The National Restaurant Association reports a 0.5 percent uptick in its November 2018 Restaurant Performance Index (RPI) for a final reading of 101.8. Any reading greater than 100 indicates growth. The rise in the RPI was due primarily to the Current Situation Index, which rose 1.3 percent to 102.2, its highest reading since August. Both comparable store sales and customer traffic improved in November.

The Expectations Index was at 101.4 in November, down slightly from October’s reading of 101.6 as operators remained uncertain about the next 6 months.

Foodservice operators showed a willingness to invest, as 62 percent of those surveyed made a capital expenditure for equipment, expansion and/or remodeling in the last 3 months. This is up 9 percent from the previous month. As for the future, 59 percent of operators plan to make a capital expenditure for equipment, expansion and/or remodeling in the next 6 months, which is up from 53 percent in October.

While November was not a spectacular month it appears to be a solid one.

Economic News This Week

• 2018 was a good year for sales of cars, SUVs and light trucks. Despite numerous predictions to the contrary, automotive sales exceeded 17 million units in the U.S. during 2018.
• Initial jobless claims totaled 231,000, an increase of 10,000 for the week ending Dec. 29. The less volatile 4-week moving average was 218,750, an increase of 500 claims.
• The U.S. economy had a hefty job increase in December, ADP reports. This marks the biggest employment increase in more than two years. Mid-size companies (50-499 employees) led the way with 129,000 new hires or almost half of the new jobs. The leisure and hospitality sector added 39,000 employees, ADP reports.
• Employment rose by 312,000 in December, reports the U.S. Bureau of Labor Statistics. Of that growth, 301,000 jobs came from the private sector. Unemployment which is determined by another study rose to 3.9 percent, up from 3.7 percent the previous month. The bureau said average hourly earnings were 3.2 percent higher in 2018 while the number of hours worked increased as well. The report also stated the foodservice sector added 235,000 jobs in 2018.
• The Institute for Supply Management’s Production Manufacturing Index reported slower growth in December. While all but one of the factors in the survey stayed above the 50 mark, meaning increasing activity, almost all declined significantly for the month. The PMI fell 5.2 points to a final level of 54.1. The New Orders Index fell 11 points to a reading of 51.1. The Production Index fell 6.3 points to a reading of 54.3. The Employment Index fell 2.2 points. The Order Backlog Index fell 6.4 points for a final monthly reading of 50.0.
• The Institute for Supply Management’s December Non-Manufacturing Index showed slower growth, too. All the important aspects of the non-manufacturing study remained more than 50 percent, indicating continuing growth. The Non-Manufacturing Index totaled 57.6, a dip of 3.1 points. The Business Activity Index was 59.9, a dip of 5.3 points. The New Orders Index was 62.7, up 0.2. The Employment Index was 56.3, down 2.1 points. The Order Backlog Index fell 5.0 points to a final level of 50.5. Of the 17 non-manufacturing industries studied, 16 – including Accommodations & Foodservices – reported growing in December. 

Foodservice News This Week

• The foodservice industry added 40,700 jobs in December, per the U.S. Bureau of Labor Statistics. This represents more than 13 percent of last month’s private sector hiring.
• The Food Institute forecasts significant growth for eating and drinking places in 2019. The Institute predicts restaurants and bars will see a 5.1 percent sales increase this year while food and beverage store sales will rise 2.8 percent.
• Sodexo adds two brands to the concepts available to the contract feeder’s college and university clients. Wolfgang Puck and Firehouse Subs will join the other 50 plus operations Sodexo offers.
• Door Dash and General Motors will test self-driving cars as delivery vehicles. The test will begin in March in San Francisco. One objective of the test will be to determine if “autonomous” vehicles can achieve the same quality standards as delivery service as those with drivers.
• Customer traffic is down at Olive Garden and that may be a good thing. The Italian chain is coming off a quarterly increase of 3.5 percent in comparable store sales, the best comps since 2008. Olive Garden executives state the reason for the decline in traffic is due to a cutback in incentives. This in turn drives higher check averages. Olive Garden has increased its advertising budget, which has increased its share of market as well.
• Growth Chains: Burger King plans to open 1,000 locations in China in the next 5 years, which will double its current number of stores. Sonic Drive Ins will open its first unit in Alaska with a likelihood of two more to quickly follow.
• Comparable Store Sales Reports: Ark Restaurants up 1.7 percent.

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