Dining out: US restaurant sales growth outpaces retail again in November
Year-over-year sales growth for US bars and restaurants in November again exceeded overall gains in retail spending for the third consecutive month, according to an analysis by S&P Global Market Intelligence.
Food services and drinking places continued to create jobs in November at a rate that exceeded the general economy, and menu prices continued to climb. Meanwhile, the stock prices of most of America’s top 15 publicly traded restaurants by market capitalization rose in the month ended December 13.
The rise in sales continues
Sales of food services and drinking places rose 5.1% from the same period last year in November to seasonally adjusted $ 65.22 billion, according to advanced monthly estimates from the US Census Bureau published on December 13. The category includes bars, restaurants, caterers and other catering services. suppliers such as McDonald’s Corp. and Starbucks Corp.
All retail sales increased 3.3% in November compared to the same period a year earlier, down from the 4.1% year-over-year growth recorded in November 2018 November marked the third consecutive month in which restaurant and bar sales were faster year over year. growth than the overall sales of the retail sector.
In October, sales of food services and drinking places rose 5.1% from the same period last year to $ 65.43 billion seasonally adjusted on a preliminary basis, up from to a previous estimate of 4.7% year-over-year growth. Sales in September were revised down to 5.9% year-over-year growth from a previous estimate of 6%.
Growth in restaurant sales was supported by faster growth in limited-service restaurants, SunTrust Robinson Humphrey analyst Jake Bartlett said in a Dec. 13 report.
The November restaurant sales results represent the continued trend of moderate growth after the September peak and a weaker fourth quarter in 2018, said B. Hudson Riehle, senior vice president of the research and knowledge group at the National Restaurant Association, in an interview.
“The positive performance definitely continues,” said Riehle.
The workforce is increasing
Food services and drinking places added 25,300 workers in November for a seasonally adjusted total of 12.3 million, up 2.6% from a year ago, according to the state Bureau of Labor Statistics United, or BLS.
Total non-farm industries added 266,000 workers in November for a total of 152.3 million workers, an increase of 1.5% from the previous year period. The unemployment rate in November was 3.5%.
Workforce issues – recruitment, retention and cost – continue to be among the top challenges cited by many restaurateurs, Riehle said.
McDonald’s agreed in November to pay $ 26 million to settle a class action lawsuit over the compensation and working conditions of its staff, the Associated Press reported. This month, the National Labor Relations Board ordered an administrative judge to approve settlements resolving complaints against McDonald’s USA LLC, McDonald’s Restaurants of Illinois Inc. and 29 franchisees based on violations allegedly committed by McDonald’s Restaurants of Illinois and franchisees.
Restaurant meal prices continue to rise
The cost of restaurant meals continued to increase in November.
According to the BLS, prices in the “out-of-home food” subcategory of the Consumer Price Index, or CPI, rose 3.2% unadjusted for the year through November. “Food outside the home” covers the average prices of meals ordered in restaurants.
The CPI for full-service meals and snacks rose 3.6% during the year through November, while limited-service meals and snacks rose 3%. The full-service meals and snacks category includes restaurants where customers are served at their tables, and the limited-service category covers restaurants where people pay for their food in advance.
The CPI’s “home food” subcategory, which refers to average prices in grocery stores, increased 1% in the 12 months to November.
Restaurant stocks are heating up
Nine of America’s top 15 publicly traded restaurants posted gains in their shares in the month ended Dec. 13, while stock prices fell for the other six companies, according to Market Intelligence. More generally, the S&P Composite 1500 Restaurants sub-index rose 2.7% and the S&P Composite 1500 index rose 2.4%.
Wingstop Inc. posted a 17.2% share price increase for the month ended December 13. The Dallas-based chicken wing company recently tested new kitchen equipment that cuts down on cooking times, a development that could transform the business by opening real estate to the business in a different way. would have avoided, Peter Saleh, a BTIG analyst, said in a Dec. 3 report.
Bloomin ‘Brands Inc. shares fell 5.5%, the largest drop among major publicly traded restaurant companies in the month ended December 13. The company behind Outback Steakhouse and Carrabba’s Italian Grill announced on November 6 that it was exploring strategic alternatives to maximize shareholder value, including a possible sale, and Bloomin ‘Brands announced that same-store sales growth in third quarter had declined 0.2%.
“While the lineups were disappointing, we believe that a slowdown was widely expected by investors given the broader trends in casual dining, and we are encouraged by the implied rebound expected in the fourth quarter,” said Sharon Zackfia, analyst at William Blair, in a November 6 article. report.