Casual dining chain sales remained weak in June. Foodservice hiring was very strong in July. The NPD Group reports “micro chains” are a growing factor in some major cities. Grocery shoppers are looking for prepared food according to one expert. These stories and more This Week in Foodservice.

Same-store sales among casual dining chains declined 0.3 percent in June, according to data from Malcolm Knapp. His Knapp Track Report includes data from more than 50 casual dining chains that report sales monthly.

Knapp noted that June sales had a relatively easy comparison as the same period last year yielded a 2 percent decline in sales. He also stated that the spread between strong concepts and week concepts remains at “elevated levels” with the winners being chains sharply focused on guest service and operations. He calls this “operational warfare.” Further, Knapp expects comparable store sales to remain stuck at up 1.0 percent to down 1.0 percent.

Knapp commented positively on Darden’s purchase of Cheddar’s stating the chain is big enough to benefit from Darden’s expertise but small enough to offer growth potential.

Family dining chain sales were down about 1.9 percent year to date through May, thus family dining chains are not performing as well as casual dining chains. Last year family dining chains outperformed the casual dining sector. Recently buffet chains have flipped and are now outperforming other types of family dining.

Mr. Knapp’s information is courtesy of Bank of America Merrill Lynch.

Economic News This Week

• U.S. car and light truck sales fell 6.9 percent in July. The automotive market could be heading for its weakest year since the recession of 2008-2009. On an annualized rate, sales were down to 16.78 million compared to an annualized rate of 17.52 million vehicles in July of last year.
• Personal income was flat in June while personal expenditures inched up 0.1 percent according to the Bureau of Economic Analysis.
• ADP’s National Employment Report estimates new jobs increased 178,000 in July. The payroll processing company stated that almost half of the hires were in midsized companies (50 to 499 employees) while the rest were about evenly split between small employers (1 to 49 employees) and large employers (500+.) ADP also reported that the leisure and hospitality sector added 15,000 new jobs.
• Initial jobless claims fell 5,000 for a reading of 240,000 in the week ending July 29. The 4-week moving average fell by 2,500 for a reading of 241,750. This measure of the job market indicates a healthy economy.
• The U.S Department of Labor reported healthy job growth in July. The number of new jobs increased by 209,000 which was considerably more than the forecasts. Further, the unemployment rate declined slightly to 4.3 percent, equal with the May rate. It has been 16 years since the unemployment rate was that low.
• The Institute for Supply Management’s Production Manufacturing Index continued to show growth in July, albeit at a slower pace than in June. The July Index declined 1.5 percentage points for a reading of 56.3. (Any reading that exceeds 50 indicates growth.) The New Orders Index declined 3.1 percentage points for a reading of 60.4. The Production Index fell 1.8 percentage points for a reading of 60.6. The Order Backlog fell 2.0 percentage points for a reading of 55.0. The Employment Index fell 2.0 percentage points for a reading of 55.2. This is the 98th consecutive month the manufacturing segment has expanded and of the 18 manufacturing industries the institute surveys, 15 reported growing in July.
• The Institute for Supply Management’s Non-Manufacturing Index grew for the 91st consecutive month in July, also at a slower rate than in June. The index read 53.9, a dip of 3.5 percentage points. (Any reading that exceeds 50 indicates expansion.) The New Orders Index was 55.1, a decline of 5.4 percentage points. The Order Backlog Index totaled 52.0, a decline of 0.5 percentage points. The Employment Index totaled 53.6, a decline of 2.2 percentage points. Of the 15 non-manufacturing industries reporting growth in July, the Accommodations & Foodservices sector had the highest rate of increase.
• June construction spending was 1.3 percent less than the May estimate. Private construction spending was estimated at 0.1 percent less than the May figure with residential construction spending down 0.2 percent from May. 

Foodservice News This Week

• Foodservice operators hired 53,100 employees in July, per U.S. Department of Labor. With the private sector adding 205,000 new employees last month, this strong showing by the industry means that foodservice accounted for 1 out of 4 new hires. The report stated foodservice and drinking places added 313,000 jobs in the past 12 months.
• Micro restaurant chains enjoy a growth spurt in some major metropolitan areas as independent operators expand. The NPD Group says chains with 3 to 19 locations are increasing even though the total number of independent restaurant units has declined by 4.0 percent in the past year. Metropolitan markets such as Dallas-Ft. Worth, Atlanta, Chicago, Houston, Los Angles, Orlando, San Francisco and Washington, D.C. have all seen growth in micro chains. Micro chains have increased their spending with broadline distributors by 5.0 percent.
• Starbucks opened its seventh location designed to train young people. The store targets people 16 to 24 who lack job skills. One notable difference between this location and Starbucks’ standard units is a section that staff can partition off from the rest of the store for training purposes. The trainees will learn skills beyond working at Starbucks, such as resume writing.
• Dunkin’ Donuts may shorten name. In what the chain calls a test, several Dunkin’ Donuts locations in California will simply go to market as Dunkin’. The company wants to be considered a destination coffeehouse rather than a donut shop. A Dunkin’ spokesman said there probably won’t be a decision made on the new name until late next year when the company starts redesigning stores.
• Corporate Stirrings: J. Alexander’s Holdings has announced an agreement to acquire 99 Restaurants LLC, a 106-unit casual restaurant chain. FAT Brands announced the company’s intent to have an initial public stock offering. The owner of Fatburger, Buffalo’s Café and Buffalo’s Express hopes to raise $20 million from its IPO. The Potbelly sandwich chain may be for sale. The company hired JPMorgan to examine “strategic business alternatives.”
• Comparable Store Sales Reports: Bravo Brio Restaurant Group (Total down 1.0 percent, Bravo down 1.0 percent and Brio down 0.9 percent), Burger King up 3.6 percent, Cheesecake Factory down 0.5 percent, Denny’s (System up 2.6 percent, company owned up 2.7 percent and franchised up 2.6 percent). Diversified Restaurant Holdings down 3.67 percent, Papa John’s (North America total up 1.4 percent, company owned up 2.3 percent, and franchised up 1.1 percent), Popeye’s Louisiana Kitchen down 3.3 percent, Potbelly Sandwich Shops down 4.9 percent, Shake Shack down 1.8 percent, Tim Hortons down 0.8 percent, and YUM! Brands (KFC up 3.0 percent, Pizza Hut down 1.0 percent and Taco Bell up 6.0 percent.

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