U.S. retail sales were almost flat in November but restaurants sales increased. One source speculates that consumers are still going to restaurants but avoiding major chains. Knapp-Track sales data remains consistently negative. Menu prices continue to increase.

The Census Bureau’s Advance Monthly Sales Report for November showed an increase of just 0.1 percent over October. Excluding motor vehicles and parts, retail sales were up 0.2 percent. Sales are up 3.8 percent over November 2015. In the first 11 months of this year retail sales are up 3.1 percent. Most observers found the November sales results “disappointing.”

Restaurant and drinking place sales bucked the trend and had the best performance of any major retail segment. Restaurants and bars were up 0.8 percent over October and up 4.9 percent over November 2015. In the first 11 months of 2016 restaurant and bar sales have risen 6.0 percent.

Other good news was that the Census Bureau revised restaurant sales from down 0.7 percent in October to down 0.3 percent. Thus, restaurants sales results in October were not down as much as first reported.

So despite a lot of talk recently of a restaurant recession, the government numbers continue to be favorable.

The usual caveats for the Census Bureau’s report apply. The data above is based on a limited sample and termed “advance.” As a larger sample is obtained, the numbers can be, and frequently are, revised. (As pointed out above, restaurant sales for October were revised significantly to minus 0.3 percent from the advance number of 0.7 percent.) The Census Bureau surveys only restaurants and bars. Excluded from the study are hotels, resorts, clubs, retail operations, employee feeding, colleges, grade schools, high schools, hospitals, nursing homes, retirement communities and military feeding. These segments represent 30 — 40 percent of the foodservice industry. Finally, some but not all of the reported numbers are adjusted for weekends, holidays, and seasonal variations but not for menu price changes.

Economic News This Week

• Initial jobless claims totaled 254,000, a decline of 4,000 for the week ending Dec. 12. The 4-week moving average was 257,750, an increase of 5,250. This is the 93rd consecutive week with first-time jobless claims less than 300,000.
• The Producer Price Index for Final Demand increased 0.4 percent in November on a seasonally adjusted basis. The Index for final demand goods climbed 0.2 percent with the index for final demand foods up 0.6 percent. The Index for final demand services rose 0.5 percent for the month.
• The Consumer Price Index increased 0.2 percent in November on a seasonally adjusted basis. Rising shelter and gasoline prices were the main factors for the increase. In the last 12 months the index for all items is up 1.7 percent. For all items less food and energy prices, the index rose 0.2 percent in November and is up 2.1 percent in the last 12 months. Inflation appears under control for the time being.
• Industrial production declined 0.4 percent in November, according to the U.S. Federal Reserve. Manufacturing dipped 0.1 percent and the utilities index declined 4.4 percent due to warmer than normal temperatures in November. Capacity Utilization decreased 0.4 percent in November to 75.0 percent, 5.0 percent less than its long-run (1972-2015) average.
• The Empire State Manufacturing Index increased 8 points to 9.0 in December. Any reading that exceeds zero indicates expanding activity. The New Orders Index increased 11.4 percent while the Shipments Index remained unchanged at 8.5 percent. The Index For Future Business Conditions rose to its highest level in nearly five years.
• The Philadelphia Federal Reserve Manufacturing Index hit 21.5 in December, an increase of 13.9 points from November. The New Orders Index fell 5 points but remained positive. The Shipments Index increased 3 points.
• Housing starts and building permits issued both declined in November. Privately owned housing starts fell 18.7 percent in November vs. October and were down 6.9 percent from November last year. Single family housing starts were down 4.1 percent from October. Privately owned building permits fell 4.7 percent from October and down 6.6 percent from November 2015. Single family building permits did inch up 0.5 percent from October.
• Consumer credit increased 5.25 percent in October, the smallest increase in 3 months. Revolving credit — mostly credit card borrowing — increased 2.9 percent. Non-revolving credit — car loans, student loans, etc. — increased by 6.0 percent. This indicates that consumers are cautious about increasing their debt.

Foodservice News This Week

• What is really happening in the restaurant business? A story on AOL.com stated that the spread between spending on food stores and spending in restaurants has shrunk. The Bespoke Investment Group notes that the percentage of retail sales spent in grocery stores is 12.84 percent while restaurants’ share remains very close at 11.97. Yet, as a group, major chains continue to experience declining sales. The theory is that people are eating out more but going to smaller chains and independents.
• Casual dining sales remain on the same downward pattern. The more than 50 participating casual-dining chains recorded a 2.6 percent decline in sales and a 4.4 percent decline in guest counts, according to the November Knapp Track Report. In contrast, check averages increased 1.8 percent during that period. Sales all 4 weeks of the month were down, including -5.1 percent the first week and -1.4 percent the second. Sales slipped roughly 2.0 percent the last 2 weeks. Knapp also reported that sales at fast-casual restaurants declined 2.0 percent and traffic was down 4.0 percent. Knapp-Track data is courtesy of Bank of America Merrill Lynch.
• Overall food prices were flat in November, according to the Bureau of Labor Statistics’ Consumer Price Index. The Index for Food at Home was down 0.1 percent while the Index for Food Away from Home rose 0.1 percent. In the past 12 months the Food At Home prices are down 2.2 percent and Food Away From Home prices are up 2.3 percent. This leaves a spread of 4.5 percent, causing some observers to blame the difference for weak restaurant sales.
• McDonald’s partnered with UberEats for delivery in the Florida markets of Orlando, Miami and Tampa. The program involves 200 McD’s units but it excludes some menu items, like ice cream and McPick2. Given that 70 percent of McDonald’s food is consumed away from their restaurants, delivery service would seem to be a natural move.
• C-stores’ foodservice focus will continue to evolve to include more attractive exteriors and even drive-thru service. So says King-Casey, a consulting and design firm. The company believes that c-stores will attract more women, develop more attractive exteriors and install drive thru windows.
• The Christmas season got a bit merrier for some staff and customers last week when two women and a man walked into a Chick-fil-A in a Cincinnati suburb and handed out hundred dollar bills. Their explanation was they were trying to spread good cheer.
• Corporate Stirrings: Chipotle replaced four directors on its board. The company has been under pressure for new directors from William Ackmen, head of Pershing Square Capital Management  and owner of approximately 10 percent of Chipotle’s shares. Chipotle also announced that co-CEO Monty Moran was leaving the company. Ending the Co-CEO position was also one of Pershing’s proposals.
• Growth Chains: With 30 restaurants now in operation, The Halal Guys plan to open 1 or 2 a month next year. Taco Bell will open an additional 45 restaurants in Spain to make it the chain’s largest European market. Pollo Campero’s franchisee in Nashville, Tenn., will open at least two stores next year. Dickey’s Barbecue Pit plans to open nine restaurants in Orange County, Calif. Dippin’ Dots and Doc Popcorn will open 10 to 15 joint locations next year. Tim Hortons plans to open at least three restaurants in the Dayton, Ohio, area next year.
• Comparable Store Sales: CEC Entertainment combined Chuck E. Cheese & Peter Piper Pizza up 3.5 percent

For details and same-store sales of other chains, please see the Green Sheet.