How much have restaurant prices increased in the past 12 months? Which casual dining chain made a comeback? Are local food halls still relevant? We answer these questions and more This Week in Foodservice.

Starbucks heeds the need for speed.

The Seattle-based coffee company is rolling out a series of equipment improvements and updates to how team members make craft beverages and food to enhance efficiency at the store level, per a company announcement.

One of the key updates is a change in beverage sequencing. Staff members now steam milk before making the espresso shots. The chain says that making this change can save time without compromising beverage quality.

The chain also added a role called the peak play caller. This person will support baristas where they need it and is supported by the company’s digital infrastructure with the goal of heading off bottlenecks before they occur.

Foodservice News This Week

• MOD Pizza has been acquired by Elite Restaurant Group, per multiple published reports, including this one from CNN. The terms of the deal were not disclosed and this transaction came as there was speculation about whether the fast-casual MOD Pizza would become the latest restaurant chain to file for bankruptcy. Elite Restaurant Group has a history of acquiring struggling restaurant concepts and turning them around, as this Restaurant Dive story notes. Other concepts in Elite’s portfolio include Slater’s 50/50 and Greek concept Daphne’s, among others, per this Restaurant Business story. Elite plans to accelerate MOD’s growth which is ironic given the fact that some observers attribute its troubles to expanding too quickly.
• A casual dining legend makes a comeback. Steak and Ale is a casual dining chain founded by the legendary Norm Brinker in 1968 that after growing to 110 units system-wide all but went out of business a few years ago. Legendary Restaurant Brands has revived Steak and Ale by opening a 5,000-square-foot restaurant in Burnsville, Minn. Certainly this news was mouthwatering to the thousands of members of Facebook group entitled “Steak and Ale’s Comeback.” 
• What does the success of McDonald’s $5 meal deal tell us about the current state of the restaurant industry? Two things, really. First, consumers’ price fatigue is real. Restaurant prices, particularly at quick-service restaurants, have gone up for a variety of reasons this year and consumers can only absorb so much. It stands to reason that a $5 meal deal delivers perceived value. Citing data from Placer.ai, QSR magazine notes McDonald’s had its two busiest days of the year shortly after launching the meal deal. It’s not a coincidence. Second, given McDonald’s success in this area, it’s highly likely that other chains will follow suit if they have not already done so.
• Consumer coffee brand Nespresso is opening a series of boutiques across the U.S., Food Dive reports. The company is doing this in response to consumers wanting “more meaningful connections,” per a company spokesperson. Each boutique will have a taste and discovery area where guests can interact with the Nespresso machines and sample different coffees, a coffee theater with master classes and other experiences that show how a bean progresses to the cup a recycling center highlighting sustainable efforts and a coffee bar with lounge space.
• Are local food halls still relevant? Atlanta-based STHRN Hospitality thinks so. So much so, in fact, that STHRN is taking over Chicago Revival food hall. On July 5, operators of Chicago’s Revival Food Hall announced plans to cease operations after citing a failure to come to “better business terms from our landlord” as the reason. STHRN will take over management of the food hall and give it a new name. Revival opened in 2016 and was a stop of restaurant development + design’s 2017 Tour the Trends event.
• Potbelly’s new smaller prototype features a collection of notable design details. These include a customized drink station and pickup shelves. The smaller prototype is 500 square feet less than its standard design, which measures roughly 2,300 square feet. The smaller prototype allows Potbelly franchisees to open their locations faster and cheaper compared to the traditional units. The chain opened its first unit using this design earlier this year in May and more will follow, per a Restaurant Dive story.
• A virtual restaurant becomes a reality. Indeed, Funeral Potatoes is now a restaurant in Chicago’s Portage Park Neighborhood specializing in Midwestern comfort food. The concept got its start as an “emergency contingency plan” amid sweeping hospitality layoffs in March 2020,” as Eater reports. The restaurant draws its name and inspiration from the funeral potatoes served following a celebration of life.

Economic News

• Consumer spending was flat in June of 2024 compared to the previous month, per the U.S. Census Bureau. Sales were up 2.3% compared to June of 2023. This was better than the 0.3% decline some economists had projected, per this Yahoo! Finance story. Total sales for April 2024 through June 2024 were 2.5% greater than the same period in 2023. Eating and drinking places registered total sales of $94.8 billion on a seasonally adjusted basis in June. That was up 0.3% from May and represented the third consecutive monthly sales gain, after May’s preliminary reading was revised significantly higher, per an analysis from the National Restaurant Association, who added that despite some of the challenges consumers face, they “will bend but not break” during the second half of the year.
• The Consumer Price Index declined 0.1% in June, the U.S. Bureau of Labor Statistics reported. This comes after the CPI was unchanged in May and represents the first time since the start of the pandemic that there was a month-on-month decline, per CNN. Over the last 12 months, the all-items index increased 3.0%. Food-away-fron-home prices (restaurants) increased 0.4% for the month compared to a 0.1% increase for food-at-home (groceries) prices. For the 12 months ending in June, food-away-from-home prices increased 4.1%, which is three points more than food-at-home prices.
• The Producer Price Index for final demand grew 0.2% in June, the U.S. Bureau of Labor Statistics reported. This was more than the 0.1% increase economists surveyed by Dow Jones had anticipated, per CNBC. The hotter-than-expected PPI reading runs counter to recent data that shows inflation declining, though economists and investors tend to put more weight on the consumer-focused inflation readings. Final demand prices were unchanged in May and increased 0.5% in April. On an unadjusted basis, the index for final demand rose 2.6% for the 12 months ending in June, the largest advance since moving up 2.7% for the 12 months ended March 2023. The BLS attributes the June rise in the index for final demand to a 0.6% increase in prices for final demand services. In contrast, the index for final demand goods decreased 0.5%.
• Higher operating costs and a negative view of the economy continue to weigh on small business owners. Despite those challenges, the NFIB Small Business Optimism Index hit 91.5 in June, its highest reading of the year. Despite this growth, though, the index has been at less than its long-run average for 30 consecutive months.
• Consumer sentiment declined slightly in July. The University of Michigan Index of Consumer Sentiment came in at 66% for July, which was down 2.2% from June. For its part, the university characterizes this change as statistically insignificant as the decline is “well within the study’s margin of error. July’s level is 5.5% less than the same period in 2023. Consumers’ assessment of both the current economic conditions and their outlook for the coming months also declined slightly.
• Initial jobless claims fell more than expected. For the week-ending July 6, 2024, initial jobless claims declined by 17,000 for a total of 220,000, per the U.S. Bureau of Labor Statistics. This is the lowest level since May. In addition, economists polled by Reuters had projected 236,000 claims. Some of the unexpected decline may be due to July 4 holiday. Unemployment claims often show some volatility during holiday reporting periods. The 4-week moving average was 233,500, a decrease of 5,250 from the previous week.