The restaurant performance edged up again in September. White Castle will expand its test of robotics. Bloomin’ Brands seems convinced it has a winner with its delivery only concept, Tender Shack. These stories and a whole lot more This Week in Foodservice.
The National Restaurant Association’s Restaurant Performance Index improved for the third consecutive month in September. The index hit 98.1, a 0.6-point increase. While this marks the index’s highest point since February, a reading of less than 100 means the restaurant industry remains in contraction mode.
Thanks to a 1.1-point increase, the Current Situation Index hit 96.8, its highest level since the start of the pandemic. Thirty-two percent of operators reported same-store sales increased in September 2020 compared to the same period last year. This is also an 11-point improvement from August.
The Expectations Index reached 99.5 in September, an increase of 0.1. The fact this component of the overall RPI remained relatively flat shows a high degree of uncertainty among restaurant operators about business conditions in the coming months, per the NRA.
In September, 53% of operators report making capital expenditures on equipment and other items. This represents a 10-point increase from the previous month. Looking ahead 46% of operators said they plan on making a capital expenditure for equipment, expansion or remodeling in the next 6 months. This is down 2% from the previous month.
While the RPI shows some signs of the industry preparing to move ahead, it also indicates the long road to recovery restaurants face.
Economic News This Week
- Real gross domestic product increased 33.1%, per the Bureau of Economic Analysis Advance Estimate for the third quarter. This follows a 31.4% decrease in real GDP in the second quarter of this year. The third quarter increase represents a recovery of approximately two thirds of the loss from earlier this year, per the BEA.
- Real disposable personal income increased 0.7% in September, per the Bureau of Economic Analysis. Real personal consumption expenditures increased 1.2%.
- Initial jobless claims totaled 751,000, a decline of 40,000 for the week-ending October 24. The 4-week moving average totaled 787,750, a decline of 24,500. While drifting lower, the number of initial jobless claims remain at depressingly high levels.
- Orders for manufactured durable goods increased 1.9%, according to the Census Bureau’s Advance Monthly Report. This marks the fifth consecutive monthly increase for new orders of durable goods.
- The Chicago Business Barometer dipped to 61.1 in October. Despite the decline, this represents the fourth consecutive month where index has exceeded 50. It had been at less than 50, its break even point, for one year.
- Consumer confidence decreased slightly in October, per The Conference Board. This comes after a sharp increase in September. The October Consumer Confidence Index stood at 100.9, down from 101.3 in September. The Present Situation Index Increased to 104.6 from 98.9. And the Expectations Index decreased to 98.4 in October from 102.9 in September. The Conference Board says there is nothing to suggest consumers foresee the economy gaining momentum in the remaining months of 2020, especially with COVID-19 cases on the rise and unemployment still high.
- The University of Michigan Index of Consumer Sentiment was “insignificantly different” in October compared to September. The October index hit 81.8 after closing at 80.4 in September. The Current Economic Index declined to 85.9 in October from 87.8 in September. The Index of Consumer Expectations, though, increased to 79.2 in October after hitting 79.6 in September.
Foodservice News This Week
- Inspire Brands has agreed to purchase Dunkin Brands, which includes Dunkin and Baskin-Robbins. The purchase price is approximately $11.3 billion and that includes Dunkin Brands debt. The price represents a 20% premium over the price of Dunkin’s shares when the deal was announced.
- White Castle will expand its robotics test to as many as 10 units. The burger and fry making robot fits in with need for social distancing in the kitchen because of COVID19 and high demand for takeout and delivery orders.
- Tender Shack, Bloomin’ Brand’s chicken delivery only concept, has expanded by a dozen locations in five more states. The company started the concept in a Tampa, Fla., Carrabba’s location. Bloomin’ Brands also took the wraps off another new concept. Aussie Grill is a counter-service operation, with its first U.S. location in Tampa Bay. The 687-square foot unit’s menu includes steaks, burgers, chicken, ribs, and salad. The location also has a drive thru. The company says initial sales and profits were “above expectations.”
- As restaurants struggle to extend outdoor dining by enclosing tables, some safety questions are starting to arise. A completely enclosed outdoor table is no safer than dining inside, per a Wall Street Journal article. In fact, dining inside may be safer if the restaurant has powerful HVAC quality filters and better airflow.
- Uber’s co-founder built a real estate portfolio that centers on ghost kitchens. Travis Kalanick’s company, CloudKitchens, has purchased more than 40 properties from Portland, Ore. to Las Vegas to Columbus, Ohio to Nashville. Last year CloudKitchens received $400 million from Saudi Arabia’s sovereign wealth fund.
- The Corner Bakery Chain was sold to Pandya Restaurant Group. In 2011, Roark Capital purchased the approximately 170-unit chain. Pandya acquired Boston Market in April.
- . The chains will do this by adding more than 40,000 digital screens that feature predictive selling and installation. Restaurant Brands International, parent company for all three chains, anticipates the project will be complete by mid-2022.
- IHOP will close almost 100 locations in the U.S. over the next 6 months. Dine Equity, parent company to both IHOP and Applebee’s, said it is only targeting “greatly underperforming restaurants that we currently believe are not viable coming out of the pandemic.”
- BarFly Ventures has emerged from bankruptcy. Two private investment firms, Congruent Investment Partners and Main Street Capital, teamed up to acquire the parent company of HopCat, Stella’s Lounge and Grand Rapid’s Brewing Company for $17.5 million. The two companies will operate the 11 BarFly units under the name Project BarFly LLC.
- Founder John” Schnatter has been bearish on Papa John’s stock. Schnatter is concerned about the high valuation of Papa John’s stock and had other criticisms as well including “lackluster pizza quality” and “limited pizza experience among leadership.”
- Growth Chains: Wing Stop will add three units in New Jersey. The Spice & Tea Exchange plans to open four franchised units in New York City.
- Comparable Store Reports: BJ’s Restaurants, Inc. down 30.2%, Burger King down 3.2%, Denny’s (domestic units system wide down 33.6, company owned units down 40.2% and franchised locations down 33.1), Popeye’s Louisiana Kitchen up 19.7%, Texas Road House down 6.3%, Tim Horton’s down 13.7% and YUM Brands (Habit Burger down 3.0%, KFC up 9.0%, Pizza Hut up 6.0% and Taco Bell up 3.0%) and YUM China (KFC down 6.0% and Pizza Hut down 7.0%.)
For details and same store sales of other chains, Please Click Here for the latest Green Sheet.