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

August Sees Increase in U.S. Retail Sales

U.S. retail sales increased in August but at a much slower rate than earlier his summer. Starbucks may not be able recover its lost sales until employees return to their offices. New York City will allow some restaurants to add a 10% pandemic surcharge to dining room customer’s bills. Texas now allows restaurants to utilize up to 75% of their dining room capacity. These stories and a whole lot more This Week in Foodservice.

The U.S. Census Bureau’s advance report for August retail sales showed an increase of 0.6% from July. This was substantially less than most forecasts and down from increases of 7.5% in June and 0.9% in July. In the first 8 months of 2020 retail sales are down 1.8%. August total sales this year are up 2.6% over August 2019.

The advance sales report for foodservices and drinking places increased at 4.7%, an obviously higher rate than the total retail sales compared to July but still down 15.4% from August 2019. The advance July sales figure of 5.0% was revised down to 4.1%. Through the first 8 months of this year foodservice and drinking place sales are down 20.9%, an amount that is probably impossible to make up this year.

There are some things to consider when looking at the government data. First, the study surveys only restaurants and bars. Not included are hotels, motels, resorts, transportation feeding, retailers (C-stores, supermarkets, etc.) employee feeding, hospitals, nursing homes. schools. colleges and universities and military feeding.

The statistics are based on small initial samples and are subject to revisions when a larger sample is received. Some of these revisions are extensive. And, while the sales data is adjusted for calendar shifts such as holidays, weekends, etc. there are no adjustments for menu price changes.

Economic News This Week

  • Initial-jobless claims totaled 860,000, a decline of 33,000 for the week ending September 12. The 4-week moving average totaled 912,000, a decline of 61,000. While the number of new claims continues to inch lower, many observers continue to wonder why the total claims remain persistently high.
  • Industrial production increased 0.4% in August, per the Federal Reserve. This was the fourth consecutive monthly increase but the Index remains 7.3% less than February’s pre-pandemic level. Industrial production declined 7.7% from August last year. Manufacturing production rose 1.0% in August while mining production fell for the month as a tropical storm and a hurricane caused sharp but temporary drops in oil and gas extraction and well drilling. Utility production output fell 0.4%. Capacity utilization for the industrial sector totaled 71.4%, a rate that is 8.4% below its long-run (1972-2019) average but is 7.3 percentage points above its April low.
  • Manufacturing expanded at a “solid clip,” according to the New York Federal Reserve’s Manufacturing Survey for September The Index rose 13.0 points to 17.0. (Any number greater than zero shows increasing activity.) The New Orders Index grew from minus 1.7 in August to 7.1. The Unfilled Orders Index improved but stayed in negative territory at minus 9.4.
  • The Philadelphia Federal Reserve’s September Manufacturing Busines Outlook Survey saw its Current Activity Index decline 2 points for a reading of 15.0. Any reading greater than zero indicates in increasing activity. The New Orders Index increased to 25.5 from 19.0. The Shipments Index totaled 36.6, a 27-point increase. Both the Employment Index and the Average Work Week Index increased which is a very positive sign for the economy.
  • August housing starts declined 5.1% from July but increased 8% compared to August 2019, per the Census Bureau. Single-family housing starts increased 4.1% compared to July. Building permits Issued for privately owned housing units fell 0.9% from July but rose 2.8% from August of last year. Building permits issued for single family homes were up 6.0% from July.
  • The Conference Board’s Leading Economic Index totaled 106.5 in August, a 1.2-point increase. This follows increases of 2.0 in July and 3.1 in June. The Index suggests the U.S. will enter the new year “under substantially weakened economic conditions,” according to a Conference Board spokesperson.
  • The University of Michigan Index of Consumer Sentiment improved in September, per the preliminary survey for the month. The Index of Consumer Sentiment was 78.9 mid-month, up from 74.1 in August. The Current Economic Conditions Index was 87.5, up from 82.9 in August. The Index of Consumer Expectations reading was 73.3, up from 68.5 in July.

Foodservice News This Week

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

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