The effects of the coronavirus slam the foodservice industry. Hooter’s sees sports betting as part of its future. Hy-Vee supermarkets will convert 22 of its Market Grill Restaurants to Wahlburger restaurants. 7-Eleven tests a chicken concept in New York.
Is eating out during the coronavirus pandemic a food safety issue? Yes and no. In a USA Today article a professor from the University of Minnesota says there is no evidence the coronavirus is spread through food. Infected people transmit the virus via the droplets they expel when sneezing or coughing. Non-infected patrons who come into contact with the virus could become infected with COVID-19.
Some experts say the virus can live on hard surfaces like ketchup bottles and other tabletop items like salt and pepper shakers. Thus, the problem with eating out is not contamination from food or the condition of the people preparing and serving the food since so many restaurants have strict guidelines governing whether sick employees should come to work. For the restaurant industry, the problem likely comes from proximity to other diners. This explains why state governments in Ohio, Illinois, Washington and other parts of the country ordered foodservice operations to close their dining areas but may permit takeout and delivery.
Chick-fil-A closed all in-store dining but remains open for takeout orders. Going even further, Starbucks switched to a “to go” service model in the US and Canada. The coffee giant is also shutting down some units, particularly those in areas that have a high number of coronavirus cases as well as units in “high social gathering areas” like universities and shopping malls.
While there’s still plenty of uncertainty surrounding coronavirus and its impact on the economy, the restaurant industry and more, the one thing that remains certain: it’s going to be quite some time before this crisis comes to an end.
Economic News This Week
- First-time jobless claims hit 216,000, a decline of 4,000 for the week ending March 7. The 4-week moving average was 214,000, an increase of 1,250 claims.
- The Institute for Supply Management’s Production Manufacturing Index barely remained in expansion territory in February. The index hit 50.1, a 0.8 decline. (Any reading greater than 50 indicates expansion.) The Production Index fell 4.0 points for a reading of 50.3. The New Orders Index declined 2.2 points for a reading of 49.8. The Order Backlog Index was one bright spot in the February report as it rose 4.6 points to a level of 50.3. The Employment Index increased by 0.3 but stayed in a contraction mode at 46.9. Of the 18 manufacturing industries surveyed, 14 reported growth.
- The Institute for Supply Management’s Non-Manufacturing Index edged up 1.8 points for a reading of 57.3 in February. The Business Activity/Production Index fell by 3.1 points for a final score of 57.8. The New Orders Index jumped 6.9 points for a final reading of 63.1. The Order Backlog Index rose 7.7 points, moving it out of contraction territory with a reading of 53.2. The Employment Index hit 55.6, an increase of 2.5 points. Of 18 service industries studied in February, 16 reported growth for the month led by Accommodation & Foodservices. For the 121st consecutive month, the non-manufacturing sector showed growth.
- Consumer borrowing increased 3.4% in January, the Federal Reserve reported. Revolving credit (mostly credit card borrowing) decreased by 3.3%. Non-revolving credit (Includes auto loans, student loans, etc.) increased by 5.8%.
- The Producer Price Index for Total Final Demand fell 0.6% in February. Excluding foods, energy and trade, total final demand prices fell 0.1%. Producer prices for food fell 1.6% in February. Compared to 12 months ago, final demand prices are up 1.3%.
- The Consumer Price Index rose 0.1% in February. In the last 12 months the Consumer Price Index is up 2.3%. Excluding food and energy prices, the index was up 0.2% in February and up 2.4% in the last 12 months. Food prices were up 0.4% in February and up 1.8% in the last 12 months. Food at home prices were up 0.5% in February and up 0.8% in the last 12 months. Food away from home prices rose 0.2% in February and are up 3.0% in the last 12 months.
Foodservice News This Week
- Early prognostications called for the coronavirus causing staffing problems for restaurants with employees trying to avoid exposure to the illness. And that was before many state and local governments began limiting the use of restaurants to stop the spread of the virus. In those areas where restaurants continue to operate as usual, operators may face labor shortages and may reduce hours for staff. Some restaurants are changing their sick leave policies. Darden, for example, now offers paid sick leave for all hourly workers. Starbucks is expanding emergency pay for employees infected by the virus. McDonald’s is offering up to two weeks pay for employees who are quarantined as a result of the coronavirus.
- Moe’s Southwest Grille transferred 67 franchised locations to Quality Fresca, a newly formed division of the Quality Restaurant Group. The restaurants in the deal operate from the District of Columbia, Florida, Maryland, South Carolina and Virginia.
- Hooter’s antes up for sports betting. Using the Konek TV package, Hooter’s has more than a dozen sports book betting units in New Jersey, Pennsylvania and Indiana.
- Grocery chain Hy-Vee will convert 22 of its table-service Market Grille restaurants to Wahlburgers. Hy-Vee has worked with the burger chain since 2017 when the grocer revealed plans to open 26 Wahlburger restaurants. Hy-Vee has also worked Wahlburger items into Market Grille menus.
- 7-Eleven tests a new chicken restaurant concept in Lower Manhattan. Raise the Roost offers made from scratch, breaded fried chicken tenders with signature sauces, bone-in and boneless wings, signature chicken sandwiches and breakfast sandwiches. It appears 7-Eleven is actively testing various concepts like the Laredo Taco Company as in-store brands.
- Growth Chains: C-store chain Wawa will open five New Jersey locations. Kelly’s Roast Beef plans to open six new stores this year, including five in Massachusetts and one in Rhode Island. Kelly’s goal is to have 50 units in the next 5 years.
- Comparable-Store Sales: Applebee’s down 2.5%, Ark Restaurants up 3.5%, Carrols Restaurant Group up 2.0%, Del Taco (system-wide locations up 0.4%, company operated units up 0.4% and franchised units up 0.5%), Alexander’s Holdings (J. Alexander’s restaurants down 0.4% and Stoney River Streak House restaurants down 2.0%), Jack in the Box (system-wide up 1.7%, company-owned and franchised locations are both up 1.6%), Noodle’s & Company (system-wide up 2.8%, company-owned up 2.0% and franchised units up 2.5%), Wendy’s up 4.3% and Wingstop up 12.2%.
For details and same store sales of other chains, please click here for the most current Green Sheet.