This Week In Foodservice

Jerry Stiegler aggregates key industry information and provides brief analysis to help foodservice professionals navigate the data.

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This Week in Foodservice

The NRA’S Restaurant Performance Index Remains at an all-time low

The National Restaurant Association’s Restaurant Performance Index fell to 96.4 in June, a decline of 0.3 from May. The decline came despite the Current Situation Index hitting 94.8, a 0.6 increase. The difficulty lay with the Expectations Index, which dropped 1.2 points for the month for a reading of 98.0. In other words, operators are disenchanted with their present business and don’t see much improvement in the next six months.

Only 47% of the operators responding to the survey reported making a capital expenditure for equipment, expansion or remodeling in the last 6 months. This just about matches a 6-year low. Looking ahead. just 39% of the those in the surveyed plan to make a capital investment in the next 6 months, which is down 4% from last month’s projection.

Economic News This Week

  • The advance estimate of second quarter Gross Domestic Product showed a 32.9% decrease, per the U.S. Bureau of Economic Analysis. This marks the worst economic performance since GDP was introduced at the end of World War II. The U.S. is now officially in a recession seeing as GDP declined 5.0% in the first quarter of 2020. Some economists, though, believe the country’s deepest recession could be its shortest as consumer spending, job growth and government spending will pick up.
  • For 2 months, initial jobless claims have exceeded more than 1 million per week. Unfortunately, the week ending July 25, was no exception with 43 million new claims filed. This represents an increase of 12,000 compared to the previous week. The 4-week moving average was 1.37 million, an increase of 6,500 compared to the previous week.
  • New orders for manufactured durable goods increased 7.3% from May, per the Census Bureau’s advance report for June. New durable goods orders were up 15.1% in May following double digit decreases in March and April.
  • The Chicago PMI improved in July, rising to 51.9. This is the first reading in expansion territory after 10 straight months of contraction. Any reading less than 50 indicates contraction.
  • The Conference Board’s Consumer Confidence Index decreased in July. The index fell to 92.6 in July from 98.3 in June. The Present Situation Index increased to 94.2 in July from 86.7 in June. In contrast, the Expectations Index tumbled to 91.5 in July from 106.1 in June.
  • The University of Michigan’s Index of Consumer Sentiment fell further in July as there was a resurgence in positive coronavirus cases. The July Index declined to 72.5 from 78.1 in June. The Current Economic Conditions Index dropped to 82.8 in July from 87.1 in June. The Index of Consumer Expectations declined to 65.9 in July from a reading in June of 72.3.

Foodservice News This Week

  • Herman Cain died at age 74 due to complications from COVID-19. If you are not familiar with Mr. Cain a quick search of the internet will tell about an interesting guy whose career included running Godfather’s Pizza and running for the Republican nomination for president of the United States four years ago. My favorite Herman Cain story was several decades ago when he spoke at an industry conference. Cain was on the schedule to speak just before lunch. The conference had started at 8:00 a.m. and the audience’s attention was drifting. Very much aware of this, as Cain walked down the aisle he started singing “The Star Spangled Banner.” What do you do when you hear you hear our national anthem? You stand up and you sing along. When the song ended everyone was on their feet laughing and applauding even knowing it was shameful manipulation. When everyone took their seats Cain quietly asked “Is everyone awake now?” We certainly were.
  • Ghost-kitchen operator Zuul received $9 million in funding that the company will use to expand in New York City. Zuul has just one facility in Manhattan that handles delivery orders for its restaurant partners which include Sweetgreen and Junzi. The source of the funding was not revealed.
  • A collection of high-profile Chicago restaurants have filed suit over their insurance company’s refusal to pay out on their business interruption insurance. There has been speculation from the beginning of the coronavirus outbreak if business interruption insurance would apply. It is believed that many such policies require property damage to go into effect, but this suit attributes the losses to the government mandated shutdowns, instead. A total of 42 businesses are part of this lawsuit, including several non-foodservice operations.
  • Are fast-food chains smart or just lucky? Maybe both. By running their businesses with drive thru and delivery services and keeping their dining rooms closed, operations have reduced staff and cleaning costs which resulted in higher profits. A survey found 21% of consumers got their food at drive thru windows in 2019 while this year 36% of customers they say use drive thru service.
  • Meal kit sales shot up during the pandemic. Blue Apron, HelloFresh and Home Chef all report strong financial performances. That growth spurt may come to an end as competition increases and the pandemic comes to an end.
  • McDonald’s reported system wide sales decreased 24% for the company’s second fiscal quarter ending June 30. Global comparable store sales declined 23.9%. U.S. comparable store sales fell 8.7% in the quarter.
  • Not everyone feels safe returning to bars just yet due to COVID-19, per a survey by Nielson CGA. Of the 1,560 people surveyed, 55% said they don’t feel safe going out to bars or restaurants due to the Of those respondents who did patronize a bar and/or restaurant, 78% were satisfied with health and safety precautions, 75% were satisfied with the atmosphere and 79% were satisfied with the overall experience. Factors that would encourage consumers  to visit bars or restaurants include staff wearing masks or gloves (39%), fewer tables or patrons allowed (38%) and outdoor seating areas (38%.)
  • Pinstripes reopened all 13 units on the same day. Like other eatertainment concepts, Pinstripes was hard hit by the closures aimed at slowing the spread of COVID-19. Pinstripes developed a nearly 100-page relaunch plan based on 4 factors: safety, product offerings, marketing and financials.
  • “Worst is behind us,” says Starbucks CFO. The company says 97% of its stores around the world are now open, including 99% in China and 97% in the U.S. The company’s CEO said “quick pivotsnamely, the introduction of curbside service, was very successful. The company hopes to have it available at up to 1,000 locations by September. Comparable store sales were down 16% in June, a vast improvement from the 65% decline in April.
  • Trudy’s Texas Star was purchased out bankruptcy via auction for $6.5 million. Hargett Hunter Capital Management acquired the three-unit chain. Trudy’s problems are believed to have started in 2011 with the opening of Trudy’s 4 Star. The unit lost $1 million a year, according to the court filing.
  • Dunkin’ Brands Inc. intends to close up to 800 underperforming U.S. locations. The company had previously announced the closing of 450 units within Speedway gas stations. The additional 350 stores are essentially unprofitable, per Dunkin. In addition, Dunkin’s international operators are assessing their stores and could close as many as 350 unprofitable locations by the end of the year.
  • California Pizza Kitchen filed for bankruptcy but expects to resolved its stats in less than three months. The chain says it has an agreement with lenders to change the “vast majority of its long-term debt into equity.”
  • Sortis Holdings has purchased the bankrupt Sustainable Restaurant Group for $2 million. SRG is the parent of Bamboo Sushi and Sortis intends to reopen all nine Bamboo locations, rehire furloughed employees and keep current management.
  • Papa John’s International plans to add 10,000 employees over the next few months. A spokesman for the pizza chain said the company wants to make the hiring process “quick and simple” so employees can start earning an income immediately. Papa John’s has recently hired 20,000 team members including many who had been displaced as a result of the COVID-19 pandemic.
  • Growth Chains: Wing Stop has opened its first location in Birmingham, Ala., and plans for to add four more.
  • Comparable Store Sales Reports: McDonald’s down 8.7%, YUM Brand’s (Habit Burger down 18.0%, KFC down 2.0%, Pizza Hut up 5.0% & Taco Bell down 8.0%) and YUM China (KFC down 10.0% & Pizza Hut Down112.0%.)

For details and same store sales of other chains, Please Click Here for the latest Green Sheet.

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