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Consumers Trim Spending Plans, Burger King May Close Up To 400 Stores, Landlords Appeal Rent Law to Supreme Court

Consumers Trim Spending Plans, Burger King May Close Up To 400 Stores, Landlords Appeal Rent Law to Supreme Court

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Consumers Trim Spending Plans

U.S. households are expecting to raise their spending by a median of 5.2% in the coming year, the lowest reading since September 2021 in a monthly survey by the Federal Reserve Bank of New York. The April result predicted year-ahead spending increase percentage was a half-point lower than March’s 5.7%.

Consumers are pulling back on non-essential spending amid high interest rates and lingering inflation, but they’re also expecting cost increases to ease, according to the regional Fed’s April survey. Households now expect inflation to be at 4.4% in a year, down 0.3% from the prior month’s prediction and below the actual 5% annual inflation rate as of April 2023.

But there is still some uncertainty about longer-term prospects for the economy and household finances. New York Fed researchers said median inflation uncertainty rose at the three-year-ahead horizon, though it remained unchanged at the one- and five-year-ahead horizons.

There is some nervousness about household income growth, with the median year-ahead prediction of 3.1% below the past year’s average of 3.6%. However, households in April generally were less pessimistic than in March on issues such as access to credit and the potential state of the stock market a year from now, and fewer respondents reported being worse off than a year ago.

Consumers as of April expected home prices to rise by a median 2.5% in the year ahead, the highest level since July 2022, with expectations highest among respondents who live in the Midwest and Northeast.

Burger King May Close Up to 400 Stores

Some restaurant chains are enjoying a boost in sales from a year earlier as customers return to dining rooms. But others, like Burger King, are reducing their real estate footprints as they weed out under-performing stores and franchisees.

Executives of Burger King’s parent firm, Toronto-based Restaurant Brands International, told analysts they are expecting to close between 300 and 400 sales-lagging locations of the burger chain during calendar year 2023. That’s despite Burger King’s 8.7% rise in same-store U.S. sales and total sales growth of 8.1% for the first quarter compared with a year earlier. The company continued to add stores in regions including Europe and Australia.

Restaurant Brands CEO Josh Kobza told analysts during an earnings call May 2 that the company has had “a few recent insolvencies” among U.S. Burger King franchisees, spurring it to move beyond its prior practice of closing up to 200 units in a given year and boosting that to an expected 300 to 400 closings for full-year 2023.

“And this will depend to some extent on the pace of recovery in the business, which we’ve already begun to see,” Kobza said. Burger King, which has about 7,000 locations, has not released a list of specific stores targeted for closing but previously reported shuttering a total of 124 franchised stores so far in 2023, primarily in the Midwest. The company did not immediately respond to a request from CoStar News to comment.

Moving forward, Kobza told analysts that only the best-operating franchisees in the U.S. — what it calls its “A and B operators” — will be allowed to build or acquire existing restaurants. “I do expect a bit more short-term noise as we transition some portfolios into the hands of top local operators, but think we are moving in the right direction to improve our foundation for the long term,” Kobza said.

Landlords Appeal Rent Law to Supreme Court

A group of New York apartment landlords is taking their challenge of the state’s rent stabilization law to the U.S. Supreme Court.

Landlords have filed a petition with the high court, after losing in lower federal courts in their lawsuit filed in 2019 over a state law that landlords contend violates their property rights under the constitution, according to media outlets including The Real Deal.

New York’s Housing Stability and Tenant Protection Act of 2019, affecting about 1 million apartments in New York City, authorizes city boards to set limits on rent increases in a bid to boost housing affordability.

Among other powers, local governments under the law can limit rent increases based on tenants’ ability to pay, which the landlords contend creates “a widening gap between owner costs and regulated rents.”

Landlords are asking the Supreme Court to “clarify the framework that applies when a law places the burden of rectifying a societal problem on a select minority of property owners.”


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