The International Foodservice Manufacturers Association released a reasonably upbeat 2021 industry forecast. Developed in conjunction with research firm Datassential, the forecast assumes the availability of an effective COVID-19 vaccine, return of domestic and international travel, and modest government regulations for the coming year.
With those factors in play, IFMA predicts consumer spending at foodservice operations will increase at a rate of 7.4%, excluding menu price inflation. IFMA projects restaurant sales will decline 28.4% by the end of 2020.
The quick-service restaurant segment will recover more than half of its losses from this year in 2021, per IFMA’s forecast. Full-service restaurants, in contrast, will not see the same bounce back as QSRs, with IFMA projecting midscale operators growing only 3.7% and casual restaurants gaining only 4.7% in 2021.
As for onsite foodservice, IFMA projects a 30% decline in 2020 will be somewhat offset by 9.7% growth next year. Along those lines, IFMA projects the healthcare and education segments will substantially recover their losses from 2020 but the lodging, recreation and business and industry segments will recover only a “small portion” of their losses in 2020.
IFMA plans to revise its forecast in the first quarter of next year when the situation becomes clearer.
Economic News This Week
- Initial jobless claims totaled 1.1 million, an increase of 135,000 for the week ending August 15. The 4-week moving average totaled 1.17 million, a decrease of 79,000.
- July existing home sales show the economic recovery is “sticking,” per the National Association of Realtors. Existing home sales increased 24.7% in July compared to June. On a year over year basis, sales are up 8.7%. The association expects sales to remain strong for the rest of this year.
- Privately owned housing starts increased 22.6% in July compared to June. Compared to July 2019, housing starts rose 23.4% in 2020. Single-family housing starts in July increased 8.2% from June. Privately owned housing unit building permits issued increased 18.8% in July compared to June. The number of permits issued were up 9.4% from July of 2019. Permits issued for single family homes were up 17.0% from June.
- The Federal Reserve Bank of New York’s Empire State Manufacturing Survey showed business activity edging slightly higher in August. The General Business Condition Index fell 13.5 points but stayed in expansion territory at 3.7. (Any reading greater than zero indicates growth.) The New Orders Index dropped 15.6 points for a reading of -1.7. The Shipments Index fell 11.8 points but stayed in expansion mode at 6.7. The Unfilled Orders index stayed in negative territory falling from minus 0.6 in July to minus 14.0 in August. The Number of Employees index crept up slightly rising from 0.4 in July to 2.4 in August. The Average Employee Workweek Index, though, dropped from minus 2.6 in July to minus 6.8 in August.
- The Conference Board’s Leading Economic Index increased 1.4% in July. This followed a 3.0% increase in June and a 3.1% increase in May. Even though the recent numbers are positive the Conference Board believes the recovery is “losing steam” and economic will weaken substantially in the final months of 2020.
Foodservice News This Week
- US Foods launched what it describes as an “all-in-one ghost kitchen solution.” The program includes proprietary technology to help identify menu opportunities, a detailed playbook to guide decision making, dedicating marketing support, webinars, and one-on-one consultations with US Foods specialists.
- Chili’s virtual brand “Just Wings” is producing revenues that equate to $150 Million annually. The basic development behind the Just Wings delivery only brand began in 2018. The roll out in the middle of the COVID-19 pandemic was a coincidence, according to Chili’s CEO. He added it is a fair question to ask if the new brand will have an impact on the Chili’s and Maggiano’s brands.
- Taco Bell will introduce a new concept called “Taco Bell Go Mobile.” The new design targets guests who order ahead using the Taco Bell app and will provide a “frictionless” experience. The new design measures 1,325 square feet, much smaller than the chain’s typical 2,500 square foot unit. The new mobile lotions will feature dual drive thru lanes and “smart kitchen technology” which will detect when customers arrive at the restaurant and suggest the quickest route for picking up orders. There is an option for contactless curbside pick-up. To streamline guests’ experience even more, Taco Bell will deploy concierge service of team members known as “bellhops.”
- Technomic, working in conjunction with Shortest Track, has developed the COVID-19 Disruption Risk Index. Using artificial intelligence, the index will calculate and predict factors affecting business disruption at a specific location. In order, here are the first five most disrupted markets: Houma, La.; Lafayette, La.; Tampa, Fla.; Panama City, Fla. and Houston.
- Fazoli’s breaks sales and traffic records in July. The Italian QSR chain reported a 16% increase in sales and a 17% rise in traffic compared to July 2019. Fazoli’s also reported a 65% increase in drive thru sales, a 410% increase in online ordering and a 200% increase in delivery sales. This sales performance followed what the company termed “tremendous” May and June sales and traffic.
- Pizza Hut’s largest franchisee, NPC International, will close up to 300 locations. Most of the units will be dine-in locations which suffered due to restrictions aimed at slowing the spread of COVID-19. NPC International, which owns 1,225 Pizza Huts and 385 Wendy’s, filed for bankruptcy last month.
- Already popular in city centers, concerts and festivals. the pandemic presented a new avenue for food trucks: the suburbs. In suburban areas food trucks now find traffic I the form of house bound customers working from home, students who cannot attend classes and people whose favorite restaurants are shut own. Because they are close to home and maintaining safe distances seems relatively easy, many consumers feel safe refueling via a food truck.
- Growth Chains: Like most full-service restaurants, the Melting Pot suffered as a result of the pandemic. At one point in April The NPD Group reported transactions were down 80%. However, the Melting Pot’s management saw the situation not as a problem but as an opportunity. The chain saw a chance to try an aggressive franchising program. The company found a lot of people were not even aware the fondue chain franchises. The Melting Pot hopes to expand by 30 franchised locations by 2022. Dickey’s Barbeque Pit inked a multi-unit franchise agreement in Florida for locations in Crestview, Destin, Ft. Walton Beach and Niceview. Following the opening of three units in the Houston area, Chicken Salad Chick opened a restaurant in Birnhiam Woods Spring. YUM! China opened a Taco Bell in Beijing, the first in the capital city.
- Comparable Store Sales Reports: Bad Daddy Hamburgers down 36.7%, Bloomin’ Brands (combined locations down 39.4%, Outback down 32.9%, Carrabba’s down 36.7%, Bonefish Grill down 56.8% & Fleming’s down 56.3%) And Good Times Burgers up 11.9%
For details and same store sales of other chains, Please Click Here for the latest Green Sheet.