Despite strong results in the foodservice industry, overall job growth remains sluggish.

Initial jobless claims for the week ending December 28, 2012, rose by 10,000 to 372,000. The number of claims from the previous week were revised upward to 362,000 from the preliminary 350,000.

Payroll processing firm ADP caused a stir by announcing the country added 215,000 new jobs in December. A few economists scrambled to revise upward their prediction of the Bureau of Labor Statistics (BLS) official report on Friday.

The government statistics were a lot lower with the BLS stating the number of new jobs added by the private sector was 168,000 in December. The net gain in jobs was 155,000 since government jobs declined by 13,000. The separately determined unemployment number was 7.8 percent, which was identical with November's level but only because the BLS revised the November up from 7.7 percent.

Where this leaves the U.S. for 2012 is an average monthly job increase of 153,000, which is the same as 2011. Many economists believe that the country needs to add 125,000 to 150,000 jobs per month just to keep up with population growth. One economist projects that to bring unemployment down to 6 percent, the economy would need to create over 350,000 jobs per month.

Economic News This Week:

  • The U.S. Congress avoided having the country plunge over the "fiscal cliff" — sort of. Spending cuts were postponed for only a couple of months so we get to go through the whole process once again in the weeks ahead. There was not even an attempt to deal with tax and entitlement reforms and it is unlikely that anything will happen given the inability to deal with far simpler stuff. The U.S. Treasury Department will have to deal with the debt limit in less than two months, too. In some ways the whole incident was a farce with members of congress voting on a bill they hadn't read, could not question or debate. Further, it was loaded with tax breaks for certain industries. This past week the Wall Street Journal showed how quirks in the tax code will result in a much higher burden than was first indicated. About 70 percent of U.S. households will experience a tax increase. And there doesn't appear to be anything in the agreement that will increase employment.
  • Consumer buying for Christmas-time purchases was more "Ho, Hum" than "Ho, Ho, Ho." While some sources saw decent sales increases, some chains were down while others were up but still missed forecasts. There is also speculation that some retailers drove volume by heavy price cutting because they didn't want to get stuck with excess inventories. This will have major impact on their bottom lines.
  • Auto sales were good in December, which drove sales for the year up 13.4 percent to a level of 14.5 million cars and light trucks, the best year since 2007. Chrysler is the only one of the old Detroit "Big 3" who increased sales in 2012 enough to gain appreciable market share.
  • The Institute for Supply Management's Manufacturing Index inched into positive territory in December posting a score of 50.7. New orders, production, and manufacturing employment all rose. The Index was 49.5 in November. Any number that exceeds 50 indicates expansion; any number less than 50 indicates contraction in manufacturing activity.
  • Factory orders in November were flat according to the U.S. Commerce Department.
  • The Institute for Supply Management's Non-Manufacturing (i.e., services) Index rose to 56.1 in December vs. 54.7 in November. Most of the study's detail numbers were good with new orders and employment both up.

Foodservice News This Week:

  • Foodservice employment is a bright spot in a rather bleak job picture. In December the foodservice industry added 38,000 jobs on a seasonally adjusted basis according to the Bureau of Labor Statistics. In other words, foodservice accounted for over 22 percent of the new jobs out of the 168,000 private sector positions the U.S. gained in December. Total foodservice employment in December reached 10,036,100 according to the Bureau's report.
  • A closer look at the 2013 forecasts of the National Restaurant Association and Technomic, Inc. shows some interesting figures. The two forecasts break down the industry segments differently so some rearrangement is necessary for head on comparisons but there appears to be a lot of agreement between both organizations. Both forecasts see limited service growing faster than full-serve restaurants. Both have recreation down but see hotel feeding growing nicely. Both predict K-12 sales will be up while Technomic has much stronger growth in College/University feeding than the NRA predicts. Both see employee feeding up this year although the NRA believes that self-operated employee feeders will be flat. Also, by doing a little addition, we calculate that the NRA has 2012 limited-service restaurant sales at $207 billion while Technomic has limited service restaurant sales at $204.7 billion, which is pretty close. Of course, Technomic does not include beverage alcohol, so their sales estimate is far apart from the NRA's sales of full service restaurants. Finally, Technomic, who put its forecast together last fall, frequently revises their projections in January. If they do, it will be interesting to see how close their numbers are to the NRA's.
  • The foodservice operation appearing most on employee expense accounts is Starbucks according to Certify, an employee travel and expense report management company. Number two is McDonald's followed by Subway, Panera Bread, and Burger King.
  • Customer evaluations of fast-casual restaurants vs. limited-service restaurants showed some surprising results, according to a new Technomic study. Customers preferred fast casual in every area except beverages which were tied. The biggest differences were found in cleanliness (+6 percent) and atmosphere (+6 percent). Consumers even thought fast-casual restaurants offered better value though the difference was just 2 percent. Customers also thought fast-casual restaurants were superior in take out compared to limited-service restaurants although by just 1 percent. Somewhat surprisingly, fast casual's leads in food and in service was just 3 percent.
  • Growth chains: Bruegger's Bagels will add 100 units by 2015. For additional information, check out this week's Chain Operating Report.
  • Comparable sales reports: Good Times Burgers (up 3.8 percent) and Sonic Drive Ins (system up 3 percent, company owned up 4.2 percent, and franchised up 2.9 percent.)

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