How is 2017 shaping up? Barnes & Noble enters the fast-casual restaurant industry. Mobile orders can be both a blessing and curse to operators. These stories and a lot more This Week in Foodservice.
It appears that restaurant sales will not reach forecasted levels for 2017, according to data through the first 10 months of 2017. Technomic Inc. predicted that restaurants and bars would see nominal dollar sales growth (that is, unadjusted for menu priced changes) of 4.3 percent for the year. The National Restaurant Association’s forecast was identical.
Through the end of October, the U.S. Census Bureau reported that restaurants and bar sales rose just 2.8 percent on a nominal basis.
The Food Institute noted that the consumer price index for food away from home from January to October rose 2.3 percent. Assuming the two government surveys are complementary, it appears that there will be only slight, if any, real growth in 2017. The Food Institute stated that restaurant sales may be at their lowest since the Great Recession.
Economic News This Week
- Initial jobless claims fell 13,000 to a final reading of 239,000 for the week ending Nov. 18. The 4-week moving average rose 1,250 to a final reading of 239,750. The Department of Labor continues to report that claim processing in the Virgin Islands remains a problem but claim handling in Puerto Rico is improving.
- The Conference Board’s Leading Economic Index increased 1.2 percent in October for reading of 130.4. The index had risen 0.1 percent in September and a 0.4 percent in August. A Board spokesman said the index indicates that economic growth should continue through the holidays and into next year.
- Existing home sales rose 2 percent in October vs. September to a seasonally adjusted annual rate of 5.48 million. Home sales in October were at their strongest pace since June but still 0.9 percent less than last year. A spokesman for the National Association of Realtors said that job growth is slowly pushing up wages but the supply of homes for sale remains tight.
- The final November report for the University of Michigan Index of Consumer Sentiment improved from the mid-month reading but remained slightly below last month. The October reading was at the highest level in a decade. The Index in November was 98.5, down from 100.7 in October. The Current Economic Conditions Index dropped from 116.5 in October to 113.5. The Index of Consumer Expectations also fell, declining from 90.5 in October to 88.9. A university spokesman noted that the current economic expansion is the longest in duration since the 1800s.
- The U.S. Economic Confidence Index fell last week, dropping to +4 from +7 the previous week. The index is now running at the same level that it has for most of this year. Pulling the index down was a decline in consumers’ perceptions of current economic conditions.
Foodservice News This Week
- The overall impact of hurricanes on the restaurant industry was not as negative as feared. Technomic Inc. found that operations that stayed open before and during the storms (and/or reopened quickly afterward) did noticeably better than those that closed for longer periods. Also, some consumers bought in larger-than-normal quantities for friends and relatives. Finally, operations with low check averages did well as customers tried to stretch their food dollar. Technomic concluded that the industry bounced back more quickly than would have been predicted.
- Barnes & Noble’s new format store will include a fast-casual restaurant. Located in Ashburn, Va., the new design will appeal more to customers on the go. Barnes & Noble’s other four Barnes & Noble’s Kitchen operations are all full service.
- Operators struggle with mobile orders. McAlister’s Deli and Starbucks found that those customers who used the mobile app to order would mill around, clogging the ordering area. McAlister’s now places mobile orders on shelves where those who order online can simply grab and go. Starbucks baristas can notify mobile customers when their order will be ready, so they do not jam the ordering area. Further, Starbucks can monitor the flow of transactions so the store can schedule more help if necessary.
- Consumers continue to skip breakfast. Long recognized as the most skipped meal period — and the one offering the most opportunity for foodservice operators — Technomic Inc. reports that more people now pass on breakfast than in the last study in 2015. People seem to be doing so at the expense of breakfast at home. Technomic also reported that all-day breakfast remains popular and that more people are eating brunch out.
- Corporate Stirrings: Bloomin’ Brands has received notification that activist investor Jana Partners may urge the multi-concept restaurant company to put itself up for sale. Jana Partners has invested $140 million in Bloomin’ Brands stock, which is 8.74 percent of the restaurant company’s outstanding shares. Bento Sushi will become part of UK-based Yo! Sushi. Bento, based in Toronto, has 600 locations and supplies sushi to 1,700 partners including supermarkets. The price of the deal was not released.
- Growth Chains: Starbucks signed a partnership agreement to open 15 stores in Jamaica in the next 5 years. Blue Water Grill will open its eighth restaurant this year and ninth in 2018. Freddy’s Frozen Custard & SteakBurgers will open one restaurant in Mississippi and two in Arkansas. FAT Brands has development agreements for 350 restaurants around the world in the next few years. Denny’s has opened a restaurant in Guatemala, No. 7 of 10 planed by Denny’s franchisee in Central America.
- Comparable Store Sales Reports: Cracker Barrel up 0.2 percent.
For details and the same-store sales of other chains, please click here for the Green Sheet.