drive-thru window.) Now, according to USA Today, a number of chains are rushing to offer drive up service including Panera, Starbucks, and c-stores.
- According to Advertising Age, while some restaurant chains are adding beer and/or wine, there are a lot obstacles and perhaps an extremely limited payoff. According to the article, Burger King, White Castle, Sonic, and Starbucks are all testing or considering adding beer and/or wine but they are encountering licensing, personnel and legal problems. The story also said that chains Chipotle and Smashburger offer alcoholic beverages but only attribute five percent or less of their sales to these products.
- C-store chain Casey's General Store is in the middle of expanding and remodeling their stores. The firm is expanding their coffee bars and adding self-serve ice cream and made-to-order sub sandwiches.
- New reports of comparable store sales include:
- AFC (Popeye's) Up 8.1%
- Krispy Kreme Up 2.1%
More detailed information on comparable store sales can be found by clicking here to access the Green Sheet.
For Foodservice Industry Equipment Supplier Financial Data click here.