Sales at foodservices and drinking place sales declined slightly in October. Luby’s has been approved for liquidation by its stockholders. Bankrupt NPC International has attracted attention from a variety of suiters, including the Flynn Restaurant Group and Wendy’s. Starbucks will give its employees a pay raise. These stories and more in This Week in Foodservice.

Total retail sales increased 0.3% from September to October, per an advance report from the U.S. Census Bureau. Compared to October of 2019, total retail sales were up 5.7%. In the first 10 months of this year, total retail sales are dead even with the same period last year.

The report also showed foodservice and drinking place sales fell 0.1% in October compared to September. This is the first time restaurants and bars experienced a sales decline since April. Compared to September 2019 sales were down 14.2%. In the first 10 months of this year sales have fallen 19.3%.

The good news was that the September advance estimate of 2.1% was revised upwards to 2.4%. Given that some states are placing restrictions on bars and restaurants due to the virus resurgence, a sales improvement in the short run seems unlikely.

This data comes with some caveats. Only restaurants and bars are surveyed. Not included are hotels, motels, resorts, transportation feeding, retailers, employee feeding, healthcare, schools and military feeders. The statistics are based on small initial samples (thus, the “advance” designation) and are subject to revisions when a larger sample is received.

Economic News This Week

• Initial-jobless claims rose by 31,000 to a level of 742,000 for the week-ending November 14. The 4-week moving average decreased 13,700 to a level of 742,000. The report provides a rare incidence of identical readings for both the weekly total and the 4-week moving average. Unfortunately, the number of claims remains stubbornly high and indicates an underlying weakness in the labor market.
• Existing home sales rose for the fifth straight month in October to a seasonally adjusted annual rate of 6.85 million homes. This represents growth of 4.3% from September and a 26.6% increase compared to October 2019. And 72% of the homes sold in October were on the market for less than a month. The inventory of homes for sale represented just a 2.5-month supply based on the current rate of sales, which means inventory remains low. This performance is amazing given pandemic and a weak employment.
• September sales of new single-family homes totaled 959,000, per the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. This is 3.5% less than the August rate but 32.1% greater than the September 2019.
• Privately owned housing starts increased 4.9% in October, per the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. This represents a 14.2% increase compared to October 2019. Single-family housing starts increased 6.4% from September. The number of building permits issued for privately owned housing units was virtually unchanged from September while the permits issued were for single-family units were up 0.6%.
• Business activity continued to expand, ever so slightly, in September, per the New York Federal Reserve’s Empire State Manufacturing Survey. The index reading was 6.3, down 4.2 points from October. (Any reading greater than zero indicates expanding activity.) The New Orders Index was 3.7, down 8.6 points. The Shipments Index totaled 6.3, down 11.5 points. The Unfilled Orders Index declined further to -11.9 after coming in at -6.6 in October. The Number of Employees Index totaled 9.4 in November, a 2.2-point increase. The Average Work Week Index totaled 4.8, down 11.3 points from October. It appears New York’s manufacturing activity is still moving ahead but at much slower pace from October.
• Manufacturing activity in the Philadelphia region continues to grow, per the data from the Federal Reserve Bank. The rate of growth, though, slowed as the Philadelphia Manufacturing Business Outlook Survey totaled 26.3 in November, a 6-point decline from October. (Any reading greater than zero indicates increasing activity.) The New Orders Index came in at 37.9, a 4.7-point dip. The Shipments Index leapt 21.6 points for a reading of 24.9. The Unfilled Orders Index increased 13.9 points for a reading of 22.2. The Number of Employees index rose 14.5 points for a reading of 27.2. The Average Employee Work Week increased 0.4 points for a reading of 25.7.
• Industrial production rose 1.1% in October, per the S. Federal Reserve. As a result, The Fed says the index has recovered much of the 16.5% decline that occurred between February and April. Despite the growth, October output was still 5.6% less than February’s pre-pandemic levels.

Foodservice News This Week

• Luby’s shareholders have approved management’s liquidation plan. This clears the way for the company to sell off its assets.
• Hit hard by the pandemic, the Rave Restaurant Group closed some units. The CEO of the Rave Restaurant Group said the multiconcept operator is well positioned for long term success. But from June of 2019 to October of this year Pizza Inn dropped from 203 locations to 178.
• Zaxby’s will sell a “significant” part of the company to Goldman Sachs. The 30-year-old chain now has more than 900 units spanning 17 states. Terms of the deal were not provided.
• A bankruptcy court has approved Flynn Restaurant Group’s “stalking horse” bid for Wendy’s and Pizza Hut franchisee NPC International. Wendy’s has not approved Flynn as a franchisee and, according to one source, at least 50 potential buyers continue to consider purchasing at least a part of NPC. One of those interested parties is Wendy’s, which also submitted a bid for NPC.
• Starbucks will raise its U.S. employees’ pay by at least 10%, effective December 14. The coffee giant will also raise the premium it pays above the minimum wage in each market. Some employees are asking for a $15 an hour wage.
• Comparable Store Sales Reports: Bloomin’ Brands (combined sales down 12.8%, Outback down 12.8%, Carrabba’s down 9.0%, Bonefish Grill down 22.5% and Fleming’s down 22.5%), Carrols Restaurant Group (Burger King up 0.8% and Popeye’s up 5.5%), J. Alexander’s Holdings (J. Alexander’s down 55.2% and Stony River Steak House down 55.9%. Jack in the Box (system wide up 12.2 %, company-owned units up 9.6% and franchised units up 12.4%) and Rave Restaurant Group (Pie Five Pizza down 2 3.0% and Pizza Inn down 22.0%.)

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