Full-service restaurants may be coming back. After yielding market share to limited-service restaurants, the full-service segment may be on the rebound, per Technomic’s 2018 Future of the FSR Consumer Trend Report.

While admitting the full-serve sector, particularly casual-dining operations, is  not “out of the woods” yet, operators continue to benefit from off-premise sales, beverage alcohol availability and by providing a memorable away-from-home dining experience.

In order to succeed, casual-dining operators must resolve the problems that got these restaurants in trouble, namely weak value propositions, opening too many locations and failing to keep up with consumers’ changing menu preferences, according to a Technomic spokesperson.

The key takeaways from the study include: 53 percent of consumers say they visit traditional casual-dining restaurants at least once a month, 38 percent of family-style consumers say they are more likely to visit a chain restaurant than an independent and 51 percent of upscale casual-dining restaurant customers say they visit these restaurants to celebrate special occasions.

There seems to be a tendency in foodservice to overestimate the impact of new types of operations. A few years ago, some forecasters felt fast-casual was going to take over the restaurant world. Now it appears fast-casual growth is slowing.

Likewise, some are quick to predict failure for a restaurant type. Back in the ’70s, one expert forecast that the new “theme” restaurants meant the end of fine dining. The white tablecloth operations may not be a growth area but when is the last time you saw a Victoria Station?

Economic News This Week

• Initial-jobless claims totaled 231,000, a dip of 4,000 for the week ending Dec. 1. The 4-week moving average totaled 228,000, an increase of 4,250.
• The U.S. workforce added 179,000 new jobs in November, ADP reported. Mid-size firms (those with 50 to 499 employees) added 119,000 of the new jobs. ADP estimated that the leisure and hospitality sector added 26,000 new employees.
• The U.S. Bureau of Labor Statistics said the economy increased employment by 155,000 in November. Private employers added 161,000 while various government entities cut 6,000 jobs. The BLS said unemployment was 3.7 percent, unchanged from October.
• Construction spending declined 0.1 percent in October from September but was up 4.9 percent from October 2017. Public construction increased 0.8 percent while residential construction fell 0.8 percent from September.
• Manufacturing sector productivity increased 2.3 percent in the third quarter. The Bureau of Labor Statistics reported that output rose 4.1 percent in the third quarter while the hours worked increased 1.8 percent. Further, unit labor costs rose 0.9 percent as they have for the last 4 quarters.
• Sales of cars and light trucks fell in November with estimates ranging from declines of 1.3 percent to double that. Actually, the decline continues to be in passenger cars as consumers switch from sedans to crossovers, SUVs and pickups. And despite predictions of 2018 being a down sales year, some automotive experts think there is a chance that sales will come close to matching the 17.2 million vehicles sold in 2017.
• New Orders for Manufactured Durable Goods fell by 4.3 percent in October according to the U.S. Census Bureau’s Full Report. Transportation equipment pulled down the data.
• The Institute for Supply Management’s Manufacturing Activity Index increased in November. The Index hit 59.3, a gain of 1.6 percent from October. (Any number greater than 50 shows increasing activity.) November marks the 27th consecutive month of manufacturing activity growth. The New Orders Index advanced an impressive 4.7 points. The Production Index inched up 0.7 as the order backlog Index crept up by 0.6. The Employment Index was up 1.6 points. The Institute added that of 18 manufacturing industries studied, 13 reported growing in November.
• The Institute for Supply Management’s Non-Manufacturing Activity Index grew in November. The Index rose 0.4 percentage point to a final level of 60.7. (Any reading greater than 50 indicates increasing activity.) November is the 106th consecutive month that non-manufacturing activity increased. The New Orders Index rose 1.0 percent to a reading of 62.5. The Order Backlog Index increased 1.0 percent to a final level of 55.5. In contrast, the Employment Index dropped 1.3 percent to 58.4. The Institute also noted that of the 17 non-manufacturing industries covered in the study, 16 reported growth including Accommodation & Foodservice.

Foodservice News This Week

• The foodservice industry added 21,200 jobs in November, per data from the U.S. Bureau of Labor Statistics. Thus, foodservice accounted for 13 percent of private sector hiring last month.
• Pizza Hut has “a lot of work to do,” according to its CEO. Despite investments in new design, technology, advertising and a partnership with the National Football League, Pizza Hut’s boss is dissatisfied with growth. He believes that consumers don’t think of Pizza Hut for delivery.
• Corporate Stirrings: Del Frisco Restaurant Group received a letter from Engaged Capital LLC castigating the company’s strategy and performance. Del Frisco’s purchase of Barteca drew particular criticism. Engaged Capital wants all or part of Del Frisco sold. The Flynn Restaurant Group has acquired 368 Arby’s restaurants from United Beef Corporation of Tulsa. Price of the deal was not revealed. The Flynn company is also a franchisee of Applebee’s, Panera Bread and Taco Bell. Speedway purchased 78 stores in Upstate New York from Petr-All Petroleum Consulting Corporation of Syracuse. Some of the locations were operating under the Tim Hortons Cafe & Bakeshop brand name. All the acquired stores will change to the Speedway brand. Domino’s 11 largest franchisees in the U.K. and Ireland have asked for a bigger share of the profits due to rising costs. The group has threatened to stop opening new stores if the company does not agree.
• Growth Chains: Checkers and Rally’s will open 20 restaurants in Houston. Popeye’s plans to open 5 locations on Long Island, N.Y.
• Comparable Store Sales Reports: FAT Brands (Buffalo’s Express up 4.7 percent, Buffalo’s Café up 6.4 percent & Bonanza and Ponderosa up 4.6 percent) and Wingstop up 6.3 percent.

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