Restaurants ended 2015 with another month of strong sales in December even though overall retail sales were down. The Christmas selling season turned out to be a good one after all. A Wall Street firm is very bullish on Restaurant Brands International. The Sheetz C-store chain is raising store employees' wages. Are there negative aspects to increasing breakfast sales? One industry observer thinks so. These stories and a whole lot more This Week in Foodservice.

December retail sales declined 0.1 percent from November according to the Census Bureau's advance report. Compared to December 2014, sales increased 2.2 percent. For 2015, total retail sales were up 2.1 percent. December sales excluding auto and auto parts sales were down 0.1 percent from November.

Now the good news for readers of Foodservice Equipment & Supplies. Restaurant and drinking place sales increased 0.8 percent in December over November. Compared to December 2014, restaurants and bars saw sales rise 6.7 percent. For 2015, restaurants and bar sales were up 8.1 percent. This means restaurants had the best sales performance of any retail segment including non-store retailers which rose 6.3 percent.

As pointed out here every month, there are some cautions and limitations to the Census Bureau's report. The data is termed "advance" as it is based on a limited sample. Thus, the numbers are subject to adjustment and, in fact, are frequently revised.

Economic News This Week

• Christmas sales increased 4.0 percent according to the National Retail Federation. Holiday sales, which include both November and December, were at the highest level since 2011. There were significant variances in sales performance between different retailers. For example, Best Buy and Macy’s reported poor results, while J.C. Penny and Victoria Secret did well. Non-store retail sales rose more than 6.0 percent.
• Initial-jobless claims totaled 284,000, an increase of 7,000 for the week ending January 9. The 4-week moving average was 278,750, an increase of 3,000.
• The Producer Price Index for final demand fell 0.2 percent in December, according to the Bureau of Labor Statistics. Final demand goods prices fell 0.7 percent, pulled down by a 1.3 percent decline in food prices and a 3.4 percent decline in energy prices. Core prices, the PPI without food and energy, increased 0.1 percent. Final demand service prices rose 0.1 percent in December. For 2015, the final demand index dropped 1.0 percent.
• Consumer borrowing increased in November by 4.8 percent on an annual basis, according to the U.S. Federal Reserve. Revolving credit, essentially credit card debt, climbed 7.4 percent. Non-revolving credit (auto loans, student loans, etc.) dropped 3.8 percent, which is the smallest increase since 2010.
• December industrial production declined 0.4 percent primarily as a result of cutbacks in utilities due to warmer than normal weather and in mining due to declining petroleum output. Manufacturing edged down by 0.1 percent. Capacity utilization decreased by 0.4 percent and at 76.5 percent it is 3.6 percentage points below its long run (1972-2014) average.
• The Empire State Manufacturing Survey showed manufacturing activity at the lowest level since the great recession with the General Business Conditions index falling 13 percentage points to minus 19.4. The New Orders Index crashed by 17 percentage points to minus 23.5. The labor indexes both remained well in negative territory.

Foodservice News This Week

• Is Restaurant Brands International underappreciated? Morgan Stanley thinks so and issued a report that sees heavy unit growth for both Burger King and Tim Horton’s. Morgan Stanley also sees extensive cost cutting to Tim Horton’s.
• C-store chain Sheetz will raise employee wages with a $15 million investment this year. The company will not cut back on full-time employee’s hours to balance the higher wage rate.
• Breakfast sales are hot but they come with a downside. Technomic reported that among consumers who now purchase breakfast away from home, 60 percent cut back eating other meals out. The Technomic’s study warns that all-day breakfast can create operational challenges and cannibalize sales of higher-priced lunch and dinner menu items.
• Bowls are big as consumers switch to casual one-course meals that layer flavors.
• Chipotle will increase advertising and direct outreach to assure consumers that the outbreak of food borne illness can’t happen again. The company will close all of its restaurants on February 8 for a few hours of food safety training. The chain is still waiting for a report from the Center for Disease Control and Prevention clearing the company of problems.
• The Panera Bread Company closed two Boston area restaurants. Panera said the two company-owned units were profitable but did not meet the profit standards the company sets. In fact, a Panera spokesman said profitability in the Boston market is “well below our system average.”
• Corporate Stirrings: Cambridge Franchise Holdings bought 42 Burger King restaurants along with 5 All-in-One C- stores from Mirabile Investment Corporation. The operations are located in Tennessee, Arkansas and Mississippi. Walmart announced closing of 269 stores worldwide, including all 102 Walmart Express units, the retail giant’s smallest locations.
• Growth Chains: Tim Horton’s will open as many as 150 locations in the Cincinnati area in the next 10 years. Smoke’s Poutinerie will open 1,300 stores worldwide in the next 5 years of which 800 will be in the U.S. Arby’s development agreement with US Beef Corporation calls for the sandwich chain’s largest franchisee to open 70 restaurants over the next 7 years. McAlister’s Deli will open five restaurants in the Des Moines area. Buffalo Wings & Rings hopes to open 75 locations in in the Midwest and Southeast in the next 5 years. Dunkin’ Donuts’ franchisee TGB Food Acquisitions Group, will open six restaurants in Western Virginia. 1,000 Degree Neapolitan Pizza will open 80 units in 2016 and another 170 in 2017. Starbucks will open 500 stores in China this year and 1,400 by 2019. Bruster’s Real Ice Cream will open 20 locations this year.
• Comparable Store Sales Reports: Denny’s (systemwide, locations were up 2.9 percent, company owned units increased 3.5 percent and franchised units were up 2.8 percent), Good Times Burgers up 4.8 percent, Ignite Restaurant Group (Joe’s Crab Shack down 2.9 percent and Brick House Tavern down 2.8 percent), Popeye’s up 5.9 percent, Rave Restaurant Group (Pie Five Pizza down 1.6 percent and Pizza Inn down 1.7 percent), and Red Robin down 0.2 percent.

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