This Week In Foodservice: Restaurant Industry Sales Get Strong Start In 2013.

While the month to month gains continue to inch along, the restaurant industry did enjoy a better January than in 2012. 

The U.S. Census Bureau reports that January retail sales increased just 0.1 percent compared to December. However, January 2013 represented a 4.1 percent jump compared to the same month in 2012. Restaurant and bar sales in January were virtually flat over December but were up an impressive 6.5 percent over January of last year.

Some observers attribute the slow growth rate between January 2013 and December 2012 to the 2 percent tax increase that took effect the first of the year as well as higher taxes on higher income earners. Others think that the increased tax burden will have to be in effect longer before consumers adjust their spending habits.

We give these caveats every time we pass on this sales data but they are important. The numbers are "advance" statistics that are subject to revision. The sales numbers cover only restaurants and bars. No hotel, resorts, clubs, etc. are surveyed and neither are any "institutional" operators. The sales figures are adjusted for seasonal variations, weekends and holidays but not for inflation.

Economic News This Week:

  • Last week's news on employment continued the theme of mixed results. First-time jobless claims for the week ending Feb. 9 dropped to 341,000. There was some concern that the blizzard that buried the Northeast may have delayed some filings. The 4-week average of new jobless claims stands at 351,500. On the brighter side, MarketWatch noted that ConvergEx Group's Take This Job And Shove It Index, which measures the number of workers who voluntarily quit their jobs as opposed to layoffs or firings was the highest since June 2008 with quitters accounting for 53 percent of job separations in December. On the reverse side, Mort Zukerman, chairman and editor in chief of U.S. News & World Report had an op ed piece in the Wall Street Journal in which he attempted to make the case that the U.S. employment picture is a lot worse than some will acknowledge and we are in the middle of a "jobs disaster."
  • Industrial production unexpectedly fell in January to minus 0.1 percent. But, the Federal Reserve revised industrial production for both November (up 1 percent) and December (up 0.3 percent). These revisions mean 4th quarter industrial production for 2013 was up 1.9 percent.
  • Capacity utilization in January was 79.1 percent, very close to the upwardly revised 79.3 for December.
  • The New York Federal Reserve's Manufacturing Survey for February provided a pleasant surprise when it jumped to plus 10 after it was minus 7.78 in January. This was the first increase in seven months for the index. New orders and shipped orders were up while unfilled orders declined.
  • The February preliminary Reuters/University of Michigan Consumer Index report came in at 76.3 compared to 73.8 for January. While a positive step, it's important to remember the index averaged 87 for the year before the recession.
  • The Gallup Organization's U.S. Economic Confidence Index fell to minus 13 last week from a 5-year high of minus 8 the previous week. The minus 13 figure means more of those surveyed see the economy as negative as opposed to positive.
  • Nielson reported that 59 percent of consumers worldwide believed they were in an economic recession in the 4th quarter of last year.
  • Small-business confidence improved slightly in January but the outlook remained poor with most small business people expecting declining sales, and not expecting to be investing in inventory, expanding or hiring. This is based on the Small Business Optimism Index from the National Federation of Independent Business.

Foodservice News This Week:

  • Concerns about restaurant sales were raised by Merrill Lynch Bank of America in the company's newsletter on the restaurant market. The stock analysts state that their concerns have intensified, not only due to the reinstatement of 2 percent social security tax as well as higher tax rates for wealthier tax payers but also due to mild weather last year vs. more normal weather this year as well as significant increases in gasoline prices. The report says there are some indications that early February same store sales have weakened substantially.
  • Real foodservice growth, that is, adjusted for menu price increases for restaurants and bars in 2012 was up 4.65 percent as calculated by the Food Institute. The Institute cautions that their work is based on government statistics, which are frequently revised. For comparison sake, the Food Institute projects that "real" growth at grocery stores was up just 0.75 percent due in part to a very weak December.
  • Economic stability is key to the foodservice industry's continued growth and success, according to Dawn Sweeney, president and CEO of the National Restaurant Association. Among challenges the industry faces are consumer confidence, the economy, tax policy, the immigration situation and the new healthcare law, according to Ms. Sweeney.
  • The new normal for the restaurant industry will be slow or no growth according The NPD Group. The researcher points out even with more than 61 billion visits in 2012, traffic still has not returned to pre-recession levels. NPD believes successful operators must build customer loyalty by delivering value.
  • UK restaurants are having problems, too, with sales down 4.5 percent over the past 5 years while this year is expected to decline 1.6 percent, according to some studies. Among problems faced by English restaurateurs are government policies concerning wage costs, anti-smoking legislation, alcohol tax and food safety.
  • Raising Cane's is the number one quick-service restaurant chain according to the Sandelman & Associates 2012 Quick-Track Awards of Excellence.
  • Growth chains: IHOP has signed an agreement with their Philippines franchisee to open 20 restaurants in the next 5 years. Corner Bakery's franchisee in the greater NY city area will open 16 restaurants in the next 6 years. Chipotle is planning on opening 183 additional restaurants this year.
  • Comparable store sales reports: Ark Restaurants (down 4.6 percent), Buffalo Wild Wings (company-owned up 5.8 percent and franchised up 7.4 percent), Burger King (up 3.7 percent), Diversified Restaurant Holdings (up 9.2 percent), Famous Dave's (down 6.0 percent), McAlister's Deli (system up 8.3 percent, company-owned up 9.2 percent and franchised up 8.2 percent), Mitchell's Fish Market (up 3.4 percent), Ruth's Chris (up 5.4 percent), and Steak N Shake (up 1.3 percent).

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

Related Articles