The National Restaurant Association reports its performance index increased moderately in April. The first quarter GDP estimate shows the economic recovery continues to struggle. Sysco and US Foods await decision on their merger. The Munchery meal delivery company raises big bucks for expansion. KFC and Taco Bell will test delivery. Burger King is back to number two in sales. These stories and a lot more in This Week in Foodservice.

The National Restaurant Association’s Restaurant Performance Index hit a 102.7 in April, a “moderate” 0.5 percent increase compared to March.

The Current Situation Index hit 102.9, an increase of 1.0 percent. This component of the overall index was driven by a nice increase in same-store sales vs. April 2014. In April this year 71 percent of operators said that same-store sales increased, up from 62 percent who reported an increase in March. And, just 13 percent of operators reported a sales decline, down from 24 percent in March.

Fifty-five percent of operators reported an increase in customer traffic, a nice jump from 45 percent who said they served more customers in March. Likewise, 25 percent of operators had traffic decline in April, down from 34 percent in March.

The only negative part of the report was operators’ view of the future with the Expectations Index retreating by 0.1 percent. Respondents to the survey were more bearish on future sales and the overall economy than they were in March.

Operator spending remained strong with 56 percent saying they had made a capital expenditure for equipment, expansion and/or remodeling in the past 3 months. This is the same percentage as in March and marks the seventh straight month more than half of the operators have made a major investment. Further, 59 percent of the surveyed operators plan on making a capital expenditure in the next 6 months, up from 53 percent in March.

Taken with other data, such as the Commerce Department’s retail sales figures, the RPI data shows an industry on a growth curve.

Economic News This Week

• Real Gross Domestic Product declined 0.7 percent in the first quarter. The Commerce Department’s second estimate is down sharply from the previous estimate that projected a 0.2 percent increase. The strength of the U.S. dollar caused a decline in exports and an increase in imports, which was one of the major factors in the economy’s poor performance. Some economists also blamed nasty weather this past winter and the labor problems at West Coast ports.
• Warren Buffett weighed in on the minimum wage debate. Buffett says the wide discrepancy in U.S. incomes is the result of an advanced market-based economy. He states that 200 years ago the differences in productivity between the most talented and those with ordinary skills were not that great. Most jobs could be performed by most people. Today much of the workforce is unable to perform the most attractive jobs. Buffett went on to say increasing the minimum wage will result in more unemployed. Instead he argues for an expansion of the Earned Income Tax Credit.
• Initial jobless claims totaled 282,000, an increase of 7,000 for the week ending May 23. The 4-week moving average for claims was 271,500, an increase of 5,000.
• Sales of new single-family homes rose in April to a seasonally adjusted annual rate of 517,000. This is 6.8 percent above the estimated March rate and 26.1 percent better than the April 2014 rate. The number of new homes on the market remains low with a 4.8-month supply.
• Manufactured durable goods orders fell 0.5 percent in April according the Census Bureau’s advance report. Transportation equipment fell 2.5 percent driving the overall decline. Unfilled orders were virtually unchanged while orders for non-defense capital goods – those goods used to manufacture other goods – rose 0.3 percent.
• The Chicago Production Manufacturing Index sank to 46.2 in May from 52.9 in April indicating negative manufacturing activity in the Chicago area. All five factors of the index were negative, falling below the benchmark of 50.
• The Conference Board’s Consumer Confidence Index rose “moderately” in May to 95.4, up from 94.3 in April. Consumers’ view of current conditions rose slightly in May with the number of those surveyed who thought business was “bad” falling from 17.4 percent in May from 19.2 percent in April. Consumers’ view of short-term conditions edged down with 10.1 percent expecting business to worsen, which was up from 9.1 percent holding that view in April.
• The Reuters/University of Michigan Consumer Sentiment Index fell significantly in May, dropping to 90.7 from 95.9 in April. May’s results were the lowest the index has been since November last year.

Foodservice News This Week

• Sysco and the FTC presented their positions in Federal Court regarding the proposed Sysco/US Foods Merger. The judge questioned both sides sharply and appeared skeptical about their arguments. Thus, it is difficult to predict which way the ruling will go and there is no indication when the court will rule.
• Munchery raises $85 million in funding. The San Francisco-based meal delivery service offers prepared meals for delivery in 20 to 40 minutes. The service delivers chef-prepared gourmet food cold, which allows the company to cover a wide area. Unlike most delivery firms Munchery uses full-time drivers who have employee benefits.
• Taco Bell and KFC plan to test delivery. The test will take place near college campuses and will be available at limited times and days. While parent YUM! remains optimistic about Taco Bell’s entry into the delivery field, the company feels KFC’s menu makes it especially suitable for a delivery program.
• Burger King is once again the number two hamburger chain in the U.S. Wendy’s rose to the number two slot in 2013 but last year its U.S. sales fell 0.4 percent to $8.51 billion while Burger King saw sales increase 1.6 percent to $8.64 billion.
• Casey’s General Store will offer online pizza ordering for all its stores later this year. Casey’s, which has made a major commitment to its pizza program, had a short but successful test of the online ordering system in place since late 2014.
• The 100 most valuable brands in the world include 4 restaurant brands. McDonald’s ranked the ninth most valuable brand along with Starbucks (#29), Subway (#40) and KFC (#83.) Apple was #1.
• Corporate Stirring: Jimmy John’s is rumored to be considering an initial public stock offering later this year. TGI Fridays has sold 32 company locations in Florida. An existing TGI Fridays’ franchisee, Jackmont Hospitality, purchased 16 of the units while a new franchisee, JIB Management Inc., purchased 16 restaurants. First Watch Restaurants, Inc. announced it has completed the acquisition of The Egg & I Restaurant chain. No terms were announced but it appears that both brands will continue to operate under their existing names. Bob Evans has put its home office and “selected industrial properties” up for sale in order to set up a sale and leaseback arrangement.
• Growth Chains: El Pollo Loco will open seven locations in North Texas in the next four years. Fuzzy’s Taco Shop announced 4 new multi-unit development deals for more than 20 restaurants in Florida. Smashburger will open 23 units in New York State. Checkers Drive-In Restaurants plans on opening up to 50 restaurants in the Boston area at a rate of 5 to 10 units a year starting in 2016. Uncle Maddio’s Pizza Joint will open 5 restaurants in Birmingham and Tuscaloosa. Dunkin’ Donuts plans to open 7 more restaurants in the Wichita area. McAlister’s Deli has signed a multi-unit development agreement for 10 delis in South Florida.
• Comparable Store Sales Reports: Cici’s Pizza up 4.7 percent and Popeye’s Louisiana Kitchen up 7.1 percent.

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