This Week In Foodservice

The editorial team aggregates key industry information and provides brief analysis to help foodservice professionals navigate the data.


Economic Update Positive, Fast-Casual Growth, Luby’s Closes 10 and Wingstop’s Founder Opens New Restaurant

The Bureau of Economic Analysis’ initial estimate for real Gross Domestic Product in the first quarter of 2019 was +3.2 percent on annual basis. This is higher than most estimates, which were in the +2.4 percent range and the highest first quarter GDP in four years. It also beat GDP for the fourth quarter of 2018, which came in at +2.2 percent.

Some economists pointed out the weakness in some segments, such as automobiles and homes, but many expect to see improvement in these areas later this year.

Another positive aspect is that inflation seems well under control and is hanging around 2.0 percent, which the Federal Reserve feels is desirable for a healthy economy.

Both government officials and observers in the private sector would be delighted with an annual GDP of +3.0.

So it appears that the economic expansion which began in 2009 will continue through this year to become the longest in U.S. history. 

Economic News This Week

  • Initial-jobless claims increased 37,000 to a total of 230,000 for the week ending April 20. It is important to note last week’s claims were near a 50-year low. The less volatile 4-week moving average increased 4,500 to a total 206,000. Existing home sales took a hit in March, falling to 521,000 on a seasonally adjusted annual basis, according to the National Association of Realtors. Sales were down 4.9 percent from February and down 5.4 percent from March of 2018. Given the strong job situation and reasonable mortgage rates, the weakness in the existing home sales market is puzzling.
  • New single family home sales increased significantly in March, rising 4.5 percent from February to an adjusted annual rate of 692,000. March sales are up 4.0 percent from March 2018. There is no easy explanation for why new home sales were strong while existing home sales were down for the month.
  • New orders for manufactured durable goods increased 2.7 percent in March according to the Census Bureau’s advance report for the month. Transportation equipment led the way with a 7.0 percent increase. Without transportation equipment, new orders for durable goods were up 0.4 percent. New orders for manufactured durable goods have increased four out of the last five months. Shipments of manufactured durable goods increased 0.3 percent in March and have been up in 4 of the last 5 months.
  • The University of Michigan’s Index of Consumer Sentiment continued to move sideways in April, according to the university spokesman. The final April results showed the index falling to 97.2 from 98.4 in March. The Current Economic Conditions Index dropped to 112.3 from 113.3 in March. Following right in line, the Index of Consumer Expectations declined to 87.4 from the March reading of 88.8. The University spokesman noted that any change of 2.0 percentage points or less is statistically insignificant.

Foodservice News This Week

  • Fast-casual restaurants have grown unit counts and customer visits, according to the NPD Group. The number of locations rose by 1.0 percent based on NPD Group’s Fall ReCount study. Customer visits increased 3.0 percent in the year ending in February 2019. While a growing segment of the foodservice business, NPD points out that fast-casual remains a relatively small sector – it accounts for just 8.0 percent of total quick-service visits.
  • Antonio Swad introduced a new concept. The founder of Pizza Patron and Wingstop opened a full-service restaurant called Swing Porch. The menu has just 8 entrees but they require 55 recipes for various sauces, gravies and condiments, all which staff make on-site. Swad is quite up front in admitting the new restaurant is a challenge and he is still learning.
  • Luby’s closed 10 underperforming restaurants in the second quarter. This includes three Luby’s Cafeterias locations, six Fuddruckers and one Cheeseburger in Paradise. The multiconcept operator has closed a total of 27 operations in the past year with the intent of reducing sales while increasing profits.
  • Barnes & Noble tests quick-serve food in a new store. It is more likely that the book seller will expand its quick-service food offerings rather than the full-service operations the company has put in some stores.
  • McDonald’s plans to hire 250,000 summer workers.What is unique this year is the hamburger giant is working with the AARP and the AARP Foundation to recruit seniors for the summer jobs. It is interesting to note the jobs McDonald’s hopes to fill include management positions.
  • Restaurant industry executive Herman Cain rejects a nomination to the Federal Reserve Board. Cain asked that his name not be considered for the Fed position for financial reasons, saying the $183,100 annual salary would be a big cut in pay. Cain has been a fixture in the foodservice industry for years. He was an executive at Pillsbury, which led to a top-level post at Burger King, and in turn to the presidency of Little Caesar’s Pizza. He also served as president of the National Restaurant Association.
  • Domino’s looks to have 25,000 locations worldwide. The objective is to increase share of market and to cut down delivery times. Average delivery time is now nine minutes but Domino’s aims to reduce it to five to six minutes.
  • Growth Chains: Saladworks plans to open as many as 20 locations in Charlotte. Dunkin’ has just opened a restaurant in Pleasant Hill, Pa., and plans three more in the area. Race Trac will open 7 stores in Tennessee this year and hopes to have a total of 50 in the state by 2023. Clean Juice plans to have 100 locations open by the end of this year. Le Macaron plans to open 10 units throughout Texas in the next 5 years.
  • Comparable Store Sales Reports: Bloomin’ Brands (Combined brands up 2.4 percent, Outback up 3.5 percent, Carrabba’s up 0.3 percent, Bonefish Grill up 1.9 percent and Flemming’s up 0.6 percent), Chipotle Mexican Grill up 9.9 percent, Domino’s Pizza (U.S. System up 3.9 percent, company owned up 2.1 percent and franchised up 4.1), and Starbucks U.S. up 4.0 percent.


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