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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Will the Entrée Act Satisfy the Foodservice Industry’s Appetite for Funding?

The use of electric stoves sparks a debate among chefs and cities. One chain launches a hybrid work model for its restaurant support center staff. Will the Entrée Act satisfy the industry’s appetite for funding? Restaurants and other businesses step up to promote COVID-19 vaccinations. These stories and more This Week in Foodservice.

For an industry starved for revenues, the Restaurant Revitalization Fund was simply an amuse-bouche. While the fund had the industry’s mouthwatering for some much-needed relief, the RRF did not satiate restaurants’ need for funding. As Sean Kennedy, vice president of government affairs for the National Restaurant Association, rightly points out, the industry appears to be doing well from a distance. But a closer look at the restaurant industry sees a business community is still feeling the impact of operating at limited capacity for an extended period, higher food costs and a complex menu of labor-related issues.

So last week’s announcement that Congressman Blaine Luetkemeyer introduced the Entrée Act (Entrepreneurs Need Timely Replenishment for Eating Establishments) was certainly welcome news that more sustenance could be on the way. The Entrée Act would pump an additional $60 billion into the Restaurant Revitalization Fund.

Nearly 200,000 RRF applications are still pending. Applicants who did not receive money before the fund closed have their applications held within the fund's platform so the Small Business Administration can process them in the order received if Congress infuses more money into RRF.

While the industry welcomed the initial cash infusion from the RRF, it was probably naive to think it could really offset the losses incurred over such an extended period. No doubt the Entrée Act represents a tasty morsel of a second course for the beleaguered restaurant industry and hopefully, even more help is on the way.

Economic News

  • Initial jobless claims totaled 419,000 for the week ending July 17, 2021. This marks an increase of 51,000 from the previous week's revised level. The previous week's level was revised up by 8,000 from 360,000 to 368,000. The 4-week moving average was 385,250, an increase of 750 from the previous week's revised average. The previous week's average was revised up by 2,000 from 382,500 to 384,500.
  • Although relatively unchanged in July, consumer confidence remains at its highest level since February 2020, per the Conference Board. The Consumer Confidence Index registered a score of 129.1 in July, up less than a point from June. Present Situation Index, based on consumers’ assessment of current business and labor market conditions, grew to 160.3 in July from 159.6 in June. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, was virtually unchanged at 108.4, compared to 108.5 last month. Consumer confidence was flat in July but remains at its highest level since February 2020 (132.6). “Consumers’ appraisal of present-day conditions held steady, suggesting economic growth in Q3 is off to a strong start,” says Lynn Franco, senior director of economic indicators at The Conference Board. “Consumers’ optimism about the short-term outlook didn’t waver, and they continued to expect that business conditions, jobs, and personal financial prospects will improve. Short-term inflation expectations eased slightly but remained elevated. Spending intentions picked up in July, with a larger percentage of consumers saying they planned to purchase homes, automobiles, and major appliances in the coming months. Thus, consumer spending should continue to support robust economic growth in the second half of 2021.”
  • Industrial production increased 0.4% in June after moving up 0.7% in May, per data from the U.S. Federal Reserve. June manufacturing output edged down 0.1%, as an ongoing shortage of semiconductors contributed to a decrease of 6.6% in the production of motor vehicles and parts, per the Fed. Excluding motor vehicles and parts, factory output increased 0.4%. For the second quarter, total industrial production rose at an annual rate of 5.5%. Manufacturing output increased at an annual rate of 3.7% despite a drop of 22.5% in motor vehicles and parts. At 100.1% of its 2017 average, total industrial production in June was 9.8% above its year-earlier level but 1.2% less than its pre-pandemic (February 2020) level. Capacity utilization for the industrial sector rose 0.3% in June to 75.4%, a rate that is 4.2% less than its long-run (1972–2020) average.
  • The Producer Price Index for final demand increased 1.0% in June, per the U.S. Bureau of Labor Statistics. This comes after final demand prices rose 0.8% in May and 0.6% in April. On an unadjusted basis, the final demand index moved up 7.3% for the 12 months ended in June, the largest advance since 12-month data were first calculated in November 2010. Nearly 60% of the June advance in the final demand index can be traced to a 0.8% increase in prices for final demand services. The index for final demand goods moved up 1.2%. Prices for final demand less food, energy, and trade services, rose 0.5% in June following an increase of 0.7% percent in May. For the 12 months ended in June, the index for final demand less food, energy, and trade services moved up 5.5%, the largest advance since 12-month data were first calculated in August 2014.
  • Businesses step forward to slow COVID-19 spread. As COVID-19 cases continue to tick upward across the country, many businesses and other institutions are starting to take matters in their own hands by requiring vaccinations for employees and others that come into contact with these organizations. New York City Mayor Bill de Blasio is urging private employers to start requiring the shots, while health officials in the San Francisco area have made similar recommendations. Some have questioned the legality of businesses requiring employee vaccines and the U.S. Department of Justice says Yes, per this Politico story. In addition, a federal judge in Indiana upheld Indiana University’s decision to require all students and faculty to be vaccinated in order to return to campus this fall.

Foodservice News This Week

  • Restaurant employment rose for the sixth consecutive month in June, according to data from the Bureau of Labor Statistics (BLS). Eating and drinking places added a net 194,300 jobs in June on a seasonally adjusted basis, which capped off an increase of more than 1 million jobs during the first half of 2021. All 50 states and the District of Columbia added restaurant jobs in June. Despite this growth, however, the National Restaurant Association reports industry employment is less than it was in June 2019.
  • McDonald’s continues to beef up its diversity goals. The burger chain vowed to boost U.S. spending with diverse suppliers and service providers to 25% by 2025 from about 23% currently. The increase will add at least another $200 million annually to the $3.3 billion that McDonald's spent with diverse suppliers in 2020, out of the $14 billion it spends on suppliers altogether. With more than 39,000 locations worldwide, even the seemingly smallest of changes to McD’s supply chain can ripple into other industries.
  • As cities try to phase out gas stoves, chefs continue to push back. To boost sustainability goals, municipalities continue to look at banning or restricting the use of gas stoves in commercial kitchens. Naturally, a change like this is being met with some resistance from chefs and other foodservice operators who have grown attached to the perceived firepower they feel gas cooking equipment can provide. That said, the idea of electrifying commercial kitchens should not come as a shock to anyone and appears to be an idea the industry should prepare for as municipalities stress decarbonization efforts.
  • The Pennsylvania Restaurant & Lodging Association is taking a pro-vaccine message to the streets of the Keystone State. Outside of healthcare operations, few businesses have more to lose than restaurants when it comes to conquering COVID-19. Nobody wants to return to the reduced occupancy levels, layoffs, etc., that really affected restaurants over the past year or more. For its part, PRLA has partnered with healthcare providers to host free pop-up clinics to get as many people vaccinated as possible to prevent the spread of COVID-19 and the various variants out there. The effort was launched in June and is increasing with more clinics across Pennsylvania. The PRLA feels these efforts will benefit both consumers and hospitality workers.
  • A hybrid approach for work comes to roost in the restaurant industry. While many businesses outside of the restaurant industry continue to evaluate their back-to-work policies, one chain has an approach that’s ready to take flight. Church’s Chicken has developed what the quick-service restaurant chain refers to as a balanced hybrid model for its Atlanta-based Restaurant Support Center teams. This approach includes three days in the office and two remote workdays for all teams. Church’s will launch this program in 2022.
  • The global quick-service restaurant market will reach $21.51 billion in revenue by 2026 thanks to a compound annual growth rate of 8.35%, per data from Research and Markets. For 2021 the firm estimated the global QSR market at $13.29 billion in 2020 and projected it will reach $14.36 billion in 2021.
  • Growth chains: The ONE Group Hospitality opened an STK Steakhouse in Bellevue, Wash. This company-owned location represents STK’s first restaurant in Washington state and fourth opening of 2021. This year STK also opened locations in Scottsdale, Ariz.; Los Cabos Airport, Mexico, and London-Westminster, United Kingdom. Cousins Subs opened a location in Wheeling, Ill., in a gas station/convenience store. This is the Wisconsin-based sandwich chain’s sixth location in the Chicago market. Nékter Juice Bar will open its first restaurant in Chicago this year. The California-based chain will enter six other new markets in 2021, including San Antonio; Boise, Idaho; Coconino County, Ariz.; St. Louis; Danville, Va. and Taylor County, Texas. Nekter, which touts a modern juice bar experience, has 170 U.S. locations.

Editor’s note: Unfortunately, we regret to inform you there will be no Green Sheet this week. We hope to be able to update this next week.