The National Restaurant Association said restaurant performance retreated in January. Industry leaders are urging the Internal Revenue Service to improve their handling of employee tax credit. Subway appears to have turned the corner after years of declining unit sales volume. Las Vegas will soon boast the largest Chevys restaurant. These stories and more This Week In Foodservice.

The National Restaurant Association reported that their Restaurant Performance Index fell 1.5 points in January from December to 103.2. This is a four-month low for the index but any number over 100 indicates expansion. The Current Situation component declined 2.1 points to 103.0. While operators said that same-store sales and customer traffic were down from December, they remain higher than in January last year. The other component of the RPI, the Expectations Index, also fell, down 0.9 points to 103.5. This is the first decline in four months. The NRA seems to think operators, by and large, remain optimistic about their business prospects in the next six months.

Despite a so-so report for the month, willingness to spend money is somewhat surprisingly positive. In the January survey, 62% of the respondents said that in the previous three months they had made capital expenditures for equipment, expansion, or remodeling. This is an increase from the December reading of 58.2%. 

When asked about future plans for investment in their operation, 66% of the operators said they would be making a capital expenditure for equipment, expansion or remodeling in the next six months.

There is a potential problem with this data in that it does not indicate if the operator is spending a couple of thousand dollars or a couple of hundred thousand. But it appears that at least some operations are set to invest in their operation.

Economic News This Week

• The U.S. Bureau of Economic Analysis reported that gross domestic product increased 7.0% on an annual basis in the fourth quarter. This is a 0.1 percentage point increase over the BEA’s advance estimate in January and a significant jump over the 2.3% increase in the third quarter. 
• Initial jobless claims fell by 17,000 to 232,000 for the week ending Feb. 19. The 4-week moving average decreased by 7,250 to 236,250.
• Real disposable income declined 0.2% in December. Real personal consumption expenditures declined 1.0% in December with goods down 3.1% and services down 0.1%.
• Single-family home sales were 801,000 on a seasonally adjusted basis in January. This is a 4.5% decrease from December and down 19.3% from January 2021. 
• The Conference Board’s Consumer Confidence Index decreased in February, dropping 0.6%. The index declined from 111.1 in January to 110.5 in February. The Present Situation Index had a small increase rising to 145.1 from 144.5 in January. The Expectations Index fell from 88.8 in January to 87.5 in February. The Conference Board said they continue to see headwinds to consumer confidence and spending.
• The University of Michigan’s final February Index of Consumer Sentiment Report showed a slight improvement from the preliminary February survey but remains at a decade low. The index stands at 62.8, down from 67.2 in January. The Current Economic Conditions Index was down to 68.2 in February from 72.0 the previous month. The Index of Consumer Expectations declined to 59.4 from the 64.1 January reading. 

Foodservice News This Week

• The Internal Revenue Service is being urged to improve the filing process for the employee retention tax credit by the National Restaurant Association and state restaurant associations. A recent survey found that 83% of the restaurants that applied for the tax credit over six months ago still have not received the funds. 
• Subway’s unit volume bounced back after an eight-year slide. But the sub chain may have improved its sales per restaurant due to the closing of more than 4,000 locations. It is safe to assume that the majority of these operations were low-volume stores. In an interview in the Wall Street Journal, Subway’s CEO said previous management had a “maniacal focus” on development, perhaps implying that the stores were opened by the wrong people in the wrong places. It is also true that for a long time Subway had very little competition other than single-unit operations. But now Subway’s management said unit Chevys will make a return to the Nevada market later this summer. Image courtesy of Chevys Fresh Mexsales, as well as their same-store sales, were improving. The company’s CEO also said that recent results show they have the right team and strategy to bring their multi-year journey to life.
• The Xperience Restaurant Group will open the largest Chevys restaurant in the chain. Scheduled to open in Las Vegas this summer, the 13,000-square-foot restaurant will seat up to 400 customers at a time.

• Growth Chains: Krispy Kreme, after testing delivery-only stores in England, will introduce the concept in the U.S. and Mexico. The chain calls them “dark stores” rather than ghost kitchens since there they do not have a kitchen. The doughnuts are made at another location. Cracker Barrel plans to open 50 locations of their delivery-only all-day chain, The Pancake Kitchen, which will result in a total of 200 units by the end of this year.
• Comparable Store Sales Reports: Chuy’s Holdings up 20.8%. Cracker Barrel up 1.9%, Jack in the Box (system up 1.2%, company-owned up 0.3% and franchised up 1.4%), Texas Roadhouse (company-owned up 33.1% and franchised up 34.8%).

For comparable store sales of other chains, please click here for the latest Green Sheet.