This Week In Foodservice

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

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The RESTAURANTS Act of 2021 Makes it to Congress

DoorDash acquires Chowbotics, maker of the salad-making robot. Virtual restaurants continue to add units at a fast pace. A bill before Congress promises to provide financial aid to restaurants. Restaurant employment declined by 19,400 in January. Restaurant chain Golden Chick chain introduced a new modular design. New York City’s restaurant week was so successful it will now go on for an entire month. These stories and a whole lot more This Week in Foodservice.

Most issues of This Week in Foodservice feature a section called Growth Chains, highlighting multi-unit operators opening new locations or those with plans to open new locations. In the current operating environment, opening three or four units is impressive. But virtual restaurants can alter the overall growth picture significantly.

Take, for example, MrBeast Burger, a new concept that launched with roughly 300 locations across 35 states back in December. That’s right. Thanks to its use of ghost kitchens, all it took was one day for MrBeast Burger to have more locations than many, many established chains.

What’s more, MrBeast is not unique. Fast-casual concept Wow Bao opened 150 locations in 85 cities in 9 months last year, including adding 40 locations in a single day. And just this week Nathan’s Famous opened its 100th ghost kitchen location since the start of the pandemic. This Nathan’s Famous unit operates from The Black Iron, an independent restaurant in Brooklyn. And last fall, Nathan’s Famous introduced Wings of New York, the company’s virtual chicken wing-themed concept that operates from its kitchens.

Economic News This Week

  • The Institute for Supply Management’s Manufacturing PMI grew in January but at a slower pace than the previous month. The index totaled 58.7, a 1.8-point decline from December. Any reading greater than 50 indicates growth. The New Orders Index totaled 61.1 in January, a 6.4-point decline from December. The Production Index hit 60.7 in January, a decline of 4.0 points from December. The Order Backlog Index was 59.7 in January, down 0.6 points from December. The Employment Index hit 52.6, a 0.9-point increase. Of the 18 manufacturing industries studied, 15 showed growth in January, including the Food, Beverage and Tobacco sector. The Institute notes January represents the eighth consecutive month the manufacturing sector showed increasing activity.
  • The Institute for Supply Management’s Report on Services shows economic activity increased for the eighth consecutive month in January. The Services PMI totaled 58.7, a 1-point increase from December. Any reading greater than 50 indicates increasing activity. Despite a 0.6-point decline, the Business Activity/Productivity Index remained in growth mode at 59.9. The New Orders Index totaled 61.8, 3.2 points greater than December. The Order Backlog Index hit 50.9, 2.2 points better than the previous month. The Employment Index hit 55.2, a 6.5-point increase from December. It’s important to note both the Order Backlog and Employment Indices moved from negative territory in December to growth in January. Of the 18 industries surveyed by ISM, 14 grew in January, including Accommodations & Foodservices (more on this segment below).
  • Consumer credit increased 2.8% in December, per the Federal Reserve. For 2020 Revolving credit decreased 11.2% while nonrevolving credit rose 3.9%. Overall, consumer credit changed little changed for the year.
  • Productivity in the non-farm business sector decreased 4.8% in the fourth quarter of 2020, per the Bureau of Labor Statistics. Output increased 5.3% and hours worked increased 10.7%. Unit labor costs increased at an annual rate of 6.8% in the fourth quarter as hourly compensation increased 1.7% and productivity declined 4.8%.
  • Initial jobless claims totaled 778,000, a decline of 33,000 for the week-ending Jan. 30. The 4-week moving average claims totaled 848,250, a decline of 1,250.
  • Private-sector employment increased 174,000 in January, per ADP. Small businesses increased their payrolls by 51,000. Medium-size employers added 84,000 jobs and large companies added 39,000 people. The leisure and hospitality sector increased its number of jobs by 35,000.
  • The January unemployment rate totaled 6.3%, a decline of 0.4%, per the Bureau of Labor Statistics. The BLS attributes part of the decline to fewer people looking for work. In fact, the number of unemployed persons decreased to 10.1 million. Both statistics are considerably lower their April highs, but they remain well above pre-pandemic levels in February of 3.5%.
  • Private construction spending increased 1.2% in December compared to November, per the S. Census Bureau. Residential spending in December was up 3.1% over November on a seasonally adjusted annual basis.

Foodservice News This Week

  • DoorDash has acquired Chowbotics, a San Francisco Bay-area company best known for its salad-making robot, per multiple published reports. While this deal expands DoorDash’s robotic footprint into the kitchen, it’s not completely clear yet how the two organizations will work together.
  • Employment at eating and drinking places declined by 19,400 from December to January, per the Bureau of Labor Statistics. Employment in restaurants and bars fell to 9.94 million in January 2021 from 11.86 million in January 2020. The report does not distinguish between full-time and part-time positions.
  • A $120 billion restaurant industry relief bill was introduced to both chambers of Congress and appears to have bipartisan support. Sponsors of the RESTAURANTS Act of 2021 recognize the serious and unique problems restaurants face and the bill calls for grants up to $10 million for operations with less than 20 units. The grants are to cover expenses from February 15 last year to 8 months from the bill becoming law. This legislation was welcome news to the National Restaurant Association. Sean Kennedy, vice president of public affairs for the NRA released a statement that said in part: “The unified RESTAURANTS Act of 2021 is a light at the end of a long, dark winter for independent, chain, and franchise restaurants that have been most impacted by the pandemic. While many other industries have started to recover, the restaurant industry finished last year in a double-dip recession, and with 2.5 million fewer jobs. These grants will put even the hardest-hit restaurants on the path to economic survival … The bill introduced today finally reflects the unified view that all small restaurants should have access to relief — regardless of whether they are an independent or a franchise of a regional chain.”
  • Quick-service chicken chain Golden Chick’s latest restaurant prototype features a modular design, which the company says are less expensive and faster to build.
  • New York City extended its restaurant week for one month. The promotion, which offers delivery and takeout, was scheduled to end Jan. 31 but will now wrap up on Feb. 28. The event organizers waived the participation fee, which in the past ran from $1,500 to $2,800 which may have influenced the record 571 restaurants to participate this year. In addition, New York City restaurants will open for indoor dining on Feb. 12.
  • Growth Chains: Agave & Rye, a full-service taco concept, opened its first restaurant in Covington, Ky., in 2018. The company then added two stores in 2019 and opened its fourth unit in February 2020, just as the pandemic was about to strike. After opening 2 more in the interim, the chain expects to double in size to 12 units this year and double again to 24 locations in 2022.
  • Comparable Store Sales Reports: Chipotle Mexican Grill up 5.7%. YUM! (Habit Burger down 5.0%, KFC up 8.0%, Pizza Hut up 8.0% & Taco Bell up 1. Yum! China (KFC Down 4.0% & Pizza Hut down 5.0%.)

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