The National Restaurant Association’s performance index showed a moderate gain in June. Gross Domestic Product grew by more than 4.0 percent in the second quarter. A $5 price seems to strike a chord with consumers. Chick-fil-A tests the meal kit business. McDonald’s reports mixed results. Physicists prove brick ovens make the best pizza. These stories and a whole lot more This Week in Foodservice.
The National Restaurant Association reports the Restaurant Performance Index reached 101.6 in June, a 0.5 percent increase. Any reading that exceeds 100 indicates growth.
The Current Situation Index hit 101.9 in June, up 1.4 percent. This marks the fifth consecutive month this index has been greater than 100. An increase in same store sales was reported by 53 percent of those operators surveyed. Customer traffic results were mixed with 38 percent of operators stating they experienced and increase while 39 percent saying their traffic decreased.
Operators are cautiously optimistic about future sales, with 38 percent expecting an increase. Operators were less enthusiastic about the overall economy. Thus, the Expectation Index fell 0.4 percent from May to 101.3 in June.
Seventy five percent of the operators said they made a capital expenditure for equipment, expansion and/or remodeling in the last three months. In the last 3 months, 60 percent of those in the survey made a capital expenditure. Operators intent to invest in the future with 58 percent planning on spending for equipment, expansion and/or remodeling.
All things considered it is an upbeat report.
Economic News This Week
- U.S. Gross Domestic Product grew 4.1 percent in the first quarter on an inflation and seasonal adjusted basis, per an advance estimate from the Bureau of Economic Analysis. The 4.1 percent is the highest rate of growth in almost 4 years and was driven by strong increases in consumer spending, exports and business investment.
- Initial-jobless claims hit 217,000, an increase of 9,000 for the week ending July 21. The 4-week moving average totaled 218,000, a decline of 2,750 claims.
- Existing home sales declined 0.6 percent in June from May to a seasonally adjusted rate of 5.38 million. This is the fourth straight month sales have declined and leaves existing home sales down 2.2 percent from last year. A spokesman for the Nation Association of Realtors attributes the decline to a lack of homes for sale.
- Sales of new single-family homes totaled 631,000 in June on a seasonally adjusted annual rate. This is 5.3 percent less than the May sales figure but 2.4 percent more than June of 2017.
- increased 1.0 percent in June after dropping 0.3 percent in May. Transportation equipment led the increase with new orders rising 2.2 percent. Shipments of durable goods rose 1.7 percent while unfilled orders increased 0.4 percent.
- The University of Michigan’s Index of Consumer Sentiment totaled 97.9 in July, down slightly down from June’s level of 98.2. The Current Economic Conditions Index dropped slightly from 116.4 in June to 114.4. But the Index of Consumer Expectation edged up slightly to 87.3 from 86.3. Consumers overcame concerns about higher interest rates and inflation based on good employment numbers and income prospects.
Foodservice News This Week
- Is $5 a magic number in foodservice? Some operators contend consumers have been conditioned to believe 5 bucks is a great deal. Carl’s Jr./Hardee’s, Dairy Queen, KFC, Little Caesars, Subway and Taco all have run $5 specials or have permanent $5 promotions.
- Chick-fil A to offer meal kits at 150 Atlanta locations. The kits have a choice of 5 different entrees, will feed 2 people and cost $15.89.
- McDonald’s reported global comparable store sales increased 4.0 percent in its second fiscal quarter, which ended June 30. System-wide sales rose 5.0 percent. McDonald’s attributes a 2.6 percent increase in U.S. comparable store sales to “product mix shifts and menu price increases.”
- McDonald’s customer traffic has declined in the first six months this year, according to the NY Post. The article went on to say that Burger King and other rivals are cutting into McD’s breakfast business.
- The perfect pizza needs a brick oven. Two physicists published a paper claiming the “unique thermal properties of the brick oven” produce the best pizza. The key is that brick slowly transfers heat allowing the crust, cheese, sauces and toppings all to reach their ideal heat.
- Wendy’s long-promised small foot print store opened in Columbus. The new design is one-third smaller than a regular Wendy’s and seats about half the number of diners. Also, it a has separate ordering and pick up area, seating at a counter overlooking the kitchen and outdoor patio seating. Wendy’s operated a regular restaurant on the site for 20 year so the chain can make comparisons with traffic and sales.
- The Bravo Brio Restaurant Group’s new owner is focusing on improved food. The chain was purchased earlier this year by Spice Private Equity, a subsidiary of GP Investments. New management will begin by taking aim at improving the quality and sustainability of the ingredients.
- Tim Hortons will take all-day breakfast nationwide in Canada. The program has been tested in a limited number of vacations. The press release did not mention any plans to roll out anytime breakfast in the US.
- Corporate Stirrings: Thompson Hospitality Group has acquired a stake in the Matchbox Food Group. Matchbox owns and operates 11 restaurants in the Washington, D.C. area. Thompson will take over the operation of the restaurants immediately. Financial terms of the agreement were not disclosed.
- Growth Chains: Chick-fil-A will open a restaurant in Toronto next year with plans to opens 15 in the coming years. Dunkin’ Donuts expects its franchisees to open 275 units in the next year. Biggby Coffee will open five locations in Cincinnati. Philippines based Jolibee will open 100 locations in Canada in the next 5 years.
- Comparable Store Sales Reports: Baskin Robbins down 0.4 percent, BJ’s Restaurants up 5.6 percent, Chipotle Mexican Grill up 3.3 percent, Del Frisco (Del Frisco Grill up 0.7 percent, Double Eagle down 1.2 percent and Sullivan’s Steakhouse down 6.0 percent,) Del Taco up 3.3 percent, Domino’s Pizza (System up 6.9 percent, Company Owned up 5.1 percent & Franchised up 7.0 percent), McDonald’s up 2.6 percent & Starbucks up 1.0 percent.
For details and same store sales of other chains, Please Click Here for the Green Sheet.