Restaurant costs keep rising as one group urges operators to keep pressing Congress for more money. Will Subway’s sweeping changes put it on a fast track for growth? The National Restaurant Association updates its COVID-19 operating guidelines. These stories and more This Week in Foodservice.
Restaurant Is Closed Today Because of Lack of Kitchen Help
A sign of the times? This was the text on a hand-written note taped to the front door of a popular seafood restaurant in a suburb of Cincinnati on Tuesday, July 6.
This says tons about the problems facing the restaurant industry as a whole. This problem goes well beyond the local independents. We ended up dining at Bonefish Grill that same night. Now, Bonefish has long been a favorite of me and my wife but that evening the restaurant was obviously struggling due to being short-staffed. In fact, the staff was literally running through the dining area. And when the food got to our table, one of the meals was missing. The person taking our order had pushed the wrong button on the computer. She apologized numerous times, as did the manager, and they comped the meal but somehow it sort of took the fun out of the entire evening.
It might be easy to think challenges like these are unique to the full-service sector but operators in other segments face similar challenges. And if a chain is trying to grow, well, that can further compound its staffing challenges.
That’s probably one reason pizza chain Papa John’s developed new hiring, referral and appreciation bonuses for its approximately 14,000 front-line team members in the company’s corporate restaurants and supply chain. Papa John’s will offer $50 referral bonuses for corporate team members for every new hire they bring in, with an additional $50 bonus paid to the new team member. Existing corporate team members are also eligible for up $400 in appreciation bonuses to be paid in increments throughout the remainder of the year. The company expects to invest approximately $2.5 million in these initiatives during the remainder of 2021.
Indeed, hiring and retaining talent has always come at a cost and that is even more so now.
Economic News This Week
- Initial jobless claims totaled 373,000, an increase of 2,000 claims for the week ending July 3. The 4-week moving average totaled 394,000, a dip of 250 claims.
- Despite a slight decline, economic activity grew in June, per the Institute for Supply Management. This represents 13 consecutive months of growth in this sector. The June Manufacturing PMI came in at 60.6, 0.6 from May. New orders came in at 66%, down 1% from May. The Production Index registered 60.8%, an increase of 2.3 percentage points compared to May. The Prices Index registered 92.1%, up 4.1 percentage points compared to May and the index’s highest reading since July 1979 when it hit 93.1%. The Backlog of Orders Index registered 64.5 percent, 6.1 percentage points lower than May.
- Economic activity grew for the 13th consecutive month in the services sector, too, per the ISM. The Supplier Deliveries Index registered 68.5%, down 1.9 percentage points from May. Any reading greater than zero indicates growth. Sixteen of the 18 segments reported growth, including accommodation and foodservice.
- Consumer credit increased 10% on a seasonally adjusted annual basis in May, per the U.S. Federal Reserve. Revolving credit which is mostly credit-card borrowing was up 11.4%. The nonevolving credit, which includes auto loans, student loans, boat loans, etc., increased 9.5%.
Foodservice News This Week
- The National Restaurant Association released its sixth edition COVID-19 Operating Guidance. The updates include the latest guidance and best practices on indoor dining, ventilation, mask use, encouraging vaccinations for employees, cleaning and sanitizing, hand washing, health monitoring, policies for ill or exposed employees, and COVID-19 precaution training. This update includes changes to reflect the new OSHA guidelines for protecting workers. The update also reflects OSHA’s new guidelines on tax credits for paid time off, accommodating vaccinated and unvaccinated employees, and the imperative need to educate employees about existing and emerging policies for safe restaurant dining in the current operating climate.
- Don’t give up now. That’s the message from the Independent Restaurant Coalition. The Restaurant Revitalization Fund is empty but the IRC sees the $28.6 Billion fund as only being a down payment. There were not only deserving operators who were not given grants but also deserving operators who were given grants and then had rescinded, per the IRC. To that end, the IRC is encouraging restaurants to contact their representatives and senators to get more help for the industry.
- Restaurant prices are on the rise and the increases may not slow down any time soon. From higher costs of ingredients to labor challenges and more, operators continue to battle cost increases on a variety of fronts. Business is, without question better, but turning a profit has become exponentially harder for many operators, as in this Chicago Tribune story.
- Subway makes sweeping changes. More than 10,000 Subway restaurants will close early on July 13. And when they reopen the next day these participating restaurants will be ready to implement the chain’s Eat Fresh Refresh launch. The changes will include new menu items and nationwide delivery service. Naturally, the chain is excited about the possibilities of such efforts, but some industry observers remain a little skeptical.
- Franchisee Carrols has acquired 19 more Burger King Units. These locations are in Michigan and Indiana. The deal represents the first significant purchase Carrols has made in the last two years.
- COVID-19 claimed another restaurant when Spiagggia, the highly regarded Chicago eatery, closed. Spiaggia’s closing came as the 37-year-old restaurant known for its scenic views of Lake Michigan and upscale menu was preparing to reopen. Unfortunately, the restaurant was unable to come to rental terms with the building’s owner.
- Growth Chains: BurgerFi Puts expansion in high gear. The fast-casual chain is building brick and mortar units, increasing ghost kitchen operations and rolling out its “Fi on the Fly” food truck. The chain reports having 25 leases in various stages of development, including 9 new locations. Multiconcept operator FAT Brands plans to bring its Fatburger and Buffalo’s Express concept to Mexico via co-branded units. Franchisee Red Rombo Group SA de CV plans to open 50 locations in the country, with the first one operating from Mexico City.
For details same store sales of other chains, Please Click Here for the latest Green Sheet.