This Week In Foodservice

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


The Food Delivery Consolidation Saga Continues

Delivering restaurant food doesn’t seem to be high tech nor exciting nor financially spectacular. Despite this, almost overnight some investors became infatuated with food delivery, something pizza and Chinese restaurants had been doing for decades.

Never mind that some restaurants did not want to partner with third-delivery firms. In some cases, the foodservice operators said the delivery fees were onerous while others found the service lacking. Almost weekly a different financial guru would remind anyone who would listen profits remained elusive in the food delivery business.

This narrative has served as the backdrop for an interesting saga that’s been playing out of late between two of the bigger names in third-party delivery. GrubHub initially tried to sell the company to Uber Eats. The two companies could not agree on a price then GrubHub wanted Uber Eats to pay a breakup fee if the deal was challenged by government regulators.

GrubHub’s next move was to agree to be purchased by Just Eat Take Away, a large European food delivery firm. The move avoids the regulation problems in the U.S., but the financial analysts at the Motley Fool claim that European investors don’t like deal at all. So, the drama continues.

Economic News This Week

  • S. retail sales increased 17.7% in May, the U.S. Commerce Department reported. This came after record-setting declines in March and April. To put the growth in context, this is more than twice the rate forecast by a variety of economists. All categories reported gains in May, with clothing and accessories (188%) and sporting goods, hobby, musical instrument, and bookstores (88%).
  • The U.S. officially entered a recession in February, according to the National Bureau of Economic Research. At one time the U.S. was in a recession if Gross Domestic Product was negative for two consecutive quarters. Given the situation the economy is currently in, the country should have no problem meeting that standard this year.
  • Consumers slammed on their borrowing breaks in April as consumer credit decreased by 19.%, per the U.S. Federal Reserve. Revolving credit, which is mainly credit card debt, fell at an annual rate of 65.0%, the largest decline on record. Non-revolving credit (auto loans, boat loans, student loans, etc.) decreased at an annual rate of 4.0%.
  • Initial-jobless claims decreased by 355,000 for a final reading of 1.54 million for the week-ending June 6. The number of claims was in line with forecasts. The 4-week moving average was 2 million, which represents a decrease of 286,250 claims.
  • The Producer Price Index for Total Final Demand increased 0.4% in May. In the 12-months ending in May the PPI fell 0.8%. The Producer Price Index for Food rose 6.0% in May.
  • The May Consumer Price Index for All Items declined 0.1%. This comes after declines of 0.8% in April and 0.4% in March. This is the first time ever the CPI has declined for three consecutive months. In the last 12 months ending in May the consumer price index has increased 0.1%. Without food and energy prices, the index has increased 1.2% in the past 12 months.
  • New home sales increased 21% in May compared to the same month in 2019. This is according to a survey of 300 builders by John Burns Real Estate Consulting, LLC.
  • The preliminary reading of the June University of Michigan Index of Consumer Sentiment showed improvement. The index rose to 78.9 from 72.3 in May. The Current Economic Conditions Index increased to 87.8 in June from 82.3 in May. The Index of Consumer Expectations increased to 73.1 from 65.9 in May. A spokesperson for the University attributes the gains primarily to a better employment situation.

Foodservice News This Week

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