Restaurant relief inches forward. Famous Dave’s will test a fast-casual prototype. Consumers flock to McDonald’s for its new chicken sandwich.

The American Rescue Plan, the latest COVID-19-inspired relief plan from the federal government, is one step closer to reality and thus providing some much needed relief to the beleaguered restaurant industry. But it is not a done deal yet.

On March 6 the U.S. Senate passed the bill by the slimmest of margins with a 50-49 vote. In doing so the Senate made some changes the other arm of the legislature will need to approve. That bill is now back in the hands of the U.S. House of Representatives, which will review the changes. The goal of Democrats is to send the bill to President Biden for his signature before the end of the week.

Included in this bill is $28.6 billion in funding for grants to restaurants, which drew positive feedback from the National Restaurant Association. “Every vote brings us closer to the relief restaurants have needed for the last year,” said Sean Kennedy, executive vice president of Public Affairs for the NRA in a statement released on March 6. “The Senate passage of the American Rescue Plan means we have turned the corner and can see the finish line. We appreciate leadership’s continued support of the Restaurant Revitalization Fund and the other programs in this bill that will support restaurants across the industry to put us on the road to recovery. We also appreciate the Senate’s action in increasing the size of the Restaurant Revitalization Fund to $28.6 billion. We look forward to prompt consideration of the American Rescue Plan in the House.”

But this is Washington, D.C., and it’s still 2021, which means there’s naturally a somewhat contrarian perspective. While pleased to see funding going to the restaurant industry, the Independent Restaurant Coalition describes the $28.6 billion as a down payment and vows to “not stop fighting for neighborhood restaurants and bars to receive the relief they need in the months ahead,” per an IRC statement, also released on March 6.

Update 1 p.m. (CST), March 10, 2021

In a near party-line vote, the U.S. House of Representatives has approved the $1.9 trillion American Rescue Plan and sent the bill to President Biden, who is expected to sign the legislation.

Reaction from the National Restaurant Association was swift and positive: “Today Congress spoke with one voice in support of the restaurant industry. The Restaurant Revitalization Fund will keep doors open in restaurants large and small in every community,” said Sean Kennedy, vice president of Public Affairs. “….refining the RESTAURANTS Act on behalf of all restaurants gives chefs, owners, and employees around the country new hope.”

Economic News This Week

• January private construction spending increased 1.7% compared to December and 5.8% from January 2020. Residential spending in January rose 2.5% compared to December.
• New orders for manufactured goods increased 2.6% in January. This represents a 1% increase from December, per the S. Census Bureau. After a 2.1% December increase, shipments of manufactured goods rose 1.9%. Unfilled orders increased 0.1% in January after increasing 0.2% in December.
• The Institute for Supply Management’s February Production Manufacturing Index totaled 60.8, a 2.1-point increase. (Any reading greater than 50 means expansion while any reading less than 50 means contraction.) The New Orders Index totaled 64.8, a 3.7-point increase. The Production Index increased 2.5 points for a total of 63.2. The Backlog of Orders Index rose 4.3 points. Of the 18 manufacturing industries surveyed, 16 reported growth in February.
• The Institute for Supply Management’s Report on Service Businesses continued to grow but at a slower rate. The Services PMI fell 3.4 points for a reading of 55.3. (Any reading more than 50 indicates expanding activity.) The Business Activity/Production Index fell 4.4 points for a reading of 55.5. The New Orders Index declined by 9.9 points to a final level of 51.9. The Employment Index dropped 2.5 points for a final level of 52.7. The Backlog of Orders Index increased 4.3 points to a level of 55.2. Of 18 service industries surveyed, 17 reported growth, including Accommodations & Foodservice which was ranked first overall in growth.

Foodservice News This Week

• Foodservice operators added a hefty 285,900 employees in February, per the S. Bureau of Labor Statistics. This represents 60% of the 379,000 jobs added last month in the U.S. While nice to see, there does not seem to be a logical reason for such a sizable jump. Some pandemic-related restrictions have eased in recent days but they were not in effect to impact February hiring.
• Famous Dave’s will unveil a new format called Famous Dave’s Quick Cue. Famous Dave’s does not use the term cafeteria, instead referring to its new approach as line service. Customers can follow their orders down a pick and point service line to customize their meals. The company feels the design offers a more affordable and potentially more profitable model for the franchisees without compromising the chain’s food quality. The new concept is set to open in September in Coon Rapids, Minn.
• McDonald’s chicken sandwich introduction increased traffic at its locations, according to Placer.ai, a research firm that measures retail foot traffic. In the first 4 days McDonald’s offered the sandwich, traffic increased 19.1%, 29.2%, 21.9% and 13.4% from the same days in the previous week.
• Add Zaxby’s to the growing list of restaurant chains running the chicken sandwich race. Long known for its chicken-centric menu, Zaxby’s will introduce its new signature sandwich nationally after sales of this menu item exceeded those of the chain’s existing hand-breaded fillet by 600% in company tests.
• Shake Shack offers $225 Million in convertible senior notes. The notes are for private investors and are due in 2028. Buyers of these notes will have the option to purchasing up to an additional $25 million of the notes. Shake Shack said the company will use funds raised by the note sale “… to support its growth and development plans.” Specifically Shake plans to add drive-thru operations, new store formats and units.
• Like so many other restaurant chains, 2020 was a challenging year for MOD Pizza. MOD entered 2020 primarily as a fast-casual concept with a mainly on-premises business. The pandemic required the chain to change its business model to target delivery and takeout. Sales declined 5.0% for the year but digital sales rose 275%. The company said comparable store sales for the year were “pretty close” to even. MOD continues to grow with an emphasis on undeveloped areas. MOD expects to open its 500th unit this year.
• Applebee’s discontinued its virtual wing concept but the company learned a lot from the experience. Dine Brands, parent company of Applebee’s and IHOP, plans a second virtual venture called Cosmic Wing. The company also plans to resume the expansion IHOP’s fast-casual spinoff, Flip’d. In addition, while Dine Brands will strive to retain its takeout and delivery business, the company believes the biggest opportunity will come from vaccines which will give people the feeling they can dine out safely.
• Ninety New York restaurants and bars successfully sued to overturn Governor Cuomo’s 11 p.m. curfew. The operators can now stay open until 4:00 a.m. The governor’s office said it was studying the court’s decision.
• Another chain files for bankruptcy. Alamo Drafthouse Cinema, an operation with 41 units within movie theaters that offer luxury seating as well as well as food and beverage service will sell the company to a group of senior lenders. The deal will provide $20 million for Alamo to keep operating.
• Comparable Store Sales: Casey’s General Store inside store sales up 2.1% and Cheesecake Factory down 19.5%

For details and same store sales of other chains Please Click Here for the latest Green Sheet.