This Week In Foodservice

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


This Week in Foodservice

Some Restaurant Chains see the Slower Period as an Opportunity for Growth

The National Restaurant Association’s Performance Index changed little in August. Some restaurant chains see the slower period as a chance to grow. The chance of Congress passing a stimulus bill to aid restaurants before the election seems to be unlikely. Ruby Tuesday has filed for bankruptcy. These stories and a whole lot more This Week in Foodservice.

The National Restaurant Association’s Restaurant Performance Index rose to 97.6 in August, up .5 from July.

The Current Situation Index totaled 95.7, a decline of 0.5. The association attributes the fall primarily to declining same sales and customer traffic.

The Expectations Index rose 1.4 points but stayed in contraction territory at 99.4. The Expectations Index creeping closer to the expansion level of 100 could mean operators are starting to see a light at the end of the tunnel.

As for investing in their businesses, 43% of operators surveyed said they had made a capital expenditure for equipment, expansion or remodeling in the past 3 months. This is the lowest reading for investment since the start of the pandemic. On the reverse side, 48% of those surveyed plan to make  a capital investment for equipment, expansion or remodeling in the next 6 months. This represents a four-point increase from July and the highest level since the February survey when 61% planned a capital expenditure.

Economic News This Week

  • Washington continues to send mixed messages about the status of federal stimulus. Late Friday the administration indicated it would be willing to increase the amount of a rescue bill, but it is still not clear what the status of restaurant package is in all this. So exactly when or how any stimulus funding might benefit the restaurant industry remains anyone’s guess.
  • Initial-jobless claims totaled 840,000, a decline of 9,000 for the week ending October 3. The 4-week moving average totaled 857,000, a dip of 13,250. The number of weekly claims have been in this same range for more than a month, which means companies continue to lay off workers. This has puzzled some experts who expected fewer layoffs this deep in the crisis.
  • The Institute for Supply Management’s Manufacturing September PMI totaled 55.4. This marks a modest decline of 0.6. Any reading greater than 50 indicates growth. This marks the index’s fifth consecutive increase. The New Orders Index totaled 60.2, a decline of fell 7.4 points. The Production Index totaled 61.0, a 2.3-ppint dip. The Backlog of Orders Index totaled 54.6, a 06 increase. The Employment Index hit 49.6, a 3.2-point increase. Of 18 manufacturing industries surveyed,14 reported growth in September.
  • ISM’s September Services PMI totaled 57.8, a 0.9-pooint increase. The Business Activity/Production Index hit 63.0, an increase of 0.6. The New Orders Index totaled 61.5, a 4.7 point increase. The Order Backlog Index totaled 50.1, a 6.5-point decline. The Employment Index pushed into expansion territory thanks to a 3.9-point growth spurt that led to a reading of 51.8. Of the 17 service industries in the survey 16 reported growing in September, including the accommodations and foodservices sector.
  • Consumer credit decreased at a seasonally adjusted annual rate of 2.0% in August, per the Federal Reserve. Revolving credit, mainly credit card debt, decreased at annual rate of 11.25%. Nonrevolving credit, such as home loans, auto loans, student loans, etc., increased at an annual rate of 0.75.

Foodservice News This Week

  • Some restaurant companies see the slower period as an opportunity to accelerate their growth. Companies such as Brinker, Darden, El Pollo Loco and Papa John’s continue to expand aggressively, per a Wall Street Journal report. The Journal also took a look at steakhouses and how this segment will need to adapt to an operating environment where takeout and delivery plays a more prominent role in operators’ success.
  • While many Americans remain uncomfortable eating at restaurants, that’s not stopping them from dining out, per a study from research firm Manifest. The study showed that while 58% of those surveyed say eating in restaurants makes them uncomfortable, 63% ate a restaurant at least once during July, which is the period for the research released on October 7. In addition, 22% said they had eaten in a restaurant 5 times or more during that month. The contradiction could be the result of outdoor dining.
  • The National Coalition of Associations of 7-Eleven Franchisees continues to spar with 7-Eleven’s corporate management. The association encourages the Federal Trade Commission to broaden and strengthen regulations for the franchising industry. The association contends 7-11 takes a larger share of franchisees’ gross profits while transferring more costs, like insurance, to the operators.
  • Some restaurants are starting to limit the amount of times guests spend on premises. Some diners are reacting by checking out the menu online before being seated so they can place their orders when servers first approach the tables.
  • McDonald’s will add three bakery items to its menu starting October 28. Apple fritters, blueberry muffins and cinnamon rolls will be available all day at participating restaurants.
  • Ruby Tuesday filed for bankruptcy protection under chapter 11. The company said it will not reopen 185 of its restaurants that closed during the pandemic. The casual dining chain should have about 230 locations in operation when it clears bankruptcy.
  • Growth Chains: True Food Kitchen opened its first location in Ohio and plans to open three restaurants in Florida, two in New Jersey, one in Virginia and one in Maryland by the end of 2022.
  • Comparable Store Sales Reports: Domino’s Pizza (U.S. system-wide locations up 17.5%, company-owned units up 16.6% and franchised units up 17.5%)

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