Sales at restaurants and drinking places saw double-digit growth in June. U.S. manufacturing activity appears to be on the rise. The IRC’s appeal for $120 billion in federal funds to support independent restaurants appears to be gaining support in Congress. Here's what you need to know.
U.S. retail sales increased 7.5% in June from May and are up 1.1% compared to June 2019. May sales were revised up to 18.2% from the initial advance estimate of 17.7%.
Sales at foodservice and drinking places rose 20.0% in June from May. May sales were revised up to 31.5% from the initial estimate of 29.1%. June sales, though, are down 26.3% from June 2019. For the first 6 months of the year, sales are down 22.8% compared to the first 6 months of last year.
Please note the advance estimates are based on a small sample. When a larger sample is analyzed the results of the advance study can be, and frequently are, revised. Included in the survey are bars and restaurants. Not included are hotels, motels, resorts, employee feeding, schools, colleges & universities, hospitals, extended care facilities and military feeding.
And, the data is adjusted for weekends, holidays and seasonal changes but not for menu price changes.
Economic News This Week
- Initial-jobless claims totaled 1.3 million, a decline of 10,000 for the week-ending July 11. The 4-week moving average totaled 1.37 million, a decline of 60,000 claims. A weekly decline of 10,000 claims is not too encouraging particularly with the number of new claims consistently coming in at more than 1 million.
- Total industrial production increased 5.4% in June, per the Federal Reserve. This follows a 1.4% increase in May. Industrial production, though, remains at 10.9% less than February, prior to the pandemic affecting the economy. For the second quarter, the index showed a 43.6% decline, the largest decrease since the end of World War II when the U.S. was shifting to a peace-time economy. Manufacturing output rose 7.2% in June. Mining production fell 2.9% in June while utility output rose 4.2%. June capacity utilization for the industrial sector increased 3.5% for a final reading of 68.6%. The rate of Industrial Production is 11.2 percentage points below its long run (1972-2019) average but 19 percentage points greater than its trough during the Great Recession.
- Business activity steadied in June, according to the Federal Reserve Bank of New York’s Empire State Manufacturing Survey. The index increased 48.3 points to a level of minus 0.2, which, in effect, is flat. The New Orders Index grew by more than 41 points for a reading of minus 0.6 which, again, is flat. The Shipments Index increased 42.3 points to a level of 3.3. The Unfilled Orders Index rose 7.8 points but stayed well into negative territory at minus 12.5 points. The Number of Employees Index was barely positive at 0.4, while the Average Work Week Index was still negative at minus 2.6. After two consecutive months with record low readings the June survey was welcome news.
- The Philadelphia Federal Reserve’s July Manufacturing Business Outlook Survey retreated slightly from June. The Index fell to 24.1 in July from 27.5 in June. The New Orders Index increased to 23.0 in July from 16.7 in June. The Shipments Index totaled 15.3 in July, down from 25.3 in June. The Unfilled Orders Index hit 3.9, up from minus 0.1 in June. The Number of Employees Index totaled 17.2, up from 6.5 in June. For the second consecutive month manufacturing activity increased in this Federal Reserve region and all future indicators remain positive.
- June housing starts were 17.3% greater than the May estimate but were down 4.0% from June 2019. Single-family housing starts increased 17.2% above the May level. Building permits issued for privately owned housing units increased 2.1% from May but were down 2.5% from May 2019. Building permits issued for single family homes rose 11.8% from May.
- The University of Michigan Preliminary July Index of Consumer Sentiment retreated, declining to 73.2 in July from 78.1 in June. The Current Economic Conditions Index fell from 87.1 in June to 84.2 in July. The Index of Consumer Expectations declined from 72.3 in June to 66.2 in July. The university attributed the fall in consumer sentiment to the resurgence of positive coronavirus cases in many states.
Foodservice News This Week
- The Independent Restaurant Coalition’ s proposal to support independent restaurants in their struggle to survive COVID-19 is making progress in Congress. Introduced with bipartisan support, The RESTAURANTS Act of 2020 will provide $120 billion in relief to keep independent operators open. The backers of the plan say it has the potential to inject $271 billion into the economy and reduce unemployment in the U.S. by 2.4%.
- Butler Hospitality closed on a $15 million investment that brought the firm’s capitalization to $85 million. The firm will use the funding to broaden service offerings and expand beyond New York City into Chicago, Miami and Washington, D.C. Butler takes over restaurants inside of hotels and transforms them into delivery hubs that provides room service to nearby hotels.
- Wegman’s will close its full-service restaurants, labeled The Pub, in 12 of the chain’s supermarkets. A Wegman’s spokesman said the company will apply its culinary expertise to developing fast, casual meal solutions for pickup and delivery.
- K-Paul’s Louisiana Kitchen, one of the most famous restaurants to grace the American dining scene, has permanently closed. Founded in 1979, the restaurant has been shut down since May and has become a casualty of the COVID-19 pandemic. Founded by Chef Paul Prudhomme and his wife Kay, the 62 seat-restaurant attracted guests from around the world. The restaurant has been run by Paul’s niece Brenda and her husband, Paul Miller, since Prudhomme passed on in 2015. Kay died in 1992.
- Canadian Based Foodee purchased San Francisco based rival Chewse. Both companies offer online platforms that connect companies that want to feed employees with local restaurants. Foodee and Chewse take and dispatch orders while also taking a cut of sales.
- Growth Chains: Yoshinaoya Japanese Kitchen opened its fourth restaurant in the San Diego area and now has more than 100 locations in California. The Bonchon Korean cuisine chain plans to open 15 units in the U.S. by the end of this year and aims to have 500 restaurants in the U.S. by 2026.
- Comparable Store Sales Reports: Domino’s Pizza (S. systemwide up 16.1%, company owned units up 16.9% and franchised locations up 16.0%.)
For details and same-store sales of other chains, Please Click Here for the latest Green Sheet.