Revisiting the “Super Size Me!” documentary. The U.S. now has more open jobs than job seekers. McDonald’s announces staff cuts. Critics say Starbucks has over expanded. There is less to IHOP’s name change than meets the eye. These stories and a whole lot more This Week in Foodservice.
In 2004, documentary filmmaker Martin Spurlock created a film about the fast-food industry that became a phenomenal success. Entitled “Super Size Me!,” Mr. Spurlock both directed and starred in the film, which had him dining only on McDonald’s food for 30 days.
Spurlock reported substantial weight gains but in what some thought was the high point of the film (or the low point, depending on your point of view) his doctor looks solemly into the camera and tells him his liver is pickled like an alcoholic’s. The inference was McDonald’s food can result in a serious or even fatal illness.
The film was a major hit, playing not just in art houses and big city theaters but also in suburban multiplexes that rarely booked documentaries.
Spurlock stated that it took him 14 months to lose the weight he gained in the 30 days and his then-girlfriend had to devise a special diet to “detoxify” him.
Then in December last year Spurlock put out a tweet confessing to abusing women as part of a #MeToo movement. He speculates on the reasons for his actions, including an admission that he had been an alcoholic most of his life, starting drinking at age 13 and stating he had never been sober for an entire week his whole life. This contradicts his saying to the doctor in film he didn’t use alcohol.
This certainly calls into question his contention that his liver problem was the fault of McDonald’s food.
Perhaps the saddest part of the “Super Size Me!” episode is the large number of journalists, and even people with science and medical backgrounds, accepted the Spurlock’s claims without question. (Reviews and comments are still around on the internet.)
Economic News This Week
- The U.S. has more job openings than unemployed. The Bureau of Labor Statistics reported there were approximate 6.1 million unemployed in May while the Bureau’s JOLT study put the number of job openings at 6.7 million on April 30. The JOLT study began in 2000 but it is believed the last time this situation occurred was in the 60s when thousands of men were being drafted due to the war in Vietnam. The statistics can get tricky. For example, only those actively looking for work are considered unemployed. But it does explain why so many restaurants have signs for job openings.
- First-time jobless claims fell to 222,000 a decline of 1,000 for the week ending June 2. The 4-week moving average rose to 225,500, an increase of 2,750.
- Consumer borrowing increased modestly in April. The U.S. Federal Reserve reported consumer credit grew by 2.9 percent on a seasonally adjusted basis. Revolving credit, mostly credit card debt, increased 2.6 percent while non-revolving credit (car loans, student loans, boat loans, etc.) grew by 3.0 percent.
- The Institute for Supply Management’s Manufacturing Index increased 1.4 points in May and now stands at 58.7. (Any reading that exceeds 50 indicates expanding activity.) The Production Index increased 4.3 points for a reading of 61.5 while the New Orders Index hit 63.7, a rise of 2.5 points. The Order Back Log Index rose 1.5 points for a reading of 63.5. The Employment Index came in at 56.3 after an increase of 2.1 points. This is 109th straight month of increasing manufacturing activity and 16 of the 18 manufacturing industries in the survey reported growth.
- The Institute for Supply Management’s Non-Manufacturing Index increased 1.8 points for a May reading of 58.6. (Any reading greater than 50 indicates expanding activity.) The is the 100th consecutive month that the non-manufacturing field showed growth activity. The New Orders Index totaled 60.5, an increase of 0.5 points. The Backlog of Orders Index hit 60.5, an increase of 60.5. The Employment Index totaled 54.1, an increase of rose 0.5. Of the 14 non-manufacturing industries included in the survey, 13 including accommodations and foodservices, reported growth for the month.
- New orders for manufactured goods fell 0.8 percent in April after increasing for the two previous months. Shipment of manufactured goods were virtually unchanged while unfilled orders rose 0.5 percent. New orders for manufactured durable goods (those goods that last at least 3 years) decreased by 1.6 percent driven by a 6.0 percent drop in orders for transportation equipment according to the Commerce Departments full report for the month.
- Business sector labor productivity increased 0.4 percent in the first quarter of this year as output increased 2.7 percent and hours worked increased 2.3 percent. The Bureau of Labor Statistics also reported that Unit Labor Cost increased 2.9 percent in the first quarter as hourly compensation rose 3.3 percent and productivity increased 0.4 percent.
Foodservice News This Week
- McDonald’s plans to reduce management slots. McD’s CEO Steve Easterbrook said the chain will restructure its regional offices and will reduce the layers of management to six from eight. The burger chain already chopped a number of jobs at its headquarters. The Wall Street Journal reported franchisees felt McDonald’s bureaucracy impeded decision making. Franchisees seek help that will aid their profitability as opposed to grading restaurants on cleanliness, customer service and order accuracy. In other news, McDonald’s plans to install 1,000 self-ordering kiosks per quarter for the next 8 to 9 quarters. The giant burger chain found the kiosks get customers to boost the check a bit. Some international markets including Australia, Canada and the U.K. are fully equipped with the kiosks.
- Does Starbucks have too many stores? Analysts note that slowing traffic coincided with an acceleration in store expansion in 2014. Traffic was flat in the last quarter. And, for years Starbucks had comparable store sales growth of 5.0 percent or more in the U.S. but since 2016 comp growth began slowing. In the last 2 quarters comparable store sales in the U.S. rose 2.0 percent. The coffee chain has more than 14,000 locations – more locations than McDonald’s – and one observer believes if Starbucks continues to open stores at the announced rate “cannibalization will intensify.”
- Renowned restauranteur Danny Meyer will open a taco restaurant in Brooklyn. Meyer has opened restaurants with all types of cuisines but this is the first time he will focus on Mexican food. Named Tacocina, Meyer said the concept will focus on authenticity rather than tweaking tacos with global fusion. As the founder of Shake Shack, Meyer was asked if he sees Tacocina someday as a chain but he dismissed this saying a Shake Shack comes along once in a lifetime.
- IHOP’s announcement last week that the company plans to change its name to IHOb has now been revealed to be a promotional gimmick to introduce a new line of hamburgers (thus the “b”) and the name change is “temporary.”
- Corporate Stirrings: Published reports say Earl Enterprises will acquire the Bertucci’s chain. Earl Enterprises owns Planet Hollywood, Buca di Beppo and Earl of Sandwich. When Bertucci’s declared bankruptcy last month, it was reported that Right Lane Capital was to acquire the pizza chain. Earl Enterprises will buy Bertucci’s for $13 million in debt, $4 million in credit and $3 million in cash.
- Growth Chains: Fat Brands will open at least five co-branded Fat Burgers and Buffalo’s Express restaurants in Bali and Jakarta, Indonesia. Fat Brands now has more than 200 restaurants open or under construction in 32 countries. Pennsylvania appears to be a target for chains with each of the following to open new locations in the commonwealth: MOD Pizza, CoreLIfe Eatery, Jersey Mike’s, Mission Barbecue, Arooga’s Grille House & Sports Bar, Marco’s Pizza, Wingstop, and Shake Shack. Dickey’s Barbeque will open restaurants in Michigan, Missouri and Nevada. A&W plans to open 12 restaurants this year.
For the latest chain comparable store sales reports, please click here for the Green Sheet.