Plus, co-branding continues to grow in popularity. Dinner becomes the show in one Chicago neighborhood.
Total U.S. retail sales remained flat in September compared to August, per data from the U.S. Census Bureau. Sales at foodservice and drinking places, though, did increase. In fact, a closer look at the data shows some interesting dynamics at play. For example, the Wall Street Journal pointed out if gasoline and auto sales were excluded, total retail sales increased 0.3% in September.
For the first 9 months of 2022, total retail sales have risen 10.1%. Total retail sales in September of his year were up 8.2% from September of 2021. Total retail sales in August were revised up to 0.4% in the preliminary report from 0.3% in the advance estimate.
The advance estimate for foodservice and drinking place sales showed a 0.5% increase in the month-over-month comparison of September to August. (It is important to note, though, the September Consumer Price Index showed food-away-from-home prices increased 0.9% for the month.) Foodservice and drinking place sales increased 17.9% in the first 9 months of this year compared to the same period in 2021. Comparing September 2022 to the same period in 2021, foodservice and drinking place sales increased 11.4%.
Always keep in mind several key factors when reading the data above. The survey only includes restaurants and bars. Operators not included in the survey include hotels, motels, resorts, convenience stores and other retailers as well as the so-called institutional sectors – employee feeding, schools K-12, colleges and universities, hospitals, nursing homes, retirement facilities and military feeding. Next, the sales figures are adjusted for holidays, weekends and seasonal changes. The data is not adjusted for menu price changes.
Economic News This Week
- The Consumer Price Index increased .4% in September, per the U.S. Bureau of Labor Statistics. This comes on the heels of a 0.1% August increase. During the last 12 months, the all items index increased 8.2% before seasonal adjustments. Increases in the shelter, food, and medical care indexes were the largest of many contributors to the monthly seasonally adjusted all items increase. These increases were partly offset by a 4.9% decline in the gasoline index. The food index continued to rise, increasing 0.8% over the month as the food at home index rose 0.7%. The energy index fell 2.1% during the month as the gasoline index declined, but the natural gas and electricity indexes increased. The index for all items less food and energy rose 0.6% in September, as it did in August. A handful of economists and other forecasters were willing to predict September’s reports would show inflation had peaked. It seems they were wrong.
- The September Producer Price Index for final demand increased 0.4%, per the U.S. Bureau of Labor Statistics. This comes after declines of 0.2% in August and 0.4% in July. The index increased 8.5% for the 12 months ending in September. In September, two-thirds of the increase in the index for final demand can be traced to a 0.4% rise in prices for final demand services. Prices for final demand less foods, energy, and trade services increased 0.4%, the largest rise since increasing 0.5%, per the BLS. For the 12 months ending in September, the index for final demand less foods, energy, and trade services moved up 5.6%.
- Initial jobless claims totaled 228,000, an increase of 9,000 for the week ending Oct. 8. Per data from the U.S. Department of Labor. The 4-week moving average increased 5,000 for a total of 211,500.
- The University of Michigan’s preliminary Index of Consumer Sentiment hit 59.8 in October, up 1.2% from September. The Index is up 9.8 points from the all-time low, which is considered a tentative improvement. The Current Economic Conditions Index increased to 65.3 from 59.7 in September. The Index of Consumer Expectations showed a slight drop from 58.0 to 56.2 in 0ctber. Consumers continue to express concern about inflation.
Foodservice News This Week
- Domino’s sold 114 company-owned stores in Arizona and Utah to its franchisees for $41.1 million, per published reports. The deal came after the third quarter ended so the company expects to record a gain from transactions in the fourth quarter as well as reduced costs from maintaining those locations. Like so many other operators, rising costs have hurt Domino’s. The pizza chain is also hurting due to a lack of delivery drivers. Realizing some of the headwinds it's delivery business faces, Domino’s has been leaning heavily into its carryout business. Despite these challenges, though, Domino’s still delivers roughly one of every three pizzas the chain makes, which the company says is the same as it was prior to the pandemic.
- For multiconcept operators, the idea of opening co-branded locations continues to become more appealing and with good reason. This approach allows operators to broaden the reach of their concepts from a single location. Co-branding also boosts menu diversity and can differentiate the operation from the competition.
- Dinner is becoming the show at some restaurants in Chicago’s West Loop neighborhood, Crains Chicago Business reports. For example, later in the evening one restaurant pushes the tables aside, hands guests sparklers and encourages everyone to dance. Another restaurant describes itself as transitioning from "an intimate dining experience to a vibrant social atmosphere as the night progresses.”
- The Savory Fund has taken a majority position in the Sicilian Butcher chain. An upscale concept with three locations, The Scillian Butcher also operates The Scillian Baker. Savory’s investment may be as much as $30 million. The private equity fund is no stranger to the restaurant industry. Other restaurants and related brands it has invested in include Swig, R&R BBQ, Pincho, Via 313 Pizzeria, The Crack Shack, Mo’ Bettahs Hawaiian Style, 86 Repairs, Saigon Hustle and Hash Kitchen.
- Growth Chains: The 16 Handles yogurt shop opened one unit in 2008 and now has 40 locations worldwide. Growth Chains: First Watch opened a location in the Houston market. The chain has more than 445 units systemwide. Stella’s Ice Cream will add two locations in Idaho. These stores will bring the chain to seven units systemwide. WaBa Grill is about to enter the Texas market. The chain inked a development deal with an existing franchisee that will bring 10 units to the greater Dallas-Ft. Worth market.
The latest comparable store sales for publicly held restaurant chains can be found by clicking here for the most recent Green Sheet