Total U.S. retail sales retreated in May but foodservice and drinking place sales edged up. Many restaurants are not paying their rent. O’Charley’s launches two virtual brands. These stories and a whole lot more This Week in Foodservice.

Total retail sales for May 2021 declined 1.3% compared to April, per the U.S. Census Bureau’s Advance Monthly Retail Sales report. Compared to May of 2020, though, total retail sales increased 28.1%. In addition, total retail sales from March to April was revised to a 0.9% increase. The initial projection showed sales were flat between March and April.

Sales at foodservice and drinking places increased 1.8% in May 2021 compared to April. And this year’s sales for May increased 70.6% compared to the same period in 2020.

While few predicted a slowdown in total retail sales, economists do not seem too concerned. As for foodservice outperforming the retail market as a whole, restaurants had fallen into a deeper pit than most other segments, so there’s more ground to recover.

As always, this data comes with a few considerations. The study covers only restaurants and bars. Not included are hotels, motels, resorts, transportation feeding, retailers (C-stores, supermarkets, etc.), employee feeding, hospitals, nursing homes, schools, colleges and universities as well as military feeding.

The statistics are based on small initial samples and are subject to revisions when the U.S. Census Bureau receives a larger sample. Some of these revisions may be extensive. And, while the sales data is adjusted for calendar shifts such as holidays, weekends, etc., there are no adjustments for menu price changes.

Economic News This Week

• Initial jobless claims increased by 37,000, for a total of 412,00 for the week-ending June 12, per the U.S. Department of Labor. The 4-week moving average totaled 395,000, a decline of 8,000. Once again, this is the lowest totals since March 14, 2020.
• Total industrial production increased 0.8% in May, per the S. Federal Reserve. Manufacturing production advanced 0.9%. Mining rose 1.2 % while utilities increased 0.2%. Capacity utilization for the industrial sector rose 0.6% in May to 75.2%, a rate 4.4% less than the long-run (1972-2020) average.
• The Producer Price Index for Final Demand increased 0.8% in May on a seasonally adjusted basis, according to the S. Bureau of Labor Statistics. On an unadjusted basis, the index advanced 6.6% for the 12-month period ending in May.
• The Empire State Manufacturing Survey showed business activity in the New York region continued to expand but at a slower pace, per the New York Federal Reserve. The General Business Conditions Index fell from 24.3 in May to 17.4 in June. The New Orders Index fell by 12.6 points from 28.9 in May. The Shipments Index declined from 29.7 in May to 14.2 in June. The Unfilled Orders Index fell from 21.4 in May to 7.9 In June. The Number of Employees Index was just about unchanged.
• May privately owned housing starts increased 3.6% compared to April and 50.3% compared to May of 2020. Single-family housing starts were up 4.2% from April.
• May building permits issued for privately owned housing declined 3.0% from April but were up 34.9% from April 2020. Single-family permits were down 1.6% from April.

Foodservice News This Week

• Despite the economy’s continued improvement, 39% of restaurants were not able to pay rent in June, per a study from Alignable. This is an improvement from May when 49% of restaurant landlords went unpaid at least part. The research company said restaurants puts the blame primarily on their inability to hire enough staff to operate efficiently.
• O’Charley’s has launched two virtual brands. Coop & Run features chicken tenders, a menu item O’Charley’s has sold for 50 years. Thus, the company sees the Coop & Run as a “no brainer.” O’Charley’s twist was to add several sauces to the Coop & Run menu. The second virtual brand is a seafood concept called Dockside Charley’s. The chain was able to utilize its conveyor ovens in preparing menu items to help ensure consistency for this seafood brand.
• Chicken chain El Pollo Loco is testing drone delivery in Southern California. The drone is designed to cruise at about 230 feet, going up to 30 miles per hour and can carry about 6 pounds. Delivery can take just 10 minutes. The Air Loco drone is also outfitted with a fastened delivery box that keeps orders intact.
• Bon Appétit Management Company announced an ambitious new climate change policy. The foodservice company plans to reduce emissions by 38% per calorie of food by 2030. As a food service management company with operations on the sites of colleges and universities, corporate offices, and cultural institutions in 33 states, Bon Appetit’s food purchases are responsible for most of its total emissions, according to a company release.
• Luby’s reached deals to sell both its Fuddruckers and Luby’s Cafeteria These deals are part of a larger liquidation and dissolution plan the multiconcept operator developed last fall.
• Growth Chains: Magoo’s is expanding into North Carolina and Ohio and is adding units in Florida. This will bring the chicken tenders chain up to 200 locations. Quick-serve concept Stoner's Pizza Joint will open its first Denver location in September. The company plans to ramp up growth through a selective strategy and aims to open several locations in the Denver market over the next three years. On the Border Mexican Grill and Cantina inked development deals with franchisees who will open restaurants in Anchorage, Alaska, and McAllen, Texas.

For comparable store sales reports please click here for the most recent Green Sheet