Below is an overview of the financial performance for the three largest foodservice distributors covering the 3rd quarter of this year.

• Sysco sales increased 0.6 percent to $15.3 billion. Sysco’s operation in the U.S. increased 2.5 percent to $10.7 billion. Local case volume within the U.S. broadline operations grew 1.5 percent in the quarter of which 1.4 percent was organic. (This means that 0.1 percent of the growth was the result of recent acquisitions.) Total case volume within U.S. broadline operations grew 0.5 percent of which 0.4 percent was organic. Sysco’s gross profit increased 1.4 percent to $2.9 billion and adjusted operating income rose 7.3 percent to $741.9 million
• US Foodservice net sales increased 6.1 percent to a level of $6.5 billion. Total case increased 3.0 percent with total organic case volume, which excludes sales from recent acquisitions, increased 0.9 percent. Independent restaurant case volume increased 6.3 percent or 4.2 percent on an organic basis.
• Performance Food Group Company reported net sales increased 37.5 percent to $6.2 billion. The sales increase was driven in large part by the acquisition of the Eby-Brown Company. Total case volume rose 10.7 percent, including 3.2 percent organic growth. Gross profit increased 19.8 percent to $711.4 million.

It appears the major distributors all had strong quarters. Given these companies total penetration of the foodservice market it should be safe to assume their customers had at least moderate growth as well.

Some would dispute this and argue that the big distributors' growth is coming at the expense of smaller distributors. Based on the best data available (government reports, the National Restaurant Associationon, etc.) there was at least some decent growth on the operator level.

Economic News This Week

• The Conference Board’s Leading Economic Index hit 111.7 in October a decline of 0.1 percent. The index has fallen for three consecutive months and its six month growth rate has turned negative for the first time since 2016. A spokesman for the Conference Board says it appears the economy will end the year on a weak note.
• October privately owned housing starts rose 3.8 percent compared to September and increased 8.5 percent compared to October 2018. October single-family housing starts increased 2.0 percent from September. Building permits issued for privately owned housing units increased 5.0 percent compared to September. Permits for single family homes increased 3.2 percent from September. The data is considered to show a very positive growth trend.
• Existing home sales increased 1.9 percent in October to a seasonally adjusted annual rate of 5.46 million, according to the National Association of Realtors. The association characterized the increase as “a slight recovery from the declines seen in September…” A NAR spokesperson sees most factors affecting home sales as positive, i.e., historically low interest rates, job expansion, higher weekly earnings, etc., but expressed concern about the lack of inventory of homes for sale.
• The Philadelphia Federal Reserve’s Manufacturing Outlook Survey showed increasing activity in November. The index rose 5 points for a reading of 10.4. (Any reading greater than zero indicates growth.) But the indices for new orders and shipments both fell. The index for unfilled orders remained positive for the month.
• The University of Michigan Index of Consumer Sentiment improved in its final report for the November. The Index reading was 98.6, up from 95.5 in October. The Current Economic Conditions component totaled 111.6, down from 113.2 in October. The Expectations Index rose 87.3 from 84.2 in October. A spokesperson for the University of Michigan’s consumer research department said there are good reasons for both optimism and pessimism but no justification for extreme swings in either direction.

Foodservice News This Week

• Chuck E. Cheese rolls out a new store design that features brighter lighting, sleeker furniture, cleaner signage and a new logo.
• Chipotle bets on drive-thru lanes to speed service. The Mexican chain’s CEO said it can get customers their food in 12 seconds. How can the chain do this when drive-thru times appear to be getting longer and not shorter? Customers using what the chain calls “Chipotlanes” will have already placed their orders either online or via Chipotle’s app. That means the food is already paid for when the customers arrive.
• Among the various changes on the horizon for c-stores, are increased use of automation and even unmanned locations. One prognosticator can even see a time when customers order from the gas pump and then have the food delivered to their cars.
• White Castle will move to a new headquarters. The company hopes the 4-story, 105,000-square-foot building will become a tourist attraction featuring a spiral slide from the second floor to the first floor, an oversize wooden throne, scepter and a gift shop with White Castle memorabilia. The new building will also house the company’s test kitchen.
• The Performance Food Group plans to issue common stock. The company plans to sell 10,120,000 shares at $44.25 per share.
• Corporate Stirrings: Chuy’s Holdings closed four underperforming restaurants after hinting it might shutter five locations.
• Growth Chains: Popeye’s will open its first restaurant in China next year and plans to add 1,500 units in the next decade. California Pizza Kitchen plans aggressive international expansion, with emphasis on Asia particularly Hong Kong, South Korea, Singapore, Japan and Malaysia. Wingstop intends to open 75 locations in France by 2029. Boston’s Pizza Restaurant & Sports Bar will open 40 locations in the Dallas Ft. Worth, Houston and San Antonio areas. Chipotle Mexican Grill intends to open 150 to 165 restaurants un 2020.
• Comparable Store Sales Reports: Applebee’s down 1.6 percent, CEC Entertainment down 0.9 percent, Famous Dave’s (Company Owned up 0.4 percent and Franchised up 2.1 percent, IHOP up 0.03 percent, Jack In The Box (System up 3.0 percent, Company Owned up 3.5 percent, Franchised up 3.0 percent), Red Robin Gourmet Burgers up 1.6 percent, Ruth’s Chris Steak House up 0.6 percent, Steak N Shake down 6.4 percent and Texas Roadhouse (Company Owned up 4.4 percent and Franchised up 3.2 percent.)

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