Restaurant performance declined sharply in November. Industry leader Darden’s sales are being hammered by pandemic. Punch Bowl Social, Garbanzo Mediterranean Fresh and Rubio’s Coastal Grill made news in bankruptcy court. These stories and a whole lot more This Week in Foodservice.

After creeping upward for the previous four months, the National Restaurant Association’s Restaurant Performance Index posted a 0.8 decline in November for a reading of 97.5. A reading less than 100 indicates declining activity.

The study’s Current Situation Index came in at 95.0, a 1.4-point decline. The Expectations Index came in at 100.0, a 0.2-point decline. Forty-seven percent of restaurant operators participating in the November survey made a capital expenditure for equipment, expansion or remodeling in the last three months. This represents a two-point decline from October. As for future investment, 41% of operators plan to make a capital expenditure in the next 6 months. This represents a 10-point decline from October.

Economic News This Week

• Over a 2-week span, initial jobless claims declined by 108,000. For the week-ending Dec. 26 claims were down 19,000 and claims declined by 89,000 for the week of Dec. 19. Unfortunately, the 4-week average number of claims came in at 836,750, an increase of 17,750 for the week-ending Dec. 26.
• Personal income decreased 1.1% in November, per the Bureau of Economic Analysis. Personal expenditures declined 0.4%. These are good indicators that the U.S. economy is slowing.
• November existing home sales declined 2.5% from October, per the National Association of Realtors. Compared to November 2019, though, sales were up an astonishing 28.5%.
• The Chicago Business Barometer rose to 59.6 in December, its strongest reading since the fourth quarter of 2018. Employment increased the most, rising to a one-year high. But the indicator remained in contraction territory where it has been since July of 2019. The new orders index declined 2 points while the production index rose 1.1 points. The Order Backlog Index grew 3.6 points.
• Durable goods orders increased 0.9% in November, per the Census Bureau’s Advance Report for the month. Durable goods orders have increased seven consecutive months.
• Real gross domestic product increased 33.4% in the third quarter of 2021, per the Bureau of Economic Analysis’ third estimate. This represents a .3% increase from the second estimate. Real GDP decreased 31.4% in the second quarter of 2020, per a BEA estimate.
• The Conference Board’s Consumer Confidence Index declined to 88.6 in December from 92.9 in November. The Present Situation Index came in at 90.3 in December, a 15.6-point decline from November. The Expectations Index, though, increased to 87.5 in December from 84.3 in November. The Conference Board believes consumers do not foresee the economy gaining any momentum in early 2021.
• Despite slipping in late December, The University of Michigan’s Index of Consumer Sentiment remained higher than November.

Foodservice News This Week

• The good news was that Congress sent a COVID relief plan to President Trump late last month. The bad news: some restaurant leaders feel it’s not enough to save the industry. A spokesperson for the Independent Restaurant Coalition said the ten weeks of payroll covered by the bill is not a solution for restaurants and won’t make up for ten months of lost revenue. The IRC proposes the maximum loan amount be expanded to nine months. Also, the IRC wants restaurants to be able to use the loan funds for rent and other outstanding bills. The coalition requests that the time loan money can be used be extended from 24 weeks to 48 weeks. Finally, the IRC wants loan forgiveness guaranteed lest debt will be piled upon debt.
• It shouldn’t come as a surprise but it gets cold during the winter months. Unfortunately, restaurant operators relying on outdoor dining to keep traffic up have found cold and wind represent tough adversaries. Various ideas to mitigate the cold include plastic igloos over the outdoor tables, complimentary hot drinks and propane heaters. One restauranteur said her propane bill is $400 a day. Another operator said if customers are not comfortable “…it’s just not going to happen.”
• Darden provides an example of the pandemic’s destructiveness. Olive Garden, which is generally regarded as a successful, well-run operation saw its 2020 second quarter same store sales fall 19% from the corresponding quarter in 2019. A real horror story is Olive Garden’s Times Square location in New York City. Prior to the COVID-19 outbreak this restaurant was generating $300,000 a week in sales now has just $2,500 in takeout business. Olive Garden is not Darden’s only chain getting hammered in the New York City region. Capital Grille, Darden’s upscale steak chain’s three units are losing millions of dollars in sales each week.
• Fifty-year old Legal Seafood was acquired by multiconcept operator PPX Hospitality Brands. The chain’s former CEO will retain ownership of the Legal Seafood name for channels outside the restaurant industry, including e-commerce and retail. PPX owns steak chain Smith & Wollensky. Price of the deal was not disclosed.
• Rubio’s Coastal Grill received court approval of the restaurant chain’s prepackaged bankruptcy plan. Rubio’s CEO said the company now has a strengthened capital structure, improved financial stability and enhanced liquidity.
• Punch Bowl Social filed for chapter seven bankruptcy. The eatertainment concept was viewed as a real comer when it first launched but the company saw the pandemic destroy its business.
• Growth Chains: Bubakoo’s Burritos inked a 10-store development agreement with a franchisee in Arizona.
• Comparable Store Sales Reports: Ark Restaurants for the second quarter in a row said their comparable store sales were “not meaningful.”

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