What does the future hold for casual dining chains? Same-store sales may grow at a rate of +1 percent to +2 percent, according to Malcolm Knapp, author of the Knapp-Track report, which monitors the actual sales of 50-plus casual dining chains. He also believes chains face 4 percent to 5 percent wage increases. Operators who have good employee training programs and who invest in technology will have competitive advantages over their peers.

Knapp also follows the family dining sector and reports a 0.1 percent decrease in same-store sales for September. He noted the Social Security Administration plans a 2.8 percent social security payment increase in 2019, which should aid the family dining segment.

Knapp did not make any predictions regarding 2019, stating it was too early.

Malcolm Knapp’s views are courtesy of Bank of America Merrill Lynch.

 Economic News This Week

• Initial-jobless claims decreased 5,000 to a final level of 210,000 for the week ending Oct. 13. The 4-week moving average increased 2,000 to a final level of 211,750. While certain aspects of the economy, such as home sales and the stock market, appear to be softening, the job market remains strong.
• The Federal Reserve reported 0.3 percent increase in industrial production in September. This was about the same rate of increase as the previous two months. Hurricane Florence held down output growth by less than 0.1 percent, per the Fed. Capacity utilization for the industrial segment was 78.1 percent, unchanged from August. This rate remains 1.7 percentage points less than
• The Empire State Manufacturing Index shows strong business activity growth in the New York region. The Index rose to 2.1 percent to 21.1 in October. (Any reading more than zero indicates growing activity.) The New Orders Index rose 6.0 points to a final reading of 22.5. The Shipments Index rose 12 points to a final level of 26.3. The Number of Employees Index fell 4.3 points to a final level of 9.0 and the Average Employee Work Week Index 11.3 points for a final reading of 0.2. Also falling into negative territory was the Unfilled Orders Index, dropping 13.3 points to a level of minus 8.4.
• The Philadelphia Federal Reserve Manufacturing Business Outlook Survey edged down very slightly in October. The index fell to 22.2 this month from 22.9 in September. (Any reading greater than zero indicates increasing activity.) The New Orders Index dropped to 19.4 from 21.4 in September. The Shipments Index rose to 24.5 in October from 19.6 the previous month. The Unfilled Orders Index declined to minus 2.3 from 12.6 in September. Both of the employment indexes rose with the Number of Employees up to 19.5 in October from 17.6 in September and the Average Employee Workweek rising from 14.6 last month to 20.8 in October.
• September housing starts dipped 5.3 percent from August but were up 3.7 percent compared to September 2017. Private home building permits issued in September were down 0.6 percent from August and down 1.0 percent from September last year.
• September sales of existing homes declined 4.3 percent compared to August for a seasonally adjusted annual rate of 5.15 million. Through the first 9 months of the year, existing home sales declined 4.1 percent. Existing home sales are at the lowest level since November 2015, per a spokesman for the National Association of Realtors. Interest rates are at their highest level in a decade and the number affordable homes listed for sale remain low, the spokesman added. Some economists pointed out that nationwide home prices have risen 50 percent since bottoming out in 2012.

Foodservice News This Week

• Three foodservice chains ranked among the top 10 fastest-growing franchises based on unit growth. The Franchise Times Top 200 reported Circle K and Freddy’s Frozen Custard & Steakburgers both grew at a 19 percent rate while Tropical Smoothie Café showed an increase of 16.5 percent.
• The number of meals eaten out has declined, according to data from The NPD Group. The number of meals eaten out this year will be 1,410 per capita this year, which is down from 1,453 occasions in 2009. NPD says an aging population and modest population growth are the primary reason for the fall in the number of meals eaten away from home.
• Starbucks’ deal with Alsea will allow the Mexican company to expand the coffee giant’s brand in four European countries. As part of Starbucks’ plan to reduce its corporate presence in Europe, it is allowing Alsea to develop in Belgium, France, Luxembourg and the Netherlands.
• Global market research company Euromonitor International projects coffee shop sales growth will outpace that of packaged coffee sales through 2022. Further, Euromonitor expects packaged coffee companies will continue to seek partnerships with coffee shop chains and/or to purchase them outright.
• YUM! China Holdings will introduce a new-look Pizza Hut. As part of a brand refresh built around the theme Always Something New, the restaurants will have a more modern appearance and a new logo and new uniforms designed by Anna Sui. One of the objectives of the revival plan is to attract a younger generation of customers.
• The Washington, D.C., City Council voted to overturn a mandatory minimum wage for tipped workers. The local restaurant association asserts a $15 an hour minimum wage for tipped employees would cost $600 million a year. One bartender told city council that she and her co-workers chose their jobs because they knew they would “make far more than the standard minimum wage.”
• Corporate Stirrings: Tillman Fertitta has reportedly approached Caesars Entertainment Corp. regarding a merger with Golden Nugget Casinos. Fertitta is also the long-time owner of Landry’s
• Growth Chains: Philippines-based Jollibee Foods plans to generate 50 percent of its revenue from outside its home market in the next 5 to 7 years with 150 locations in the U.S., 100 in Canada and 50 in Europe. VegaBurg intends to open 300 franchised unit in California. Checkers Drive Ins will open 50 restaurants in the Orlando area. Media and entertainment company Out Time Group PLC plans to open food halls in Miami, New York, Boston, Chicago and Montreal. The Shake Shack will open 30 restaurants in Mexico by 2028.
• Comparable Store Sales Reports: Domino’s Pizza (US System up 6.3 percent, Company Owned up 4.9 percent and Franchised up 6.4 percent)

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