Food Delivery Up, Meal Kit Potential and More

What’s up with meal kits? More consumers are having restaurant meals delivered but there’s a catch. Dunkin’ Donuts cuts a major deal with BJ’s Wholesale club. These stories and a whole lot more This Week In Foodservice

Meal kits represent an extremely hot topic. Basically they offer all the ingredients necessary to prepare a meal at home. Consumers purchase kits to save time, according to a study from The NPD Group.

Cost could be one reason more consumers have not purchased meal kits. NPD says meal kits are priced more like a restaurant meal even though the consumer has to do the preparation and cooking. Average food cost for a meal prepared at home is $4.00 per person while the meal kits are in the $10.00 range.

While the meal kit concept is in its infancy, NPD believes there are opportunities for continued growth. In fact, only 3 percent of those surveyed by NPD purchased a meal kit in the past year. And while NPD says that meal kits essentially take the place of meals prepared at home, foodservice operators can enter the business to take advantage of this emerging trend. 

Economic News This Week

  • Initial jobless claims totaled 253,000, a decline of 1,000 for the week ending July 16. The less volatile 4-week moving average was 257,750, a decline of 1,250. If the economy is in fact slowing, as some economists suggest, it certainly is not showing that in this report.
  • Privately owned housing starts in June were up 4.8 percent from May but down 2.0 percent from June 2015. While building permits issued for privately owned housing in June increased 1.5 percent over May, they were down 13.6 percent from June 2015.
  • The National Association of Realtors reported June existing home sales increased 1.1 percent from May to a seasonally adjusted annual rate of 5.57 million homes. June sales were also up 3.0 percent from June of 2015 and are at the highest annual pace since February 2007. The NAR credits the rise in part to the biggest increase in first time home buyers in four years. 
  • The Philadelphia Federal Reserve’s Manufacturing Business Outlook Survey read -2.9 in July, a significant change from June’s reading of +4.7. Not all the news was bad, as the New Orders Index rose to +11.8 from -3.0 in June. The Unfilled Orders Index was flat. The Employment Index improved, rising to -1.6 in July from -10.9 in June. 
  • The Conference Board’s Leading Economic Index edged up 0.3 percent in June after falling by 0.2 percent in May. In April it increased 0.5 percent. The Conference Board said the index continues to “point to moderating economic growth in the U.S. through the end of 2016” and finds the expansion “resilient enough to weather the volatility in financial markets and a moderating outlook in labor markets.”

Foodservice News This Week

  • Foodservice delivery grew 69 million orders in the past 4 years, according to The NPD Group. But, this increase seems to have occurred at the expense of restaurant drive-thrus, which saw traffic fall by 128 million visits. 
  • Dunkin’ Donuts will replace the food courts in many BJ’s Wholesale Clubs. No exact count was given of how many locations that Dunkin’ Donuts will open but BJ’s has more than 180 locations.
  • McDonald’s may face a slowdown this year. Burger Business shared some observations from Nomura stock analyst Mark Kalinowski, including possibly comparable store sales running minus 1.0 percent in the 4th quarter this year when McD’s will work against a strong sales increase from the introduction of all day breakfast in the last quarter of 2015. Kalinowski surveys a tiny sample of McDonald’s franchisees, some of whom said that their sales growth was primarily the result of price increases. One franchisee expressed concern that the chain’s stated goal of simplifying the menu is not happening. 
  • In other news, McDonald’s reported total corporate comparable store sales of +3.1 percent vs. a consensus forecast of +3.6 percent. Comparable store sales in the U.S. were + 1.8 percent vs. the consensus forecast of +3.2 percent. 
  • Starbucks opened an express unit in London. This concept targets customers on the go who know what they want and features fewer menu options than a regular Starbucks. The London operation is the fourth Starbucks Express, with others now open in Chicago, New York, and Toronto. 
  • Growth Chains: Dunkin’ Donuts, which failed twice to get established in China, has signed franchise agreements with 7 partners to open 1,400 locations in the Asian country. Jimmy’s Egg, which opened its 50th restaurant earlier this year, signed 6 area development agreements that will bring a total of 52 new locations across the states of Arkansas, Iowa, Kansas, Nebraska, New Mexico and Texas. PizzaRev, with 41 restaurants now open, has more than 200 franchised units in development. Papa John’s opened its first store in the Netherlands with 2 more to follow. Rita’s Italian Ice signed development agreements for 50 locations in Florida. 
  • Comparable Store Sales Reports: Baskin-Robbins up 0.6 percent, Chipotle Mexican Grill down 23.6 percent, Del Taco up 3.3 percent, Dunkin’ Donuts up 0.5 percent, Del Frisco Restaurant Group (Del Frisco Grill down 0.2 percent, Double Eagle down 1.9 percent and Sullivan’s up 2.9 percent), McDonald’s up 1.8 percent, and Starbucks up 4.0 percent.

For details and same-store sales of other chains, please click here for the Green Sheet.

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