The Wall Street Journal reported last week that McDonald’s is testing a robot deep fryer and the burger giant plans to expand the test to more stores.

Automated kitchen equipment is not new, at least in concept. One foodservice equipment manufacturer had a grill that automatically flipped burgers a quarter century ago. For some reason, though, the robots never caught on among operators. Perhaps the technology wasn’t good enough or perhaps operators didn’t see the need for automation.

Given the tight labor market and widespread increases in the minimum wage, though, foodservice operators may be more receptive to automated equipment, including robotics. Operators used to express doubts about labor-saving products, often saying unless the solutions kept them from having to hire the equivalent of a full-time employee, the products were probably not worth the investment. Now, more progressive operators say they feel saving even smaller amounts of employee time makes these solutions more appealing.

The Journal story also dealt with the question of whether automated equipment eliminates jobs. McDonald’s said the purpose for the robot fryer is not to save on labor costs but rather to make employees jobs easier so they can focus more on customer service and teamwork.

The article said McD’s is also testing voice-activated drive-thru technology. Meanwhile, other chains are testing self-operating ovens and dishwashers and, yes, grills that flip burgers.

 

Economic News This Week

  • Initial jobless claims declined by 6,000 for a total of 216,000 for the week ending June 15. The 4-week moving average increased 1,000 to a final level of 218,750. Despite rumblings of an economic slowdown, it appears that the labor market remains firm.
  • The Conference Board’s Leading Economic Index was unchanged in May at 111.8. This came after three consecutive monthly increases. As the economy enters its eleventh year of expansion, the board states, the index “…clearly points to a moderation in growth towards 2 percent by the end of the year.”
  • Existing home sales increased by 2.5 percent to a seasonally adjusted annual rate of 5.34 million in May. The increase follows two months of declining sales. Existing home sales are down 1.1 percent from a year ago, though. Falling mortgage rates is responsible for the increase, per a spokesman for the National Association of Realtors.
  • The Empire State Manufacturing Survey trended downward in June. Virtually all indicators declined in June with the General Business Conditions Index went from 17.8 in May to -8.6, per The New York Federal Reserve. (Any reading greater than zero shows expanding activity while any reading less than zero shows declining activity) The New Orders Index was -12 in June, down 21.7 points from May. The Unfilled Orders Index was – 15.8 in June, down 17.9 points from May. The indexes for the number employees and average work fell into negative territory as well. Just as disturbing as the steep declines in the indicators is the fact that as recent as last month most of the data was trending up.
  • The Philadelphia Federal Reserve’s Manufacturing Business Outlook Survey declined 0.3 points in June from May’s reading of 16.6. (Any reading greater than zero indicates increasing activity.) The New Orders Index declined to 8.3 this month from 11.0 in May. The Shipments Index dropped to 16.6 from 27.6 in May. The Number of Employees Index declined to 15.4 this month from 18.2. The only good news was the Philadelphia survey was not near as severe as the Empire State report.
  • May housing starts declined 0.9 percent from April, according to the U.S. Census Bureau. Compared to May 2018, housing starts were down 4.7 percent. Single-family housing starts were down 6.4 percent in May. Building permits issued in May were up 0.3 percent from April but down 0.5 percent from the number of permits issued in May of 2018. Building permits for single family homes were up 3.7 percent from April.

Foodservice News This Week

  • The strongest restaurant brands in the U.S. by segment are: burgers – Five Guys, casual dining – Cheesecake Factory and Texas Roadhouse, chicken – Chick-fil-A, ice cream/yogurt – Ben & Jerry’s, Mexican – Taco Bell, pizza – Blaze Pizza and sandwich – (tie) Panera and Subway. These rankings come courtesy of Harris Poll’s EquiTrend Study, which is based on a survey of 77,000 consumers.
  • Cousins Subs opened its first delivery-only location. The lower cost structure of the new operation allows the chain to expand hours of operation, spend more on labor and delivery drivers to increase service speed and efficiently distribute large catering orders throughout Milwaukee’s downtown area, per a company spokesman.
  • The Panera Bread Company plans to test a dinner menu. The chain sees significant opportunity in increasing its dinner business which now accounts for a quarter to a third of Panera’s sales. The test menu items include flatbread pizza, meatier sandwiches and bowls. The test began at Panera’s Jacksonville, Fla., location and the chain is extending it to Lexington, Ky. It’s unclear what changes, if any, these new menu items will have on the chain’s back of the house operations.
  • Buyout firm takes a bite out of Potbelly Sandwich Shops. 3G Capital has purchased a 3.5 percent stake in the troubled sandwich chain. There is some speculation that 3G Capital’s ultimate goal is purchasing Potbelly.
  • Domino’s will test unmanned delivery vehicles in Houston. The pilot program will utilize a vehicle from robotics company Nuro, which has been safely running in Houston since March.
  • Corporate Stirrings: In an all-cash deal valued at $650 million, The Del Frisco’s Restaurant Group has agreed to be purchased by private equity frim L Catterton. Elevation Burger, a 44-unit chain that presents itself as a “better for you burger,” has been purchased by FAT Brands for $10 million cash. Papa John’s Pizza plans to spend $80 million on its domestic franchisees and marketing.
  • Growth Chains: Eggs Up Grill will open nine more locations by the end of this year, that's in addition to the four it's opened thus far in 2019. The chain has an additional 18 planned openings for 2020. Another Broken Egg signed 9 franchise agreements and is aiming for 300 locations by 2025.
  • Comparable Store Sales Reports: Darden Restaurants (Blended up 1.6 percent, Bahama Breeze down 1.9 percent, Capital Grille up 2.9 percent, Cheddar’s Scratch Kitchen down 3.2 percent, Edie V’s up 2.0 percent, LongHorn Steak House up 3/3 percent, Olive Garden up 2.4 percent, Seasons 52 down 2.1 percent and Yard House down 1.4 percent.)

 

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