April U.S. retail sales tumbled 16.4% from March, according to the U.S. Census Bureau. This comes on the heels of a record setting 8.7% decline in March. The April report shows with just two exceptions every retail sector in the U.S. experienced a double digit decline in sales. Sales by building materials and garden supplies dealers declined 3.55%. Non-store retailers saw sales rise 8.5% for the month, making it the only sector without a decline.
The hope and expectation is that restaurant sales will improve in May as more states and local governments loosen restrictions related to on-premises dining.
Economic News This Week
- Initial jobless claims dipped 195,000 for a reading of 2.98 million for the week ending May 9. The 4-week moving average declined by 574,000 to a level of 3.62 million. In the last 8 weeks more than 36 million people have filled applications for jobless benefits.
- Industrial production fell 11.2% in April, the largest monthly drop in the 101 years the Federal Reserve’s been indexing this data. Manufacturing output dropped 13.7%. Output for utilities fell 0.9%, while mining output fell 6.1%. Capacity utilization decreased 8.3% points for an April reading of 64.9%.
- The New York Federal Reserve’s Empire State Manufacturing Survey hit -78.2 in April. The 57-point decline resulted in the lowest reading in the history of the survey “by a wide margin.” The New Orders Index (down 57 points) and the Shipments Index (down 66.4 points) both contributed to the sorry report. And as would be expected, the Employment Indexes tanked. The Average Employee Workweek Index declined 51 points and the Number of Employees Index fell 53.8 points.
- The Consumer Price Index decreased 0.8% in April, the largest monthly drop since December 2008. In the last 12 months the Consumer Price Index is up 0.3%. Food prices bucked the overall trend and rose 1.5% in April. Food-at-home prices were up 2.6% and food-away-from-home prices increased 0.1%. In the last 12 months the food index is up 3.5%, with food-at-home prices up 4.1%. The food-away-from-home index is up 2.8%. This is a complete reversal from the pattern of the last few years when food-away-from-home prices were increasing much faster than food-at-home prices. Offsetting the increase in food prices were declining prices for other items, especially gasoline which was down more than 20%.
- The University of Michigan Index of Consumer Sentiment sprung a surprise when the preliminary reading rose to 73.7 in May from 71.8 in April. Most forecasters predicted a decline of at least several points. Driving the rise was a rise in the Current Conditions Index to 83.0 from 74.3. The Expectations Index, though, declined to 67.7 in May from 70.1 in April.
Foodservice News This Week
- Sysco sells directly to consumers, per published reports. It is not entirely clear if all Sysco locations are doing this. The story focused on Sysco in Sacramento, Calif., but an internet search turned up several more locations doing the same. It appears that this is a onetime offer limited to May 15. Perhaps this is a test on Sysco’s part.
- Consumers show caution about patronizing those businesses ordered closed to slow the spread of the pandemic, per one survey. In addition, 46% of consumers say they would wait at least one month before visiting restaurants and other reopened businesses.
- Pizza Inn introduces its Right Way Buffet with the goal of enhancing safety for customers. Key steps include staff handing out items and utensils that were previously self-serve, closure of self-serve beverage stations with staff now bringing drinks to customers and more.
- Steak ‘n Shake permanently closed 51 restaurants in the first quarter. There were 62 units closed on temporary basis as a result of the coronavirus pandemic.
- The New York City Council passed a law capping third-party delivery fees at 20%. This applies only if the delivery service’s driver is used. Without the delivery company’s driver, the fee is set at 5.0%. Restaurant managers have complained bitterly about losing money with 30% delivery charges.
- Uber offered to buy Grubhub but the offer was rejected. Grubhub felt the offer was too low. Some observers feel the food delivery field features too many players and predict a shakeout. It is estimated that together the two firms would have 55% of the domestic market.
- Sustainable Restaurant Holdings filed for bankruptcy. The parent company of Bamboo Sushi and Quickfish had 10 units and 480 employees but now has 3 Bamboo Sushi locations and 38 employees due to closures attributed to the COVID-19 pandemic. The company hopes to find a buyer through the Chapter 11 process in the next 90 days.
- Growth Chains: Lefty’s Famous Cheesesteak Hoagies Grill opened 5 locations in Michigan and plans to have 75 by the end of 2021.
- Comparable Store Sales Reports: Bad Daddy Hamburgers down 15.7%, Del Taco (system wide down 3.1%, company-operated down 2.5% and franchised locations down 3.7%, El Pollo Loco (system wide down 1.5%, company-owned units down 0.7% and franchised locations down 2.2%) and Good Times Burgers up 3.0 %.
For details or Same Store Sales of other chains, Please Click Here for the latest Green Sheet.