This Week In Foodservice

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


Restaurants Reopen but Labor is Scarce

The Restaurant Revitalization program is off and running. Restaurants are reopening and labor remains scarce. Instead of following other operators who furloughed staff, Bloomin’ Brands chose to keep its staff and that approach is starting to pay dividends. Despite their labor challenges, restaurants accounted for 70% of all the new hires in April.  These stories and a whole lot more This Week in Foodservice.

Potential borrowers didn’t take long to apply for the funding available via the Restaurant Revitalization Act. In the first 2 days operators were eligible to submit their paperwork, the Small Business Administration received more than 186,000 applications. About half of the applicants were classified as priority businesses. With respect to the Restaurant Revitalization initiative, priority businesses include those who are at least 51% owned by women, veterans or socially and economically disadvantaged people. The SBA defines socially disadvantaged individuals as those who have been subject to racial or ethnic prejudice or cultural bias. The SBA defines economically disadvantaged individuals as those whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same business area who are not socially disadvantaged.

Given the heavy response to the Restaurant Revitalization program, some industry observers have expressed concerns the fund’s $28.6 billion will not be able to meet the needs of all of the businesses that are filing.

The SBA plans to begin sending funds to the bank accounts of foodservice and other food and beverage businesses as early as Tuesday, May 11.

Economic News This Week

  • The Institute for Supply Management’s April Manufacturing Survey declined 4 points from March’s reading of 64.7. The New Orders, Production and Employment Indexes all declined between four and six points. Despite these declines, all 18 of the manufacturing industries surveyed still reported growth.
  • The Institute for Supply Management’s April Services Survey declined in April. The Services Index went from 63.7 in March to 62.27 in April. The Business Activity/Production Index declined from 69.4 in March to 62.7 in April. The New Orders Index declined from 67.2 in March to 63.2 in April. The Employment Index inched up from 57.2 to 58.8 and the Order Backlog Index rose from 50.2 to 55.7. Of the 18 service industries included in the study, 17 reported growth including Accommodations and Foodservices.
  • New factory orders increased 1.1% in March, per the U.S. Census Bureau’s full report for the month. Factory Orders increased 10 out of the last 11 months. Shipments, also up 10 out of the last 11 months, increased 2.1% for March, while unfilled orders increased 0.4%
  • The number of babies a woman would have over her lifetime, also known as the birth rate, fell to 1.64, per a Wall Street Journal report. This is the lowest number since the government started tracking it in the 1930s and the sixth consecutive time the U.S. birth rate has declined. The low birth rate can have major negative impacts on the country in numerous ways.
  • Initial-jobless claims fell by 92,000 for a total of 498,000 for the week ending May 1. This is the lowest number of claims since the week ending March 14, 2020. The 4-week moving average declined by 61,000 claims to a level of 560,000, also the lowest number of claims since the week of March 14, 2020.
  • April employment increased 742,000, per ADP’s National Employment Report. The increase was fairly evenly split between small, medium and large companies. The leisure and hospitality sector added 169,000 new employees, per the ADP report.
  • S. employment increased by 266,000 and unemployment rose to 6.1% in April, per the Bureau of Labor Statistics. Many observers were extremely disappointed in the April results. An increase of more than 260,000 new jobs is quite respectable and the rise in the unemployment rate from 6.0% in March to 6.1% is considered by the Bureau to be “little changed.” The problem is that some forecasters were expecting new jobs to be greater than one million. This might be reasonable given new jobs exceeded 900,000 in March. (Please see the This Week In Foodservice Section Below to see foodservice employment in April.

Foodservice News This Week

  • Foodservice added 187,000 jobs in April, per the Bureau of Labor Statistics. This represents an increase of 12,000 from March. It’s worth noting 70% of the people added to U.S. payrolls in April were in foodservice.
  • As the foodservice industry tries to recover from the pandemic, finding employees remains a major battle. Denny’s provides an example of the hiring woes certain concepts face. As the family-dining chain tries to staff up so it can once again offer 24-hour service, Denny’s CFO says the company cannot even find people to interview. Other operators also find late shifts are particularly difficult to staff.
  • Los Angeles and San Francisco are coming back. As virus cases have fallen two of California’s signature cities have had a turnaround going from being an epicenter of the pandemic to serving as an example of the least restrictive urban areas. Now in these cities restaurants, wineries and other businesses like Major League Baseball, movie theaters, amusement parks and gyms have come back to life.
  • Krispy Kreme filed paperwork for an initial public offering with the Securities and Exchange Commission. Certain details of the IPO, including the number of shares and share price, were not included in the announcement. Krispy Kreme has been private since 2016 when it was purchased by JAB Holding Company.
  • Bloomin’ Brands rolled the dice last year and it appears the bet has paid off. Last year Bloomin’ Brands chose not to furlough any staff. Now the chain has lower turnover and a higher staffing pool. This has lead to a quicker recovery and the company hopes is long term success.
  • Growth Chains: Restaurant Brands International, the parent company of Burger King, Popeyes ’Louisiana Kitchen and Tim Hortons, plans an aggressive international expansion. Leading the way is Popeye’s with plans to open in the UK, India, Mexico and Saudi Arabia. The seven-unit Ynot Italian chain is committed to growing in part with off-premises-only stores. Specifically, the chain plans to open 3 full-service units this year and then 2 full-service units and 5 to 10 express restaurants a year starting in 2022. Twin Peaks signed an area development agreement for central Florida with the first of three restaurants set to open in Jacksonville next year. Wendy’s returns to the UK after a 20-year absence, with the goal of opening 400 locations, the first of which will open later this year.
  • Comparable Store Sales Reports. Chuy’s Holding’s down 3.2% and Denny’s down 20.0%.

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