The National Restaurant Association predicts 2019 restaurant industry sales will hit $863 billion, a 3.6 percent nominal growth rate over 2018. When menu price increases are factored in, the NRA places real growth this year at 1.1 percent this year.
Overall, the NRA’s 2019 State of the Industry report is positive with the association predicting operators driving their businesses thru improved technology and adding more customers by increasing off premise business especially delivery.
The simple fact is that a real growth of 1.0 percent means the industry is not growing as fast as the economy as a whole. In the fourth quarter of last year, Real Gross Domestic Product rose 2.2 percent. And, the U.S. population is growing at about 0.5 percent a year.
Thus, real growth of 1.0 percent is not going to drive much sales volume for industry suppliers. Those firms selling to foodservice businesses should be prepared to invest in new and innovative products and by using intelligent sales and marketing programs.
Economic News This Week
- Initial-jobless claims totaled 196,000, a decline of 8,000 for the week-ending April 4. This is the fewest initial claims filed since October 4, 1969. The 4-week moving average was 207,000, a decline of 7,000.
- Consumer borrowing increased 4.5 percent in February, per the Federal Reserve. Revolving credit, which is mostly credit card borrowing, rose 3.3 percent while non-revolving credit (auto loans, student loans, etc.) increased 4.9 percent.
- The U.S. Census Bureau’s Advance Report for Manufactured Durable Goods found new orders declined 1.6 percent in February. Excluding transportation equipment, new orders increased 0.1 percent. Shipments of manufactured durable goods rose 0.2 percent in February.
- The Producer Price Index for Final Demand increased 0.6 percent in March. In the last 12 months the index is up 2.2 percent. Excluding food and energy prices, the index was up 0.2 percent in March and up 2.0 percent in the last 12 months.
- The March Consumer Price Index increased 0.4 percent. The index is up 1.9 percent in the last 12 months. The Core Index, that is without food and energy prices, was up 0.1 percent in March and up 2.0 percent in the last 12 months.
- The preliminary report for the University of Michigan’s Index of Consumer Sentiment “…continued its sideways shuffle in early April posting an insignificant decline…” The Index now stands at 96.9, down from 98.4 in March. The Current Economic Conditions Index is was also very close, 114.2 vs 113.3 in March. The Index of Consumer Expectations declined from 88.8 in March to 85.8. A spokesman for the university said the level of the Sentiment Index during the past 30 months was higher than at any time since 1997 to 2000.
Foodservice News This Week
- The Consumer Price Index for Food increased 0.3 percent in March and is up 2.1 percent in the last 12 months. Food at home prices were up 0.4 percent in March and have increased 1.4 percent in the last 12 months. Food away from home prices were up 0.2 percent in March and increased 3.0 percent in the last 12 months. Of all the items on the Consumer Price Index the only one that increased more in the last 12 months than food away from home was shelter which rose 3.4 percent.
- Corporate Stirrings: Shake Shack founder Danny Meyer made a $15 million investment in Digg Inn, a 10-unit chain featuring a vegetable heavy menu. J. Alexander’s Holdings is the target of a takeover by Ancora Advisor. Ancora claims when J. Alexander’s went public in 2015, the spinoff by Fidelity National Advisors the chain agreed to hire Black Knight Advisory Services whose principal member is the chairman of Fidelity National. Further, Ancora contends that J. Alexander’s paid Black Knight more than $7 million at the expense of stock holders. Ancora, which already owns 1.3 million J.Alexander’s shares, is offering $186 million for the company, which is a 24 percent premium for the stock. The MTY Food Group will buy the Papa Murphy Take N’ Bake pizza chain. The deal is an all cash arrangement with MTY buying all of Papa Murphy’s stock at a 31.9 percent premium. Friendly’s closed 23 restaurants in the Northeast. The closings were announced by Friendly’s CEO in a letter to franchisees.
- Growth Chains: FAT Brands will open 10 co-branded Fat Burger & Buffalo Express restaurants in Canada in partnership with Frankie’s Burger Enterprises. Fat Burger will also open three locations in the Dallas/Ft. Worth area. Grimaldi Pizza is expanding via a new franchise program and believes having 200 locations is feasible.
- Comparable Store Sales Reports: Ark Restaurants up 2.9 percent, Dunkin’ Flat and Wingstop up 6.0 percent.
For details and same store sales of other chains,
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