Restaurant industry posts solid June numbers. McDonald’s and a few other chains post solid second-quarter results. Airline food may be making a comeback. These stories and more This Week in Foodservice.

The sign on the restaurant’s door said it all: New day. New rules.

As COVID-19 cases continue to rise across the country courtesy of the Delta variant, restaurants and various other foodservice operators continue to deal with the twists and turns of a pandemic that’s dragged on for more than 18 months.

On Aug. 3, New York City announced it would require proof of vaccination for patrons who wish to dine indoors. Late last week Union Square Hospitality Group took a similarly decisive step of requiring patrons who choose to dine in its restaurants to show proof of vaccination. The mandate also applies to current employees and new hires. The multiconcept operator even offered eight hours of pay for employees when they went for their vaccinations. And, earlier this week, Philadelphia-area restaurants started to require customers to show proof of vaccination, too. In Chicago, some restaurants are weighing similar vaccination measures as well.

Union Square Hospitality Group is not the only business requiring employees to get vaccinated in order to return to work. Tech giants Google and Facebook have asked employees to get vaccinations, too. Despite these vaccine requirements, some companies have delayed their return to work plans, including Google.

Of course, not all companies are on board with requiring vaccinations for employees. For example, companies like Amazon and Walmart have opted not to require their hourly workers to be vaccinated. For now. The same applies to Tyson Foods, which has held more than 100 company vaccination events. Interestingly, though, Walmart is requiring its headquarters employees to receive their vaccinations by Oct. 4.

All of this continues to impact the corporate feeders and restaurants that feed workers in downtown areas, business districts, and even on-site.

When the pandemic first started, school foodservice operators quickly found out how flexible and resourceful they can be. That experience will, undoubtedly, prove valuable as schools start welcoming students back to class this month. As they prepare to open their doors for the 2021-2022 academic year, school foodservice operators continue to deal with a variety of supply chain issues that include difficulties sourcing disposables, equipment and even food items.

The short of it is that as much as life seemed to return back to normal for consumers and the foodservice industry, there are still a few twists and turns ahead on the road to putting the pandemic behind us.

Economic News This Week

• Initial jobless claims totaled 400,000 for the week ending July 24. This marks a decrease of 24,000 from the previous week. The 4-week moving average was 394,500, an increase of 8,000 from the previous week.
• Real gross domestic product increased at an annual rate of 6.5% in the second quarter of 2021, per the advance estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 6.3%. Factors leading to GDP growth include increases in personal consumption expenditures, nonresidential fixed investment, exports, and state and local government spending that was partly offset by decreases in private inventory investment, residential fixed investment, and federal government spending. Reuters takes a look at the factors driving second-quarter GDP growth and whether the second quarter represented a peak in this growth cycle.
• Personal income increased 0.1% in June, per estimates released by the Bureau of Economic Analysis. Disposable personal income decreased less than 0.1% and personal consumption expenditures increased 1.0%. Real DPI decreased 0.5% in June and real PCE increased 0.5%; goods decreased 0.2% and services increased 0.8%. The PCE price index increased 0.5%. Excluding food and energy, the PCE price index increased 0.4%. What all of this portends for the remainder of the year is not entirely clear. Some metrics increased at their fastest rates since 2008, as a NY Times story But perhaps as supply chains start to loosen up things will even out.

Foodservice Industry News This Week

• The National Restaurant Association’s Restaurant Performance Index hit 105.5 in June, up 0.1 from May. The Current Situation Index stood at 105.7 in June – unchanged from May. The current situation indicators remain elevated because of the dampened comparisons during the early months of the pandemic, per the NRA. The Expectations Index, which measures restaurant operators’ six-month outlook for four industry indicators, stood at 105.4 – up 0.2 from the previous month. Restaurant operators remain optimistic about sales growth and the economy in the months ahead, and a solid majority of operators continue to plan for capital expenditures. In addition, 67% of operators said they made an expenditure for equipment, expansion or remodeling in the past three months. This is the highest level in three years. Further, 69% of operators plan to make a similar investment in the next three months. Capital expenditure expectations have been greater than 60% for five consecutive months, per the NRA.
• The restaurant industry’s recovery accelerated in June, according to Chicago-based research firm Technomic. The company’s index on the total U.S. restaurant industry, also known as TIndex (Technomic Index), increased to 101.8 in June from 94.3 in May. “This month, we’re seeing a spike in the industry driven by the casual-dining restaurant, lodging and recreation segments, each of which showed significant gains in June,” explains Joe Pawlak, managing principal at Technomic. “With the TIndex sitting at 101.8 this month, it’s 1.8% larger in June 2021 than it was in 2019, and 28% larger compared to 2020.”
• Nathan’s Famous opened its 223rd ghost kitchen location. In addition to its namesake Nathan’s Famous brand, the multiconcept operator’s ghost kitchens operate two other restaurants: Wings of New York, which debuted last year, and Arthur Treacher’s, a legacy seafood QSR concept. Nathan’s Famous began incorporating ghost kitchens in the business model in 2019, working with Franklin Junction. The following year, the company teamed with REEF Kitchens, which brought the brand to new markets in the Midwest, as well as Kitopi, to help the brand’s growth in the UAE. “We could not have done this without collaboration with outside brands who have helped to bring the Flavor of New York to more guests through Nathan’s Famous, Wings of New York and Arthur Treacher’s,” says James Walker, sr. vice president, restaurants for Nathan’s Famous. “Our goal with these ghost kitchens is not just to grow our brand around the world, but also help other restaurants by providing them additional business during these turbulent times for the industry.”
• Add Wingstop to the list of restaurant chains looking to scare up some sales via ghost kitchens. The chain’s growth plans target urban areas and central business districts as these regions slowly start to rebound from pandemic-related closures. Wingstop will soon open its first ghost kitchen in Manhattan, 1 of 25 the chain intends to open in the New York City borough. The chain hopes to open these locations “as fast as we can,” according to a Wingstop spokesperson.
• Airline food is poised to make a comeback. Sort of. United Airlines plans to allow customers seated in its economy cabins to order snacks, meals and drinks before longer flights, according to various published reports. This approach may better align galley provisioning with customer demand and help United convey a more premium travel experience. Pre-ordering meals was a common amenity in first-class air travel on numerous airlines before the pandemic. United will become the only U.S. airline to offer food and beverage pre-ordering in the economy cabin, per a company statement. United began testing the service on flights from Chicago to Honolulu and to 3 California destinations. United intends to expand this in the fall to all flights of more than 1,500 miles.
• Thanks to strong sales of its crispy chicken sandwich, McDonald’s reported strong second-quarter earnings, exceeding analyst expectations. This was also true of some other major chains including Chipotle and Starbucks. As for sales, McDonald’s comparable store sales were up 6.9% globally, with the U.S. units leading the way to a 14.9% increase. (Both are on a 2-year basis.) One thing interesting about McDonald’s results is that 30% of McDonald's dining rooms in the U.S. are still closed. Then there was this from the CNBC story: One issue that’s hitting McDonald’s supply chain is slow shipping times for sending equipment manufactured in Asia to markets that are adding new restaurants. Executives said that the ongoing global chip shortage is also impacting its equipment orders, so the company has been trying to plan for longer lead times.
• There were some interesting data points in Chipotle’s second-quarter results. The fast-casual Mexican chain reported same-store sales increased 31.2%. The company opened 56 new locations and closed 5 units during the second quarter. Chipotle added that digital sales, those made by customers online or using the chain’s app, increased by 10.5% and digital now accounts for 48.5% of the fast-casual chain’s revenues.
• Cold drinks really heated up Starbucks sales, for the company’s third fiscal quarter ending June 27, 2021. Domestic same-store sales increased 83% compared to the same period in 2020. On a 2-year basis, same-store sales are up 10%. Starbucks reports nearly three-quarters of its beverage sales come from cold drinks.
• Growth chains: With the opening of its LaGrange, Ga., location, Chicken Salad Chick now has 200 locations systemwide. Ledo’s Pizza has returned to Pennsylvania, opening its first location in The Maryland-based pizza chain has more than 100 locally owned locations across 7 states.
• Earnings: A variety of publicly-traded restaurant companies reported same-store sales for the second quarter ending June 30, 2021. Given the pandemic-related restrictions in place during the second quarter of 2020, some chains are reporting significant year-over-year growth. Restaurant Brands International reported Tim Horton’s was up 27.6%, Burger King up 18.2% and Popeye’s Louisiana Kitchen down 0.3%. It should be noted that Popeye’s posted a 24.8% increase in sales during the second quarter of last year due, in part, to the strength of its spicy chicken sandwich. It was the only one of RBI’s brands to post an increase during that time period. Texas Roadhouse reported company-owned units up 80.2% and 21.3% compared to 2020 and 2019; franchised units up 76.5% and 19.4% compared to 2020 and 2019. BJ’s Restaurants reported same-store sales increased 121.7% compared to the same period in 2020 and down 6% compared to 2019. Wingstop reported a 2.1% increase in same-store sales in the U.S. Del Taco reported a 17.8% increase in same-store sales for the period.