Support for ghost kitchens grows. McDonald’s and other chains say stimulus money is driving sales but will it last? Starbucks will help Washington state distribute vaccine. Friendly’s is sold out of bankruptcy to Amici Partners. These stories and a whole lot more This Week in Foodservice.

Could ghost kitchens save the restaurant industry? Operators like The Halal Guys claim their ghost kitchens, which produce food only for takeout and/or delivery, cut their costs and increase profits.

These operators see ghost kitchens as a sustainable model during the pandemic and one that could create a $1 trillion market by 2030.

If this forecast is correct, ghost kitchens will represent a significant market segment of their own for operators and the supply chain alike.

Economic News This Week

• Initial jobless claims fell by 26,000 to a level of 900,000 for the week-ending Jan. 16, 2021. The 4-week moving average increased 23,000 to a level of 848,000. The continuing high number of jobless claims is an indication of a slowing economy.
• The Philadelphia Federal Reserve’s Manufacturing Business Outlook Survey shows manufacturing business activity in the region continues to grow and the outlook for the next six months is positive. The General Business Activity Index increased to 26.5 in January from 9.1 in December. (Any number greater than zero indicates increasing activity.) The New Orders Index rose to 30.0 in January from 1.9 in December. The Shipments Index increased to 22.7 in January from 12.0 in December. The Unfilled Orders Index increased to 25.6 in January from -0.1 in December. The Number of Employees Index went up to 22.5 in January from 5.6 in December. The Average Employee Work Week rose to 18.6 in January from 15.5 in December. The significant jump in almost every indicator is a positive sign.
• Sales of existing homes increased 0.7% in December, per the National Association of Realtors. On a seasonally adjusted annual this is 6.76 million homes. On a year-over-year basis existing home sales increased 22.2% and were at the highest level since 2006.
• December privately owned housing starts grew 5.8% compared to November. Single-family housing starts rose 12.0% in December from November. Building permits issued for privately owned housing in December were up 4.5% compared to November and up 17.3% compared to December 2019. December Single family permits issued were up 7.8% compared to November.

Foodservice News This Week

• Did the second round of stimulus checks give restaurants a shot in the arm? Some restaurant chain executives say yes, attributing increased sales to the latest round of government stimulus passed into law last month. Those operations experiencing a rise in sales include Beef O’Brady’s, Checkers Drive-Ins, Church’s Chicken, Fogo de Chao, Noodles & Company and TGI Fridays. In addition, some McDonald’s owners attribute strong January sales to the recent stimulus checks. But some restaurant executives expressed their belief that the impact from the stimulus money on sales will be short lived.
• Add Cici’s Pizza to the list of restaurant chains filing for bankruptcy due to COVID-19. One of the chain’s hallmarks is its pizza buffet, which like all aspects of self-service has had a rough go during the pandemic.
• Starbucks will assist the state of Washington in the distribution of the COVID-19 vaccine. At the request of the state’s governor, the coffee giant assigned 11 employees who are knowledgeable in research and development, operations and labor. The company will make use of its computer simulation technology to develop methods to speed the vaccination process. Also assisting the state in the vaccine distribution are Microsoft, Costco, Amazon and Walmart.
• Connecticut-based restaurant group Amici Partners acquired Friendly’s out of bankruptcy. Amici Partners offered $2 million and the deal will have a ripple effect due to the fact that it will save thousands of jobs, protect Friendly’s franchisees and reduce claims as the buyer assumed numerous contracts and the majority of leases. Amici is affiliated with Brix Holdings, the company behind such concepts as Red Mango, Smoothie Factory and other franchise-driven chains.
• The hottest item in the burger business is … chicken? So says a report in the Wall Street Journal, which notes that at least 10 major fast-food chains have introduced fried chicken in the past 3 months or plan to shortly. They include McDonald’s, Shake Shack and Jack in The Box. Whether these new chicken sandwiches will resonate with consumers is anyone’s guess but the trend could be a windfall for breading machine manufacturers.
• A bill updating New York City’s limitations on street venders has drawn fire from restaurants and business groups. The bill would raise the number of licenses for street venders to 9,000 from 5,000. The battle between the food cart operators and the brick and mortar restaurants has been going on for more than 20 years.
• Restaurants have dealt with a variety of challenges since the start of the pandemic. Add sourcing propane to the list. With indoor dining forbidden or severely restricted, operators began serving customers outside. While no panacea, eating on patios and sidewalks enabled many restaurants to at least survive. Then came winter. This led operators to buy propane heaters to heat the outdoor serving areas. First, heater prices shot up. Next, manufacturers were unable to meet the sudden rise in demand. Now some restaurants are being told heaters may not be available until spring. And those that were fortunate enough to get the heaters have run into still another problem. There is a shortage of small tank propane. Propane dealers claim propane is available, but it is necessary to look a little harder to find it. Tell that to a Ft. Collins, Colo., restaurant manager who spent an entire day driving around town only to find every propane station he contacted was out.
• Is more online ordering and curbside delivery on the menu for restaurant chains? YUM! Brands’ CEO David Gibbs thinks so. The 31-year company veteran told the Wall Street Journal he wished the company had moved faster to change Pizza Hut’s business model from dine in to take out and delivery. Hundreds of Pizza Hut restaurants have closed permanently.
• Growth Chains: The One Group plans to open four STK restaurants In the U.S. and four international locations this year. The company hopes to eventually have 200 units systemwide. The Fogo de Chao signed five leases to open new units: White Plains, N.Y.; Albuquerque, N.M.; Burlington, Mass.; Coral Gables, Fla. and Oak Brook, Ill. Chick-fil-A will open four restaurants in the Chicago area this month.
• Comparable Store Sales Reports: El Pollo Loco (system-wide sales down 0.2%, company-owned units down 3.0% and franchised locations up 1.8%.)

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