Casual dining chains were flat in February. The National Restaurant Association shows restaurants are a source of good jobs. More restaurants are owned by women. What can Chipotle learn from the Jack in the Box food poisoning in the 1990s? These stories and a whole lot more This Week In Foodservice.
Knapp-Track reported casual dining same-store sales were virtually flat in February with Malcom Knapp’s sales data from over 50 casual dining chains down 0.1 percent. Guest counts were down 1.7 percent and check averages were up 1.6 percent. This is the smallest increase in check averages in 2 years.
Knapp stated there was “noise” in the February sales data because of bad weather last year, menu price discounting, and calendar shifts, including a late Super Bowl this year. Super Bowl Sunday is a bad day for casual restaurant sales.
Same-store sales were up 3 of 4 weeks in February but guest counts were up in just one. The third week was the strongest going up against bad weather in 2015; week one was the softest due to the Super Bowl.
The story for February may be worse than it appears in that Darden, the largest participant in the program, accounting for roughly 20 percent of the sales base, announced their same-store sales for the month were up 4.0 percent to 6.0 percent. This would mean total overall comp sales took a tumble.
Knapp-Track information is courtesy of Bank of America Merrill Lynch.
Economic News This Week
- Consumers reigned in their borrowing in January with the U.S. Federal Reserve reporting that credit expanded at a relatively slow 3.6 percent. The problem lay with revolving credit (mostly credit cards), which fell by 1.3 percent, indicating that consumers were not confident enough to increase their borrowing. Non-revolving credit — auto loans, student loans, etc. — increased at a rate of 5.4 percent.
- Initial jobless claims fell 18,000 to 259,000 for the week ending March 5. The 4-week moving average dropped 2,500 claims to 267,500. As pointed out almost every week, the number of claims being filed is at an “acceptable” level and this report does not raise any red flags for U.S. employment.
- The Gallop Economic Confidence Index was steady at minus 11, indicating more Americans felt negative about the economy than positive. The current conditions index was minus 4 and the economic outlook index was minus 18. The index has been moving in a narrow range since last July but confidence was slightly higher a year ago.
Foodservice News This Week
- Restaurants provide a lot of good jobs. As reported last week, foodservice operators led the way in February with over 40,000 new hires, which represented 17 percent of all newly added workers. The National Restaurant Association provided some insight into broad statistics by pointing out that half of the people hired were new entrants to the job market or people being promoted within the same organization.
- Restaurant ownership by women continues to grow. Women’s ownership of restaurants has grown three times as fast as the overall industry. Between 2007 and 2012 restaurants majority owned by women increased from 26 percent to 33 percent.
- Does the Jack in the Box food poisoning in the 1990s hold any lessons for Chipotle? A recent in-depth article from Marketwatch shows some similarities and differences. Jack in the Box’s E-coli outbreak resulted in 4 deaths, all children. There were no reported deaths from the Chipotle outbreak. It appears that Chipotle’s victims were not as sick and involved fewer people, perhaps because most of the chains customers are adults. Or, the strain of E. coli may not have been as virulent. The source of Jack in the Box’s contamination was traced to hamburger while the origin of Chipotle’s illnesses has not been determined and probably never will be. Chipotle’s problems may be exacerbated by the chain positioning themselves as offering better food. The incident cost Jack in the Box billions in legal fees and lost business though the company was successful in recovering some money from their meat suppliers. Perhaps the most important lesson for Chipotle is that the hamburger chain did recover.
- TGI Fridays has opened a totally new design in Corpus Christi. The goal is to attract millennials for “mid-afternoon gatherings” such as work meetings, studying or just “hanging out.” The new concept features hang out spaces, amplified bar space, WiFi, and a full coffee menu.
- The McDonald’s co-op in Central North Carolina expands the all-day breakfast menu. Scott Hume, publisher of Burger Business, reports that while McD’s national all-day breakfast program offers nine items, the North Carolina group are offering 17. The North Carolina co-op has 26 franchisees who operate a total of 92 restaurants so there are not just a few units involved. It will be interesting to see if other McDonald’s restaurants follow this menu expansion.
- CKE Restaurants has finalized plans to move to the Nashville area. The chain is expected to move from Carpintera, Calif., and St. Louis, Mo., to a building now under construction in Cool Spring in early 2017. Unconfirmed reports last week said some CKE executives were already working in the Nashville area and some employees had purchased residential property in the community.
- RaceTrac Petroleum will remodel at least 21 stores in Louisiana this year. The new format will offer more fresh and customized prepared food options. RaceTrac operates nearly 400 c-stores in Florida, Georgia, Louisiana and Texas.
- A London pizza chain has new delivery method. Sodo, a UK-based chain that prides itself on using locally and ethically sourced ingredients, and refuses to offer delivery because cars pollute, did a one-day promotion having runners deliver pizza. Using the services of a local runners’ club and donating proceeds to charity, customers could follow their delivery runners online and even provide the runners with short cuts. The company sold out in three hours and plans on making the program a monthly event.
- NYC may require restaurants to post warning on sugar and other carbohydrates. A spokesman from the National Restaurant Association calls the proposal an example of the “nanny state.” The NRA and the city are currently embroiled in a court battle over putting sodium warnings on menus.
- The implementation of the controversial menu labeling law has been postponed. The Food & Drug Administration announced that the rules will not be enforced until one year after the rules have been published. The FDA gave no indication when this will happen.
- Corporate Stirrings: Bob Evans is being urged by one of the company’s stock holders, Sandell Asset Management, to sell their packaged goods business. Sandell says the business will bring more than $950 million. Buffets, LLC, is set to file Chapter 11 bankruptcy. The press release indicates the company’s restaurants (Ryan’s, Fire Mountain, Country Buffet, Old Country Buffet, Tahoe Joe’s Famous Steakhouse, and Hometown Buffett) will continue to operate and “vendors will be largely unaffected.” However, news reports from at least 5 states have Ryan’s locations shutting down and one report of equipment and furnishings being auctioned.
- Growth Chains: Minor International, a Thailand-based chain that operates Burger King, Sizzler, Swensen’s, and The Pizza Company restaurants throughout Asia, has announced that they are planning to grow from 1,851 locations to 3,100 by 2020. Del Taco will open 6 restaurants in Florida. GanQiShi Bao Bao, a steamed bun restaurant chain with almost 200 stores in China, will open their first U.S. restaurant in Cambridge, Mass. Tropical Smoothie Café has signed a franchise agreement for 3 units in Dallas. Dickey’s Barbecue will open 3 restaurants in California. Dunkin’ Donuts will open 20 restaurants in the Yucatan region of Mexico. Pie Five Pizza has signed a franchise deal for 2 restaurants in the Baltimore Washington International Airport. Pie Five Pizza has signed a franchise agreement that could bring as many as 34 new restaurants to Ohio and Pennsylvania. Papa Murphy’s Pizza plans on opening 115 to 120 new restaurants this year.
- Comparable Store Sales Reports: Bojangles (up 0.6 percent), Casey’s General Store (up 6.0 percent), Del Taco (up 5.8 percent,) El Pollo Loco (system up 1.8 percent, company-owned up 1.0 percent, and franchised up 2.4 percent), J.Alexander’s (J.Alexander’s/Redland’s Grill up 1.4 percent and Stony River Steakhouse up 6.2 percent), NPC International (Pizza Hut up 3.2 percent and Wendy’s up 5.8 percent), Papa Murphy’s (domestic down 3.1 percent, company-owned down 2.7 percent, and franchised down 3.2 percent), Rave Restaurant Group (Pie Five Pizza down 1.6 percent and Pizza Inn down 1.7 percent), and Shake Shack (up 11.0 percent).
For details and same-store sales of other chains, please click here for the Green Sheet.