Here's what you need to know.

February total retail sales declined 3% compared to the previous month, per the U.S. Census Bureau. Forecasts had called for retail sales to increase roughly 5.0%. Weather played a significant role in the economy’s struggles last month, with cold, snow, ice and power outages affecting large parts of the country. The good news was the total retail sales increased 5.1% in the first 2 months of the year from the same period in 2020. Even with the weather-induced struggles, total retail sales in February are still up 6.3% compared to the same month in 2020. Also lessening the sting of the February sales drop, the Census Bureau revised January total retail sales upward to 7.6% from the initial estimate of 5.3%.

Most economists see this unexpected bad news as a one-time glitch and point to positive factors including declining new coronavirus cases, the number of people being vaccinated growing daily and stimulus money beginning to flow into consumers’ bank accounts.

Not surprisingly, foodservice and drinking place sales also turned negative in February. After rising a very healthy 6.9% in January, restaurant sales declined by 2.5% in February. The other comparisons are negative as well. In the first 2 months of the year sales at foodservice and drinking places declined 17.4% compared to last year. Compared to February of last year's restaurants and bar sales declined 17%.

We can only hope the economy will improve and will positively impact restaurant sales.

This data comes with a few caveats. The Bureau classifies this as an advance report since it is based on a small sampling. The findings can be revised when a larger sampling is received. The Bureau surveys restaurants and bars only. Not included are hotels, resorts, retailers (c-stores, etc.), employee feeders, healthcare, schools and universities or military foodservice. Finally, the report adjusts some of the sales figures for seasonal changes, holidays and trading days but not for menu price changes.

Economic News This Week

• Is that the light at the end of the tunnel? Customer traffic at restaurants, hotels and gyms appears to be picking up. Airline bookings are picking up. Some say increasing COVID-19 vaccinations, falling business restrictions, accumulated household savings and stimulus money are beginning to work. A Wells Fargo economist says people are seeing the biggest surge in economic growth in their lives.
• Initial jobless claims rose 45,000 for a total of 770,000 for the week ending March 13. The number of claims was higher than expected but almost half of the new claims were from Texas. The increase is probably weather related. Observers do not seem concerned and are regarding it as a fluke.
• Industrial production decreased 2.2% in February, per the Federal Reserve. Manufacturing output fell 3.1%, mining output fell 5.4% and utilities output rose 7.4%. Capacity utilization for the industrial sector hit 73.8% in February, a 1.7% decline. The February rate is 5.8 percentage points less than its long run (1972-2020) average.
• Business activity grew at a solid clip in March, per the Empire State Manufacturing Survey. The General Business Conditions Index rose to 17.4 in March, a 5.3-point increase from February. (Any reading greater than zero indicates expansion.) The New Orders Index hit 9.1 due to a 1.7-point decline. The Shipments Index jumped 17.1 points from February. The Unfilled Orders Index edged up 1.4 points for a March reading of 4.0. The Number of Employees Index totaled 9.4 in March, a 2.7-point decline. In contrast, the Average Employee Work Week Index crept up 1.9 points for a reading of 10.9.
• The Philadelphia Federal Reserve reported general business actvity hit a 50-year high in March with the index rising from 23.1 in February to 51.8 in March. The New Orders Index rose from 23.4 in February to 50.9 in March. The Shipments Index Increased from 21.5 in February to 30.2 in March. The Unfilled Orders Index increased from 12.6 in February to 21.8 in March. The Number of Employees Index rose to 30.1 in March from 25.3 in February. The Average Employee Work Week Index rose from 30.6 in February to 39.7 in March. The Philadelphia Federal Reserve seemed to accept the huge jump without any resrvations.
• February privately owned housing starts declined 10.3% from January and 9.3% from February 2020. Single-family-home starts declined 10.0% from January. Building permits issued for privately owned housing declined 10.8% in February compared to January but increased 17.0% from up to February 2020. Permits issued for single family homes were down 10.0% from January.
• The Conference Board’s Leading Economic Index increased 0.2% in February. This comes after a 0.5% rise in January and a 0.4% rise in December. While the Conference Board pointed out some weaknesses in the economy (declining building permits issued, etc.) it predicts the U.S. economy will grow 5.5% this year.

Foodservice News This Week

• The ghost kitchen phenomenon continues to grow. Walmart joined with Edible (formerly Edible Arrangements) to work with a company called Ghost Kitchen Brands to offer both restaurant food and packaged food for pick up and delivery from Walmart stores in Canada. Another new player is the National Basketball Association’s Detroit Pistons, which formed a partnership with ghost kitchen provider Reef Technology to offer menu items such as Fast Break Falafel.
• The pandemic left in its wake a record number of vacant restaurants. This represents a significant problem for property owners but a great oportunity for restaurant operators sitting on a pile of cash or good credit lines. Landlords continue to offer various incentives to fill vacant space. There is a possibility there could be a record number of restaurant openings this year and/or next.
• Chick-fil-A released a fleet of food trucks to take its menu to customers. The “mor chikin” folks found their mall stores were especially hard hit by the pandemic, so the trucks are parked outside malls. Instead of going inside, customers can get their chicken fix outdoors. One truck found people were waiting in line for an hour. The trucks have made the rounds in more than 30 cities in Indiana and Kentucky.
• Wall Street is bullish on McDonald’s. Stock market analysts think the Golden Arches people have a lot going for them. The new chicken sandwich is doing well. Franchisees report strong drive-thru and delivery business. Both the company leaders and the franchisees expect a sales bounce from the stimulus checks. Other positives include reopened dining areas and improved sales during the breakfast and late-night dayparts.
• Alimentation Couche-Tard plans to sell 49 sites in Oklahoma to Casey’s General Stores. The deal covers 46 leased and 3 owned properties for $39 million cash. Couch-Tard hired a real estate advisory firm to coordinate the sale of 306 sites, including 269 sites in the U.S. and 37 in Canada. Alimentation Couche-Tard Announces Intention to Sell 355 Sites Following Strategic Review of Network (prnewswire.com)
• Comparable store sales reports: Bad Daddy Hamburgers down 11.8%, BJ’s Restaurant down 32.3%, Carrols Restaurant Group (Burger King down 0.9% and Popeye’s down 12.9%) Cracker Barrel down 21.9%, Dave & Busters down 66%, Del Taco (systemwide sales up 3.8%, company-operated units up 0.6 % and franchised locations up 7.5%), El Pollo Loco (systemwide locations down 0.2%, company-owned units own 3.0% and franchised locations up 3.8%), Fiesta Restaurant Group (Pollo Tropical down 11.0% and Taco Cabana down 10.0%), Good Times Burgers up 22.1%, Alexander’s Holdings (J.Alexander’s down 21.4% and Stony River Steakhouse down 24.9%), Noodles & Company (systemwide locations down 4.7, company owned units down 4.2% and franchised locations down 7.9%), One Group Hospitality (consolidated units down 14.8%, STK down 20.7% and Kona Grill down 8.0%.), Potbelly Sandwich Shop down 19.7%, Rave Restaurant Group (Pie Five Pizza down 16% and Pizza Inn down 18.0%), Ruth’s Chris Steak House down 39.7% and Wingstop up 18.2%.

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