The National Restaurant Association’s Restaurant Performance Index changed little in December from November. The index, which was at 101.8 in November, now stands at 101.6. Any reading above 100 indicates growth.
The Current Situation Index fell 0.4 percent, dipping from 102.2 in November to 101.8 in December. Higher same-store sales were reported by 60 percent vs. 61 percent who reported higher same-store sales in November. An increase in customer traffic was reported by 40 percent of the operators in December, a slight change from 44 percent reporting similarly in November.
The Expectations Index stood a 101.4, which was unchanged from November. Operators remain more confident about the health of their own businesses than the economy as a whole.
As for investing in their businesses, 55 percent of those surveyed made a capital expenditure for equipment, expansion and/or remodeling in the past 3 months. While a strong number, it is down from 62 percent who did so in November.
Looking ahead, 60 percent of operators in the survey said they plan on making a capital expenditure for equipment and/or remodeling in the next 6 months. This is virtually identical to the November response — 59 percent — to the same question.
While not a banner month, December is a reasonably positive one.
Economic News this Week
- Initial jobless claims jumped 53,000 to 253,000 for the week ending Jan. 26. This is the highest first-time claims have been since Sept. 30, 2017. The 4-week moving average rose by 5,000 claims to 220,250. While the Department of Labor did not comment on the unusually large increase in claims, it is possibly related to the government shutdown.
- ADP reported that U.S. employment in the private sector increased by 213,000 in January. The payroll processing company said that companies of all sizes shared in the expansion and that the Leisure and Hospitality sector added 31,000 jobs during the month.
- The Bureau of Labor Statistics reported that U.S. employment rose 304,000 in January. January marks the 100th consecutive month that employment increased. Unemployment increased to 4.0 percent, up from 3.9 percent in December. Average hourly earnings are up 3.2 percent from a year earlier. (The report includes an explanation of how the bureau dealt with the effects of the partial government shutdown.) For January foodservice hiring please see the Foodservice News This Week section below.
- Construction spending increased 0.8 percent in November over October on a seasonally adjusted annual basis. Private construction spending was up 1.3 percent from October while residential construction spending grew 3.5 percent for the month.
- U.S. car, SUV and light truck sales rose 1.0 percent in January despite miserable weather in many parts of the country. SUV and pickup trucks led the sales rise and are generally more profitable to dealers and manufacturers than autos.
- The Chicago Production Manufacturing Index tumbled in January to 56.7 from 63.8 in December. (Any reading above 50 shows expansion.) The New Orders Index fell to 53.2 from 67.9 in December. The Production Index declined from 71.0 in December to 58.8, which is a 10-month low.
- The Conference Board Consumer Confidence Index declined in January, falling 6.4 points to 120.2. The Current Situation Index barely moved from 169.9 in December to 169.3. But the Expectations Index “declined sharply” to 87.3 from its December reading of 97.7. The Board spokesman said the government shutdown may have played a role in the index’s drop but see this as a “temporary shock than a precursor to a significant slowdown…”
Foodservice News this Week
- The Bureau of Labor Statistics reported that foodservice and drinking places added a hefty 36,600 new jobs in January. With 296,000 jobs added in the private sector for the month, restaurants and bars accounted for more than 12 percent of the new hires.
- Papa John’s potential sale seems to be on hold. Evidently current Papa John’s management did not think any of the offers for the chain were adequate. However, activist hedge fund Starboard Value LP is investing $200 million in the company. It is quite possible the Papa john’s saga is not yet over.
- Subway’s unit count falls below 25,000. As part of the chain’s “optimization plan” approximately 1,000 stores have closed, others have relocated and hundreds have been remodeled. The company says they are focusing on “slightly fewer” but more profitable restaurants.
- McDonald’s reported strong international sales in its last quarter. Global comparable store sales rose 4.4 percent while system-wide sales increased 5.0 percent in constant currencies. Earnings per share were $1.82, up from $0.87 per share a year earlier. U.S. comparable store sales were 2.3 percent primarily due to menu price increases and premium-priced limited time offers.
- Golden Coral has a new prototype. The 490-unit chain’s new design features a contemporary look with stone exteriors, wood-toned interior ceilings, a double-sided fireplace and more compact, quieter dining areas. Since only 40 of Golden Coral’s locations are corporate owned, franchisees were involved in the development of the new plan from the beginning.
- West Coast Ventures Group Corp. will begin franchising its Illegal Burger concept. Illegal Burger has an agreement with North American Cannabis Holdings to develop a cannabis-themed restaurant in Colorado.
- Apple Cal LLC purchased 13 Northern California Applebee’s. The chain, owned by Dallas-based SSCP Management Inc., now has 75 Applebee’s franchised restaurants.
- Growth chains: Tom’s Urban plans to open 1 to 2 locations this year and 2 to 4 in following years. California Tortilla plans to grow their current 42 stores to 100 by 2023.
- Comparable store sales reports: Brinker International (Chili’s company owned up 29 percent, Chili’s franchised down 0.8 percent and Maggiano’s down 1.8 percent), Darden’s (Blended up 2.1 percent, Bahama Breeze down 1.1 percent, Capital Grille up 3.7 percent, Cheddar’s Scratch Kitchen down 4.0 percent, Eddie V’s up 0.9 percent, LongHorn up 2.9 percent, Olive Garden up 3.5 percent, Season 52 down 0.8 percent and Yard House down 1.1 percent), Luby’s (All concepts down 5.5 percent, Luby’s Cafeteria down 3.0 percent, Fuddrucker’s down 11.2 percent, Cheeseburger In Paradise down 0.6 percent and combo units down 11.1 percent) and McDonald’s up 2.3 percent.
For details and same-store sales of other chains, please click here for the latest Green Sheet.