Foodservice hiring improved in July. Burger King develops an innovative store design to deal with the pandemic. One c-store chain will offer curbside pickup. These stories and a whole lot more This Week in Foodservice.

COVID-19 hit the three biggest broadline foodservice distributors hard during April, May and June:

• The largest U.S. foodservice distributor, Sysco reported a 42.8% decrease in U.S. sales for the fourth quarter of its 2020 fiscal year.
• Performance Food Group reports a 2.1% sales decline for the fourth quarter of its 2020 fiscal year.
• US Foods sales decreased 29.2% for the second quarter of its 2020 fiscal year.

Given their penetration into the foodservice operator market, these distributors provide good insight into how much the industry performance suffered during the spring months.

Economic News This Week

• Initial jobless claims totaled 881,000, a decline of 130,000 for the week-ending August 29. The 4-week moving average totaled 991,750, a decline of 77,500. This represents the first time the initial jobless claims was less than one million since the end of March. Despite this improvement, claims remain high from a historical perspective.
• August employment rose 428,000, per ADP’s National Employment Report. Firms with 1 to 49 employees added 52,000 new workers. Firms with 50 to 499 employees added 79,000 jobs. Large employers, those with more than 500 employees, added 298,000 jobs. The leisure and hospitality sector increased employment by 129,000.
• By adding 1.4 million jobs in August, the U.S. unemployment rate declined to 8.4%, per the S. Bureau of Labor Statistics. Both numbers were significantly better than most forecasts. One economist tempered the encouraging news by adding the U.S. is in a very deep hole and that the improvement in employment will be slow moving forward.
• Builder confidence reached 78 in August, a 6-point improvement for the month, per the National Association of Home Builders. This represents the highest reading in the 35-year-history of the study.
• Business interruption insurance represents one of the pandemic’s many side stories. Insurers usually issue such policies as part of a package with fire and other damage protection. But when the government ordered restaurants closed and restaurant owners contacted their insurance carriers, they were told the policy required physical damage to the insured’s facility that would make operating the business impossible. In other words, a virus attack doesn’t qualify. The usual example given is that of fire damage. A number of operators have taken their insurance companies to court. A Wall Street Journal article reports insurance companies have prevailed more frequently in the cases that have been decided thus far.
• The Institute for Supply Management’s Production Manufacturing Index improved in August, climbing to 56.0 from 54.2 in July. (Any reading greater than 50 indicates expanding activity.) The Production Index totaled 63.3, an increase of 1.2. The New Orders Index totaled 67.6, an increase of 6.1 points. The Backlog of Orders Index rose totaled 54.6, a 2.8-point increase. In fact, all the major indictors increased and all are in the expansion area.
• The Institute for Supply Management’s Services Index eased back in August, dropping to 56.8 from July’s level of 58.1. The New Orders Index fell to 56.8 in August from 67.7 in July. The backlog of orders Index increased to 56.6 in August from 55.9 in July. A spokesperson for the Institute said it appeared the services sector grew in August but at slower rate.
• New orders for manufactured goods increased 6.4% in July, per the U.S. Census Bureau’s full report for the month. This is the third consecutive month new orders rose. Shipments, also up for three consecutive months, increased 4.6% in July.
• Nonfarm business sector productivity decreased 2.5% in the first quarter of 2020, per the Department of Labor. Output decreased 6.2% and hours worked decreased 3.8%. Unit labor costs in the nonfarm business sector increased 4.8% as hourly compensation increased 2.2% and productivity decreased 2.5%.
• July private construction spending increased 0.6% compared to June, per the U.S. Census Bureau. July residential construction spending was estimated at 2.1% greater than the June estimate.

Foodservice News This Week

• The foodservice sector added a hefty 133,600 jobs in August. This undoubtedly includes a lot of employees being called back to work after layoffs and furloughs as restaurants reopened following government mandated closings. August foodservice new hires accounted for 13% of new positions for the month.

• Luby's board of directors has adopted a plan of liquidation and dissolution that will allow for the sale of company assets and distribution of net proceeds to company stockholders. The company will then be dissolved. Assets to be sold include the operating divisions of Luby's Cafeteria, Fuddruckers and the company's Culinary Contract Services business, as well as its real estate.
• Following the lead of Amazon Go, Dunkin’ is testing a series of cashier-less locations. Upon entering the store, guests check in before selecting their coffee and donuts. They can simply walkout when through.

• Burger King’s new prototype offers a lot of flexibility. A drive-in feature will enable customers to park and place an order by using the BK app or scanning a QR code. Staff will then deliver the food to the customers’ cars. A curbside delivery option will have advance orders brought to dedicated parking spaces. Pickup lockers will have the food sent directly from the kitchen. For customers who prefer to dine on premise there will be a shaded outdoor patio. Another version will have a suspended kitchen and dining room over the drive thru lanes to reduce the building’s footprint.
• Casey’s General Store now offers curbside pickup. The c-store chain tested curbside pickup along with the Casey’s app allowing customers to order more than 100 grocery items as well as pizza. The new service was very well received by customers, who liked both the convenience and safety of curbside pickup. The chain will continue to offer delivery service for its pizza.
• One big COVID question: which of the changes in consumer behavior will be permanent? So far one change that appears will stick is ordering takeout food on Friday and Saturday. A study found the average number of orders was up 31% and dollar spending was up 34%. The researchers note this trend held up well even as restaurants reopened their dining rooms for on-premises dining.
• New York City extends the temporary cap on third-party delivery and marketing fees for restaurants’ off-premises orders. The limit is 15% on delivery fees and 5% on marketing fees until restaurants can reopen indoor dining at 100% capacity.
• Comparable Store Sales Reports: Carrols Restaurant Group (Burger King down5 6.4% and Popeyes up 17.1%), Chipotle Mexican Grill down 9.8%, Del Taco (systemwide down 10.1%, company-owned units down 12.6% and franchised locations down 7.2%), FAT Brands S. locations down 23.1%, Freshii down 46.5%, Potbelly Sandwich Shops down 41.5%, Ruth’s Chris Steakhouse down 74.0% and Starbucks down 4.0%.

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