Data indicates most industry suppliers are doing well. Foodservice hiring was flat in March. Will Chick-fil-A soon be number three in sales? The pizza market is growing even more competitive. These stories and a whole lot more This Week in Foodservice.
An analysis of the financial performance of a dozen publicly held corporations that sell to the foodservice market shows decent results for most of them. (Click here to get the chart.)
There is a major problem with this analysis. For most of the manufacturing companies, foodservice is just one market they compete in and it may not even be their largest market. Thus, it is entirely possible that their sales and profits do not reflect what happened in their last quarter’s foodservice business.
That said, 10 of the 12 firms listed saw sales increase. Three of the companies experienced a loss for the quarter. Of the remaining nine firms, eight saw their profits rise, some significantly.
As pointed out a couple months ago in this newsletter, the three largest foodservice distributors have had strong financial performance recently.
Economic News This Week
- Initial-jobless claims climbed 24,000, for a final reading of 242,000 for the week ending March 31. Despite the rather large increase, the total number of claims remains low. The less erratic 4-week moving average rose 3,000 to a final level of 228,500.
- The ADP Employment Report placed new jobs at 241,000 in March. This is the third highest month for new jobs in the past 12 months. The report said medium size companies (50 to 500 employees) were responsible for half of the March increase. ADP also said the leisure and hospitality sector added 26,000 employees for the month.
- The U.S. Bureau of Labor Statistics reported only 103,000 new jobs were added in March. This follows a banner month of 326,000 new hires in February. Some labor experts speculate that the low number of people added to payrolls is, at least in part, due to employers unable to find qualified workers. The unemployment rate was steady 4.1 percent. (For hiring in the foodservice industry, please see the Foodservice News This Week section below.)
- The Institute for Supply Management’s Manufacturing Index grew in March but at a slower rate than in February. The Index fell 1.5 percentage points to 59.3 percent. Any reading that exceeds 50 shows increasing activity. The New Orders Index fell 2.3 percentage points to 64.2 while the Production Index fell by 1.0 point to 61.0. The Order Backlog Index was unchanged from February. The Employment Index dropped 2.4 percentage points. March marks the 107th consecutive month of expanding manufacturing activity. The Institute further reported of 18 manufacturing sectors surveyed, 17 had increased manufacturing activity.
- New orders for manufactured goods increased 1.2 percent in February according to the U.S. Census Bureau’s Monthly full report. Shipments and unfilled orders both rose 0.2 percent. New orders for manufactured durable goods increased 3.0 percent with shipments up 0.9 percent and unfilled orders up 0.2 percent.
- U.S. construction spending rose 0.1 percent in February from January. Spending was up 3.0 percent over February 2017. Private construction spending was up 0.7 percent in February vs. January. Residential construction rose 0.1 percent in February over January.
- Consumers pulled back on their borrowing in February. The U.S. Federal Reserve reported consumer credit increased at 3.3 percent, a notably low rate. Revolving credit, which is primarily credit card debt, rose just 0.2 percent. Non-revolving credit (auto loans, student loans, etc.) increased 4.4 percent.)
Foodservice News This Week
- Foodservice hiring was flat in March, per the Bureau of Labor Statistics. It has been more than a decade, if it ever happened, that the total number of people employed in the industry didn’t grow.
- Will Chick-fil-A take become the third largest restaurant chain by sales volume? BuzzFeed News predicts in two years Chick-fil-A will pass Taco Bell, Wendy’s and Burger King in sales to become the third largest fast-food chain behind Starbucks (No. 2) and, of course, McDonald’s (No. 1). Chick-fil-A has a reputation for having an excellent operations system and the chain has just 2,300 locations in the U.S., which leaves plenty of room for unit growth.
- The pizza market keeps getting more competitive, per Technomic. The limited-service pizza sector saw sales increase 3.7 percent last year while the number of units grew 0.9 percent. Technomic reports a large number of consumers pick their pizza based on the crust while others look for unique toppings and/or ingredients. Customers also want more “authentic” pizzas.
- Starbucks looks to increase its food sales. The chain says its food sales are 1.5 times greater than they were in 2013 and Starbucks’ goal is to doubling its food business by 2021. The chain is especially focused on lunch business and noted sales of its Bistro Boxes – prepackaged sandwiches and salads – haveincreased by 20 percent.
- Growth Chains: Freddy’s Frozen Custard & Steakburgers has opened 17 locations already in 2018 with plans for 20 more throughout the end of the year. Supermarket chain Kroger plans to open its second standalone restaurant in the Cincinnati area. Cooking expert Paula Dean has opened the third Paula Dean’s Family Kitchen restaurant with more planned for later this year.
- Comparable Store Sales Reports: Bojangles down 3.1 percent, FAT Brands (Fatburger / Buffalo Express up 7.4 percent, Buffalo’s Café up 6.0 percent and Ponderosa + Bonanza down 2.7 percent) and Fogo De Chao up 0.8 percent.
For details and same-store sales of other chains, please click here for Green Sheet.