The National Restaurant Association’s Restaurant Performance Index chalked up a “healthy gain” in March with the index up 0.9 percent from February to 101.9. The Current Situation Index led the way, rising 1.5 percent for the month. Factors driving this rise include operators’ increases in same-store sales and customer traffic.
The other component of the major index, the Expectations Index, also rose, increasing 0.3 percent to 102.1. March marks the fourth consecutive month the Expectations Index has increased, and it now stands at its highest level in 11 months.
There was good news on the investment side of the business as well. Fifty three percent of operators report making a capital expenditure in the last three months for equipment, expansion and/or remodeling. This is virtually identical to the 54 percent who reported doing the same last month.
And, this month’s survey shows 61 percent of operators plan to make a capital expenditure for equipment, expansion and/or remodeling in the next 6 months. This is up from 57 percent of operators in February who said they had investment plans.
After a weak February, restaurants seemed to have bounced back nicely in March.
Economic News This Week
- The ADP National Employment Report for April estimates the number of new jobs at a very hefty 275,000. Mid-size firms, those with 50 to 499 employees, added 145,000 of the new employees. ADP said the leisure and hospitality sector added 53,000 new jobs.
- Initial-jobless claims totaled 230,000 for the week ending April 27. The number of claims filed were the same as the previous week. The 4-week moving average rose 6,500 to a final level of 212,500.
- The Labor Department reports the U.S. economy added 263,000 jobs in April. The private sector was responsible for 236,000 of the new positions. The expansion in the labor force was considerably higher than most forecasts. In addition, unemployment totaled 3.6 percent, down 0.2 percent. Most observers consider April’s report to be excellent.
- March construction spending declined 0.7 percent from February and was down 0.8 percent from March of last year. Residential construction spending was down 1.8 percent from February.
Foodservice News This Week
- Employees at U.S. foodservice operations increased by 25,000 in April according to the Department of Labor. Since total private sector employment rose by 236,000 in the month, the foodservice industry accounted for 1 out of 10 of the new jobs.
- The Cheesecake Factory tests a smaller restaurant design. The 5,500-square-foot operation opened in Oxnard, Calif., last month. Most Cheesecake Factory restaurants measure 7,200 to 7,500 square feet. The chain primarily plans to use the smaller footprint restaurant in international markets but the company continues to monitor its performance and may consider building these locations in the U.S.
- Subway closed 1,108 restaurants in 2018. This chain had predicted it would close 500 stores last year. In 2017 the chain had 866 net closures and closed 357 net units in 2016.
- Kona Grill filed for bankruptcy protection. The troubled casual-dining chain has been closing restaurants and is now down to 27 locations. The chain would reportedly consider being purchased as well.
- McDonald’s reported a strong first fiscal quarter for 2019. The burger giant beat expectations with a 6.0 percent sales increase for the corporation. Comparable store sales rose 5.4 percent systemwide. U.S. comparable store sales increased 4.5 percent, driven in large part by effective promotions.
- Growth Chains: Starbucks now has more than 30,000 locations worldwide. The Cheesecake Factory will open as many as six restaurants this year. Patzi’s Deep Dish Pizza will open three locations in the San Diego area.
- Comparable Store Sales Reports. Applebee’s up 1.8 percent, Baskin Robbins down 2.8 percent, Brinker International (Chili’s company owned up 2.9 percent, Chili’s franchised up 2.0 percent and Maggiano’s up 0.4 percent), Burger King up 0.4 percent, The Cheesecake Factory up 1.3 percent, Denny’s (domestic systemwide locations up 1.3 percent, company owned up 1.5 percent and franchised up 1.2 percent), El Pollo Loco (systemwide up 2.4 percent, company owned up 1.5 percent and franchised up 3.2 percent), Habit Burger up 3.2 percent, IHOP up 1.2 percent, J.Alexander’s Holdings (J.Alexander’s up 0.3 percent and Stoney River Steakhouse up 2.2 percent), Popeyes Louisiana Kitchen up 0.4 percent, Ruth’s Chris Steak House up 1.8 percent, Shake Shack up 3.6 percent, Tim Hortons Canada down 0.4 percent, YUM (KFC systemwide up 5.0 percent Pizza Hut U.S. down 1.0 percent and Taco Bell systemwide up 4.0 percent), and YUM! China (KFC up 5.5 percent and Pizza Hut up 2.0 percent).
For details and same-store sales of other chains, please click here for the latest Green Sheet.