• Signs of Economic Acceleration, US Hotels Get Valentine's Day Boost, Wingstop Earnings Fly High

    Signs of Economic Acceleration, US Hotels Get Valentine's Day Boost, Wingstop Earnings Fly High

    What You Need to Know to Start Your Day

    Adding delivery helped Wingstop restaurants such as this one in Chandler, Arizona, drive revenue gains last year. (CoStar)
    Adding delivery helped Wingstop restaurants such as this one in Chandler, Arizona, drive revenue gains last year. (CoStar)

    Signs of Economic Acceleration

    Retail sales grew in January to reverse three months of declines and produce the best month since June.

    The Commerce Department reported Wednesday that sales increased 5.3% from December, beating expectations by more than 4 percentage points.

    Sales in October, November and December last year fell between 0.7% and 1.3% month-to-month. Sales dropped 8.2% in March and another 14.7% in April because of temporary business closures and stay-at-home orders to try halting the coronavirus spread.

    Nonstore retailers saw the biggest increase with 22.1%, followed by 22% for sporting goods, hobby, musical instrument and book stores. Food services and drinking places, however, dropped 15.8%.

    Sales boomed in May and June when the economy reopened, giving hope that the economy was on the mend. Then slowing sales growth dashed hopes of a stout recovery along with lingering weekly unemployment claims and anemic job recovery.

    The report comes after Americans started receiving $600 in direct payments from the federal government as a result of more than $900 billion in aid Congress approved in December.

    “Lesson: if you give the American consumer free money, they will spend it,” Charlie Bilello, founder and chief executive officer of investment firm Compound Capital Advisors, wrote on Twitter.

    Guy Berger, Principle Economist for business social media site LinkedIn, wrote on Twitter that the sales report and positive industrial production data the Federal Reserve Board reported Wednesday are “consistent with at least modest reacceleration in the U.S. economy during January.”

    The Fed’s report showed that industrial production increased .9%. Its index has been steadily improving since September.

    Several months ago, economists were concerned that gross domestic product would turn negative in the first quarter this year. “That now seems a lot less likely, Berger wrote.

    U.S. Hotels Get Valentine's Day Boost

    Valentine’s Day falling on a weekend may have helped to drive improvement in U.S. hotel occupancy last week.

    Average occupancy rose to 45.1% for the week that ended Feb. 13, up from 40.9% the previous week, according to data from hotel industry research firm STR, which is owned by CoStar Group.

    Valentine’s Day fell on a Sunday and many people had Presidents Day off. Air travel numbers reflected a desire for a long weekend.

    Transportation Security Administration data shows that 1.03 million people passed through U.S. airport checkpoints on Thursday, Feb. 11, and another 1.15 million the next day. The number last hit 1 million on Jan. 4.

    During the week, large hotels with 300 or more rooms saw a big jump from 29.1% occupancy the previous week to 35.6%. Still, hotels with 75 to 299 rooms are better with 47.8% occupancy last week followed by 45.7% at small hotels.

    Tampa again led the 25 largest tourism markets with 66.3%, still feeling the Super Bowl impact. Miami followed with 63.7% and Phoenix with 60.3%, marking just three cities above 60%.

    Revenue per available room improved, being down 46.6% from last year instead of more than the 50% in previous weeks.

    Wingstop Earnings Fly High

    Chicken wing franchise chain Wingstop reported same-store growth of 21.4% last year, validating its introduction of delivery last year in the pandemic.

    The Garland, Texas-based company’s system-wide sales increased 28.8% to $2 billion in 2020, adding 153 new locations worldwide to increase its restaurant count to 1,538. Of those, 1,327 are in the U.S., an increase from 1,200 in 2019.

    Since it is mostly a franchise model, royalty revenue and franchise fees increased $24.6% to $248.8 million, largely because of the addition of 152 net franchise restaurant openings. At its company-owned stores, revenue increased $9.5 million to $65 million from 2019.

    Charles Morrison, Wingstop’s chief executive officer, said on an earnings call with investors that the company opened 59 restaurants in the fourth quarter alone, a record for the chain.

    “Our domestic development agreement pipeline hit an all-time high with more than 700 restaurant commitments at the end of 2020,” compared to 610 at the end of 2019, Morrison said.

    Wingstop launched delivery last year, and that business quickly grew to 25% of total sales.

    “Guests that use us for delivery are typically new to our brand, representing a great growth opportunity,” Morrison said.