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Upscale NYC Eateries Lower Prices, Wendy’s Debuts New Store Design, Starbucks Looks for a Better Cup

Malcolm Knapp provides his latest take on the chain restaurant world. McDonald’s looks for more energy-efficient kitchen equipment. New York City restaurants lower prices. Starbucks will spend big bucks to develop more environmentally friendly cups. These stories and a whole lot more This Week in Foodservice.

Same-store sales at casual dining chains crept up 0.1 percent in February according to Malcolm Knapp, publisher of the Knapp-Track Report. The study tracks the actual sales of more than 50 casual-dining chains. Guest counts dipped 3.1 percent while check averages increased 3.2 percent. February’s check average was the strongest since May 2008.

Previously Knapp had forecast casual dining same-store sales would be up 0.3 percent to 0.5 percent this year. Knapp also noted that Texas, Florida and California continued to rack up higher comp store sales than the U.S. market as a whole.

Same-store sales among fast-casual chains increased 0.1 percent after swinging to the negative side last year. It’s important to note neither Panera nor Chipotle participate in the Knapp-Track Report. High-end steakhouse same-store-sales declined 0.9 percent after posting a 3.6 percent jump in the fourth quarter of 2017.

Mr. Knapp’s information is courtesy of Bank of America Merrill Lynch.

Economic News This Week

  • Initial-jobless claims totaled 229,000, an increase of 3,000 for the week ending March 17. The 4-week moving average totaled 223,750, an increase of 2,250 claims. Thus, the number of claims remains at a very low level.
  • Sales of existing homes increased 3.0 percent in February. Sales had declined during the previous two months, per the National Realtors Association. Sales are now up 1.1 percent from a year ago. The bump up in sales occurred even as home prices increased, nasty weather held down home shopping and the supply of homes declined to a 3.4-month supply. (Realtors consider a six-month supply of homes as normal.)
  • Sales of new single-family homes were at seasonally adjusted annual rate of 618,000 in February, which is 0.6 percent decline from January but a 0.5 percent rise from February 2017.
  • The Conference Board’s Leading Economic Index increased 0.6 percent to a final reading of 108.7 in February. This follows an increase of 0.8 percent in January and an increase of 0.7 percent in December. The Conference Board states that the index’s six-month growth rate has not been this high since 2011. Further, the index points to “robust economic growth throughout 2018.” This rise in the index occurred despite a sharp downturn in the stock market and weakness in housing construction.
  • Manufactured durable goods orders increased 3.1 percent in February according to the U.S. Census Bureau’s advance report for the month. This marks the third month out of the last four that orders rose. Shipments of manufactured durable goods rose 0.9 percent while unfilled orders increased 0.2 percent.

Foodservice News This Week

  • McDonald’s looks for more energy-efficient kitchen equipment to help meet its goals to reduce greenhouse gas emissions. The world’s largest restaurant company committed to a 36 percent decline in greenhouse gas emissions by 2030 and a 31 percent reduction in emissions intensity. These targets were approved by the Science Based Targets Initiative.
  • Upscale New York City restaurants find ways to shave prices. The Wall Street Journal reports some eateries have rebranded themselves as lower price operations. Others keep the high-price menu items but offer some less expensive fare, too. Some operators hope that lower prices will pull in customers more often.
  • Starbucks challenges inventors to come up with a more environmentally friendly cup and is willing to spend $10 million in the next 3 years to get it. The coffee giant is under pressure from environmental groups to develop cups that can be easily recycled and composted. Some estimates say Starbucks uses 1.0 percent of all the paper and plastic cups produced in the world annually.
  • Wendy’s debuts a new store design. Called the Smart 55, the new store in Portsmouth, Va., uses a smaller footprint, bright open dining areas, multiple seating options and a wi-fi bar. Earlier this year Wendy’s announced plans to build more smaller units.
  • Long John Silver’s new flagship design comes ashore in Louisville. The new store has a completely different façade with sleek lines, new logo, new signage and a more contemporary appearance. The new design will eventually replace the Cape Cod style Long John’s restaurants currently use.
  • Dunkin’ Donuts plans to test catering in the Boston area. The new program will be available at seven locations and Dunkin’ will target every catering opportunity from kids’ parties to bridal showers to office lunches.
  • Introducing fine casual, a hybrid operator segment. Many attribute the term to celebrity chef Danny Meyer. Fine casual refers to an upscale menu operation that has customers order at the counter. Menu prices are lower than fine dining and the ambience tends not to be as distinctive as typical fine-dining restaurant. In addition to being more economical, fine casual addresses consumers insatiable appetite for speed and convenience.
  • Corporate Stirrings: Darden will discontinue the Wildfish Seafood Grille Chain the multiconcept operator acquired seven years ago when it bought the Edie V’s operation. Some Wildfish units will close while Darden will convert others to Edie V’s restaurants. The two chains have similar menus. Jack in The Box completed the sale of its 700-unit Qdoba chain to affiliates of Apollo Global Management, LLC for approximately $305 million cash. Jamba Inc. received an “expected” letter from Nasdaq regarding the company’s failure to meet the listing requirements for its stock. Jamba plans to apply for an extension from Nasdaq to comply with filing the required information forms and holding a stock owners meeting.
  • Growth Chains: Pokeworks plans to open 100 franchise locations across the U.S. in the next 2 years. Bennigan’s signed a master franchise agreement that will result in the opening of four restaurants in Pakistan. The Wawa c-store chains plans to open 25 locations in the Mid-Atlantic region this year. Wingstop, which has about 1,100 units currently, sees potential to grow to 2,500 locations in the U.S. The firm’s CEO says in an average year the restaurant chain will open 140 to 150 locations.
  • Comparable store sales reports: Arcos Dorados up 10.6 percent, BJ’s Restaurants up 1.6 percent, Brinker International (Chili’s company-owned locations down 1.5 percent, Chili’s franchised locations down 1.7 percent and Maggiano’s up 1.8 percent), Darden’s (Bahama Breeze up 0.2 percent, Capital Grille up 2.8 percent, Cheddar’s Scratch Kitchen down 2.2 percent, Edie V’s up 2.7 percent, LongHorn up 2.0 percent, Olive Garden up 2.2 percent, Season’s 52 down 0.2 percent and Yard House up 1.9 percent), Famous Dave’s (company-owned up 8.0 percent and franchised up 1.1 percent), Kona Grill down 6.5 percent, Potbelly Sandwich down 2.4 percent, Shake Shack up 0.8 percent, Steak N Shake down 1.8 percent, and Wingstop up 5.2 percent.

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