Published on Tuesday, 09 April 2013
Written by The Editors
The vast majority of Americans dine out regularly — that's what Harris Interactive found in a recent study. Jerry Stiegler reviews those findings as well as many other economic indicators affecting the foodservice business in This Week In Foodservice.
Harris Interactive surveyed almost 2,500 adults in mid-February and the study provides a ton of data on the restaurant market. For example, 64 percent of respondents visited a fast food restaurant at least once in the last month. Also, 54 percent visited a local casual dining restaurant, 52 percent a chain casual dining restaurant, 18 percent a local fine dining restaurant, and 9 percent a chain fine dining restaurant.
Harris noted that it appeared Americans may be cutting back on dining out in general. When asked whether they had eaten out more frequently, the same or less frequently, more responded "less frequently" than "more frequently" for every restaurant segment. However, Harris believes that the decline in restaurant visits is leveling off.
In addition to data on why consumers choose a restaurant and the preferred type of cuisine, one statistic stands out: only 10 percent of those surveyed said they had not visited any restaurant in the previous month. It is probably safe to conclude that 10 percent maybe overstated. The research specifies "restaurants" so meals eaten at company dining facilities would not be counted nor would meals at hospitals or schools or colleges. People traditionally tend to not count some meals such as pizza delivery. So here is some new evidence confirming that Americans like to eat out and ninety plus percentage of them do so at least once a month. Statistically speaking, that's everybody
Economic News This Week:
- An overview of the economic news this week shows an unusual pattern. Most weeks there is a hearty mix of both good and bad reports and sometimes it is contradictory. This was true last week when there were conflicting results on consumer confidence studies. This week, possibly excluding auto sales, virtually all the news was bad. The details are listed below but it seems that most of the comments were of the gloom and doom variety. To be sure, there were some observations to the effect that the negative numbers were just one month. One expert, weighing in on the surprisingly bad employment figures said they were "disappointing but not disastrous." The statistics are what they are and everyone can draw their own conclusions but those who believe that the recovery is slow and fragile won't find anything this week to change their position.
- Employment and unemployment drew a lot of attention this week. First, ADP, the payroll processor, stated that the private sector created 158,000 new jobs, which was way under the 215,000 forecast. Next, initial jobless claims for the week ending March 28 jumped to 385,000 from 357,000 the week before. This is a 4-month high. The 4-week average rose to 354,250. Some labor authorities speculated that the number could be affected by Easter week and spring break. The big hit came Friday when the Bureau of Labor Statistics reported that only 88,000 new jobs were created in Match. The private sector added 95,000 new jobs but government employment dropped by 7,000. The news that unemployment (which is determined by a different method) fell to 7.6 percent from 7.7 percent in February looked encouraging until the report added that the labor force dropped by 496,000. The Labor Department said the employment to population ratio fell to 58.5 percent while Gallup, which calculates its employment to population ratio on adults who are employed full time, put their results at 43.4. Further, the Brookings Institute, according to the Wall Street Journal, says that only 14 of the country's 100 largest metropolitan areas have more jobs now than they did before the 2008-2009 recession. Six of the cities are in Texas and the others are Omaha, Salt Lake City, Pittsburgh, San Jose, Knoxville, Washington and Charleston.
- Small businesses are suffering because of the "current economic policies of this country" charged the CEO of the International Franchise Association. He went on to say while franchising is projected to add 152,000 jobs this year, the industry could grow as much as 3 times faster if it were not for government polices and regulations.
- The Small Businesses Administration says that small businesses are more willing to borrow, some banks are more willing to lend, but small banks that traditionally offer the most small business loans still are suffering and unable to lend.
- The Institute for Supply Management's Manufacturing Index fell to 51.3 in March from 54.2 in February. If the Index is above 50 it indicates manufacturing activity is increasing but one Wall Street analyst looked at ISM's data during recoveries going back six decades and found this was by far the weakest. He quipped that "The US manufacturing story looks a lot like Goldilocks...both are fairy tales." Another analyst asked "What manufacturing recovery?"
- Factory orders were up 3 percent in February after falling 2 percent in January but the Department of Commerce said that this was due to major increases in defense spending and aircraft orders. Excluding these two categories, factory orders were up 0.3 percent.
- The Institute for Supply Management's Non-Manufacturing Index dropped to 54.4 in March, which was down from 56 in February. March's reading was the lowest the Index has been in 8 months. Production and new orders both declined while the employment component fell to 53.3 from 57.2 in February.
- U.S. car and light truck sales recorded a strong month in March with most auto manufacturers, including Chrysler, Ford and GM, enjoying increased sales.
Foodservice News This Week:
- The Labor Department's report for March said that the foodservice industry added 7,000 new jobs out of the 95,000 private sector jobs created last month. It was not a great month but the retail segment lost 24,000 jobs in March.
- New York City fast food workers rallied Thursday, the second time in six months that the employees gathered to protest their low pay and the right to form a union. Most media stories were sympathetic to the workers who make $7.25 an hour. Several media sources described the turnout as being in the hundreds. It was not clear how many of the people had actually walked off the job or were fast food employees. There were no reports of slow service or closed restaurants. None of the NYC fast food restaurants were willing to comment. One story said there are an estimated 50,000 fast food workers in the city.
- Recruiting and training employees is obviously a critical function for restaurants and the Frisch's restaurant chain has an unusual program. Once a week the Cincinnati company sends trainers to a city correctional facility to teach the kitchen help and wait staff how to prepare and serve Frisch's menu items. Successful graduates of the 124-hour program are given jobs at Frisch's, many of them convicted felons who would find it difficult to find any job. The system is not a panacea. Roughly 70 percent of the graduates leave Frisch's within 6 months with 30 percent returning to jail within two years. But, many of the graduates move on to jobs at other restaurants while others go on to higher paying jobs with Frisch's.
- The best quick-service restaurant is...Subway. No, it's Chick-fil-A. Harris Interactive does a survey of 38,000 Americans that measures quality, familiarity, and purchase considerations and that ranks Subway as the top-rated fast food brand. But, the Temkin Group measures consumers' experience for functional, accessible, and emotional factors and Chick-fil-A comes out on top.
- Growth chains: Dunkin' Donuts has signed a franchise agreement that will bring seven units to Northern Utah. Dunkin' Donuts also has signed an agreement with Little General to open three new locations in West Virginia by 2018. Pizza Fusion has a contract that will open 25 franchised stores in the Untied Arab Emirates. Dairy Queen has 500 stores in China but plans to have 1,000 by 2016. Wingstop has a franchise agreement for 20 restaurants in Singapore. A Del Taco franchisee has announced plans for 20 restaurants in Alabama and Florida. Starbucks will be opening 100 new stores in Indonesia in the next 3 years and 100 new stores in the Philippines over the next 4 years.
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