The Restaurant Performance Index edged up a bit in January. Household income rose at a near record pace in January. One financial analyst thinks McDonald’s crispy chicken will be a major success. Texas Roadhouse is working on a fast-casual restaurant as well developing a burger chain. These stories and a whole lot more This Week in Foodservice.

The National Restaurant Association’s Restaurant Performance Index increased 0.5% in January and now stands at 99.1%. Driving the rise was a 0.2% increase in the Current Situation Index. The NRA pointed out January saw improvement in same-store sales and traffic, but the Current Situation Index remains at less than 100 and thus in contraction territory.

The other major component of the RPI, the Expectations Index, fell 0.2% to 102.2 but stayed well in the growth range. Perhaps this is due to many operators believing economic conditions will improve in the next six months.

As for investing in their businesses, 45% of participating operators report making a capital expenditure for equipment, expansion or remodeling in the last 3 months. This represents a 7% decline from December. As for future investments, 51% of participating operators plan to make a capital expenditure in the next 6 months.

It is safe to say the foodservice industry is not yet out of the woods. How bad things will get is anyone’s guess. But vaccines seem to be having a positive impact and Congress appears committed to some form of financial support for the industry.

Economic News This Week

• Household income increased 10.0% in January. This is the second largest increase on record, surpassed only by an 11% rise in April last year. Both jumps were driven by government stimulus payments in attempts to offset the effects of the pandemic’s damage to the economy. Congress continues to wrestle with a third relief package that would pump as much as $1.9 trillion into the economy. Consumers also increased their spending in January, with personal consumption expenditures rising 2.4% compared to December.
• The Bureau of Economic Analysis' second estimate for the real gross domestic product grew 4.1% for the fourth quarter of 2020. This estimate is identical to the Bureau’s first estimate. In the third quarter of last year real GDP increased 33.4%.
• Initial jobless claims totaled 730,000, a decline of 111,000 for the week ending Feb. 20. This represents the largest decline in claims since the summer and may indicate an improving labor market.
• The Conference Board’s Leading Economic Index increased 0.5% in January. This is the third consecutive monthly increase. The pace of the increase has slowed since mid-2020, per a Conference Board spokesperson. The broad base of January’s increase, though, suggests economic growth should improve gradually over the next six months.
• Durable goods orders increased a sizable 3.4% in January, per the U.S. Census Bureau. This follows a 1.2% rise in durable goods orders in December.
• The Chicago Business Barometer fell in February. The New Orders Index dropped 11 points to its lowest level since August 2020. Production was also down, falling 9.3 points. The Order Backlog Index edged higher for the fourth consecutive month, while the Employment Index rose 5.7 points to a 16-month high. This month’s report is pretty much a mix of good and bad.
• New rules for phase two of the Payroll Protection Program now favor small businesses. Only businesses with fewer than 20 employees can apply for the first two weeks of the plan.
• New residential sales totaled 923,000 in January, per the Census Bureau and the U.S. Department of Housing & Urban Development. This represents a 4.3% increase in sales compared to December 2020 and a 19.3% jump from January 2020.
• Consumer Confidence declined in February according to the University of Michigan Consumer Sentiment Index, which posted a 0.4-point decline from January. The Current Economic Conditions Index moved slightly lower to 86.2 from 86.7, while Consumer Expectations slid to 70.7 from 74.

Foodservice News This Week

• News from the chicken sandwich wars finds McDonald’s crispy chicken sandwich priced less than its competitors. Credit Suisse says McD's new offering could boost same store by as much as 4.0%. It appears Burger King is examining its pricing while Taco Bell may introduce a chicken sandwich taco.
• Thirsty Lion parent company Concept Entertainment Group introduced an “online food hall” with six or more concepts, including: southern food, Asian, wings, Mexican, pizza and burgers. In the works are a Mediterranean, a health-focused brand and a breakfast brand. All these concepts will use gastro pub locations serving as ghost kitchens and will be for delivery service only. Customers can mix and match the various brands.
• Texas Roadhouse considers growing via two burger-based concepts. One is a fast-casual operation called Jagger’s with a menu featuring burgers, chicken sandwiches, tenders, shakes and salads. Jaggers has three units and the company calls the restaurant “franchise ready” but whether Texas Roadhouse will go that route is not yet clear. The second concept is Bubba’s 33, a burger chain with 31 company-owned restaurants. Texas Roadhouse has 69 franchised units and 503 corporate locations.
• Cracker Barrel will test a chicken-and biscuits-themed virtual brand. Cracker Barrel converted an Indianapolis location into a ghost kitchen and will begin testing the delivery only product.
• The pandemic may have changed Golden Corral forever. The buffet chain is testing an array of initiatives that include drive-thru, plated meals, a la carte menus, a virtual concept specializing in comfort foods and alcoholic drinks. The last idea shows how serious the chain is about changing its business model. Golden Corral had rejected serving alcoholic beverages, believing doing so was counter to its family-focused concept. But as the pandemic seemed to increase customers’ desire for adult libations the company added margaritas and daiquiris as well as beer and wine.
• Ruby Tuesday has emerged from voluntary chapter 11 bankruptcy with a new focus. The chain was able to shed liabilities, including lease payments on closed locations. Management’s goal is to maintain its commitment to existing guests while developing delivery-only brands. Ruby Tuesday currently has 209 restaurants.
• TravelCenters of America will sell 41-unit Quaker Steak & Lube for $5 million. Quaker Steak was bought out of bankruptcy by TravelCenters of America in 2016 for $25 million.
• Growth Chains: Texas Roadhouse plans to open 25 to 30 company restaurants this year.
• Comparable Store Sales Reports: Domino’s Pizza (U.S. systemwide sales up 11.2%, company-owned units up 8.1% and franchised up 11.4%) and Papa John’s Pizza (Systemwide North American units up 13.5%, company-owned restaurants up 10.2% and franchised locations up 14.5%)

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