Restaurants showed a “modest gain” in October. A MSNBC story documents the problems restaurants have encountered with the pandemic. The National Retail Federation predicts fairly strong sales for this Christmas season. Two major studies report a decline in consumer confidence in November. The Charleys Philly Steaks chain signed a deal to put its restaurants in Walmart stores. These stories and a whole lot more This Week in Foodservice.

The National Restaurant Association’s Restaurant Performance Index “…posted a modest gain in October.” The index totaled 98.3, a 0.2-point increase for the month. This represents the fourth consecutive monthly increase but the NRA cautions the industry remains “… firmly entrenched in contraction territory…” (As a reminder, any reading greater than 100 signals expansion.)

The problem lies with the Current Situation Index component of the RPI, which posted a 0.4-point decline in October for a final reading of 96.4. Same-store sales, customer traffic, labor and capital expenditures have all rebounded from their pandemic lows but remain far from expansion territory.

The Expectations Index climbed 0.7 points in October, which was good enough to move it into expansion mode at 100.2. But the NRA states operators continue to signal uncertainty about business conditions in the future.

In terms of capital expenditures, 49% of survey participants report they had invested in equipment, expansion or remodeling. This represents a 4% decline from September. Looking ahead, 51% of operators plan to make capital expenditures in the next 6 months, up 5% from the previous study and the highest reading since March.

Economic News This Week

• Real gross domestic product grew by 33% in the third quarter, per the second estimate from the Bureau of Economic Analysis. In the second quarter, real gross domestic product declined 31.4%.
• Initial-jobless claims remain stuck in the 700,000 range. The Department of Labor reported initial-jobless claims totaled 778,000, an increase of 30,000 for the week ending Nov. 21. The 4-week moving average totaled 748,000, an increase of 5,000.
• Disposable personal income fell 0.8% in October, per the Bureau of Economic Analysis. The Bureau attributes the decline mainly to a decrease in the Lost Wages Supplemental Program that was established to assist individuals affected by the pandemic. The BEA also reported personal consumption expenditures increased 0.5% in October.
• Holiday sales will increase between 3.6% and 5.2%, per projections from the National Retail Federation. The Federation expects online and other non-store sales will grow between 20% and 30%. The Christmas season has always been big for dining out but NRF did not forecast what would happen to restaurant sales this year.
• New single family homes sales in October fell 0.3% from September but grew by 41.5% compared to October 2019, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. The supply of new homes for sale represents a 3.3-month supply at the current rate of sales.
• The Conference Board’s Consumer Confidence Index fell to 96.1 in November from 101.4 in October. The Present Situation Index totaled 105.9, a modest decline of 0.3. The Expectations Index was 89.5 in November, down from 98.2 in October. A Conference Board spokesperson said consumers do not see the labor market nor the economy getting better. The resurgence of COVID-19 is increasing uncertainty and exacerbating concerns about the outlook.
• The final November University of Michigan Index of Consumer Sentiment was virtually unchanged from the preliminary monthly survey. A university spokesperson warned a delay in the federal aid to next year would allow great harm and permanent damage to occur to many firms, local governments and households.

Foodservice News This Week

• MSNBC runs a story on the plight of restaurants due to the pandemic. The story stresses the major role restaurants play in the U.S. economy with well-known restauranteur Danny Meyer presenting a good case for government assistance. Meyer adds that government aid must come in the form of grants and explains why loans won’t work. Further, the story says the only way that restaurants will get the funds they need to survive will be as part of a total aid package including local governments, healthcare and other industries, such as airlines.
• Charleys Philly Steaks opened its first restaurant in a Walmart. Based in Columbus, Ohio, the newly designed restaurant focuses not just on food but on fun family experiences such as arcade games. Current plans call for opening 10 Charleys Philly Steaks in Walmart stores in 2021.
• An analysis of major restaurant chains revealed Starbucks has the most advanced digital capabilities. Other chains with leading digital capabilities include Panera Bread, McDonald’s, McAlister’s Deli and Pizza Hut.
• Smashburger expanded its all-day breakfast program. The chain’s all-day offering of breakfast sandwiches was originally in 10 units and is now available in 30 locations.
• Growth Chains: Donatos Pizza will be available in approximately 200 Red Robin restaurants by the end of this year. In ‘N Out Burger opened eight locations this year. Small burger plans to open 40 restaurants in 2021.
• Comparable store-sales: Bad Daddy Hamburgers down 12.2%. Cheesecake Factory down 7.0%. FAT Brands up 63.2%, Good Times Burgers up 10.0%, Noodles & Company (System down 3.8%, Company Owned down 3.6% and Franchised down 0.5%), One Group Hospitality down 15.6%, Potbelly Sandwich Shops down 21.0% and Shake Shack down 31.7%.

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