The National Restaurant Association’s Restaurant Performance Index edged up 0.3 percent to a final reading of 100.7 for August. This marks the first increase in the index in three months. But the Current Situation Component of the Index hit 100.3, a decline of 0.5 percent. Forty eight percent of those surveyed report an increase in August same-store sales vs. 52 percent in July. Operators also reported a net decline in customer traffic.

Driving the increase in the RPI was a 1.1 percent rise in the Expectations Index with operators feeling the economy will improve in the next 6 months. Just 32 percent of those surveyed expect sales to increase in 6 months – the lowest level in 2 years.

The picture is a little brighter when it comes to operators’ investment in their businesses. Sixty-two percent said they had made a capital expenditure for equipment, expansion or remodeling in the past three months. This is up from 50 percent in the July survey and the highest level in 9 months. Looking ahead, 60 percent of operators say they plan to make a capital investment for equipment, expansion or remodeling in the next 6 months. This is up from 48 percent in July.

Economic News This Week

• The Institute for Supply Management’s Manufacturing Index dropped to 47.8 in September, its second consecutive monthly decline. This is down from 49.1 in August. Any reading less than 50 indicates declining activity. The New Orders Index did rise by 0.1 percent from August but stayed in negative territory at 47.3. All the other future indicators showed declining activity with the Production Index at 47.3, the Employment Index at 46.3 and Orders Backlog Index at 45.1. Of the 18 manufacturing industries included in the study, only 3 reported growth. The Manufacturing Index reading of 47.8 is the lowest it has been since June of 2009.
• The Institute for Supply Management’s Non-Manufacturing Index Declined in September. Unlike the manufacturing sector, non-manufacturing continued to grow but at a slower rate. The September Index fell to 52.6 in September from 56.4 in August. (Any number greater than 50 indicates expansion.) The Business Activity/Production Index fell to 55.2 in September from 61.5 in August. The New Orders Index dropped to 53.7 in September from 60.3 In August. The Employment Index declined to 50.4 in September from 53.1 in August. The Orders Backlog Index did rise to 54.0 in September from 49.0 in August. Of the non-manufacturing industries studied, 4 reported decreases and 13 reported growth. Accommodations & Foodservices were in the latter group showing up in the middle of the pack. While the numbers are certainly better than those of the Production Index, the Non-Manufacturing Index is at its lowest point in 3 years.
• The Chicago Production Manufacturing Index mirrored the National PMI by falling into contraction mode. The index declined to 47.1 in September from 50.4 in August. Any reading that exceeds 50 shows growth while less than 50 indicates declining activity.
• New orders for manufactured goods decreased 0.1 percent in August, per data from the U.S. Census Bureau. Shipments of manufactured goods fell 0.1 percent, too. The unfilled orders index, though, increased 0.1 percent.
• Initial-jobless claims hit 219,000, an increase of 4,000 for the week ending September 28, per the U.S. Department of Labor. At 212,500, the 4-week moving average was unchanged from the previous week.
• The economy added 135,000 new jobs in September, per data from ADP. Roughly half of the new jobs came from large employers, organizations with 500 or more employers. The Leisure & Hospitality sector saw employment rise by 18,000 for the month.
• U.S. employment increased by 136,000 in September, according to the U.S. Bureau. Private employment rose by 114,000 while government entities added 22,000 new jobs. So far in 2019 payroll growth has averaged 161,000 a month, down from a monthly average of 223,000 in 2018. The Bureau also revised the number of new jobs up in both July and August. The unemployment rate fell from 3.7 percent in August to 3.5 percent in September. The last time the unemployment rate was this low was in December 1969.

Foodservice News This Week

• Hiring among foodservice operations slowed in September with the industry adding only 1,500 workers. Until recently, the industry had averaged about 20,000 new jobs a month.
• A company named Picnic plans to use artificial intelligence to make pizza. Formerly called Vivid Robotics, the Seattle-based firm says its equipment can make 300 12-inch pizzas or 180 18-inch pizzas in an hour. The equipment can customize the toppings on each pizza. While the product is now in the development stage, the company expects to have production models available next year.
• Off-premise orders account for nearly 60 percent of foodservice occasions, per data from joint study by The National Restaurant Association and Technomic. Included are drive-thru, takeout, delivery and prepared items from grocery stores and c-stores.
• Starbucks introduces a new store concept. Called Starbucks Pickup, the new location will operate from New York’s City’s Penn Station. Customers will order using the Starbuck’s app and then will find their order using a status board. There will be baristas available to assist when necessary. The Pickup concept will rely heavily on foot traffic so it will it will probably work best near transit stations, in downtown areas, office buildings and college campuses.
• Compass Group’s FoodWorks operation partners with independents and small chains to run pop-up operations. The program is used in education, healthcare, workplace and food halls. Many of the operations are small and owned by women and minorities.
• The Federal Trade Commission has requested additional information regarding PFG’s proposed purchase of Reinhart Foodservice. Requests from federal agencies for information about acquisitions are not unusual do not necessarily mean the Reinhart deal will be challenged.
• Four Corners Property Trust has purchased 24 outparcel properties, including 14 restaurant properties. The restaurant brands included in the $46.4 million purchase are BJ’s, Black Angus, Bonefish Grill, Chili’s, IHOP, LomgHorn, Olive Garden, Outback, Red Lobster, Red Robin and Wendy’s. All the Locations were formerly owned by Brookfield Properties.
• Growth Chains: MOOYAH Burgers Fries & Shakes will open 26 locations in Houston by 2021. Church’s Chicken reopened three restaurants in Texas. Restaurant Brands International will develop Burger King restaurants in Latvia, Estonia and Lithuania. These three countries are among the very few in Europe where Burger King has yet to open.

  For comparable store sales reports, read the latest Green Sheet.