Same-store sales for more than 50 casual-dining chains grew by 3.3 percent in December, according to the Knapp-Track report released by Malcolm Knapp and Merrill-Lynch.

Guest counts were up 0.6 percent and check averages rose 2.7 percent. The data indicates improvement throughout the entire month with the first half of the month up 2.6 percent and the second half up 4.1 percent.

The 2.7 percent increase in December comparable store sales is greater than the 2.5 percent year to date growth in sales and also more than November’s 2.2 percent growth.

High-end steakhouses had comps increase 1.2 percent in December after falling 0.5 percent in November, Knapp reported. November’s decline was one of just two negative months last year.

Building on Knapp-Track statistics, Merrill-Lynch’s restaurant stock analyst forecasts a jump in disposable income will support comparable store sales growth of 2.0 percent - 2.5 percent in 2019. Further predictions are for a 4.0 percent increase in labor inflation and a 1.0 percent - 2.0 percent rise in commodity prices, which will translate in to a 2.5 percent-3.0 percent cost pressure increase.

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

Economic News This Week

• Initial jobless claims fell by 17,000 to a final level of 216,000 for the week ending Jan. 5. The 4-week moving average increased 2,500 to a final level of 221,750.
• Small business optimism was down slightly in December. The National Federation of Independent Business reported the optimism index fell 0.4 points for a reading of 104.4 but remains near record highs. Small business managers’ major difficulty were unfilled jobs and the lack of qualified applicants.
• U.S. consumer borrowing increased by 6.7 percent in November according to the Federal Reserve. Revolving credit, which is primarily credit card borrowing, rose 5.5 percent. Non-revolving credit – auto loans, student loans, etc. – increased 7.1 percent in the month.

Editor’s note: Due to the shutdown some of the government agencies have suspended reporting their data for the interim. Once they resume releasing data we will begin sharing it again in this space.

Foodservice News This Week

• Starbuck’s backs away from upscale concepts. Under former CEO Howard Schultz, the coffee chain planned to open about 1,000 Starbucks Reserve Cafes. These locations would offer more expensive coffee, artisanal baked goods and serve cocktails. Also planned were giant Roastery stores that would roast coffee on the premises. The current CEO, Kevin Johnson said he will concentrate on building up the standard Starbuck’s stores.
• Foodservice operators feed U.S. Government workers affected by the shutdown. The restaurants helping out the workers who are without paychecks include the 6 locations in Washington, D.C., owned by chef Jose Andres and the 10-unit Ruby Slipper chain in New Orleans.
• Tim Hortons relocated its headquarters to downtown Toronto. The 65,000 square foot facility includes a large test kitchen.
• Corporates Stirrings: Mr. Gatti’s Pizza and Gigi’s Cupcakes filed for Chapter 11 bankruptcy protection. FundCorp, a private equity fund, owns both chains. Centerbridge Partners is reported to have sold P.F. Chang’s to Triartisan Capital Advisors. The sale price was reportedly $700 million. The Blue C Sushi chain abruptly closed its seven locations and employees were told to quickly cash their final pay checks. Bojangle’s shareholders have approved going private at a price of $16.10 a share. Durational Capital Management LP and The Jordan Company LP will purchase the chicken chain.
• Growth Chains: Checkers & Rally’s plan to open 40 restaurants in the Philadelphia area. Capriotti’s Sandwich Shops has more than 100 units in the company’s development pipeline with 15 locations set to open in 2019. Burger King plans to open a restaurant every three to four days in Brazil with the goal of overtaking McDonald’s. McD’s has 934 locations in Brazil. BK Brazil also plans to open 300 Popeye’s in Brazil in the next 6 years. Denny’s Corporation signed a franchise development agreement with Northland Properties Corporation to open an additional 40 restaurants in Canada. Chicken Salad Chick, which opened 20 restaurants in 2018, will expand into Missouri and Ohio this year. CEC Entertainment has signed agreements for Chuck E. Cheese restaurants in Mexico, Egypt, Kuwait, El Salvador and Bahrain. FATBrands will open 10 co-branded Fatburger and Buffalo Express restaurants with at least one location in Arizona, California, Pennsylvania, Texas and Virginia.
• Comparable Store Sales Report: Denny’s Corporation (Domestic system up 0.8 percent, company owned up 1.8 percent and franchised up 0.6 percent) and One Group Hospitality up 15 percent.

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