Plus, the University of Michigan’s Consumer Sentiment Index hit an all-time low in May. The Greene Turtle goes through some changes. These stories and more this Week in Foodservice.

The National Restaurant Association’s Restaurant Performance Index fell sharply 1.5% in April, as both the current situation and expectations indicators registered broad-based declines. The RPI stood at 102.1 for April.

The Current Situation Index stood at 102.3 in April, down 2.2% from a level of 104.6 in March. All four of the current situation indicators declined in April, led by softer same-store sales and customer traffic readings.

The Expectations Index stood at 101.9, down 0.8% from the previous month. This marks the fourth consecutive monthly decline, per the NRA. Although operators remain cautiously optimistic about sales growth in the months ahead, they had a net negative outlook for the overall economy for the third straight month.

Despite the uncertainty about business conditions, 70% of operators said they plan to make a capital expenditure for equipment, expansion or remodeling during the next 6 months. That was up from 63% last month and represented the seventh consecutive month with a reading of greater than 60%.

Economic News This Week

• Initial-jobless claims increased by 2,000 for a total of 229,000 for the week ending June 18, per the U.S. Department of Labor. The 4-week moving average increased by 4,500 claims for a total of 223,500. If the U.S. is heading into a recession this report should be one of the early indicators but so far so good.
• Sales of existing homes declined 4.3% in May, per the National Association of Realtors. This marks the fourth consecutive month to experience a decline in sales. Compared to May of last year sales declined 8.6%.
• Privately owned housing starts dipped 14.4% in May compared to April, per the U.S. Census Bureau. May housing starts were down 3.5% from the same month in 2021. Building permits issued in May for privately owned housing declined 7.0% from April but grew 0.2% compared to May 2021.
• Sales of new single-family homes were surprisingly good at 696,000 on a seasonally adjusted annual basis in May, per the U.S. Census Bureau. One observer said, given the slowing economy and rising mortgage interest rates that May could be home builders' best month for quite a while.
• Total industrial production increased 0.2% in May, per the U.S. Federal Reserve. Output has increased every month so far this year with an average monthly gain of almost 0.8%. In May manufacturing output declined 0.1% while utility output rose 1.0% and mining output rose 1.3%. Capacity utilization edged up to 79% which is 0.5% less than its long run (1972-2021) average.
• The University of Michigan’s final survey for June confirmed a decline in consumer sentiment. The June reading of 50.0 is 14.4% less than the May Index and the lowest on record since the survey began in 1946. The Current Economic Conditions Index declined from 63.3 in May to 53.8 in June. The Index of Consumer Expectations fell to 47.5 in June from 55.2 in May.
• The Conference Board’s Leading Economic Indicators decreased 0.4% in May and is down 0.4% for the 6-month period ending in May 2022. The May decline was fueled by the tumbling stock market, slowing construction and gloomy consumer expectations. While the Leading Economic Indicators remain near a historic high, in the near term the U.S. can expect weaker economic activity and tighter monetary policy, which will further slow the economy, per the Conference Board.

Foodservice News This Week

• McDonald’s is overhauling its franchising requirements in an attempt to improve diversity, per a Bloomberg report. The company will standardize the way it reviews applications for all potential franchisees. Previously, the children and spouses of existing operators were reviewed separately from new applicants. Also, operating on the concept that franchise renewals are “earned, not given” McDonald’s will now evaluate its franchisees every 20 years. The new system is not just a matter of hitting numerical targets but looking at such areas as complaints received and sending in evaluation teams made up of McDonald’s employees and outside investigators who will grade each employee.
• The Greene Turtle created a new holding company structure, ITA Group Holdings LLC, and then acquired Oklahoma-based Clark Crew BBQ. Clark Crew BBQ is founded and led by Travis Clark, a grand champion on the competitive BBQ circuit. The acquisition was completed simultaneously with a recapitalization of the company, with debt provided by Sandy Spring Bank and Pelham S2K. Post-transaction, ITA will own The Greene Turtle, Clark Crew BBQ and the Founder Growth Platform (FGP), which invests in restaurant concepts. FGP has partnered with six fast-casual brands to date. This year, The Greene Turtle will build four company-owned units. In addition, ITA will build six FGP units – for a total of 10 in the year, per a release announcing the deal.
• Pizzeria Uno has launched a new restaurant conversion franchise initiative aimed at hotel owners. Prospective franchisees now have the chance to leverage the brand’s menu and support infrastructure while creating a full-service pizzeria that serves Chicago-style deep dish pizza in their hotel. This growth strategy comes on the heels of the company converting three in-hotel restaurants in the Midwest into Pizzeria Uno locations earlier this year.
• Multiconcept operator Dine Brands Global will move its California-based global restaurant support center to 10 West, a new office campus in Old Pasadena, Calif., from its current location in Glendale, Calif. The parent company of Applebee’s Neighborhood Grill & Bar and IHOP will begin transitioning its California headquarters to Old Pasadena in mid-2023. The company also has restaurant support centers in Kansas City, KS, and Raleigh, NC.
• Pei Wei Asian Diner will relocate its U.S. corporate headquarters to Irving, Texas. The Asian-inspired restaurant company’s new 10,693 square foot office space will feature standard offices and a flex/open space for hotdesking, hoteling, or cubicles.
• Russia is usurping western brands that have exited the country in response to the Ukrainian invasion, per published reports. A Russian restaurant chain named Black Star was using the letters Mac on its signs, which drew a letter from a legal firm hired by McDonald’s. But Russian leader Vladimir Putin dismissed the problem by saying it is the fault of the western companies for creating the demand in Russia then withdrawing.
• Growth chains: Nando’s Peri Peri will open a location in Virginia Beach later this fall. Next year the chain plans to open two locations in Houston as part of its plans to expand throughout Texas. FAT Burger and Buffalo’s Express inked a franchise deal to open 10 locations in Puerto Rico.
• Comparable Store Sales Reports: Applebee’s up 14.1% and IHOP up 18.1%.

For comparable store sales of other chains, Please Click Here for the Green Sheet.