This Week In Foodservice

Jerry Stiegler aggregates key industry information and provides brief analysis to help foodservice professionals navigate the data.


NYC Loses Take-Out Case, C-Store Opens Sit-Down and More

Starbucks attempted to deal with scheduling problems but came up short. New York City tried to rid the city of foam and hard plastic food containers but was shot down in court. Johnny Rockets and the QuikTrip C-store chain have both introduced new concepts. These stories and a whole lot more This Week In Foodservice.

It’s not just the money. Foodservice employees also have other problems. Take Starbucks, which caught some flack last week when a survey of 200 past and present employees was released by the Center for Popular Democracy, a non-profit organization that works with community groups. Starbucks has an image of being several cuts above the average foodservice chain. The company offers health insurance to employees who work more than 20 hours a week. The company also pays for employees to take online college courses. And, to many, being a barista is sexier than flipping a burger.

Starbucks’ problem lies with the company’s scheduling system. Last year the coffee chain said it would furnish employees with their schedules at least 10 days in advance. Some reports claim this simply has not happened, though a company spokesman denied it. Also catching flack was the practice known as “clopening” where employees who close the restaurant at night have to return to open it in the morning.

Critics say at least part of the problem is the staffing system used in the stores encourages managers to err on the side of under staffing. Store managers strive mightily to stay within their allotted hours. The system is so ingrained that managers refuse to change even when higher management sees the benefits of adding more help. Another part of the problem may be many Starbucks do not have assistant managers, which throws a lot of work on the backs of managers.

With low staffing levels, any single employee out sick can result in a very stressful situation. And, Starbucks employees who want to take a sick day are required to find their replacement themselves at some stores.

One possible solution is to create a mini workforce of floating relief employees who call a central number each morning. The QuikTrip C-store chain uses this system successfully in some areas.

Economic News This Week

  • Initial jobless claims totaled 267,000, an increase of 3,000, for the week ending September 19. The 4-week moving average was also virtually unchanged at 272,500, a decrease of 750.
  • Existing home sales declined 4.8 percent in August from July, after 3 straight months of increases. The National Association of Realtors estimated August existing home sales at an adjusted annual rate of 5.31 million. Sales were up 6.2 percent compared to August 2014. The median price for existing homes rose 4.7 percent compared to August last year.
  • Sales of new single-family homes rose 5.7 percent in August from July to a seasonally adjusted annual rate of 552,000. Compared to August 2014, new single-family home sales were up 18.7 percent. The August estimate places new home sales at the highest level since 2008.
  • New orders for manufactured durable goods fell 2.0 percent in August. The U.S. Census Bureau’s Advance Report attributed the drop to a decline in new orders for transportation equipment. Excluding the transportation equipment, overall new orders were down 0.1 percent. Shipments of manufactured durable goods were virtually unchanged from July while unfilled orders were down 0.2 percent. New orders for capital goods – those goods used in the manufacture of other goods – were down 2.0 percent.
  • Growth in the U.S. manufacturing sector was flat in September, according to the U.S. Manufacturing Purchasing Managers Index from financial data firm Markit. The Index was 53, the same reading as in August. Any number that exceeds 50 indicates growth in manufacturing but 53 is the lowest the index has been in 2 years, indicating that manufacturing may be a drag on the economy in the third quarter. The chief economist for Markit theorizes that the strong U.S. dollar, reduced demand in export markets, and reduced capital investment by energy companies are all hurting manufacturers.
  • Personal income rose 0.3 percent in August while personal spending rose 0.4 percent according to the U.S. Bureau of Economic Analysis.
  • The Reuters/University of Michigan Consumer Sentiment Index Fell To 87.2 in the final September reading, down from 91.9 in August. The reading was slightly better than forecast. The Current Economic Conditions Index fell to 101.2 in August and the Expectations Index dropped to 79.2 from 83.4 in August.
  • The Gallup Organization’s U.S. Economic Confidence Index edged up a bit to minus 12 for the week ending September 20. This is below the average so far this year but up from the year’s low point of minus 17 in August.

Foodservice News This Week

  • New York City’s ban on foam cups, plates, clamshells, hard plastic utensils and packing peanuts was overturned in court. The judge ruled that despite claims by the city to the contrary, the products are recyclable so the ban is not justified. Fines proposed by the city for the use of the products were greater than those for marijuana offenses. The city said they would appeal the judge’s ruling.
  • Johnny Rockets opened a fast-casual concept called Johnny’s Burger Factory in Buffalo, N.Y. The new concept is aimed at Millennials who the chain described as “time starved.” The operation will feature “an industrial look” with reclaimed wood siding and corrugated siding. There is also a digital menu board that looks like a hand written chalkboard, touch screen kiosks for ordering, and a self-serve sauce bar.
  • The QuikTrip C-store chain is testing a sit-down restaurant concept at a truck stop in Tulsa. The new concept, called QT Kitchens, offers sandwiches, wraps, flatbreads, pizza, drinks and desserts. The operation will allow customers to order from touchscreen computers and also have a drive-thru window.
  • Taco Bell shut down US Taco Company, its fast-casual concept. Taco Bell had hoped their gourmet tacos would attract a higher-income demographic but prices may have been too high. Located in Huntington Beach, Calif., the restaurant had been open for approximately a year.
  • A Freshii franchisee came up with a new spin for a test kitchen. The franchisee has opened a restaurant in the 1871, a tech incubator in Chicago’s Merchandise Mart. The unit is surrounded by startups and innovators and the franchisee said that there may be some ideas that they can use in their business.
  • New York City food truck and food cart vendors are pushing the city to lift the number of permits available. The city currently limits the number of permits to 3,000 year round and 1,000 seasonal, valid from April to October. Current permit owners renew them year after year and rent them out for as much as 100 times their face value. This can be as much $25,000 a year. Other operators work without a permit and risk getting a $2,000 ticket.
  • Food carts are now legitimate in Chicago. For years food carts could only sell food prepared in kitchens subject to health inspection. This caused many food carts to operate outside the law. The new regulations set standards for where operators can prepare the food, regulate hygiene and set rules for food cart storage. However, a new law has been introduced which will ban the carts from certain upscale neighborhoods.
  • Here’s a first for McDonald’s or maybe any fast food restaurant: BurgerBusiness reports that McDonald’s in Sweden is inviting diners to reserve a table as part of an introductory program for a limited time deluxe burger called the Maestro Classic. Reserved tables are available at a limited number of locations for 2 weeks. McDonald’s has frequently developed high-end items in the UK and Europe.
  • Peet’s Coffee & Tea will offer all day breakfast in its Chicago area locations. The chain plans to expand the all day program in 2016 and eventually offering it at all their locations.
  • Corporate Stirrings: Major foodservice distributor Performance Food Group Co. has announced they have filed a registration with the U.S. Securities and Exchange Commission for an initial public offering of 14.5 million shares. The price per share is expected to be the range of $22 to $25. The board of directors of Jack in the Box has authorized a $200 million stock buy-back program.
  • Growth Chains: Dickey’s Barbecue has 178 new restaurants in development including 27 in California and 13 in Ohio and Northern Kentucky. Ergon Greek Deli & Cuisine has just opened two restaurants in Southern Florida with three more to follow shortly. The Melting Pot plans to open five restaurants in Mexico. The Wok Box Fresh Asian Kitchen has signed a master agreement for 50 stores in the Mid-Atlantic region. Slim Chickens, a made-to-order wing chain headquartered in Fayetteville, Ark., plans to open 20 restaurants in Houston and has announced a goal of 600 restaurants in the U.S. by 2025. Starbucks plans to add 50 more locations in South Africa in the next 5 years. Dunkin’ Donuts signed a master franchise agreement for 30 stores in Switzerland. Pieolgogy Pizza has signed an agreement for 6 locations in St. Louis. Corner Bakery will open 8 locations in Northern Pittsburgh.  MOD Pizza will open 6 restaurants in St. Louis by the end of next year. Sbarro will open 100 to 200 restaurants annually for the next 5 years.
  • Comparable Store Sales Reports: Darden (Bahama Breeze up 1.8 percent, Capital Grille up 7.2 percent, Edie V’s up 5.1 percent, LongHorn up 4.4 percent, Olive Garden up 2.7 percent, Seasons 52 up 3.9 percent, and Yard House up 3.4 percent.) and Rave Restaurant Group (Pie Five Pizza up 6.7 percent and Pizza Inn up 0.2 percent.)

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