Published on Tuesday, 27 May 2014
Written by Jerry Stiegler
This Week In Foodservice recaps the National Restaurant Association’s Annual trade show, discusses the important role permanent ware plays in foodservice, looks ahead to menu prices, reports on the settlement of a US Foodservice suit, and a whole lot more.
If the National Restaurant Association Show is any indicator of the kind of year the foodservice industry can expect 2014 should be pretty good. For the third consecutive year, the association reported an increase in attendance. More than 63,000 foodservice professionals registered for the annual event, which reported a 10.5 percent growth rate since 2011. Dealer/distributor registration increased 9 percent, according to the National Restaurant Association.
A total of 2,168 exhibitors covered more than 600,000 square feet, representing increases of 4.3 percent and 5.7 percent respectively over 2014. In the past 3 years the amount of exhibit space is up over 18 percent and the number of exhibitors is up almost 12 percent.
The National Restaurant Association also announced that the 2015 Show will expand into the Lakeside Center to meet the demand for exhibit space.
Economic News This Week
- Initial jobless claims hit 326,000, an increase of 28,000, for the week ending May 17. The less volatile 4-week moving average was 322,500, a decline of 1,000. It seems that unemployment insurance claims can’t seem to stay below the 320,000 mark.
- Existing home sales increased 1.3 percent in April to a seasonally adjusted annual rate of 4.65 million. But, the National Association of Realtors also said that sales were down 6.8 percent compared to April 2013. An association spokesperson said that the number of homes on the market is increasing, which may lead to improved sales.
- The National Association of Home Builders Confidence Index dropped by one point in May to 45. Any number less than 50 means more builders are pessimistic than optimistic.
- New home sales increased 6.4 percent in April to a seasonally adjusted annual rate of 433,000. Although this represents an increase from March, it’s still down 4.2 percent compared to April 2013. Housing experts point out that before the housing boom started new home sales were 800,000 annually. Given population growth, this would translate into 900,000 new homes a year.
- The U.S. Economic Confidence Index was flat in May. The Gallup Organization reported consumer confidence stayed virtually even in May at minus 15. The Index has been in the same general range for most of this year.
- The Conference Board’s Leading Economic Indicators Index rose 0.4 percent in April after a rising 1 percent in March and 0.5 percent in February. A spokesman for the board said it appears that the economy is “picking up steam” and the last six months of the year could be much better.
Foodservice News This Week
- Chains are upgrading permanent ware to boost sales. Smokey Bones, Hard Rock Café, Sonny’s BBQ, and others are modernizing their dishware to emphasize menu changes and boost prices. A Technomic spokesman said that putting an item on a nicer plate makes it look like it’s worth more. Of course, manufacturers of glassware, china, and flatware have been telling operators that for decades.
- Menu price hikes are on the way. A survey by SpenDifference, the restaurant supply chain co-op, found the majority of chain restaurants held the line of price increases the first part of the year. Those who did increase prices raised them by an average of less than 1 percent. However, 93 percent of the restaurants plan to raise prices by an average of 2.1 percent this year. Food cost increases were given as the main reason for the planned increase but 57 percent of the nearly 60 chain executives surveyed also cited rising labor costs as well.
- The restaurant industry will hire more than 500,000 people this summeraccording to the National Restaurant Association. This will be the second year in a row the foodservice industry will hire more than half a million people but the forecast for 508,000 new hires this summer is actually down from the NRA’s projection of 538,000 hired in the summer of 2013.
- US Foodservice has settled a class action lawsuit over pricing practices. Plaintiffs had charged the distributor with artificially inflating the price of products and overcharging their customers.
- McDonald’s is the fifth most valuable brand in the world according to a study by Millward Brown Optima. The four brands ahead of Big Mac were Google, Apple, IBM and Microsoft. The next five on the list were Coca-Cola, Visa, AT&T, Marlboro, and Amazon.com. Three other food chains made the top 100 — Starbucks (31), Subway (43) and KFC (83).
- How a restaurant smells makes a difference. A Wall Street Journal article reported how retailers, including restaurants, use aromas to nudge customers to buy more. The story relayed how Panera Bread does its baking during business hours instead of the early morning when baking traditionally occurs. Also explored was the experience that Starbucks had when they found the smell of cheese on their breakfast sandwiches overcame the coffee aroma.
- Corporate Stirrings: Speedway will purchase Hess Retail Holdings to become the largest company owned and operated C-store chain in the U.S. Speedway will become the second largest chain by store count with 2,700 locations. Sbarro’s reorganization plan was approved by the bankruptcy court. TGI Friday’s has been sold by the Carlson Companies to Sentinel Capital Partners and TriArtisan Capital Partners. The amount of the sale was reported to be $800 million to $900 million.
- TGI Fridays has joined the food truck parade. The objective is reach out to younger consumers by sending their food trucks to outdoor festivals all across the country to promote new menu items.
- Growth Chains: Bojangles plans to open 55 to 60 new units this year. Subway plans to open 3,000 stores worldwide this year. The Cheesecake Factory entered into an exclusive agreement with a franchisee that will develop a minimum of 14 restaurants in Asia over the next 10 years. Smashburger has 461 new restaurants in their development pipeline for the next several years. Krispy Kreme will open as many as 20 new stores in the mid-Atlantic region. Burger 21 will open four or more locations in the Charlotte area. Chickery has signed a franchise development for 80 to 100 locations in the Middle East.
- Comparable Store Sales Reports: Ark Restaurants (down 1.5 percent) and Red Robin (up 5.4 percent)
For details as well as same store sales reports for other chains, please click here for the Green Sheet.