November retail sales were discouraging. A restaurant sues its insurance company for non-payment of business interruption policy. Schlotzky’s focuses on off-premises business with two smaller store prototypes. These stories and more This Week in Foodservice.

Total U.S. retail sales declined 1.1% in November compared to October. Retail sales were up 4.1% compared to November 2019. While forecasters had expected sales to decline, most predictions were in the range of fraction of a percentage point. Also, advance October retail sales were reduced from to down 0.1% from up 0.3%. Total retail sales for the first 11 months of this year increased just 0.3%.

Foodservices and drinking places sales posted a 4.0% decline in November. Restaurant and bar sales declined 17.2% from November last year. October foodservice advance sales were revised to a decline of 4.0% from a 0.1% dip.

Economic News This Week

• Initial jobless claims continue to confound the experts. For the week-ending December 12 initial-jobless claims hit 885,000, an increase of 23,000. The 4-week moving average hit 812,500, an increase of 34,250.
• Led by a decline in the services sector, U.S. business activity slipped in December, per IHS Markit. The composite retreated to 55.7 from November’s 5-year high of 58.6. Any reading greater than 50 indicates expanding activity. For the past six months the composite index had been in expansion mode.
• Industrial production increased 0.4% in November, per the U.S. Federal Reserve. After declining 16.5% between February and April, industrial production is about 5.0 % less than its pre-pandemic level. The manufacturing sector’s output rose 0.8% in November, marking the seventh consecutive monthly advance. Utilities output fell 4.3% due to warmer than usual temperatures across much of the country. Mining production increased 2.3% in November after falling 0.7% in October. Capacity utilization increased 0.3% for a reading of 73.3%, a rate that is 6.5% less than its long run (1972-2019) average but up 9.1% from its low in April.
• The Philadelphia Federal Reserve Bank’s December Manufacturing Business Outlook Survey remained positive but showed signs of slowing. The index to 26.3 from 11.1 in November. (Any reading that exceeds zero shows increasing activity.) The New Orders Index experienced an even steeper declining falling to 2.3 from 37.9. The Shipments Index declined to 14.4 from 24.9. The Unfilled Orders Index fell to 1.4 from 22.2. The Number of Employees Index declined to 8.5 from 27.2. The Average Employee Workweek fell to 18.0 from 25.7. It Is amazing the indicators could retreat as much as they did and yet they all remain in expansion territory.
• The Empire State Manufacturing Survey showed slightly higher business activity in December, per the Federal Reserve of New York. The index came in at 4.9, down from 6.3 in November. Any reading greater than zero indicates increasing activity so that means activity increased in December but at a slower rate than in November.
• Privately owned housing starts increased 1.2% in November, per the Census Bureau. In addition to being up compared to October, housing starts were up 12.8% from November 2019. Single-family starts increased 0.4% from October. Building permits issued for residential construction in November increased 6.2% from October and 8.5% compared to November 2019. Permits for single-family homes rose 1.3% from October.
• The Conference Board’s Leading Economic Index for the U.S. continued its run of modest increases in November. The LEI hit 109.1, a 0.6 increase. This comes after a 0.8 rise in October and 0.7 rise in September. The Conference Board says this data portends a significant moderation in the growth of the U.S. economy next year.

Foodservice News This Week

• No more mousing around: Chuck E. Cheese must still pay rent, so says a bankruptcy court judge. In a closely watched case, the judge said the terms of the company’s leases did not permit parent company CEC to delay or reduce rent payments due to a “force majeure” even with various government regulations closing restaurants in an attempt to slow the spread of COVID-19.
• New Orleans-based Oceana Restaurants sued its insurance carrier for not reimbursing the restaurant under the terms of its business interruption policy. There were predictions at the start of the pandemic that the restaurant operators and their insurance companies would end up in court over whether their policies covered the type of business interruption brought forth by COVID-19. The insurance industry argues a restaurant must endure physical damage, such as fire, wind, etc. before the business interruption policy applies. The insurance industry also contends the insurance was never intended to cover a pandemic. Oceana’s attorneys argue the contamination of surfaces by the virus represents physical damage and that the policy does not specifically exclude pandemics.
• Shlotzsky’s introduced two new smaller prototypes aimed at winning off-premises business. One designs measures 1,000 square feet and will only offer drive thru and takeout service. An 1,800-square-foot version can seating 35 guests. Restaurants with the new formats will open next year in Arkansas and Oklahoma.
• December generated a flurry of convenience store company acquisitions. Murphy USA acquired the 157-store QuickCheck chain. The Classic Star Group purchased the retail assets of H&M Wholesale Inc. Jay Petroleum purchased a majority of the assets of Ottawa Oil, including 22 C-stores which expands Jay’s store count to 57.
• By Chloe becomes the latest restaurant chain to file for bankruptcy. BC Hospitality, which owns By Chloe, seeks permission from a bankruptcy court to sell the company. The fast-casual vegan chain has operated 11 restaurants at reduced capacity due to the pandemic and the company has closed 3 units.
• Growth Chains: Raising Cane’s plans to add 20 restaurants in Northern California in 2021 and 2022.
• Comparable Store Sales Reports: Darden Restaurants (LongHorn down 11.1%, Olive Garden down 19.9%, Fine dining down 31.0% & Other businesses down 28.6%.) A note on Darden’s latest quarterly report and their comp store sales report. For years and perhaps decades, Darden provided comparable store sales for each of their brands. Starting with the quarter ending August 30 and including the most recent quarterly report the company has only reported the comps for Olive Garden and LongHorn. The other concepts grouped under the headings Fine Dining and Other Businesses.

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