This Week In Foodservice

Jerry Stiegler aggregates key industry information and provides brief analysis to help foodservice professionals navigate the data.


This Week in Foodservice

Department of Labor’s August Stats, Starbucks Opens in Italy, TA Sells its Minit Market C-Store Chain

On the first Friday of the month the Bureau of Labor Statistics releases a voluminous study regarding the U.S. employment picture. Most media outlets, including this one, report just a couple of key numbers since the entire labor study runs about 40 pages. This week we take a slightly more detailed at some statistics.

Starting with the major numbers, the economy added 201,000 new jobs in August, but the unemployment rate remained unchanged at 3.9 percent. This can occur because more people have entered the workforce.

The number of part-time workers who desire full-time work has declined by 830,000 over the year but the number of discouraged workers — those not looking for work because they believe there are no jobs for them — is unchanged from a year ago. Unemployment figures do not count this group since they are not actively looking for a job.

Unemployment rates for minorities  have declined significantly since last year. So has the unemployment rate for teenagers. The unemployment rate for whites also declined.

One of the most encouraging pieces of data in the reports was that private sector hourly wages grew by 2.9 percent since last year.

Finally, foodservice employers hired 17,500 new workers in August, which accounts for approximately 8.5 percent of the total private sector hiring for the month. Since August of 2017 the foodservice industry has added 213,000 workers.

Economic News This Week

  • Initial-jobless claims totaled 203,000, a decline of 10,000 for the week ending Sept. 1. The 4-week moving average totaled 209,500, a decline of 2,750. The last time the average was this low was Dec. 6, 1969. The low number of claims being filed has confounded some labor experts with the numbers similar to 40 years ago when the labor force was significantly smaller. And, just a couple of years ago it was thought that the weekly norm should be around 300,000.
  • ADP reports U.S. private sector employment increased by 168,000 in August with mid-size firms (those with 50 to 499 employees) accounting for more than two-thirds of the increase. The leisure and hospitality industry saw employment rise by 25,000.
  • The Institute for Supply Management’s Manufacturing Index advanced in August, rising 3.2 percentage points to a final reading of 61.3. (Any reading that exceeds 50 shows increasing activity.) Thus, the August report shows an increase for manufacturing activity. All of the supporting indexes showed significant advances with the exception of prices, export orders and imports. The indexes that grew included New Orders (+4.9), Production (4.8), Employment (+2.0) and Order Back Logs (+ 2.8).
  • The Institute for Supply Management’s Non-Manufacturing Index Rose increased in August to 58.5, which is 2.8 percentage points over July. (Any result greater than 50 indicates increasing activity.) Most of the components of the Non-Manufacturing Index increased including Business Activity/Production, New Orders, Employment, and Back Orders showed increases. This includes Accommodation & Foodservices.
  • Productivity increased 2.9 percent in the second quarter. The Bureau of Labor Statistics reported output rose 5.0 percent while hours worked increased 2.0 percent. Unit Labor Costs decreased 1.0 percent for the quarter with a 1.9 percent increase in hourly compensation and a 2.9 percent increase in productivity.
  • New orders for manufactured goods fell 0.8 percent in July according to the full monthly report from the U.S. Census Bureau. The July decline in orders followed two months of increased orders. Manufactured goods shipments were virtually unchanged from June as were unfilled orders.
  • August sales of cars and light trucks fell as booming SUV sales couldn’t offset plunging sales of passenger cars. The seasonally adjusted annual rate for August was 16.69 million vehicles, which was the lowest in a year. There has been an expected slowdown in the market but nevertheless, most auto manufacturers had a sales increase in August.
  • Private construction spending in July was virtually unchanged from June, falling 0.1 percent. Residential construction spending rose 0.6 percent in July.

Foodservice News This Week

  • Starbucks opens its first Italy location. The initial unit is the chain’s upscale Reserve concept but Starbucks plans to add standard stores, too. It was coffee shops in Milan 35 years ago that inspired the creation of the Starbucks chain. A Starbucks executive said the company’s mission in Italy is not to teach Italians about coffee but to offer a different experience.
  • Starbucks’ partner in New Zealand will let its two decades old agreement expire next month. Restaurant Brands New Zealand said Starbucks was “becoming less relevant to the company’s overall direction” and it would focus on the company’s other restaurant brands such as KFC and Pizza Hut. But Starbucks has a new partner in New Zealand, Tahua Capital, which acquired the license for $2.9 million. There are currently 22 Starbucks locations in New Zealand. Some observers state that Starbucks never delivered on its expectations in New Zealand.
  • Starbucks staffs its new location in Mexico City with employees above the age of 50. The coffee chain is working with the Mexican government to find employment for Mexico’s rapidly growing senior population. Starbucks plans to hire 120 older workers in Mexico by the end of next year.
  • TravelCenters of America plans to sell its 225 freestanding Minit Mart C-stores to EG Group for $330.8 million. TravelCenters of America will use the proceeds from the deal to reduce debt and expand its travel center business.
  • A good economy may mean bad customer service. Recent government labor studies shows more job openings then people looking for work in the U.S. This means lower hiring standards and finds many businesses shorthanded trying to man shifts. Companies also have to require longer shifts, causing surly employees. This translates into unhappy customers and loss of sales. The American Customer Satisfaction Index found consumer happiness declined from 77 last year to 76.7, where it has stayed all year. This is the longest period of stagnation since 1993.
  • MOD Pizza’s “open hiring” policy pays off with loyal and enthusiastic employees. The chain has hired ex-convicts, the homeless, disabled people, workers with autism and others with Down syndrome. Most turn into high-quality employees, a great thing in the tight labor market that exists now. More important, MOD says that it creates a culture of success for all employees.
  • Growth Chains: SoBol will open 18 locations on Long Island, N.Y., with intentions to grow to 100 units by 2022. The WaWa c-store chain will open three stores in East Naples, Fla.

For the latest same-store sales reports for U.S. chains, please click here for the Green Sheet.