Wednesday, July 22, 2015

10-Year Eastern Massachusetts Restaurant Report

In the past ten years a number of restaurant chains have come and gone but the absolute number of restaurants has trended up. In 2005, KeyPoint data showed that 6,179 restaurants operated within Eastern Massachusetts. By 2010, even after withstanding the Great Recession, that number climbed to 6,391 units.

In the past five years the restaurant count in the region has rocketed to 6,946 locations, more than doubling the pace of new openings from the first half of the decade.

Much of the growth in the number of restaurants resulted from the development of fast casual chains, in addition to the phenomenal growth of Subway, which passed McDonald’s by the end of 2010 to become the largest restaurant chain in the world. Its current global store count exceeds 42,000 locations, an average of two store openings per day since 1965. In Eastern Massachusetts, Subway has added 71 locations in the ten years since 2005.

While Subway is in a class all by itself, in the next tier are fast casual chains Chipotle, Panera Bread, and Five Guys, which combined for more than 100 new locations since 2005. Neither Chipotle nor Five Guys operated stores in the region until 2007 and 2008, respectively.
Other chains showing notable growth since 2005 include Boloco, Qdoba, and b. good.  Figure 1, below, illustrates the change in store counts during the past ten years among restaurant chains with 10 or more locations in the region:

Friendly’s, D’Angelo, McDonald’s and KFC lead all restaurant chains in the region for the most closings between 2005 and 2010 in Eastern Massachusetts. Other chains losing significant market share include Applebee’s, Boston Market, Burger King and Uno. Although operational problems caused some of the fallout at these chains, the more salient issue may lie in the fact that they were not quick to adapt to consumer trends toward better eating habits and healthier lifestyles.

Looking down the road, without significant menu changes toward healthier fare, we can expect continued erosion of market share and store closings in the fast food segment.

Bob Sheehan, Vice President of Research

Company News

New Business: Leasing: Putnam Parkade, a 57,257 s/f center on Providence Pike in Putnam, CT. VP of Leasing Don Mace is handling the assignment...New Employees: Tony Russo joined the Burlington, MA office as Systems Administrator. Tony has over 20 years IT experience, including 9 years as IT Director at New England College of Optometry in Boston. Greg Kuksin joined the Burlington, MA office as a Property Manager. Greg had been most recently at Jamestown Properties.

National Industry News

Retail sales unexpectedly dropped in June, Commerce Department figures showed. Among retailers reporting monthly comp-store sales, L Brands was up 5%, Gap was down 1.0%, Rite Aid was up 2.1%, and Costco was up 2%. See our sales report on Page 4... Dollar Tree has completed its acquisition of Family Dollar Stores, opening the doors to a $19 billion company with more than 13,000 stores....Albertsons Cos. filed for an initial public offering. The number of shares set to hit the trading floor has not been disclosed. The IPO will bring an end to its ownership by the investor group led by Cerberus Capital Management, which purchased Albertsons and other grocery chains from Supervalu for approximately $3.3 billion in early 2013. Albertsons plans to use the IPO monies to pay down debt and fund other corporate initiatives. It also plans to open 8 new and replacement stores in 2015 and remodel a total of 115 existing stores across most of its operating divisions.

Accelerating Industry News

Ahold and Delhaize intend to combine their businesses. The combined company will be known as Ahold Delhaize with a base of more than 6,500 stores. In the US, Ahold operates the Stop & Shop, Giant, and Giant/Martin’s banners primarily in the Northeast, as well as online shopping service Peapod. Delhaize operates the Food Lion and Hannaford banners in the Southeast and Northeast...Johnny Rockets plans to open 25 new domestic stores during 2015 and 100 new domestic stores by 2017 via franchise expansion. Johnny Rockets operates more than 330 restaurants across the globe...Pirch plans to roll out three locations a year. In 2016, it will open a three-level, 32,000 s/f store in Manhattan. Pirch has 8 US locations. Pirch lets shoppers test the products in its stores, and greets them with fresh coffee and complimentary food while they browse...Nordstrom plans to open a Nordstrom Rack at Woodmore Towne Center in Glenarden, MD in spring 2017, the fifth Nordstrom Rack in Maryland...Apple opened a store on July 11, in the Queens Center mall in Queens, NYC, giving it a total of 8 locations in the city...Furniture and appliance retailer Conn’s opened 4 new stores this month in Texas, North Carolina and Tennessee. Conn’s has more than 90 stores in 12 states. The latest expansion is part of larger strategy of opening 15-18 stores through the end of its fiscal year...Indoor cycling franchise CycleBar inked franchise deals  for more than 100 studios across the country...Marbles: The Brain Store opened a new store in Washington D.C., its second location in the area and its third to open this summer, with new stores debuting in Times Square and Myrtle Beach, South Carolina. The games retailer plans to open over 50 additional locations in the next three years. Currently, it operates 31 stores...Dunkin’ Donuts has signed multi-unit store development agreements with seven franchise groups to develop 51 new restaurants in Virginia and West Virginia during the next several years...J. Crew opened its first J. Crew Mercantile store in Dallas later this month, and plans to open more nationwide. The retailer developed the lower-priced Mercantile brand to house products that are specifically designed and manufactured for its outlet stores...The world’s second smallest Target store, a 16,000 s/f TargetExpress, opened in Highland Park, St. Paul, MN this month...Ollie’s Bargain Outlet raised $143 million in an initial public stock offering that positions the company for expansion of its 181 unit chain. The company has identified 950 suitable store locations and the company will maintain a measured pace of expansion. Growth this year will be driven by the addition of 25 new stores, an increase from 22 units opened in 2014 and 23 units opened in 2013. Between fiscal year 2010 and fiscal year 2014, Ollie’s grew its store base from 96 stores to 176 stores...Starbucks plans to open stores in 15 diverse, low-to-median-income urban communities across the US by 2018, starting with at least 5 stores in 2016. The plans include a store near the heart of last summer’s racial unrest in Ferguson, MI....Ross Stores is opening 19 Ross Dress for Less and 8 dd's Discounts stores across 15 different states in July, part of the off-price retailer's plans to add approximately 90 stores during 2015, including 70 Ross and 20 dd's Discounts. Ultimately, the retailer believes Ross Dress for Less can grow to 2,000 locations and dd's Discounts can become a chain of 500 brand MAD Greens began its national expansion last month with its first openings outside of its home state of Colorado in Tempe and Scottsdale, Arizona. The chain currently has 15 locations and will finish 2015 with 21 locations...C. Wonder, which shuttered all its stores and filed Chapter 11 early this year, has entered into a definitive agreement for Xcel Brands to acquire the C. Wonder brand from Burch Acquisition LLC. The deal gives Xcel the rights to C. Wonder trademarks, related designs and other intellectual property rights. Xcel owns the Isaac Mizrahi, Judith Ripka, H by Halston and H Halston brands and designs and manages the Liz Claiborne New York brand.

Decelerating Industry News

Starbucks is closing all 23 locations of La Boulange, the bakery chain it acquired for $100 million in 2013. The brand will continue to play a role as its French-style pastries are served in Starbucks cafes across North America... Great Atlantic and Pacific Tea Co. (A&P) has is selling 137 of its 301-store portfolio throughout Connecticut, New Jersey and New York. A&P filed for bankruptcy in 2010 and became privately held when it emerged in 2012 with 320 stores. The Stop & Shop Supermarket Co. LLC has entered into an agreement to acquire 25 A&P stores in greater New York for $146 million. Upon completion of the transaction, Stop & Shop plans to convert these Waldbaum's, Pathmark and A&P stores into Stop & Shop stores. The deal is subject to further terms and conditions, court approval, and regulatory requirements...Darden Restaurants Inc will separate some of its restaurants into a publicly traded REIT as part of changes engineered by investor Starboard Value LP. Darden will transfer about 430 restaurants, mostly Olive Garden properties, to the REIT this year and lease back most of the properties. Darden also listed 75 properties for individual sale-lease backs, with most of these deals expected to close by the end of August. The company has more than 1,500 restaurants.

New England Industry News

PriceRite will open its first New Hampshire store later this summer, a 45,000 s/f store in a space that formerly housed a Stop & Shop in Manchester...Bedford Farms Ice Cream will open a third location at the 3rd Ave. shopping and dining center in Burlington, across from Wegmans...The Boston Public Market will open its doors at 100 Hanover Street at Boston’s Haymarket Station on July 30. The 28,000 s/f Market will be the only locally-sourced market of its kind open year-round in the US. Everything sold at the Market is produced or originates in New England. In addition to more than 35 vendor stalls, the Market will include a 3,200 s/f demonstration kitchen...PAUL Bakery in Northwest Park, Burlington received unanimous approval from the Board of Selectmen for a beer and wine license. The French bistro in is the fourth in Massachusetts, with locations in Somerville, Natick, and Boston’s Downtown Crossing. Established in Lille, France in 1889, PAUL Bakery has nearly 600 stores in 30 countries. There are 11 in the US, 7 in Washington DC and 4 in Massachusetts.

June Retail Sales Report

Notes: figures gathered from individual company websites, press releases, and Federal filings.  Not all companies report all figures; results not reported will be marked “n/r”. Quarterly results will be updated when available; quarterly figures are shown in italics. Figures from companies not calculated to one decimal point automatically received an ending digit of 0. 

Commerce Department Monthly Sales

Retail sales unexpectedly dropped in June, Commerce Department figures showed. Purchases decreased 0.3% after a 1% advance in May that was smaller than previously reported.

Source: U.S. Department of Commerce -

Treasury Yields

Treasury Yield Sources:;

Consumer Confidence Index

The Conference Board Consumer Confidence Index®, which had improved moderately in May, increased further in June. The Index now stands at 101.4 (1985=100), up from 94.6 in May. The Present Situation Index increased from 107.1 last month to 111.6 in June, while the Expectations Index advanced to 94.6 from 86.2 in May.

Source: The Conference Board -

Purchasing Managers Index

Manufacturing expanded in June as the PMI® registered 53.5 percent, an increase of 0.7 percentage point over the May reading of 52.8 percent, indicating growth in manufacturing for the 30th consecutive month. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

Source: Institute for Supply Management - Manufacturing Report on Business -