The National Restaurant Association’s Restaurant Performance Index rose to 102.0 in August, up from 101.1 in July. Any reading greater than 100 shows increasing activity. The Current Situation Index hit 102.3 in August, up 1.6 percent. Both same-store sales and customer traffic trended up for the month.
The Expectations Index, which has been trending sideways for several months, edged up 0.4 percent for a final reading of 101.7. Operators are fairly positive about sales in the next 6 months with 38 percent expecting an increase vs. 10 percent who expect lower sales. Operators are not as bullish on overall economic conditions with 26 percent looking for them to improve and 13 percent expecting a decline.
As far as operators investing in their businesses, 66 percent said they made capital expenditures for equipment, expansion and/or remodeling in the last 3 months. This is identical to the percentage of operators who reported similarly in July.
As for future investments, 63 percent of operators are planning for capital expenditures in the next 6 months. This is up slightly from 59 percent who affirmatively answered this question for July.
The Restaurant Performance Index has pretty much reported positive data across the board.
Economic News This Week
- Gross Domestic Product for the second quarter remains at 4.2 percent according to the Bureau of Economic Analysis’ third estimate. This is unchanged from the Bureau’s second estimate for the quarter. The GDP of 4.2 percent is considered excellent by most economists and is the highest GDP reading since the third quarter of 2013.
- The Conference Board’s Consumer Confidence Index rose to near an all-time high in September. Following a significant rise to 134.7 in August, the index in September hit 138.4. The Present Situation Index component increased slightly to 173.1 from 172.8 in August while the Expectations Index jumped from 109.3 in August to 115.3. This puts the index closer to its all-time high of 144.7 reached in 2000.
- The University of Michigan’s Index of Consumer Sentiment “remains at very favorable levels,” according to a university spokesperson. The final September reading put the Index at 100.1. This marks only the third time since January 2004 the index exceeded 100. The Current Economic Conditions Index rose to 115.2, up from 110.3 in August. The Index of Consumer Expectations increased to 90.5 in September from 87.1 in August.
- Initial-jobless claims totaled 214,000, an increase of 12,000 for the week ending Sept. 22. The 4-week moving average was 206,250, an increase of 250. The number of claims for unemployment insurance remain very low by historical standards.
- Disposable Personal Income increased 0.3 percent in August. The Bureau of Economic Analysis also reported that Personal Consumption Expenditures rose 0.3 percent In August.
- New orders for manufactured durable goods grew by 4.5 percent in August driven by transportation goods. Without transportation equipment, August new orders were up 0.1 percent. Manufactured Durable Goods shipments were up 0.8 percent with transportation goods up 1.9 percent. Unfilled orders for manufactured durable goods rose 0.9 percent with transportation goods up 1.2 percent.
- August new home sales totaled 629,000 on a seasonally adjusted rate, according to a joint estimate of the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. The estimate is up 3.5 percent from July and 12.7 percent over the August 2017 figure.
Foodservice News This Week
- Quoting “sources” CNBC reported Papa John’s founder John Schnatter is contacting private equity firms seeking a partner in buying back the pizza chain. However, CNBC also stated a Schnatter spokesman denied the report.
- Papa John’s International Inc. may be up for sale. Last month it was reported that the company had hired Bank of America Corp. and Lazard Ltd. to prepare the chain for sale. The story indicates a sale is not a certainty and the company will explore other alternatives. It is not known if these actions are the result of founder and former chairman John Schnatter’s possible moves.
- The Melting Pot debuts a new design. In addition to extensive menu changes, the new design includes an open plan with local touches, a social bar area, outdoor dining, a patio bar, an open cheese and chocolate kitchen, a dedicated wine tasting area and a expanded retail area.
- Chuck E. Cheese introduced a redesigned store called 2.0 in the Houston market. The company says this is part of an improved customer experience for parents and kids. Muted colors and updated furniture replace the bright colors and flashing lights. The new design includes a lightup dance floor and a live show will replace the animatronic show.
- Dunkin’ Donuts will roll out the new name of Dunkin’. The revised name will begin to appear on packaging, advertising, websites, social sites, as well as interior and exterior signage. The changeover should be complete early in 2019.
- Grubhub purchased of Tapingo’s, the developer of custom technology for college campus foodservice call-ahead systems. Tapingo also works with chains like Chick-fil-A, Chipotle and Taco Bell for pickup and delivery programs with college and university meal plans and point-of-sale equipment.
- New York City has the largest number of coffee shops per capita according to data by researcher WalletHub. But, after New York, it is all California. Fremont, Irvine and San Francisco have the highest spending on coffee per household while Santa Ana and Anaheim have the highest number of adult coffee drinkers per capita.
- Corporate Stirrings: Inspire Brands announced it will buy Sonic for $2.3 billion including debt. Inspire also owns Buffalo Wild Wings and Rusty Taco. Ricker Oil Company Inc. has been acquired by the Giant Eagle super market chain. Financial terms were not disclosed for the sale of the 56 unit c-store chain located in central Indiana.
- Growth Chains: Pie Five Pizza will open 2 locations in Northern Texas. Dunkin’ plans to add 1,000 stores by the end of 2020.
- Comparable Store Sales Reports: Rave Restaurant Group (Pie Five Pizza down 12.9 percent and Pizza Inn up 1.8 percent.)
For details and same-store sales of other chains, please click here for the Green Sheet.