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

Industry adds 200,000 jobs in September

After languishing in Congress for months the stimulus program for restaurants is by no means a done deal. Restaurants and bars added 200,000 jobs in September but the industry remains down 2.3 million employees for the year. Fatburger Brands introduced a fast-casual version of Hurricane Grill & Wings.

The restaurant industry won a victory last week when the U.S. House of Representatives passed a $2.2 trillion coronavirus stimulus bill that included $1.2 billion package of programs for restaurants. The bill was passed by a narrow margin of 214 to 207. The proposal was introduced in congress five months ago but has lacked bipartisan support.

The bill’s next major hurdle is the U.S. Senate, where some members are balking at the overall cost of the deal.

Complicating the issue is the Senate’s continues to focus on filling the U.S. Supreme Court opening created by the death of Justice Ruth Bader Ginsberg. And it is an election year, which means members of both congressional bodies will need to return home to campaign in the coming weeks.

Combined, these factors will make negotiating a compromise all the more difficult.

Economic News This Week

  • Initial jobless claims totaled 837,000, a decline of 36,000 for the week ending September 26. The 4-week moving average declined by 11,750. While the number of claims seems to be slowly moving lower, larger, high-profile employers like the airlines, Disney and All State have all made major layoffs.
  • The U.S. added 749,000 jobs in September, according to the ADP National Employment Report. All sizes of companies increased employment. The leisure and hospitality sector added 92,000 jobs.
  • Non-farm employment rose by 661,000 in September, reported the S. Bureau of Labor Statistics. This is less than most forecasts but the numbers require a closer look. Total private employment increased 877,000 but government employment dropped by 216,000, including 34,000 temporary Census Bureau jobs. The unemployment rate declined by 0.5 percentage point to a level of 7.9%. The number of unemployed fell by 1.0 million. Both numbers have declined for 5 consecutive months, but both are higher than they were February by 4.4 percentage points and 6.8 million claims respectively.
  • Real gross domestic product decreased at an annual rate of 31.4% in the second quarter, per the Bureau of Economic Analysis’ third estimate.
  • The Bureau of Economic Analysis introduced a new statistic. It is gross output or the top line to the bottom line gross domestic product. Simply called GO, it can provide the direction of growth, not just its current state. In past economic downturns, GO collapsed by multiples of GDP. In 2008 GO declined 6.6% vs. a 2.0% drop in GDP. In the second quarter this year GO declined by 8.4% while real GDP decreased by 9.0%, basically a one-to-one ratio. This indicates the recovery may be faster than projected.
  • Disposable personal income fell 3.2% in August in current dollars, per the Bureau of Economic Analysis. Personal consumption expenditures rose 1.0% in August in current dollars.
  • New factory orders increased 0.7% in August, per the U.S. Census Bureau. This represents fourth consecutive month orders increased. Temper this good news with the fact that March and April saw double-digit declines in orders. August shipments were up 0.3% and have increased for 4 consecutive months, too.
  • The Chicago PMI reached 62.4 in September, its highest level since December 2018. Also known as the Chicago Business Barometer, all five of the reports main indicators grew during the month.
  • The Pending Home Sales Index hit a record high as sales increased 8.8% in August. Year-over-year contract signings rose 24.2% driven by “tremendously low interest rates,” according to the National Association of Realtors.
  • Consumer confidence improved in September, per The Conference Board. Its Index of Consumer Confidence grew to 101.8, up substantially from 86.3 in August. The Present Situation Index rose to 98.5 from 85.8 in August. The Expectations Index hit 104.0, up from 86.6 in August. The Conference Board believes the September rise in confidence may keep consumers from cutting their spending more.
  • The University of Michigan’s Index of Consumer Sentiment rose to 80.4 in September from 74.1 in August. The Current Economic Conditions Index rose to 87.8 from 82.9, while the Index of Consumer Expectations increased to 75.6 from 68.5 in August. University economists see two non-economic issues causing volatile shifts in consumer confidence: when and how the election is decided and delays in obtaining a COVID-19 vaccine and its availability.

Foodservice News This Week

  • Foodservices and drinking places added 200,300 jobs in September, per the Bureau of Labor Statistics. Despite job growth totaling 3.8 million over the last 5 months, employment in foodservices and drinking places is down 2.3 million since February.
  • FAT Brands opened a fast-casual version of its full-service concept Hurricane Grill & Wings. The new concept is in Chula Vista, Calif., and will serve as virtual restaurant for a Fatburger operation that will be available only via third-party party delivery services.
  • It’s taking about 30 seconds longer to get a drive-thru order at one of the top 10 fast-food chains according to a survey by SeeLevelHX. This is about 30 seconds slower than last year. The reasons for the slowdowns are thought to be newly hired staff after store re-openings, higher drive thru volume with closed dining areas an and a surge of delivery orders.
  • Cheeseburger in Paradise has closed its last freestanding location. Founded In 2002 by singer Jimmy Buffet and OSI Partners (now Bloomin’ Brands), the chain was purchased by Luby’s in 2012. At its peak there were 38 Cheeseburger in Paradise units.
  • Can New York City restaurants survive on 25% indoor dining? Some operators say the problem lies with fixed costs. If their landlords were to demand all of their back rent from March, virtually no one would be able to pay. Others point out that they probably need the same number of line cooks when running at 25% capacity as they would at 75%. Then there is the thousands of dollars that restaurants had to lay out for protective barriers and equipment. And, finally, many restaurants don’t work on month to month basis but rather week to week.
  • Papa John’s reported an 18.4% increase in system wide same-store sales in September. Domestic company-owned stores comparable sales rose 14.3% while international comp store sales were up 23.3%. This marks the sixth consecutive month comparable store sales ran in double digits.
  • Growth Chains: East Coast Wings plans to open seven locations next year. Fajita Pete’s will open15 locations in Texas.
  • Comparable Store Sales Reports: Rave Restaurant Group (Pie Fie Pizza down 37.9% and Pizza Inn down 39.0%)

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

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