With almost every restaurant in the U.S. either shut down or offering limited service, it is no surprise that the National Restaurant Association’s Restaurant Performance Index hit an all-time low in March. The Index dropped to 95.0 in March from the February reading of 101.9.
With most operators reporting sharp declines in same-store sales and customer traffic, the Current Situation Index hit 93.1, a decline of 9.6 points. This represents another all-time low.
The Expectations Index hit 97.0, a decline of 3.8 points. In addition, the National Restaurant Association believes operators do not expect any rapid improvements in their business environments.
As for the future, 33% of the operators surveyed plan to make a capital expenditure for equipment, remodeling and/or expansion in the next 6 months. Given the incredibly seriousness and complexity of the situation it might be considered amazing that a third of the operators are still willing to invest in their operations.
Economic News This Week
- Initial jobless claims hit 3.84 million, a decline of 603,000 for the week ending April 25. The 4-week moving average declined to 5.03 million, a decrease of 757,000. While it’s good to see the overall number of people applying for unemployment slowly declining, the fact remains in about 6 weeks 30 million Americans lost their jobs.
- Gross domestic product decreased 4.8% in the first quarter of 2020 on an annual basis, per the Bureau of Economic Analysis’ advance estimate. The advance estimate is subject to revision, though, so it may change.
- The Chicago Business Barometer crashed in April, falling 12.4 points. Production fell 19 points while new orders tumbled 21 points, the biggest decline on record. Employment fell 11.1 points to the its lowest reading since June 2009.
- Real disposable income fell 1.7% in March, per the U.S. Bureau of Economic Analysis. Real consumption expenditures declined by 7.3%.
- March private construction spending rose 0.7% over February on a seasonally adjusted annual basis. Residential construction spending in March was up 2.35% from February.
- The Conference Board’s Consumer Confidence Index fell in April after a sharp decline in March. The Index ended the month at 86.9, a decline of 31.8 points from March. The Present Situation Index dropped more than 90 points for a reading of 76.4. It is somewhat surprising, the Expectations Index inched up a bit to 93.8 from 86.8 in March. The Conference Board believes that the uncertainly inherent with the COVID-19 crisis will result in the Consumer Index fluctuating significantly in the months ahead.
Foodservice News This Week
- Georgia became the first state to allow restaurants to offer dine-in service. The move was not without controversy and restrictions, though. Most critics felt the decision to re-open dining rooms came too soon and without enough controls and data to justify it. Backers of reopening stress economic damage of keeping restaurants shut. Meanwhile other states moving towards reopening include South Carolina and Tennessee.
- A Seattle ordinance limits how much third-party delivery services can charge restaurants. Like San Francisco did, Seattle will place a 15% ceiling on delivery costs. The Seattle law will remain in effect until dining areas are reopened. Other cities continue to explore similar steps.
- BJ’s Restaurants receives a $70 million investment. The 209-unit chain has seen its takeout and delivery service sales nearly triple since stay-at-home mandates took hold, but its total sales volume is still down 70%. BJ’s CEO said the $70 million cash infusion puts the chain in a better financial position when it reopens. Two investment firms were the source of the funds, Act III Holdings and funds managed by T. Rowe Price Associates. Act III is headed by Ron Shaich, the founder of Panera Bread.
- California Pizza Kitchen strives to stay out of bankruptcy. The chain hopes to restructure its debt as it seeks a $30 million bridge loan. CPK was purchased by Golden Gate Capital in 2011 and taken private. The Wall Street Journal stated that two years after the purchase Golden Gate borrowed money to pay itself a multimillion-dollar dividend which seems to put the chain in a difficult financial position. Earlier this year the company hired financial advisors to sell the chain. Five bids were received but the coronavirus outbreak put an end to the sales process. read:
- Comparable Store Sales Reports: Applebee’s down 10.6%, Baskin Robbins up 1.8%, Burger King down 6.5%, Chipotle Mexican Grill up 3.3%, Domino’s Pizza (systemwide up 1.6%, company owned locations up 3.9% and franchised units up 1.5%), FAT Brands up 0.2%, IHOP down 14.7,Popeye’s Louisiana Kitchen up 29.2%, Starbucks down 3.0%, YUM Brands (KFC down 3.0%, Pizza Hut down 7.0% and Taco Bell up 1.0%) and YUM China (KFC down 11.0% and Pizza Hut down 31.0%).
For details and same store sales of other chains, Please Click Here for the most recent Green Sheet.