Restaurant sales soften in January. What restaurant chain gained the most as a result of Chipotle’s troubles? Prepared food delivery business shows impressive growth. The National Restaurant Association says the industry will hire 300,000 more employees this year. Starbucks introduces a new upscale version. These stories and a whole lot more This Week in Foodservice.

U.S. retail sales increased 0.2 percent in January over December and increased 3.4 percent over January 2015. Excluding motor vehicle and part sales, January sales were up 0.1 percent.

The bad news is that sales at foodservice and drinking establishments dropped 0.5 percent in January from December. Compared to January 2015, though, sales at eating and drinking establishments increased 6.1 percent. Will this break in in the string of monthly sales increases become a trend or was it a fluke? Well, that remains to be seen.

The Census Bureau’s advanced retail sales report is based on a small preliminary sample. The data is subject to revision and is, in fact, frequently updated. The data is adjusted for calendar changes, seasonal variances, and weekends but not for menu price changes.

Economic News This Week

• Job openings climbed in December. The Bureau of Labor Statistics “JOLT” study reported that there were 5.6 million job openings in December, up from 5.3 million in November. The number of hires and separations were not significantly changed from November. The number of hires totaled 5.4 million in December 2015 compared to 5.0 million in December 2007[AD1] . The number of quits – those people voluntarily leaving their job – was 3.1 million vs. 2.8 million in December 2007, the first month of the recession.
• For the week ending February 6, initial jobless claims totaled 269,000, a decline of 16,000. The less volatile 4-week moving average was 281,250, a decline of 3,500. Once again this measure of the employment situation indicates there is no cause for concern.
• Consumer borrowing increased by 7.2 percent in December on an annual basis according to the U.S. Federal Reserve. Revolving credit, which would be mostly credit card borrowing, rose 7.5 percent on an annual basis while non-revolving credit, which would include auto loans and student loans, rose 7.1 percent.
• The University of Michigan’s Preliminary February Consumer Confidence Index slipped 1.4 percent from the final January reading to 90.7. The Current Economic Conditions Index declined slightly to 105.8 from 106.4 while the Index of Consumer Expectations fell to 81.0 from January’s 82.7.

Foodservice News This Week

• Where did all those Chipotle customers go? ITG Consumer Research, which monitors credit and debit card data, checked what happened to Chipotle’s sales in four cities: Seattle; Portland, Ore. Dallas and Miami. The research showed that Chipotle saw significant sales declines in all four locations but declines were most severe in Portland and Seattle. About 25 percent to 33 percent of consumers either ate at home or went to an upscale restaurant. Somewhat surprisingly, other Mexican chains didn’t capture many of Chipotle’s disaffected customers. Qdoba received the third largest share in Seattle and Taco Bell was ranked fourth in Portland. In three of the four cities McDonald’s emerged as the chain that gained the most. And perhaps shockingly, Chick-fil-A was number one in luring in former Chipotle customers in Dallas.
• Prepared food deliveries are up double digits, according to The NPD Group. While noting that restaurant food delivery is not a new concept, delivery traffic (not including pizza) is up 33 percent since 2012 as consumers become used to ordering online and getting fast delivery. NPD believes that restaurants will stay on “a strong growth path as delivery services like Grub Hub expand their service.”
• The National Restaurant Association predicts the industry will add 300,000 jobs this year. Should this projection come to fruition, 2016 will become the 6th straight year that foodservice grew by 300,000 or more jobs. Eating and drinking places added new jobs at a 3.2 percent rate in 2015 while total U.S. employment increased at 2.1 percent.
• Starbucks debuts a new concept in New York City. Named Starbucks Reserve after the coffee chain’s new premium coffee line, this location uses the chain’s pricey Clover brewing system that allows baristas to prepare cups of coffee one at a time. The new location will display original artworks for sale. Starbucks plans on having 500 Starbucks Reserve operations worldwide. A 12-ounce cup of black coffee will cost $4.00 at this location, according to published reports.
• The Sunoco APlus convenience store chain will “import” the Laredo Taco concept from Sunoco’s sister chain Stripes. Sunoco will open seven Laredo Taco operations in its Pennsylvania stores this year as well as “several others” in Southern states. Stripes has 450 Laredo Taco restaurants in Texas, New Mexico and Oklahoma.
• Chipotle plans to spend $10 million to improve food safety. A large portion of the $10 million will go to Chipotle suppliers, mostly small farmers, in order to pay for extensive food testing.
• Taco Bell’s marketing program succeeded. The chain’s new product called a Quesalupa (a cross between a quesadilla and a chalupa) was introduced with teaser ads that resulted in 67,000 people ordering the new menu item before customers even knew what it was.
• Burger King’s adding hot dogs to its menu will not require any changes in the kitchen. Staff will grill the heavily promoted new menu item on existing equipment.
• Corporate Stirrings: US Foods Holding Corporation, the parent company of distributor US Foods, has filed a form with the Securities & Exchange Commission for an initial public offering of common stock. Timing, number of shares to be offered and share prices were not disclosed but expects to raise about $100 million.  Wendy’s plans to sell about 315 company owned restaurants to franchisees this year. The chain is now 85 percent franchise operated but plans to reach 95 percent franchise operated by the end of 2016. Long John Silver’s purchased 10 franchised operations in Central Ohio. The chain says they will use the restaurants to test new products and train franchisees.
• Growth Chains: Pacific Restaurant Partners, a joint venture of U.S. based Due North and Japan based Hotland Companies LTD., plans to open 1,000 Japanese concept restaurants in the U.S. by 2020. MOOYAH Burger plans to open 10 locations in the Orlando area in the next 5 years. Perkins has remodeled 69 company restaurants and 40 franchised restaurants since 2014 and plans on remodeling 20 corporate units and 70 franchised units this year. Mrs. Winner’s Chicken & Biscuits has put bankruptcy and other “missteps” behind them and plans to open 100 restaurants in the next 5 years. Mrs. Winner’s signed two franchise agreements for a total of six locations in Atlanta. Blaze Fast Fire’d Pizza will open five restaurants in Arizona. Dunkin’ Donuts signed a master development agreement for 30 restaurants in Switzerland. Smashburger has signed a partnership agreement for 22 restaurants in the United Arab Emirates and 4 in Qatar. Marco’s Pizza will open 10 locations in Oklahoma in the next 4 years.
• Comparable Store Sales Reports: Ark Restaurants up 1.9 percent, Bad Daddy’s Burgers up 6.5 percent, Panera Bread Company (system-wide up 2.3 percent, company owned locations up 3.6 percent, and franchised locations up 1.1 percent), Ruth’s Chris Steakhouse up 3.2 percent, and Wendy’s (North American locations up 4.8 percent, company owned locations up 3.7 percent  and franchised locations up 4.9 percent.) 

For details and same-store sales of other restaurant chains, Please Click Here for the Green Sheet.