Are restaurants preparing to shut their dining rooms again? One QSR prepares to ring the breakfast bell, again. Operators continue to make capital investments. Plenty of tech talk, plus National Food Safety Month will focus on knowing what’s safe and how operators can stay safe. These stories and more This Week in Foodservice.

As vaccines rolled out this spring and positive COVID-19 cases declined, restaurant owners across the country breathed a sigh of relief and prepared for what was supposed to be the second coming of the roaring 20s. With state and local governments rolling back restrictions aimed at stopping the spread of COVID-19, restaurants began resetting their tables to welcome back guests. It seemed like the perfect comeback plan, except the delta variant had other ideas about how the summer would go.

Data from the National Restaurant Association continues to show the surge of positive COVID-19 cases brought on by the delta variant continues to affect consumers’ dining habits. And the restaurants are starting to adjust their operating procedures more and more.

In fact, McDonald’s franchisees received instructions on steps to re-close indoor dining in places based on the COVID-19-related conditions in their specific market, per published reports. McDonald’s recommended franchisees consider closing indoor dining in counties with more than 250 COVID-19 cases per 100,000 people on a rolling three-week average, per a report received by Reuters.

A month ago, the idea a chain like McDonald’s would issue such guidance seemed unthinkable given how well things seemed to be going throughout the U.S. Now, one is left to wonder if McDonald’s will be the first of several large restaurant chains to implement such steps.

Economic News This Week

• Real gross domestic product increased 6.6% in the second quarter of 2021, per the second estimate released by the Bureau of Economic Analysis. This marks a 0.1% increase from the previous estimate and a 0.3% increase from the first quarter. The update reflects upward revisions to nonresidential fixed investment and exports that were partly offset by downward revisions to private inventory investment, residential fixed investment, and state and local government spending.
• Personal income increased $225.9 billion or 1.1% in July, per data from the Bureau of Economic Analysis. Disposable personal income increased $198.0 billion or 1.1%, and personal consumption expenditures increased $42.2 billion or 0.3%. Real DPI increased 0.7% in July and Real PCE decreased 0.1%. The PCE price index increased 0.4%. Excluding food and energy, the PCE price index increased 0.3%.
• Initial jobless claims totaled 353,000, an increase of 4,000 for the week ending Aug. 21. The 4-week moving average was 366,500, a decrease of 11,500 from the previous week. This is the lowest level for the 4-week moving average since March 14, 2020, when it was 225,500.
• Home prices rose 18.6% annually in June, up from the 16.8% increase in May, according to the S&P CoreLogic Case-Shiller national home price index. This marks the largest annual gain in the history of the index dating back to 1987. Prices nationally are now 41% higher than their last peak during the housing boom in 2006. Unlike other median price surveys, which can be skewed by the type of homes selling, this study measures repeat sales of similar homes over time.
• The Conference Board’s Consumer Confidence Index declined to 113.8 in August from 125.1 in July. The Present Situation Index, consumers' assessment of current business and labor market conditions, fell to 147.3 in August from 157.2 last month. The Expectations Index, consumers' short-term outlook for income, business, and labor market conditions, fell to 91.4 from 103.8. Looking ahead, consumers don’t seem to be too confident. Specifically, 229% of consumers expect conditions to improve in 6 months, down 8% from the previous month. And 17.8% of consumers expect conditions to worsen, up from 11.9% in July.

Foodservice News This Week

• The National Restaurant Association’s Restaurant Performance Index held steady in July with a score of 105.4. This presents a very slight decline from 105.4 in June. With these scores, the RPI remains at near historic levels, per the NRA. The Current Situation Index, which measures current trends across same-store sales, traffic, labor and capital expenditures, stood at 106.3 in July, up 0.5 from June and the highest level in three months. The sales, traffic and labor indicators continue to be elevated because of the dampened comparisons during the early months of the pandemic, per the NRA. As a result, the heightened level of the Current Situation Index is not a direct indication of the health of the restaurant industry. The Expectations Index, measuring operators’ six-month outlook for same-store sales, employees, capital expenditures and business conditions, stood at 104.5, its lowest level in six months, per the NRA. Seventy-six percent of restaurant operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months. That matched October 2015 as the highest reading in the nearly 20-year history of the association’s monthly tracking survey. In addition, 78% of restaurant operators plan to make a capital expenditure in the next 6 months.
• Time to ring the bell for breakfast at Taco Bell, once again. The quick-serve Mexican-themed restaurant chain suspended breakfast sales during the pandemic and is preparing to bring the morning meal back to 90% of units nationwide starting in mid-September. To mark the occasion, Taco Bell plans to add several new menu items to the breakfast daypart, including three breakfast burritos.
• To give its employees a break, Bojangles closed its 300 company-owned stores for the day on Aug. 30 and will do so again in Sept. 13. Bojangles CEO Jose Armario praised the company’s workers in a statement and acknowledged the reality of the current operating environment for restaurants. “But this hasn’t been easy, and we know many people are physically and emotionally drained, so we hope these extra two days off will provide rest and refreshment,” he said.
• The restaurant industry’s labor crisis may not be temporary, according to a study by Technomic. Key points from the Chicago-based market research firm’s Crisis on the Front Lines Multi Client Study showed that former restaurant employees who left the industry prior to the pandemic are now in more traditional career-oriented jobs, including office positions (30%) and teaching/education (17%). In addition, the study shows a change in the employment value proposition, with 85% of survey participants citing work-life balance and professional management as the most important factors in a job. The Technomic study also showed that independent restaurants are viewed more positively than chains as employers. In fact, 66% of survey participants view independent restaurant operators positively as employers vs. 55% who say the same for chains.
• More regulation appears to be on the menu for the food delivery business. New York City lawmakers passed a measure that will make temporary caps on third-party delivery fees permanent in a blow to companies like DoorDash Inc., Grubhub and Uber. The measure is part of a package of bills aimed at regulating the food delivery industry, per published reports. Another piece of legislation the council passed will require delivery companies to be licensed by the Department of Consumer and Worker Protection every two years. It will also give city lawmakers more power to enforce previously passed regulations including requiring food delivery companies to share customer order data with restaurants, barring them from listing eateries on their platform without the businesses’ permission and prohibiting charging restaurants for telephone orders when a transaction did not take place. The new bill will allow lawmakers to impose fines, revoke, suspend or decline the renewal of licenses for food delivery companies that violate regulations. These new regulations may only be the beginning of the challenges these operations face. The City of Chicago has filed suit against Grubhub and Door Dash, alleging the two companies misled diners during the pandemic. This is something of an abrupt about-face for the Windy City, which as recently as June was offering $50 Grubhub gift cards to entice residents to get vaccinated.
• Restaurant technology company Toast hopes to generate $20 billion from its initial public offering. The move to go public comes 16 months after Toast had to lay off roughly half of its workforce. By developing software to help restaurants add capabilities to accept online orders, arrange deliveries, issue gift cards, and market their businesses via email, Toast bounced back. The company also created partnerships with delivery services such as DoorDash, allowing restaurants to pay a flat fee for each delivery instead of a percentage of the order.
• September is National Food Safety Month, and the National Restaurant Association has adopted the theme “Know Safe & Show Safe,” which seems a natural fit given the more visible and intense sanitation efforts operators around the country have taken during the pandemic. In recognition of National Food Safety Month, the NRA and ServSafe have planned five weeks of educational topics and activities. “The way restaurants are cleaned and kept safe hasn’t changed, but it’s become more important that your guests know that you know and that their safety will be held to the highest standard,” says Sherman Brown, executive vice president, Training and Certification for the NRA. “With this content, we are helping operators and employees across the country brush up on their skills, while telling that story to their communities.”
• South Carolina-based Greenville County Schools has launched a training program through which participating special education students will earn their Culinary Employability Credentials and receive School-Based Business Enterprises Training. Students in the program, which is a partnership between food and nutrition services and the special education departments, started training last week. Students have already learned basic food safety and sanitation procedures, working with recipes, mixing ingredients, etc. The partnership will serve as a national model for preparing students for success in the workplace, according to Greenville County Schools Food and Nutrition Services. While the program does not lead to any specific job, it gives special education students the opportunity to gain necessary workplace skills to acquire living-wage jobs.
• Growth Chains: Automat concept Brooklyn Dumpling Shop plans to open five locations in the Dallas market. Fast-casual chain Curry Up Now will add its first college campus locations with a unit at Stanford University’s Tressider Memorial Union and the University of California San Diego’s Price Center. Noodles & Company will add four new locations over the next three years across the El Paso, Texas, and Las Cruces, N.M., markets. Pizza Inn will open three locations in Palestine. The chain plans to open the first location in the city of Ramallah / Nablus in March of 2022. Smoothie chain Robeks plans to add ten more locations throughout Southern California, including eight stores in Los Angeles and two in the San Diego area. Slim Chickens opened a location in La Porte, Texas.