The National Restaurant Association says restaurant performance showed slight improvement in November. A research firm predicts a lean year for restaurants. McDonald’s new HQ will lease space to suppliers. Chains will work with the National Retail Federation to train employees. McFlurry lovers are frequently out of luck.

The National Restaurant Association’s Restaurant Performance Index rose 0.2 percent in December to 100.7, keeping the industry in a very slow expansion mode.

The Current Situation Index read 99.7, an increase of 0.1 percent. Thirty-seven percent of participating operators reported an increase in same-store sales for November 2016 (the reporting period for this data). This was the same as November 2015. Forty percent of operators report a decline in same-store sales, a 4 percent improvement compared to the previous month — October 2016.

The Restaurant Performance Index’s Expectations Index hit 101.6, a slight increase of 0.2 percent. Operators’ outlook for general business conditions in the next six months contributed to the stability of this data point. The survey shows 37 percent of operators expect better business conditions in the next 6 months, with only 9 percent expecting business conditions to worsen.

As far as purchasing, 64 percent of those in the study report making a capital expenditure for equipment remodeling or expansion in the past 3 months, with 58 percent expecting to do so in the next 12 months.

Economic News This Week

• The December Consumer Price Index increased 0.3 percent. For 2016 the index grew 2.1 percent. The Federal Reserve Board has set its target for inflation at +2.0 percent annually. In December the core index, that is all items less food and energy, grew 0.2 percent. For the year the core index rose 2.2 percent. (For food inflation in December, please see the This Week In Foodservice section below.)
• Initial jobless claims totaled 234,000, a decline of 15,000 for the week ending Jan. 14. The 4-week moving average was 246,750, a decline of 10,240. 
• The Bureau of Labor Statistics November JOLT Study reported job openings fell to 5.198 million from 5.451 million in October. The study also showed new hires increased slightly to 5.253 million from 5.160 million in October. Total separations and the number of people quitting remained virtually unchanged. The job openings for accommodation and foodservices increased to 668,000 from 589,000 in October. This also represents an increase from November 2015’s reading of 643,000. Accommodation and foodservice hires increased to 861,000 from 824,000 in October. This does, however, represent a decline from the November 2015 level of 896,000. Separations from accommodation and foodservice employers were virtually identical in October and November.

• The Federal Reserve reported a 0.8 percent increase in industrial production for December. This comes after the index posted a 0.7 percent decline in November. Utilities increased 6.6 percent and manufacturing climbed 0.2 percent. Mining was flat. Capacity utilization totaled 75.5 percent, an increase of 0.6 percent.
• The January Empire State Manufacturing Survey totaled 6.5 for its general conditions business index, indicating moderate growth in business activity in New York State (any number that exceeds zero shows growth). The new orders index declined to 3.1 while the shipments index remained steady at 7.3. The labor indexes showed weak hiring levels and that hours fell for the average work week.
• The Philadelphia Federal Reserve Manufacturing Business Outlook Survey increased to 23.6 in January, up from 19.7 in December. (Any number that exceeds zero indicates increasing business activity.) The new orders index jumped 11 percentage points while the shipments index fell 1 point, staying at a high level. Manufacturing employment increased.
• Privately owned housing starts rose in December to a seasonally adjusted rate of 1,226,000, up 11.3 percent over November starts and 5.7 percent above November 2015. Single family housing starts were down 4.0 percent from November. December building permits issued were at a seasonally adjusted annual rate of 1.21, 0.2 percent below November but 0.7 percent better than the November 2015 permits issued. Single family permits were up 4.7 percent from November.

Foodservice News This Week

• One research firm says the restaurant outlook is grim. TDn2K said December same-store sales fell 2.4 percent, the worst in 3 years. Further, overall sales and traffic declined as well. The casual and family dining segments were the worst performers but fine dining saw an increase in same-store sales. The press release didn’t mention fast feeders but blamed the struggles on rising household debt and higher prices for gasoline, rent and prescriptions.

• McDonald’s plans a “vendor village.” The 12-story building at McDonald’s new headquarters will have space leased to companies that do business with the hamburger chain.

• Companies are partnering with The National Retail Federation to develop a training and credentialing program for people to secure jobs and advance in the retail business. Operating with the name RISE Up (Retail Industry Skills & Education), the program’s goals include helping the people who need it most by making it easier to hire and train employees, as well as decrease turnover. Participating companies include foodservice firms Pilot Flying J, Wendy’s and White Castle.
• McFlurry not available and equipment gets the blame. Foodservice equipment rarely makes news, much less front page news in the Wall Street Journal, but a front page article in last Friday’s edition said that McFlurry fans have found the treat is frequently not available. The culprit, according to the article, is the machine that makes the product takes an extensive cleaning process of 11 steps, including the removal of 7 parts and a bacteria-destroying procedure that can take up to 4 hours. It may be McDonald’s customers are told the machine is broken rather than interrupt the cleaning work and reassembling it.
• Severe weather cripples restaurants. Unusually bad weather has closed restaurants in many parts of the country. Deep snow, punishing rain, ice, flooding and power outages have forced restaurants to close in many states. Even when restaurant operators strive to stay open they have been hampered by the loss of staff who can’t make it to work.
• The Consumer Price Index for Food Away From Home continued its uphill climb by rising 0.2 percent in December. For the year, prices for food away from home increased 2.5 percent. Food at home prices fell 0.2 percent in December and for the year they declined 2.0 percent. Some foodservice operators believe that the price spread between grocery and restaurants is having a negative impact on restaurant sales.

• The “Impossible Burger” made from all-plant material is being promoted for meat lovers. The Impossible Burger is available at a few independent restaurants. The company has not disclosed any expansion plans or if they will eventually start their own restaurant operations.
• Corporate Stirrings: Papa Murphy’s is looking to refranchise in some markets. In this instance that means replacing existing franchisees with “high-quality franchisees.” Papa Murphy’s stated performance is stronger in markets with greater penetration and higher brand awareness. It may be the company is looking to replace one- and two-unit operators with franchisees that will run multiple units. Papa Murphy’s hired the Franchise Performance Group to advise the company in accomplishing their goal. Apollo Global Management, owner of CEC Entertainment, which operates Chuck E. Cheese, is exploring the possibility of going public. In 2014 CEC was acquired at a cost of $1.3 billion, so the deal could be worth more than $1 billion. The company might also consider selling to another private buyer. Sentinel Capital, owner of Checkers Drive-In Restaurants is reportedly considering selling the chain, which could fetch $500 million.
• Growth Chains: Fazoli’s will open five locations in Detroit. Boston Market will open 16 restaurants in 2017, including 4 outside the U.S. Dickey’s Barbecue Pit will open 4 restaurants in the state of Washington. Wahlburger’s signed a joint venture agreement for at least 3 restaurants in Asia. Pollo Campero will open 3 locations in Houston. Casey’s General Store has 84 new site locations under contract. East Coast Wings & Grill has a goal of opening 27 restaurants in South Carolina in the next 5 years. Sub Zero Ice Cream plans to open at least 10 stores in the Tampa area. McAlister’s Deli will open three locations in Dallas.
• Comparable Store Sales Reports: Del Taco up 5.5 percent, McDonald’s down 1.3 percent and Tropical Smoothie Café up 4.0 percent

For details and same-store sales of other chains, refer to the Green Sheet.