The National Restaurant Association’s Restaurant Performance Index hit 100.4 in September. Despite a decline of 0.3 percent, the index remains in expansion mode by .4.

The Current Situation Index declined 0.6 percent to a final reading of 99.6, the lowest level this component has been since January 2018. Operators reported a net decline in same-store sales for the first time in 23 months. In addition, 49 percent of those surveyed said their sales declined in September, which was up from 35 percent in August and the highest proportion of negative respondents since February 2017. As might be expected when sales are down, operators saw a net decline in customer traffic.

The Expectations Index inched up by 0.1 percent to a reading of 101.3. The percentage of operators expecting higher sales in 6 months was 39 percent, up from 32 percent in August. As for the overall economy, 19 percent of operators think conditions will improve while 20 percent think conditions will worsen. September is 13th consecutive month in which fewer than 25 percent of operators expected the economy to improve, the NRA noted.

The final aspect of the Restaurant Performance Index is operators’ commitment to investing in their businesses. In September, 61 percent of operators reported making a capital expenditure for equipment, expansion or remodeling in the last 3 months. This was up 1 percent from August.

As for future investments, 63 percent of operators said they plan to spend capital on equipment, expansion or remodeling in the next 6 months. This is just about identical to the 60 percent of the survey respondents in August who said they plan to make capital expenditures in the next 6 months.

Economic News This Week

  • Real Gross Domestic Product was up 1.9 percent on an annual basis from July through September, per an advance estimate from the Bureau of Economic Analysis. This is down from 2.0 percent in the 2nd Quarter but beat the consensus estimate of 1.6 percent.
  • Initial-jobless claims totaled 218,000, an increase of 5,000 for the week ending October 26. The less volatile 4-week moving average was 214,750, a decline of 500 claims.
  • Private sector employment grew by 125,000 in October, per an ADP estimate. Midsized companies, those with 50 to 499 employees, accounted for 64,000 of the new hires. ADP reported the leisure and hospitality sector, which includes restaurants, hired 19,000 people in October.
  • Non-farm payroll employment increased by 128,000 in October, per data from the U.S. Bureau of Labor Statistics. Private-sector employment rose 131,000 as government employment fell by 3,000. The unemployment rate was 3.6 percent, up .1 percent from last month. Employment numbers for both August and September were revised upward. While the increase in jobs was below the average for this year, most observers were quite pleased with the employment picture.
  • The Chicago Business Barometer fell 3.9 points in October for a final reading of 43.2. (Any reading less than 50 indicates contraction.) The Index is now at its lowest level since December 2015. New Orders declined to 37.0, its lowest since March 2009. Order Backlogs declined by 13.6 points to a final level of 33.1. Production, which has been in contraction since July, bounced up to 46.8. Employment rose to by 4.2 points to just below the breakeven point at 49.8.
  • Real disposable income increased 0.3 percent in September and real personal consumption expenditures grew 0.2 percent for the month, per The Bureau of Economic Analysis.

Foodservice News This Week

  • Companies in the foodservices and drinking place sector added 47,500 employees in October, according to the Bureau of Labor Statistics. Barring any revision in the numbers, 36 percent of all the new jobs created last month were in foodservice.
  • Corporate Stirrings. TA Restaurant Group has agreed to open 94 IHOP restaurants in TravelCenters of America and Petro locations in the next 5 years. This represents IHOP’s largest development deal to date. Petroleum Services Company has put several assets up for sale including eight Hawkeye convenience stores, a tobacco outlet store, a large travel plaza and two development sites. The c-stores and tobacco outlet are in the Cedar Rapids and Iowa City metro areas. The Krystal Company hired The Cypress Group to manage the refranchising 100 to 150 company-owned units in Alabama, Florida, Georgia, Mississippi and Tennessee. Meritage Hospitality Group Inc., a major franchise restaurant operator, has acquired five additional Wendy’s restaurants in the Atlanta market.
  • Growth Chains: Jaggers fast-casual restaurants, a division of Texas Roadhouse, will add two more units next year doubling its total unit count. Cheesecake Factory has six international units in its pipeline and plans to open at least four locations in 2020. Chicken Salad Chick opened 7 restaurants in the last quarter and signed franchise deals to develop 13 restaurants in 8 states – Florida, Georgia, Indiana, Kansas, Kentucky, Louisiana, Missouri and Texas. The fast-casual chain also came under new ownership.
  • Comparable Store Sales Reports: Baskin Robbins up 3.6 percent. BJ’s Restaurants Inc. down 0.3 percent, Brinker International (Chili’s company owned up 2.9 percent, Chili’s franchised locations in the U.S. up 0.4 percent and Maggiano’s down 1.8 percent), Cheesecake Factory up 0.4 percent, Denny’s (domestic systemwide sales up 1.1 percent, company owned down 0.2 percent and franchised up 1.2 percent), Dunkin’ up 1.5 percent, Habit Restaurants Inc. up 3.1 percent, Starbucks up 6.0 percent and Wingstop up 12.3 percent.


For details and same-store sales of other chains, click here for the latest Green Sheet.