Measuring consumer satisfaction can be rather tricky. In fact, what consumers say on surveys and what they do with their disposable income can be two very different things.

The American Customer Satisfaction Index was widely quoted this past week. Some news groups chose to focus on the fact that satisfaction with limited service restaurants is now equal to that of full-service restaurants. There was another statistic that was equally interesting: McDonald's, the largest and arguably most successful member of the foodservice industry, came in dead last in customer satisfaction, despite posting a score of 73, which represents an all-time high for the company.

Of course, this was not earth-shaking news given the fact that McDonald's tends to land toward the bottom of the list. While McDonald's would probably rather be at the top of heap, the highest scoring restaurants, Red Lobster and Papa John's, are tightly clustered, having pulled scores of 83. McDonald's competitor Burger King scored a 75, which is probably not too significant. Wendy's was marginally better at 78. Starbucks, which seems to have a pretty loyal consumer base and has racked up nice sales figures for the last few years, came in at just 76.

Despite its performance on this ranking, McDonald's continues to show impressive comparable store sales and profit figures, meaning it will have to cry all the way to the bank.

Economic News This Week

  • It has been frequently noted that until the U.S. housing market returns to normal, the economy will continue to limp along. Thus, it is encouraging that at least some measurements of the real estate market now show positive results. The National Association of Home Builders' May sentiment index came in at 29, its highest level since May 2007. Housing starts fell by 4.8 percent in May while building permits took a big leap forward to an annual rate of 780,000 compared to 723,000 in April. The number of permits issued in May was the biggest since October 2008. New home sales in May increased 7.6 percent compared to April. Existing home sales fell to an annual rate of 4.5 million, but this was 9.6 percent higher than May 2011. The National Association of Realtors stated that the percentage of distressed home sales fell to 25 percent of the market, the lowest rate since the realtor organization started tracking the number. Finally, the S&P/Case-Schiller 20 city composite index reported that April home prices shot up 1.3 percent, the first increase in almost a year.
  • Initial jobless claims rose to 389,000 for the week ending June 15. The four week moving average, which is considered a more reliable indicator, is the highest it has been in seven months.
  • The Philadelphia Federal Reserve's Factory Activity report fell to a dismal 16.6.
  • The Conference Board's Consumer Confidence Index fell to 62 in June from a revised 64.4 in May.
  • Leading Economic Indicators, which had turned negative in April, surprised some observers by rising 0.3 percent in May with 7 of the 10 indicators in positive territory.
  • Dry weather is making commodity traders nervous, particularly regarding corn and soybeans.
  • USA Today reported that the shortage of truck drivers is getting worse, leading to predictions that shipping costs will increase 2 percent to 5 percent. One trucking firm states that a lack of drivers is causing up to 10 percent of their deliveries to be late.

Foodservice News This Week

  • Global food and agribusiness research and advisory group Rabobank predicts that the acceleration of limited service restaurant sales will result in better than half of consumer food dollars being spent in food away from home by 2018. This prediction has been kicking around since the 1970s. In fact, at least twice we've been told that the industry has crossed the 50 percent mark only to find out the shift has not occurred. When the USDA says it has happened, then we can probably believe it.
  • In their quarterly evaluation of the restaurant market, Bank of America and Merrill Lynch state that weak employment figures are a negative factor for restaurants. But, the increase in the absolute level of disposable income is a positive since restaurant sales "have tracked a remarkably consistent 5 percent of disposable income." Merrill Lynch also believes that fast food and fast-casual restaurants are better positioned than the family dining and casual dining chains to provide earnings. Merrill Lynch further says that lower food commodity costs and falling gas prices "should cushion weaker sales."
  • reports a boom in what it calls Hooter's style restaurants. These concepts include Hooters, of course, but also Twin Peaks, the Tilted Kilt, and Mugs 'N Jugs. The chains insist they are family friendly and rely on good food to attract and retain their customers.
  • Panera Bread opened a fourth "pay what you can afford" restaurant, this one in Chicago. The company says the three such restaurants they have open now all made a profit in 2011.
  • Caribou Coffee will expanding its menu and open 55 to 70 more units this year. McDonald's plans to open 250 outlets in India during the next 3 to 5 years. Steve B's Pizza has signed an agreement that will open four franchised location in Ohio. Dairy Queen will open three or four units in New York City this year.
  • Darden reported comparable store sales for their last fiscal quarter. Bahama Breeze up 2.8 percent, Capital Grille up 2.8 percent, LongHorn up 3.0 percent, Olive Garden down 1.8 percent, Red Lobster down 3.9 percent, and Seasons 52 up 1.9 percent.

For details and the complete report on comp store sales click here for access to the Green Sheet.

For Foodservice Industry Equipment Supplier Financial Data click here.