This Week In Foodservice

Jerry Stiegler aggregates key industry information and provides brief analysis to help foodservice professionals navigate the data.


Restaurants Outperform Retail Segment, Consumers Like to Eat Out and More

Restaurant sales showed solid growth in May. New study shows all consumer income groups devote about the same percentage of their day-to-day spending at restaurants. Prices consumers pay for food away from home continues to rise faster than food at home prices. Johnny Rocket’s opened their first drive thru location. The Ricker’s C-store chain has expanded their foodservice menu extensively. These stories and a whole lot more This Week in Foodservice.

U.S. retail sales increased 0.5 percent according to the Census Bureau’s advance estimate for May over April 2016. Excluding motor vehicles and parts, May sales were up 0.4 percent. For the first 5 months of this year retail sales increased 3.2 percent and were up 2.5 percent over May 2015.

Restaurants and bars outperformed the total retail market with May sales increasing 0.8 percent from April. So far this year restaurants and drinking places have seen sales rise 6.9 percent. Sales were up 6.5 percent over May of last year.

While far from spectacular growth, restaurants and bars showing steady improvement and indicate that consumers continue to eat out. For sake of comparison, grocery store sales grew 0.3 percent in May over April, are up 2.2 percent for the first 5 months of 2016, and had a 2.4 percent sales increase over May of 2015.

This data comes with some limits and other considerations to take into account. The Census Bureau considers the report to be “Advanced Estimates” since it is based on a small sample. The data can be, and frequently is, revised when a larger sample is analyzed. The Bureau only samples restaurants and bars. Excluded from the study are hotels, motels, resorts, clubs, retail feeders (supermarkets, C-stores, etc.), employee feeding, healthcare foodservice, schools, colleges and universities, and military feeding.

Some of the sales figures are adjusted for seasonal variations, holidays, weekends, and trading day differences but not for menu price changes.

Economic News This Week

Foodservice News This Week

  • Consumers eat out regardless of income levels according to a study from the JPMorgan Chase Institute. On a basis of the percent of day to day spending allocated to different products (not actual dollars spent) there is very little difference between various income groups when it comes to restaurants. The spread between the lowest spending income quintile and the highest spending quintile is just 2.0 percent. The top quintile of earners allocates 17.8 percent of their daily purchases to restaurants. Interestingly, those earning in the bottom quintile do not spend the least of their earnings at restaurants. In fact, they tie with the fourth quintile at 16.6 percent. The second quintile comes out at the bottom with 15.8 percent while the middle quintile spends 16.0 percent. This supports the old truism — people like to eat out.
  • Food away from home prices increased 0.2 percent in May and are up 2.6 percent in the past 12 months. Thus food-away-from-home prices continue to outpace food at home prices which were down 0.5 percent in May and down 0.7 percent for the 12 months ending in May.
  • Ricker’s C-store chain will expand its foodservice menu to include pizza, bread sticks, deli sandwiches and salads at more than 20 locations. The chain will add 200 employees in the next 6 months, in large part to staff up for the expanded foodservice offerings.
  • Millennials continue to help fuel supermarket foodservice growth, according to the NPD Group. Take-out and in-store dining at supermarkets has grown almost 30 percent since 2008. In 2015 supermarket foodservice accounted for 2.4 billion foodservice visits and $10 billion in spending. While millennials do not patronize supermarkets as often as other age groups, the perception of supermarket foodservice offerings, namely variety and healthy options, are factors very important to this demographic.
  • The National Restaurant Association lost its attempt to overturn the N.Y. state law establishing a $15 an hour minimum wage. The law applies to New York City with the increase being phased in across the rest of the state.
  • Corporate Stirrings: Romano’s Macaroni Grill will relocate its home office to Denver from Houston. The move is being made to be closer to the new owners, Redrock Partners, LLC. All current employees have been invited to make the move to Denver. The company states the move will be completed in April 2017. McDonald’s may look to outsource some restaurant support jobs to India as part of a cost cutting program announced last year. McDonald’s has already reduced some jobs including closing a regional office in Columbus, Ohio.
  • Growth Chains: Highway 55 has signed a master franchise agreement for more than 50 stores in Louisiana over the next 10 years. Papa Murphy’s plans to have 14 stores open in the Memphis area by the end of this year and sees the opportunity for more than 40 units in the market eventually. Tropical Smoothie Café will open three franchised locations in Houston in the next 12 months. The Wawa C-store chain will invest approximately $150 million in the Jacksonville, Fla. area to open 25 to 35 stores by end of 2017, with another 10 planned for 2018. The Graeter’s Ice Cream chain will open stores in Columbus, Cleveland, Pittsburgh and Chicago. PizzaRev has signed a franchise agreement to develop 45 restaurants in the Miami area. The One Hospitality Group has signed a licensing agreement for two STK restaurants in San Juan, Puerto Rico. Marco’s Pizza plans to open more than 30 franchised locations in Maryland.
  • Comparable Store Sales Report: Bob Evans down 3.0 percent.

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