Restaurant sales increased in December, while menu prices continue to exceed the rise in grocery store prices. Tim Hortons' battles with some of their franchisees. Pizza Hut joins with Toyota to develop delivery vehicles. Red Robin will eliminate the bus boy position in its restaurants. These stories and a whole lot more This Week in Foodservice.

The U.S. Census Bureau reported U.S. retail sales increased 0.4 percent in December from November and were up 5.4 percent compared to December 2016. Overall, December’s performance exceeded a number of forecasts. For 2017 total retail sales increased 4.2 percent.

The Census Bureau revised November total retail sales up 0.1 percent for a final reading of +0.9 percent.

Sales at foodservice and drinking place sales increased 0.7 percent in December compared to November. December 2017 sales increased 4.2 percent compared to December 2016. For the entire year of 2017, restaurant and bars saw sales rise 2.8 percent. However, the advance report changed the initial sales figure down slightly to +0.5 percent from +0.7 percent. In other words, 2017 marked another year of modest growth for the restaurant industry.

Please note the advance sales numbers are based on a small sample and are subject to revision. And the study only includes restaurants and bars. Foodservice operators not surveyed include hotels, resorts, clubs, retailers, employee feeding, healthcare, education, and military feeding.

Economic News This Week

• Initial-jobless claims rose 11,000 to a level of 261,000 for the week ending Jan. 6. The less volatile 4-week moving average rose by 9,000 claims to a final level of 250,750. The Department of Labor continues to report claim filing difficulties in Puerto Rico and the U.S. Virgin Islands.
• The Bureau of Labor Statistics’ November JOLT Study showed little change. The number of job openings, hires and separations (including layoffs, discharges and quits) were all close to the numbers from October.
• The Producer Price Index fell 0.1 percent in December. The Index for Final Demand Goods was flat while the Index for Final Demand services fell 0.2 percent. The Producer Price Index for final demand rose 2.3 percent for 2017. The Producer Price index for foods fell 0.7 percent in December.
• The Consumer Price Index increased 0.1 percent in December on a seasonally adjusted basis. The Consumer Price Index rose 2.1 percent in 2017. The “core index,” which does not include food and energy prices, was up 0.3 percent in December and up 1.8 percent for 2017.
• Consumer borrowing increased in November by a hefty 8.8 percent. Revolving credit – mostly credit card borrowing – rose 13.3 percent while non-revolving credit increased 7.2 percent. 

Foodservice News This Week

• The Consumer Price Index for Food increased 0.2 percent in December. Food-at-home prices increased 0.1 percent and Food-away-from home prices grew 0.2 percent. For 2017, the food index rose 1.6 percent with the index for food at home up 0.9 percent and the index for food away from home up 2.5 percent.
• Tim Hortons’ parent company lashes out at rogue franchisees. Ontario Tim Hortons franchisees drew the ire of Restaurant Brands International when it was revealed the franchisees were cutting benefits and in some cases, wages. The cuts were evidently in response to a minimum wage increase in Ontario by $2.40 to $14 per hour. Originally, RBI had stated that it was strictly a matter for the franchisees but took a harder line when criticism arose from the public.
• Pizza Hut formed a partnership with Toyota to explore the development of pizza delivery vehicles around the world. Toyota unveiled designs of a self-driving concept vehicle called e-Palette at the Consumer Electronics Show in Las Vegas. The e-Palette could also serve as a mobile kitchen. Pizza Hut and Toyota will jointly test dual communications technology in Pizza Hut delivery vehicles to capture data on driver patterns and behaviors to improve safety and performance.
• Postmates Delivery Service is partnering with Ford to test driverless equipment. Ford had a partnership with Domino’s Pizza working on driverless pizza delivery. The program will focus, in part, on the impact of requiring the customers to come out to get their orders.
• HMSHost has a partnership with Shake Shack to open locations in airports and on highways in the U.S. The first unit opened at LAX.
• Dunkin’ Donuts will cut reduce its menu by 10 percent. A test of the smaller menu resulted in faster, more accurate service and easier work for its staff, according to Dunkin’. The chain will introduce the new menu in New England and it will go national by mid-March.
• Red Robin Gourmet Burgers will eliminate the bus boy position to offset rising labor costs. Other staff will take over the bus boy’s duties but a consultant has raised concerns that customer service will suffer.
• Cameron Mitchell will open a food hall in Columbus, Ohio. The former Budd Dairy building will have 14,000 square feet plus a rooftop deck. There will be space for 8 to 10 spaces for culinary entrepreneurs.
• Darden will pass along some tax savings to employees. Darden Restaurants says the newly enacted federal tax bill will save the company about $70 million in its third quarter. As a result, Darden plans to pass on $20 million to its employees. The company did not provide any additional details.
• Corporate Stirrings: Pizza Hut plans to sell 77 corporate owned units in North Texas to Ampex Brands. Ampex owns 128 Pizza Huts as well as 218 KFCs, 38 Taco Bells, 68 Long John Silvers, and 49 Tim Hortons. In the past quarter, Ampex purchased 52 KFC locations in Columbus, Ohio, and Oklahoma City. MOD Super Fast Pizza Holdings Inc. has raised $33 million in additional equity and closed on a $40 million credit facility. MOD will use the funds to support the chain’s expansion. WKS Restaurant Group will acquire Pennant Foods, an operator of 52 Wendy’s restaurants in Southern California. WKS operates more than 180 franchised restaurants including Denny’s, Pollo Loco, Krispy Kreme Donuts, Corner Bakery Café, and Blaze Pizza.
• Growth Chains: Black Bear Diner will open 19 locations in California and Texas in the next 6 years. Chic-fil-A will open 19 restaurants across the USA in January. Dickey’s Barbecue Pit’s franchisee in Arizona will open four restaurants. MOD Pizza will open 110 restaurants this year. CKE will open its first restaurant in New York City, a Carl’s Jr. at Coney Island. Wendy’s opened 60 restaurants in the International market last year.
• Comparable Store Sales Reports: One Hospitality Group up 6.0 percent.

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