The Economic Research Service (ERS) of the U.S. Department of Agriculture has released a detailed revised study of key data for food sales.
One major point from the study. The revision of food sales between 1997 to 2014 decreased food at home (FAH) sales by 4.2 percent ($22.4 billion) and increased food away from home (FAFH) sales by 2.5 percent ($13.3 billion.) One effect of this change means that FAFH sales overtook FAH sales in 2010. Previously, the USDA had announced that FAFH sales didn’t overtake FAH sales until 2014.
Total household food expenditures as a share of disposable personal income declined between 1997 and 2004 but has remained “somewhat stable” since then, staying around 10 percent. While the ERS report does not compare that statistic with other countries, in the past, U.S. consumers spent the smallest share of their incomes on food. In some third world countries, citizens spend 70 percent or more of their incomes on food. The fact is that we in the U.S. have cheap food.
The report puts full-service restaurants’ nominal sales at 35.3 percent of the share of FAFH and limited-service restaurants close behind with a 33.6 percent share.
Nominal sales growth between 1997 and 2017 for full-serve restaurants was 5.3 percent while limited-service restaurant sales grew 5.5 percent in that period.
Food sales are seasonal, peaking in December and declining in January and February.
Economic News This Week
- Small business optimism hit an all-time high in September. The National Federation of Independent Businesses reported the optimism index rose to 108.8, breaking the previous high of 108 set 35 years ago in July 1983.
- The Conference Board Leading Economic Index increased 0.4 percent in August after rising 0.7 percent in July and 0.5 percent in June. The Conference Board’s press release noted that the Leading Economic Index now stands at 111.2, which is well over the previous high of 102.4 in March 2006.
- Initial jobless claims fell by 3,000 to 201,000 for the week ending Sept. 15. The 4-week moving average declined by 2,250 to 197,000. This is the lowest this average has been since Dec. 6, 1969. As pointed out before, the labor force was much smaller then.
- Existing home sales were unchanged in August from July after declining for four straight months. Strong home sales gains in the East and a moderate gain in the Midwest offset downturns in the South and West according to the National Association of Realtors. Sales remain at a seasonally adjusted annual rate of 5.43 million from July and are down 1.5 percent from 2017.
- August housing starts rose 9.2 percent over the July estimate on a seasonally adjusted basis. Compared with August last year, housing starts were up 9.4 percent. Single-family housing starts in August increased 1.9 percent from July. Building Permits issued in August for private housing units fell 5.7 percent from July. The number of permits issued in August dropped by 5.5 percent from August 2017. The number of single-family permits issued declined by 6.1 percent from July.
- The Empire State Manufacturing Survey Index “continued to grow at a solid clip” in September according to the Federal Reserve Bank of New York. However, the rate of growth slowed, with the index declining by 6.6 points to 19. (Any reading over zero means increasing activity.) The New Orders Index inched down from 17.1 in August to 16.5 this month. Shipments and Unfilled Orders Indexes also slowed while staying positive at 14.3 and 4.9 respectively. The labor indicators pointed to increased hiring and longer work weeks.
- The Philadelphia Federal Reserve Manufacturing Business Index came on strong in September. The Index rose to 22.9 from 11.9 in August. (Any number over zero means increasing activity.) The New Orders Index jumped from 9.9 in August to 21.4. The Shipments Index rose to 19.6 this month from 16.6 in August. The Unfilled Orders Index doubled to 12.6 from 5.6 in August. Both of the employment indexes rose approximately 3 points.
Foodservice News This Week
- Miso Robotics says pilot test of Flippy a success. The test this summer was at Dodger Stadium, where the foodservice operation is managed by Levy. Flippy picked up frying baskets, placed them in fryers, shook baskets gently, monitored cooking times, drained oil, placed the baskets at a designated station for temperature testing and skimmed excess oil. A spokesman for Levy said the robotic system works well with their team members and “the consistency of the product is incredible.”
- Chick-fil-A will debut its new restaurant design in Nashville. The new concept is designed to make catering, delivery and mobile ordering more convenient.
- Dave & Buster’s announced a new fast-casual concept called TNT Tacos. Positioned as a “test,” the new restaurant is aimed at consumers who want access to the amusement offerings but don’t want sitdown foodservice.
- Starbucks will open its Princi Bakery concept in Chicago. Princi offers a wide variety of baked goods including pizza, breakfast sandwiches and “a rotating selection of pastries.” The operation is modeled after the Italian chain and is the second store in the U.S. The first Princi opened in Seattle this summer and the next one is scheduled for New York City later this year.
- Dot Foods will build a distribution center in Bear, Del. The $36 million facility is scheduled to open in the fall of 2019 and will eventually employ 200 people.
- Corporate Stirrings: Luby’s Inc. has completed the sale of eight properties since May with proceeds of $11.6 million. The funds were used to reduce its outstanding term loan and for general business purposes. The company expects the asset sales program to generate $25 million to $45 million when complete. Aramark has agreed to sell its Healthcare Technologies business to TRIMDEX. Aramark’s CEO stated the reason for the sale was to concentrate on its core businesses of food, facilities and uniforms. The sale price was $300 million. Romano’s Macaroni Grill will purchase the 14-unit Sullivan’s Steakhouse from the Del Frisco chain. Del Frisco’s had announced their intention to sell Sullivan’s in order to concentrate on their other brands and to pay down debt. The price of the deal was given as around $32 million. Washington, D.C.-based Taylor Gourmet announced the closing of all 17 of their District of Columbia area units as well as their two restaurants in Chicago. Expanding too rapidly was blamed but sources say the hoagie chain was harmed by the owner’s association with President Donald Trump, which led to a boycott.
- Growth Chains: Checkers Drive-In Restaurants plans to add at least 20 more locations in the Milwaukee area. This year Darden opened 52 restaurants in the U.S. and Canada including 11 Olive Garden sites, 15 LongHorn Steakhouse sites and 16 Cheddar’s Scratch Kitchen locations. PJ’s Coffee of New Orleans plans to add 40 units in Maryland, Virginia and Washington, D.C., in the next 10 years. Huddle House signed 36 new franchisees last year and plans to open 12 corporate stores a year. Angry Crab Shack plans to open 100 locations by 2023 including 5 in Arizona in 2019.
- Comparable Store Sales Reports: Cracker Barrel down 0.4 percent, Darden (Bahama Breeze up 1.1 percent, Capital Grille up 3.9 percent, Cheddar’s Scratch Kitchen down 4.0 percent, Edie V’s up 3.0 percent, LongHorn up 3.1 percent, Olive Garden up 5.3 percent, Seasons 52 down 1.9 percent and Yard House up 0.6 percent) and Ruth’s Chris Steak House up 1.3 percent.
For details and same-store sales of other chains, please click here for the Green Sheet.