The National Restaurant Association projects a moderately good year for 2020. Restaurants hired 50,000 employees in February. Dine Brands will test ghost kitchens. Fogo de Ch?o does delivery its own way. Starbucks reopens stores in China.
The National Restaurant Association projects 2020 to be the eleventh year in a row that industry sales will increase with a forecast for sales to hit $899 billion. This represents a 4% rise in sales or a 1.2% increase when adjusted for inflation. Full-service restaurant sales will grow 3.6% nominally or 1% in real terms. Sales at fast-food restaurants will increase 4.4% or 1.5% in real terms. Noncommercial operations are forecast to grow 3.7% or 0.8% when adjusted for inflation.
Looking ahead, the NRA predicts total industry sales will reach $1.2 trillion by 2030. Factors fueling this growth include consumer optimism, a strong economy and the growth of takeout and delivery meals.
The NRA believes the biggest challenges the industry will face revolve around labor, including recruiting, hiring, training, compensating and retaining employees. It is estimated industry employment will reach 15.6 million this year and employ 17 million workers by 2030.
The major question hanging over the foodservice industry (and everyone else’s) is trying to determine the impact of the coronavirus. Some economists refer these situations as “rogue factors.” They roar in, may disrupt everything, but usually don’t last very long.
Note: The data above is courtesy of The National Restaurant Association’s 2020 State of the Industry report.
Economic News This Week
- Initial-jobless claims totaled 216,000, a decline of 3,000 for the week-ending February 29. The 4-week moving average totaled 213,000, an increase of 3,250 claims. to 213,000.
- The U.S. added 183,000 new jobs in February, per ADP’s National Employment Report. Employers with more than 500 employees accounted for 133,000 of the new jobs. The lodging and hospitality sector added 44,000 employees.
- Total U.S. employment grew by 273,000 jobs in February, according to the U.S. Bureau of Labor Statistics. This growth includes the unusually high addition of 45,000 government employees. The unemployment rate was 3.5%. The unemployment rate has been at 3.5% or 3.6% for the last 6 months.
- Construction spending hit a two-year high in January. Spending grew 1.8% from December and up 6.8% compared to December 2018.
- Labor productivity in the business sector increased 1.2% in the fourth quarter of 2019. The U.S. Bureau of Labor Statistics reported that output increased 2.4% while hours worked grew 1.2%. Unit labor costs in the business sector increased 0.9% in the fourth quarter 0f 2019 as hourly compensation grew 2.1% while productivity grew at a rate of 1.2%.
- Orders for manufactured goods declined 0.5% in January, according to the U.S. Census Bureau’s full monthly report. Shipments of manufactured goods decreased 0.5%, too, while unfilled orders were unchanged.
Foodservice News This Week
- Foodservice and drinking places added 53,000 jobs in February, per the U.S. Bureau of Labor Statistics. Restaurants accounted for 23% of the 228,000 new positions created in the private sector last month.
- Dine Brands will experiment with ghost kitchens. The parent company of Applebee’s and IHOP sees ghost kitchens, also known as cloud kitchens, as a way of working more efficiently with third-party delivery firms. Further, ghost kitchens might prove to be a way of economically getting established in underserved cities.
- Fogo de Chao offers its unique take on delivery. The 40-year old Brazilian chain has a $200 minimum delivery order and requires customers place the order at least 2 hours in advance. The average delivery order is $600 and growing. Fogo says the chain won’t use a third-party delivery service. Instead, the restaurants will call a ride share provider and deliver the food themselves.
- Starbucks expects a 50% decline in restaurant sales in China due to the coronavirus. The giant coffee chain said sales in China are picking up, though. The chain said it has not seen a sales decline in the U.S., where Starbucks has suspended use of customers’ personal cups as a precaution for its staff. At the same time, Starbucks is testing a cup with a biodegradable liner in some of its stores.
- Growth Chains: Sushi Sake, the result of a merger of a teppanyaki house and a sushi restaurant by two Cuban American brothers, aims to have 100 locations in 5 years.
- Comparable Store Sales Reports: Casey’s General Store up 2.8% and Chuy’s Holdings up 2.9%.
For details and same-store sales of other chains, please click here for the latest Green Sheet.