Retail sales in the U.S. increased 0.7 percent in July compared to June, per an advance report from the United States Census Bureau.
best month-over-month increase since March. Given the fact that retail sales are roughly two thirds of the U.S. economy, July’s sales results are extremely important. And with the manufacturing sector slowing and business investment lagging, retail sales become doubly significant.
Compared to July of 2018, retail sales were up +3.4 percent for 2019. The Census Bureau estimates that in the 7 months ending in July, total retail sales increased of 3.1 percent.
The U.S. Census Bureau’s advance estimate for July foodservice sales was +1.1 percent over June. This is the strongest month-over-month sales performance for restaurants and bars this year. July sales this year were up 3.8 percent from July 2018. And, the sales estimate for the 7-month period ending in July increased 4.1 percent over the same time period last year.
Overall, this was a very good month for restaurants. Time will tell if this positive performance will continue.
As frequently pointed out, there are some limitations and cautions when using this data. Due to the data’s limited sample size, these are advanced numbers and are subject to revision. The sales data covers restaurants and bars only. The Census Bureau does not survey operators in the following segments: hotels, resorts, clubs, business and industry, healthcare, schools and colleges, and military. Some sales statistics are adjusted for calendar changes, holidays, weekends but not for menu price changes.
Economic News This Week
- Industrial production declined 0.2 percent in July. Manufacturing Output declined 0.4 percent for the month and has been down 4 of the last 6 months. (Please see the article on retail sales above). Mining output was down 1.8 percent while utilities output was up 3.1 percent after being down 3.3 percent in June. Capacity Utilization for manufacturing was down 0.4 percent to 75.4 percent in July, a rate that is 2.9 percent below its long run average.
- The New York Federal Reserve’s Empire State Manufacturing Survey showed a second month of modest improvement with the index rising up from 4.3 in July to 4.8 in August. The New Orders Index rose from -1.5 in July to +6.7 in August. The Shipments Index inched up from 7.2 to 9.3 in August. The Number of Employees Index improved but stayed in negative territory at minus 16. The Average Employee Work Week Index worsened, falling from 3.8 in July to minus 1.3 in August.
- The Philadelphia Federal Reserve’s Manufacturing Business Outlook Survey indicated manufacturing activity continued to grow. However, the indicators were mixed. New Orders and Unfilled Orders improved while Shipments and Employment Indicators fell. However, all indicators remained in a positive range.
- July housing starts for privately owned houses fell 4.0 percent from June but increased 0.6 percent from July 2018. Single family housing starts in July were up 1.3 percent over June. Building Permits issued in July for privately owned homes increased 8.4 percent from June and rose 1.5 percent over July 2018. Single family permits issued increased 1.8 percent in July from June.
- The Consumer Price Index for all items increased 0.3 percent in July. In the 12-month period ending in July the index for all items increased 1.8 percent. The Index for all items not including food and energy rose 2.2 percent in the last 12 months. (For the food prices in July, please see the Foodservice News This Week section below.)
- The University of Michigan’s Index of Consumer Sentiment declined in the preliminary August reading. The index is now at its lowest since the start of the year. The index dropped to 921 from 98.4 in July. The Current Economic Conditions Index slipped 110.7 to 107.4 while the Index of Consumer Expectations fell from 90.5 to 82.3. A spokesman for the University expressed the opinion that the tariff increases with China are the primary factor for consumer pessimism.
Foodservice News This Week
- The Consumer Price Index for Food was unchanged in July from June. (June was unchanged from May.) In the 12 months ending in July, the index for food increased 1.8 percent. For July the index for food at home fell 0.1 percent from June while the index for food away from home rose 0.2 percent. In the last 12 months food prices for food at home were up 0.6 percent while the index for food away from home prices jumped 3.2 percent.
- J. Alexander’s announces it will conduct a strategic review. When 9 out of 10 companies use the term “strategic review,” it simply means they’re up for sale but J. Alexander’s top management insists that they will consider all options. The company could be sold or they could acquire one or merge with a “complementary concept.” Time will tell what the board of directors really have on their minds.
- Fazoli’s will introduce a new restaurant design featuring a new color scheme including warm, rich tones as well a new technology like self-ordering kiosks and a pickup counter for mobile aps and online orders. Fazoli’s hopes to have the entire system remodeled by the end of 2021. Remodeled locations see close to a 11 percent sales increase, a 9.0 percent rise in traffic and an increase in guest review scores.
- Sysco announced the acquisition of J. Kings Food Service Professionals, a broadline foodservice distributor located in New York. J. Kings also services foodservice operators in Connecticut and New Jersey and has sales of approximately $150 million annually. Terms of the purchase were not disclosed.
- Clark Crew BBQ — with backing from Famous Dave’s — will open a 7,200-square-foot restaurant in Oklahoma City. The building was formerly a Macaroni Grill until it folded in 2017. Clark Crew BBQ has earned numerous food-related awards.
- Growth Chains: Marco’s Pizza plans on open 15 locations in the Denver area by 2023. Baskin Robins will open 10 stores in upstate New York. Quaker Steak & Lube will open restaurants in Pittsburgh and Cleveland.
- Comparable Store Sales Reports: Brinker International (Chili’s company owned up 1.5 percent, Chili’s franchised up 0.9 percent and Maggiano’s down 0.2 percent), Chuy’s Holdings up 1.9 percent, Cracker Barrel up 1.3 percent, Famous Dave’s (company owned down 0.8 percent and franchised up 0.7 percent), J. Alexander’s Holdings, (J. Alexander’s up 0.3 percent and Stoney River Steakhouse up 0.3 percent) and Potbelly’s Sandwich Shops down 4.0 percent.
For details and same-store sales of other chains, click here for the latest Green Sheet.