McDonald’s provided an update on the makeover of its U.S. locations. Big Mac announced the company and its franchisees will spend $6 billion to modernize most of the chain’s units by the end of 2020. (The story did not reveal how the costs will be split between the corporation and the franchisees.)
In addition to modernized dinning areas with globally and locally inspired decor, there will be “refreshed” exterior designs. Other changes include digital menu boards, digital self-order kiosks, remodeled counters for table service, remodeled McCafe counters, larger display cases and designated parking spots for pickup orders.
McDonald’s has made a major commitment to delivery with more than 5,000 U.S. locations now offering the service through UberEats.
The company also continues to work on updating their menu with their franchisees playing an important role.
Economic News This Week
- Sales of existing homes declined 0.7 percent in July to a seasonally adjusted annual rate of 5.34 million. July marks the fourth straight month existing home sales have dropped and are now at the slowest level since February 2016. The National Association of Realtors believes escalating home prices are keeping would-be buyers out of the market.
- Sales of new homes dropped 1.7 percent in July from June to a seasonally adjusted annual rate of 627,000. Compared to July 2017, new home sales rose 12.8 percent.
- What’s happening to the housing market? Concern about the home industry seems to be mounting as existing home sales turn soft and new home sales are slowing. Rising prices have some potential buyers locked out the market, particularly potential first-time buyers. Meanwhile the upscale home market is doing well. Rising sales at home improvement stores (Lowe’s, etc.) have lead some housing experts to conclude that owners are fixing up their current homes and staying put. The housing market is a stealth industry in that affects a lot of industries such as furniture, home decorating, floor coverings, hardware, etc. Some auto dealers claim they can judge the health of the home market by how many contractors buy light trucks.
- Initial-jobless claims declined by 2,000 to a final level of 210,000 for the week ending Aug. 18. The 4-week moving average fell by 1,750 for a final reading of 213,750.
- New orders for manufactured durable goods declined 1.7 percent in July, according to the U.S. Census Bureau’s advance report for the month. In June this metric rose by 0.7 percent. Manufactured durable goods shipments fell 0.2 percent while unfilled orders were virtually unchanged from June.
Foodservice News This Week
- The NPD’s ReCount Study shows a 1 percent decline in the number of U.S. restaurants as of spring 2018. The total number of restaurants stood at 660,755 as of spring 2018. A 2.0 percent drop in independent restaurants to 315,802 units was the cause of the decline. But, the number of cases shipped to independent restaurants from broadline distributors increased 4.0 percent in the year ending June 2018. The number of chain restaurant units rose to 307,940 units, meaning there are still more independent than chain units in the U.S.
- Famous Dave’s will introduce a new upscale barbecue concept named Clark Crew BBQ. The restaurant is in partnership with pit master Travis Clark. The new operation is expected to open in early 2019.
- A Technomic study shows takeout and delivery could drive sales rather than cannibalize sales of dine-in customers in the Canadian market. The research indicated that to take advantage of this potential sales increase, operators must invest in packaging, develop menu items geared toward on-the-go customers and plan labor and workspace for off-premise orders.
- In what U.S. cities do people eat out the most? The website Wall Street 24/7 devised an index consisting of the number of residents per 100,000 residents, annual restaurant sales per capita, and the ratio of full-service restaurants to fast-food restaurants. The report noted that cities that are upscale tourist destinations score well in the study. To state the obvious, a different formula in all likelihood would yield different results but the top 10 restaurants where people eat out the most are Breckenridge, Colo.; Vineyard Haven, Mass.; Key West, Fla.; Kill Devil Hills, N.C.; Ocean City, N.J.; Steam Boat Springs, Colo.; Edwards, Colo.; Astoria, Ore.; Jackson, Idaho and Summit Park, Utah.
- Washington State announced eight restaurant chains have agreed to eliminate “no poach” clauses from franchise contracts. The clause would stop an employer at one unit from hiring employees from another franchisee’s unit. The chains agreeing to stop the practice are Applebee’s, Church’s Chicken, Five Guys, IHOP, Jamba Juice, Little Caesar’s, Panera Bread Company and Sonic. Earlier this year Arby’s, Carl’s Jr. and McDonald’s stopped using the restriction in its franchise agreements. The Washington State attorney general’s office stated the agreement will affect the companies’ operations nationwide.
- 7-Eleven is testing stores largely consisting of vending machines in Japan. Called 7-Eleven Express, the new concept will have 5 linked together vending machines that sell about 200 items. There has been conflict between c-store owners, franchise headquarters and the Japanese government regarding minimum wage.
- Standex International reported the company’s foodservice sales increased 6.6 percent in the its last fiscal quarter. Organic growth accounted for 2.7 percent of the sales growth while acquisitions were responsible for 3.4 percent and currency fluctuations for 0.5 percent. Most of the sales increase was due to refrigeration equipment.
- Growth Chains: FAT Burger Brands will open 12 co-branded Fat Burger and Buffalo Express locations in the state of Washington. White Castle plans to open restaurants in Phoenix and Scottdale, Ariz., the chain’s first locations west of St. Louis. An Arby’s franchisee will open 100 units in South Korea in the next 10 years. Arby’s will open a total of 10 locations in New York City and on Long Island. Built Custom Burgers inked an area development agreement for the country of Ghana.
- Comparable Store Sales Reports: Ark Restaurants up 2.3 percent, FAT Brands (Fatburger and Buffalo’s Express up 9.5 percent, Buffalo’s Café up 10.8 percent and Bonanza and Ponderosa up 0.9 percent), J. Alexander Holdings (J. Alexander’s up 1.9 percent and Stony River Steakhouse up 6.2 percent) and Steak ‘n Shake down 3.4 percent.
For details and same-store reports of other chains, please click here for the Green Sheet.