U.S. retail sales increased 0.1 percent in August, reports the Census Bureau. There’s no statistical evidence that the actual change is different from July’s results, per the Census Bureau. Retail sales were up 6.6 percent from August 2017. In the first 8 months of this year, the Census Bureau reports a 5.7 percent increase in retail sales. The advance sales report for July was revised up to +0.7 percent from +0.5 percent.
August sales at foodservice and drinking places rose 0.2 percent from July and were 10.1 percent greater than August last year. The Census Bureau said that foodservice and bar sales have increased 6.2 percent in the first 8 months of 2018. The advance report for July for foodservice and bars of was unchanged at +1.6 percent.
It may take a couple or so more months to see if the slower sales represent a trend or an aberition.
There are some cautions and limitations for this data. First, the Census Bureau’s advance report is based on a limited sample and may be revised with the receipt of a broader sample.
Second, the survey covers only restaurants and bars. Not included are hotels, resorts, clubs, employee feeding, schools, colleges, healthcare and military. Finally, some but not all of the statistics are adjusted for seasonal variations, holidays, and weekends but none for menu price changes.
Economic News This Week
- The gap between the number of job openings and the unemployed hit a record in July. The Bureau of Labor Statistics reported there were 6.94 million job openings in July and 6.28 million people unemployed but actively seeking work. From the year 2000 up to March of this year the number of people looking for work exceeded the number of job openings. Obviously, this means many employers are going to have a tough time filling jobs.
- Initial-jobless claims hit 204,000, a dip of 1,000 for the week ending Sept. 8. The 4-week moving average was 208,000, a dip of 2,000. This is the lowest this average has been since Dec. 6, 1969.
- The Producer Price Index for Final Demand declined 0.1 percent on a seasonally adjusted basis. Final demand goods prices were flat. The index for food prices fell 0.6 percent for the month, while the index for energy prices rose 0.4 percent. This left the core prices — all goods prices less food and energy — flat for August. The price index for final demand services fell by 0.1 percent.
- The Consumer Price Index increased 0.2 percent in August on a seasonally adjusted basis. In the past 12 months the overall index has increased 2.7 percent unadjusted. The core index –-all items less food and energy – rose 0.1 percent for the month and 2.2 percent in the last 12 months.
- Consumer borrowing increased 5.1 percent in July, according to the U.S. Federal Reserve. Revolving credit — mostly credit card borrowing — rose 1.5 percent, while Nonrevolving Credit — auto loans, student loans, etc. — increased by 6.4 percent.
- The University of Michigan’s preliminary September Index of Consumer Sentiment “posted a robust rise.” The Index hit 100.8, up from 96.2 in August. This marks the second highest level since 2004 and less than 1 point from 101.4 in March of this year. The Current Economic Conditions Index rose sharply to 100.8 from 96.2 in August. The Index of Consumer Expectations rose to 91.1 from 87.1 in August. The spokesman for the University stated, “Importantly, the gains were widespread across all major socioeconomic subgroups.”
Foodservice News This Week
- Food prices increased 0.1 percent in August, per the Bureau of Labor Statistics’ Consumer Price Index. In the past 12 months the price consumers paid for food has risen 1.4 percent. The price for food away from home continues to outpace the price for food at home. Prices for food at home were flat in August and up 0.5 percent in the past 12 months while prices for food away from home rose 0.2 percent for the month and up 2.6 percent in the last 12 months.
- Starbucks plans to develop greener stores. The goals of the program include energy efficiency and water stewardship; use of renewable energy; creation of a healthy environment for employees and customers that includes lighting, noise, air quality and temperature; and “responsible” material and waste diversion. A couple of the specifics are a discount for patrons providing their own cups and combating food waste by donating unsold food nightly. The coffee chain plans to have 10,000 of the greener stores globally by 2025.
- Analyst says Papa John’s may have to close some locations. Stifel analyst Chris O’Cull predicts that Papa John’s may be forced to close 150 to 250 stores in non-core markets, mainly the West Coast and the Northeast, if sales do not improve. Some estimates put the pizza chain’s same-store sales down 10 percent to 11 percent. O’Cull said recent aggressive promotions by Papa John’s have failed to revive sales. Papa John’s has been forced to support stumbling franchisees by reducing commissions, fees and commissary prices. If Papa John’s does close stores it will tend to increase commissary prices to the remaining operations. And, if Papa John’s does withdraw from markets it would result in new business opportunities for other pizza operators, especially Domino’s and Pizza Hut.
- FAT Brands CEO says delivery is here to stay. Andy Wiederhorn believes third-party delivery services are the way to go despite their inconsistencies and possible risks. He stated his company’s six restaurant concepts generate about 16 percent of their sales in delivery business and delivery orders raise check averages by “a good 25 percent.” Further, he believes casual restaurant chains must embrace delivery and they will find it their salvation.
- The National Labor Relations Board proposes new rules for its “joint employment” standard. The new standard appears to make it more difficult to establish joint employment. The NLRB under the previous administration liberalized the long established rules making it far easier to claim joint employment. For example, it could be claimed that the franchisors were joint employers of their franchisees’ workers. The previous standards were believed to make it easier to unionize workers.
- Tex-Mex quick service chain Taco Bueno closed 16 restaurants, effective Mon., Sept.10. The restaurants were located in Texas, Oklahoma, Kansas and Missouri. The company said the action was “strategic closures in order to position the brand for future growth.”
- Crate & Barrel will open a full-service restaurant in its Oak Brook, Ill., store. The operation is in partnership with Chicago’s Cornerstone Restaurant Group. Crate & Barrel’s CEO called the move “…a natural extension of the … brand.”
- Corporate Stirrings: Philippines-based Jobllibee Foods Corporation has taken a 47 percent stake in Tortas Frontera, a fast-casual, 4-location chain started by multiconcept operator Rick Bayless. Jobillibee’s minority investment was valued at $12.4 million. Bayless and other stockholders will retain 53 percent ownership. A wholly owned subsidiary of MTY will purchase most of the franchised assets of SweetFrog yogurt chain. The cost of the acquisition is $35 million. SweetFrog’s 78 corporate owned units will transition into franchise operations.
- Growth Chains: Bojangles will open three restaurants in North Carolina. Burger Brothers Restaurant Group will open seven Roy Rogers locations in the New York City metro area. Curry Up inked a franchise agreement for 20 restaurants in Colorado and Utah. Huey Magoo’s will open as many as 46 restaurants in the Atlanta area. Seoul Taco, the Korean Mexican chain, will add 2 locations in the Chicago area.
- Comparable Store Sales Reports: Casey’s General Store up 1.7 percent and Dave & Buster’s down 2.4 percent.
For details and same-store sales of other chains, please click here for the Green Sheet.