The U.S. Census Bureau reports retail sales every month; we share the results in this blog. This data comes with some limitations and cautions, including the fact that it’s subject to revision.
How impactful can the Census Bureau’s changes be? For the first 6 months of this year eating and drinking place sales were adjusted upward by $9 Billion.
Trying to find a way to put the revision in some sort of perspective, Chick-fil-A’s total sales for all of 2018 were $3 billion. According to the government, it is as if three restaurant operations the size of Chick-fil-A appeared in the U.S. on January 1.
And just last year the bureau added $20 billion to eating and drinking place sales. Ironically, this actually has a sort of a negative effect since 2018 sales were higher, sales for the first 6 months of this year rose 4.2 percent instead of 4.6 percent which was first reported.
The revision process is not limited to eating and drinking place sales. The Census Bureau increased sales for retail food stores by $6 billion in the first 6 months of this year.
Economic News This Week
- First-time jobless claims fell by 8,000 to a level of 209,000 for the week ending August 3. The 4-week moving average was 212,250, an increase of 250 claims.
- The Institute for Supply Management’s Manufacturing Index grew for the 123rd consecutive month but the rate of growth slipped 0.5 percent from June to 51.2 percent in July. This is the lowest reading since August 2016. The New Orders Index edged up from flat in June to 50.8 percent last month. (Any reading greater than 50 shows increased activity.) The Production Index fell by 3.3 percentage points but stayed in positive territory at 50.8. The Order Backlogs Index, which was negative in June with a reading of 47.4, declined further to 43.1. The Employment Index fell to 51.7 in July from 54.5 in June.
- Growth slowed for the Institute for Supply Management’s Non-Manufacturing Index in July. While the non-manufacturing sector marked growth for the 114th consecutive month, the index dropped 1.4 percentage points to a level of 53.7. (Any reading greater than 50 means increasing activity.) The Business Activity Index fell to 53.1 in July from 58.2 in June. The New Orders Index declined to 54.1 from 55.8 in June. The Order Backlog Index fell to 53.5 from 56.0 in June. Of the 18 non-manufacturing segments the institute surveyed, 13 reported growing in July. The segment reported the highest growth rate was Accommodations and Foodservices.
- Consumer borrowing increased 4.3 percent in June, per the U.S. Federal Reserve. Revolving credit, which is primarily credit card debt, fell 0.1 percent — the first decline in years. Nonrevolving credit (auto loans, boat loans, student loans, etc.) rose 5.8 percent.
- July car and light truck sales fell 7.0 percent from a year earlier. Auto Data estimated 1.42 million vehicles were sold, pulled down by low sales numbers for small- and medium-size sedans. Sales of SUVs, crossovers and pickup trucks were fairly strong. But sales for the “Detroit 3” all tumbled.
- The Producer Price Index for Total Final Demand rose 0.2 percent in July. The Index for Final Demand Goods less food and energy increased 0.1 percent. The change in final demand from 12 months ago is +1.7 percent. In July, the Index for Food increased 0.2 percent.
Foodservice News This Week
- Pizza Hut plans major changes. The pizza giant will temporarily close hundreds of full-service locations and convert them to takeout and delivery service only. Some will be remodeled, refranchised or rebuilt. Some will be rebuilt in new locations.
- Steak ‘n Shake has temporarily closed 103 locations as of the end of June, per published reports. This is up from the 44 temporary closings reported in May. The closings are part of the chain’s plan to turn company-owned units over to franchisees. The costs are very attractive at first appearance, with franchisees paying just $10,000 plus 50 percent of the profits. But S&P Global Ratings predicts Steak n’ Shake’s operating results will deteriorate and it’s at heighted risk for a debt restructuring.
- Potbelly Sandwich tests a new design in two Chicago area locations. The new restaurant concept will both save money and eliminate the current somewhat chaotic experience. Instead of following their sandwich down a line and leaning over a tall counter, customers will find workers at a cash register to take their order. There will be a menu board instead of the current scattered display. Sandwich makers will be behind a glass wall so customers can still watch.
- Noodles & Company’s new restaurant design features a smaller footprint, pickup windows for digital orders and more efficient equipment packages. The chain will test new kitchen prototypes in the fourth quarter with a goal of rolling out the new design in early 2020.
- Growth Chains: Biggby Coffee plans to expand from its current base of 239 locations to 1,400 in the next 10 years. This growth will come, in large part, through the use of compact, lower cost stores, including some modular units. Mooyah Burgers, Fries & Shakes will add about 10 restaurants in the Philadelphia area in the next 4 to 5 years. Kura Sushi USA plans to expand from its current 22 units with the $47 million raised by the Japanese-based chain’s recent USA initial public offering. CNBC reported plans for China by 3 major chains: Popeyes Louisiana Kitchen wants to have 1,500 restaurants in 10 years; McDonald’s wants to almost double its current number of Chinese units to hit 4,500 by 2022 and Starbucks plans to have 6,000 stores in China by 2022. Noodles & Company is confident enough to predict 5.0 percent unit growth in 2021 with a 7.0 percent growth rate in subsequent years. JINYA Ramen Bar, with 32 full-service locations currently, plans to have 100 restaurants by 2021 and 250 by 2024.
- Comparable Store Sales Reports: Arcos Dorados up 14.2 percent, Bad Daddy Hamburgers down 0.7 percent, Carrols Restaurant Group up 0.1 percent, Del Frisco Restaurant Group (total up 0.5 percent, Double Eagle down 1.5 percent, Barcelona up 2.4 percent, Bartaco up 5.5 percent and Del Frisco Grille down 0.6 percent), Fiesta Restaurant Group (Pollo Tropical down 1.3 percent and Taco Cabana down 3.0 percent), Good Times Burgers up 2.8 percent. Jack in the Box (system up 2.7 percent, company owned up 2.8 percent and franchised up 2.7 percent), Noodles & Company (system up 4.6 percent, company owned up 4.8 percent and franchised up 3.7 percent), One Group Hospitality up 6.4 percent, Papa John’s (North America down 5.7 percent, company owned down 6.8 percent and franchised down 5.3 percent), Ruth’s Chris Steak House down 0.5 percent, and Wendy’s up 1.4 perccent.
For details and same-store sales of other chains, click here for the latest Green Sheet.