This Week In Foodservice

Jerry Stiegler aggregates key industry information and provides brief analysis to help foodservice professionals navigate the data.

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Positive Reports from Broadline Foodservice Distributors

A lot of people believe that the three major broadline foodservice distributors provide a quick look at what is happening in the field. If this is an accurate assessment, the market is doing well based on the big three’s most recent financial quarters.

Below are some of the key numbers for each of the broadliners:

  • Sysco’s sales increased 17.5% even though broadline volume decreased 2.1%. Gross profit increased 18.1%.
  • The Performance Food Group Company’s total case volume increased by 17% while net sales increased 57%. Gross profit increased 40% and net incomed increased 142%.
  • US Foods reported their net sales increased 15.2% while total case volume and independent case volume were flat. Gross profit increased 18.3%.

All in all, not bad reports and they indicate that at least some foodservice companies aren’t doing too badly.

Economic News This Week

  • Initial jobless claims fell by 6,000 to 222,000 for the week ending Sept. 3 from the previous week. The 4-week moving average dropped by 7,500 claims to 233,000. Many economists believe that the initial jobless claims data provides an early warning signal of recession. If so, we are in safe territory in that, if anything, the number of claims have been drifting lower. 
  • Employment market has been interesting recently. Remember the “Great Resignation?” One rule has always been to hold on to your present job in a recession, but a recent front-page story in the “Wall Street Journal” proclaimed that laid off workers are quickly finding new positions. Moreover, discharged employees are not only landing a job within days (or in some cases within hours) but sometimes at substantially more money. 
  • Construction spending in the U.S. fell by 0.4% in July from June. The seasonally adjusted annual rate in July was $1.78 billion. Private Construction Spending dropped by 0.8%, dragged down Residential (-1.5%) and Healthcare (-1.3%) construction. Public construction increased by 1.5%. 
  • The Federal Reserve reported that consumers increased their borrowing by a seasonally adjusted annual rate of 6.2% in July. Revolving credit, which mostly consists of credit card borrowing, increased at an annual rate of 11.6%. Non-revolving credit (auto loans, student loans, etc.) increased at annual rate of 4.4%. 

Foodservice News This Week

  • The hope that Governor Newsom of California would veto the so-called “Fast Act” was dashed when the governor signed the bill into law. The law establishes a council that set wages and working conditions for fast-food restaurants (without defining what is or is not fast food) of chains with 100 locations nationally. The National Restaurant Association estimates the bill will the increase expenses of restaurants in California by $3 billion. And even restaurants that are not directly covered by the bill will be pressured to raise their wages to attract and retain workers. The NRA expects similar bills will be introduced in Illinois, New York, Oregon and Washington. There is also speculation that a similar law will be introduced that applies to full-service chains or even independent restaurants
  • …But the Fast Act is not a done deal yet. The National Restaurant Association and the International Franchise Association have formed a coalition to sponsor a referendum that if successful will in effect repeal the bill that is officially entitled the Fast Food Accountability and Standards Recovery Act. The coalition is called Protect Neighborhood Restaurants will have a little under 3 months (90 days from the passing of the law) to gather 60,000 signatures of California voters. It is estimated that combined spending of both the proponents and opponents of the referendum will be $200 million. If the referendum is successful, the issue will go on the ballot in the next general election and California voters get to decide. 
  • The National Restaurant Association recently provided an overview of the employment picture in restaurants. Restaurants hiring was slow in August with just 18.200 people added to restaurant payrolls. This is by far and away the slightest number of employees that restaurants have added in a year and half. Whether this is a trend or simply a statistical glitch we will have to wait and see. Another interesting fact is that the industry is still 633,000 jobs below — 5.1% below — the pre-pandemic job level. No other industry is remotely close to being in such a negative position. Further, the majority of operators state that they do not have enough employees to handle their current level of business. 
  • Au Bon Pain revealed a new store design it will implement company-wide starting in 2023. The new layout includes a new ordering station, self-serve bakery and to-go areas.
  • Growth Chains: I Heart Mac & Cheese signed over 40 franchise agreements last year and 27 more so far this year has announced their first international franchise will be opened in Canada. Eggs Up Grille, who had previously announced a deal to add 20 operations in Texas, will now also triple their footprint in North Carolina.
  • Comparable Store Sales Reports: Casey’s General Store – Prepared Foods & Dispensed Beverages up 8.4%

For comparable store sales and reports of other chains, please click here for the most recent green sheet.

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