The National Restaurant Association expects industry sales to roughly double to $1.2 trillion by 2030. Much of the increase will coming from off premise meals, which will also change the definition of a restaurant. Growth of meal delivery, online ordering, virtual restaurants, subscription services and grab and go meals will all occur. Restaurants may struggle with third-party delivery services for customer loyalty.
The industry workforce will likely exceed 17 million by 2030, but the makeup of the labor force will change significantly as the number of teenagers shrinks by millions and the number of those 65 years and older remain employed by the industry.
Economic News This Week
- The Institute for Supply Management’s Manufacturing Index came in at 48.1 in November, a decline of 0.2. This was the fourth consecutive month the index contracted. (Any reading greater than 50 indicates expansion while any number less than 50 indicates contraction.) The New Orders Index totaled 47.2, a decline of 1.9 points. Despite a 2.9-point increase, the Production Index stayed in contraction mode at 49.1. The Employment Index fell 1.1 percentage points for a reading of 46.6. The Order Backlog Index dropped 1.1 points for a reading of 43.0. Of the 18 manufacturing industries surveyed by the ISM, only 5 reported expanding in November.
- The Institute for Supply Management’s Non-Manufacturing Index hit 53.9 in November. Despite the 0.8 decline from the previous month, November was the 118th consecutive month in which the index remained in growth mode. (Any reading greater than 50 shows expanding activity.) The Business Activity Index declined 5.4 points for a reading of 51.6. In contrast, the New Order Index hit 57.1, a 1.5-point increase and the Employment Index hot 55.5, an increase of 1.8 points. The Order Backlog Index was unchanged and remained in contraction mode at 48.5. Of the 17 non-manufacturing industries surveyed by the ISM, 12 reported growth in November including Accommodations and Foodservices.
- Initial-jobless claims totaled 203,000, a decline of 10,000 for the week ending November 30. The 4-week moving average fell by 2,000 claims to a level of 217,750.
- Private sector employment grew by 67,000 jobs in November, per data from payroll processing company ADP. Small companies, those with 1 to 49 employees, added 11,000 employees. Mid- size employers, organizations with 50 to 499 employees, added 29,000 employees. Large companies, those with 500 or more workers, added 27,000 more employees. ADP also reported that the leisure and hospitality sector, which includes restaurants, grew by 18,000 jobs.
- Nonfarm payroll employment rose by 266,000 jobs in November, per the U.S. Bureau of Labor Statistics. The average monthly increase had been 180,000 new jobs a month so far in 2019. The unemployment rate, which is determined in a separate study, fell to 3.5 percent – the lowest it has been in 50 years. In the last 12 months average hourly earnings increased by 3.1 percent, per the report.
- October construction spending fell 0.8 percent compared to September, per the U.S. Census Bureau. Despite the month to month decline, this represents a 1.1 percent increase compared to October 2018.
- The University of Michigan Index of Consumer Sentiment hit a 7-month high in the preliminary December reading. The Index rose to 99.2 from 96.8 in November. The Current Conditions Index rose to 99.2 from 96.8 in November. The Expectations Index hit 88.9, which is up from 87.3 last month.
Foodservice News This Week
- Jobs in foodservice and drinking places rose by 23,500 in November, per The Bureau of Labor Statistics. Since there were 254,000 new jobs added in the private sector for the month, restaurants and bars accounted for approximately 1 out of 10 new jobs.
- American Airlines will spend $100 million on a new flight kitchen in the Dallas-Ft. Worth Airport. The airline has requested permission to lease 21.5 acres to build the new foodservice facility. American Airlines’ rent on the property will start at $645,820 a year and will increase throughout the 40-year agreement. The current catering kitchen was built in 1982 and is too small and inefficient for current needs, per a spokesperson for American. LSG Sky Chefs, which is under contract with the airline, will operate the new kitchen.
- AirAsia became the first airline to offer its cuisine in restaurants. AirAsia opened its first operation in Kuala Lumpur. The menu will have the same items as the onboard meals. AirAsia believes there is “a significant appetite for our inflight menu offerings…” and plans to open more than 100 restaurants globally in the next 5 years.
- Smokey Bones is renovating all 61 of the restaurant chain’s current locations. Roughly 75 percent of the chain’s units have been renovated with the remainder to be completed in the first half of 2020. Smokey Bones plans to completely update its menu next year as well.
- Customers and store managers love Domino’s GPS order tracking system, according to the pizza chain. The system enables consumers and management to see the exact location of the order and the driver. The system will be operational in roughly a quarter of Domino’s U.S. locations by year end. A “significant portion of the remaining stores will have the tracking technology available in 2020,” said a Domino’s spokesperson.
- Corporate Stirrings: Growler USA has filed for protection under the Chapter 11 bankruptcy laws. The Centennial, Colo.-based chain has 22 locations and is known for letting customers fill their growlers with draft beer. Del Taco refranchised all eight company restaurants in Reno, Nev., to existing franchisee Mark Miller of 3 Brothers Restaurants. Related to this franchise agreement Miller has also committed to develop 10 additional Del Taco restaurants over the next 7 years. This includes six Del Taco restaurants in the Yakima and Spokane, Wash., markets and four in his current operating area. Grand Parade Investments, LTD, the master franchisee for Burger King in South Africa, hopes to sell a stake in its BK operation. No reason for the move was given. In February Grand Parade said it planned to close Dunkin’ and Baskin Robins locations after failing to find buyers for the two brands.
- Growth Chains: Cracker Barrel Old Country Store plans to convert six of its seven fast-casual Holler & Dash units to the company’s recently acquired Maple Street Biscuit Company concept. Cracker Barrel also plans to open an additional Maple Street location this spring. Glory Days Grill will open eight locations in North Carolina. KFC has increased its units by 71 percent in the last 6 years and now has more than 23,000 restaurants in 140 countries, per a company release. KFC’s CEO believes the company can keep growing, noting that McDonald’s has 38,000 restaurants.
- Comparable Store Sales Report: Casey’s General Stores up 1.3 percent.
For details and same-store sales of other chains, Please Click Here for the latest Green Sheet.