Customers Want Memorable Interactions

Sales at restaurants and bars declined in June. The spread between food-away-from-home prices and food-at-home prices narrows. A consulting firm focuses on how restaurants can improve their customers’ experience. Chipotle introduces a new concept. These stories and a lot more This Week in Foodservice.

 June total retail sales fell 0.2 percent compared to May, reported the U.S. Census Bureau. Total retail sales increased 2.8 percent compared to June 2016. For the first 6 months of this year retail sales are up 3.9 percent compared to the same period last year. The report also revised the advanced sales for May to down 0.1 percent, a 0.2 percent improvement from the previous estimate.

June sales at eating and drinking places declined 0.6 percent from May but were up 1.7 percent compared to June 2016. For the first 6 months of this year restaurant and bar sales increased 2.9 percent.

One positive factor in the June report was that May sales for restaurants and bars, which were originally reported as being down 0.1 percent, were revised upward to +0.4 percent.

While these results may not bring shouts of joy from foodservice operators, industry performance still shows some growth this year.

There are limitations and caveats in the Census Bureau’s survey. This is an advance report because it is based on a limited sample size. As the sample grows, the U.S. Census Bureau often revises the numbers. That happened with the May data.

The survey covers restaurants and bars only, meaning it excludes roughly a third of the foodservice industry. Not surveyed are hotels, resorts, clubs, retailers, employee feeding, K through 12 schools, colleges and universities, healthcare and military feeding.

Finally, some of the data is adjusted for holidays, weekends, and seasonal changes but not for menu price increases or decreases.

Economic News This Week

• First-time jobless claims dipped to 247,000, a decline of 3,000 for the week ending July 8. The 4-week moving average was 245,750, an increase of 2,250. Jobless claims remain well in the “acceptable” range.
• Consumer credit climbed by 5.8 percent in May on an annual seasonally adjusted basis. The U.S. Federal Reserve reported that revolving credit — mostly credit card debt — increased 8.7 percent while non-revolving credit — auto loans, student loans, boat loans, etc. — grew 4.7 percent.
• The Producer Price Index for Final Demand grew 0.1 percent with 80 percent of the increase driven by 0.2 percent growth in final demand services. The Final Demand Index for Goods rose 0.1 percent. In the last 12 months, total final demand prices are up 2.0 percent. The index for final demand food rose 0.6 percent.
• The Consumer Price Index was flat in Junevs. May. In past 12 months the index increased 1.6 percent. The Core Index, which does not include food and energy prices, was down 0.1 percent in June and up 1.7 percent in the last 12 months.
• Industrial production rose 0.4 percent in June, marking the fifth consecutive monthly increase. The Manufacturing Output Index increased 0.2 percent, the Mining Index rose 1.6 percent and the Utilities Index was flat. Capacity Utilization increased 0.2 percentage points for a final reading of 76.6, a rate that is 33 percentage points below its long run (1972-2016) average.
• The Index of Small business optimism retreated 0.9 points in June to a final reading of 103.6, per the National Federation of Independent Businesses.
• The University of Michigan Index of Consumer Sentiment was down in July, according to the study’s preliminary results. The Index read 95.1, down 3.1 from June. The Index of Current Economic Conditions rose slightly to 113.2 from 112.5. The Index of Consumer Expectations declined to 80.2 from 83.9. A university spokesman stated the drop was not severe and probably does not signify a recession. 

Foodservice News This Week

• Food-away-from-home prices were flat in June and up 2.2 percent for the last 12 months. Some observers blame gap between food prices out and at home for soft foodservice sales.
• It’s all about the customer experience according to Deloitte Consulting. For a strong customer experience the restaurant must engage customers in a friendly, authentic and hospitable way. Customers must feel empowered with real-time information. Customers want to be heard, particularly when something goes wrong. Customers must be delighted by being surprised and exceeding their expectations. Finally, customers want to be known by having the restaurant remember them and their preferences. Restaurants generally get low marks in the factors above but there is a clear opportunity for operators wishing to provide memorable interactions.
• Chipotle debuts a new concept in New York City. Chipotle NEXT Kitchen will not only test new menu items but also new technology and equipment. Some of the equipment being tried is a new margarita machine and a rice cooker that prepares small batches.
• US Foods will acquire TOBA Inc. TOBA owns The Thompson Company in Grand Island, Neb., Braunger Foods in Sioux City, Iowa, and Variety Foods in Sioux Falls, S.D. US Foods plans to keep all three locations and retain all of the distributors’ current employees. Price of the acquisition was not disclosed.
• Corporate Stirrings: Back Yard Burgers was sold to Axum Capital Partners by the Pharos Capital Group. The amount of the sale was not disclosed. The chain now has 55 units down from 120 locations. The Jim ‘N Nicks Bar-B-Q chain, a 37-unit company started in 1985, has sold a majority stake to the Roark Capital Group. Roark has investments in 60 restaurant chains including Jimmy John’s, Arby’s, CKE Restaurants and FOCUS Brands. The purchase price was not disclosed Panera Bread Company’s sale to JAB Holdings closed this week. The Pan American Group has purchased 34 Panera Bread locations from the Original Bread Company. This gives Pan American 130 Panera Bread restaurants making it the concept’s second largest franchisee.
• Growth Chains: Popeye’s Louisiana Kitchen will open three restaurants in South Africa. A 250,000-square-foot dining and entertainment venue outside Dallas called The Music Factory will eventually have 25 concepts. Captain D’ssigned franchise development agreement will bring five restaurants to San Antonio, one to Jackson, Tenn., and four to Mobile, Ala., and Pensacola, Fla. CKE opened a Carl’s Jr. in Nicaragua and plans 200 units in the region. Dickey’s Barbecue Pit will open two restaurants in Las Vegas. MOD Pizza will open six restaurants in Houston.
• Comparable Store Sales Reports: Bad Daddy’s up 0.1 percent, Good Times Burgers up 3.7 percent, and Luby’s (All concepts down 2.7 percent, Luby’s Cafeteria down 2.5 percent, Fuddrucker’s down 0.9 percent, Cheeseburgers in Paradise down 9.8 percent and combo units down 5.5 percent.)

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