The National Restaurant Association’s Performance Index totaled 101.2 in January, a 0.4 percent decline from December. Any reading greater than 100 shows expansion.

Driving the decline was the Current Situation Index, which fell 1.1 percent to a final reading of 100.7. Both comparable sales and customer traffic were down in January. Given the negative reports in January as a result of the Federal government’s partial shutdown, it would be surprising if sales were not soft for this period.

On the other hand, the Expectations Index edged up 0.3 percent for a final reading of 101.7. Also, on the positive side, 55 percent of the operators surveyed indicated they had made a capital expenditure for equipment, expansion or remodeling in the past 3 months. This matches the percentage of operator who reported investing in their business in December.

Looking ahead, 57 percent of the operators plan to make a capital expenditure for equipment, expansion and/or remodeling in the next 6 months. This is down slightly from the 60 percent in December who said they planned to do the same.

Economic News This Week

  • The Bureau of Economic Analysis’s first estimate for Gross Domestic Product for the fourth quarter of 2018 is +2.6 percent. Due to the recent government shut down, the bureau reports the data that is “incomplete or subject to further revision.” That said, the 2.6 percent increase beats most estimates.
  • Real Disposable Personal Income increased 1.0 percent in December while Real Consumption Expenditures Decreased 0.6 percent for the month.
  • Initial-jobless claims hit 225,000, an increase of 8,000 for the week-ending February 23. The 4-week moving average was 229,000, a decline of 7,000. It appears the recent gyrations in the number of claims being filed have settled down.
  • Building permits issued in December for privately owned housing increased 0.3 percent compared to November and 0.5 percent compared to December 2017. 
  • December housing starts for privately owned housing units fell 11.2 percent from November and were down 10.9 percent from December 2017. Single family starts were down 6.7 percent from November. This puts housing starts at the lowest level in two years. 
  • The U.S. Census Bureau’s December Manufacturing Report showed new factory orders increased 0.1 percent for manufactured goods after declining for 2 months. Shipments decreased 0.2 percent and unfilled orders fell 0.1 percent for the months. 
  • The Chicago PMI Bounced back in February after a steep drop in January. The Chicago Production Index, also known as the Chicago Business Barometer, increased to 64.7 from 56.7 in January. Any reading greater than 50 indicates growing activity. The February New Orders Index rose to 68.4, up from 53.2 in January. The Production Index rose to 67.3 from January’s 58.8. https://www.briefing.com/Investor/Calendars/Economic/Releases/chi.htm
  • The Conference Board’s Consumer Confidence Index bounced back in February, rising to 131.4 after falling to 121.7 in January. The Present Situation component of the Index increased to 173.5 from 170.2 in January. The Expectations component rose sharply to 103.4 from 89.4 in January. The Conference Board now believes the U.S. economy will continue to expand this year but at a moderate pace.
  • The University of Michigan’s Index of Consumer Sentiment edged up to 93.8 in February, an increase of 2.6 percent compared to January. The Index of Current Economic Conditions was virtually unchanged at 108.5 in February vs. 108.8 in January. The Index of Consumer Expectations rose to 84.4 in February from January’s 79.9. 

Foodservice News This Week

  • Shake Shack adds two trucks to its fleetOne truck will work in the New York, New Jersey, Connecticut & Pennsylvania while the second truck will circulate in Atlanta. Unlike traditional food trucks, Shake Shack’s units do not cruise the streets nor find a place and just park. Customers book the trucks in advance for use during an organized activity like company meetings or weddings. Shake Shack will customize the menu for the event. More trucks may be in route for the chain.
  • More robots are on the way. This summer FedEx will team up Pizza Hut to test a battery-powered robot to deliver food and other items the “last mile,” which is considered to account for 50 percent cost of delivery. Walmart, AutoZone and Target are also involved in the test which utilizes a robot manufactured by the company that makes Segway scooters. Meanwhile, Sodexo is working with a robot made by Starship Technologies to test food deliveries on the George Mason University campus.
  • Breakfast consumption will increase at a rate of 5 percent through 2019according to data from The NPD Group.Convenience seems to be the driving factor, which can favor such menu items as breakfast sandwiches and granola bars. Contrary to expectations, Millennials seem to prefer traditional sit-down dishes like eggs, NPD notes.
  • Social Monk Asian Kitchenthe Cheesecake Factory’s long-awaited fast-casual concept, opened in California. The restaurant features rice and noodle dishes but doesn’t offer cheesecake. 
  • Growth Chains: Tim Hortons opened its first restaurant in China and plans to have 1,500 units there in 10 years.
  • Comparable Store Sales Reports: Applebee’s up 3.5 percent, Carrols Restaurant Group up 2.7 percent, Cracker Barrel up 3.8 percent, Fiesta Restaurant Group (Pollo Tropical down 1.9 percent & Taco Cabana up 5.1 percent), Freshii, Inc. down 6.1 percent, IHOP up 3.0 percent, Papa John’s (North America down 8.1 percent, Company Owned down 10.2 percent & Franchised down 7.4 percent), Potbelly Sandwich down 1.7 percent and Red Robin Gourmet Burgers down 4.5 percent.

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