This Week In Foodservice

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


Consumer Confidence Takes a hit – Again

Consumer confidence takes a hit – again. One restaurant chain hopes to grow to 600 units in the next 25 years. Robots are making food deliveries on college campuses. A ghost kitchen operation adds a storefront. These stories and more This Week in Foodservice.

August restaurant traffic offers a mixed bag of results. The good news is despite COVID-19 surges fueled by the delta variant and bad weather, August 2021 U.S. online and physical restaurant traffic increased by 5% compared to the same month in 2020, per data from The NPD Group. Compared to August of 2019, though, restaurant traffic declined by 5%.

Want more good news? Here goes: Larger average check sizes drove a 13% increase in dollars compared to a year ago and a 3% gain in dollars over the same month two years ago, according to NPD’s daily tracking of the U.S. restaurant industry.

“Overall, the state of the U.S. restaurant industry today reflects the steady-state of the home-centric lifestyle that has us eating more meals at home,” says David Portalatin, NPD food industry advisor and author of Eating Patterns in America. “This behavior predates the pandemic and will continue into the foreseeable future. To meet the needs of today’s restaurant consumers, restaurant operators need to think about getting meals and snacks into the home.”

Quick-service restaurant visits declined 3% in August compared to August 2019 but increased 2% versus last year’s same month. Visits to full-service restaurants declined by 9% this August compared to the same month 2 years ago and increased by 20% versus a 25% decrease in August 2019.

While restaurant visits are improved overall, dine-in or on-premises traffic continues to struggle compared to pre-pandemic levels. Dine-in visits were down 34% in August compared to August 2019, per NPD Group. Off-premises orders, which gained significant ground during the pandemic, represented 73% of all restaurant visits this August. Among off-premises services, delivery saw orders increase 128% in August compared to the same month two years ago, and now represents 10% of off-premises visits. Carry out visits, which hold a 49% share of off-premises traffic, increased by 6% compared to pre-pandemic levels. Drive-thru visits rose by 11% in August compared to August 2019 and represented 41% of off-premises visits in the month.

Although digital ordering has grown by triple digits since the pandemic began, non-digital orders represent the bulk, 85% in August, of all restaurant orders, reports NPD.

Economic News This Week

  • Initial jobless claims totaled 351,000, an increase of 16,000 for the week ending Sept. 18, 2021. The 4-week moving average totaled 335,750, a decrease of 750 from the previous week's revised average.
  • Existing-home sales declined 2% in August, breaking two straight months of increases, according to the National Association of Realtors. Each of the four major U.S. regions experienced declines on both a month-over-month and a year-over-year perspective. Year-over-year, sales dropped 1.5% from a year ago (5.97 million in August 2020). “Although there was a decline in home purchases, potential buyers are out and about searching, but much more measured about their financial limits, and simply waiting for more inventory,” says Lawrence Yun, NAR's chief economist. "High home prices make for an unbalanced market, but prices would normalize with more supply.”
  • Sales of new single‐family houses totaled 740,000 in August, per data from the U.S. Census Bureau and the Department of Housing and Urban Development. This represents a 1.5% increase compared to July, when sales totaled, 729,000. Compared to August 2020, sales declined 24.3%.
  • Consumer confidence declined again in September, per data from The Conference Board. Its Consumer Confidence Index came in at 109.3 in September, down from 115.2 in August. This marks the third consecutive month of declines. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, fell to 143.4 in September from 148.9 in August. The Expectations Index — based on consumers’ short-term outlook for income, business, and labor market conditions — fell to 86.6 in September from 92.8 in August. “Consumer confidence dropped in September as the spread of the delta variant continued to dampen optimism,” said Lynn Franco, senior director of economic indicators at The Conference Board. “Concerns about the state of the economy and short-term growth prospects deepened, while spending intentions for homes, autos, and major appliances all retreated again. Short-term inflation concerns eased somewhat but remain elevated. Consumer confidence is still high by historical levels — enough to support further growth in the near term — but the index has now fallen 19.6 points from the recent peak of 128.9 reached in June. These back-to-back declines suggest consumers have grown more cautious and are likely to curtail spending going forward.”

Foodservice News This Week

  • What’s the future look like for outdoor dining? How operators across the country address this question may well depend on their home market. Take, for example, New York City. Nearly 12,000 restaurants have taken advantage of the city’s Open Restaurants Program, some spending as much as $25,000 to erect permanent structures. But that program ends in 2022, leaving operators wondering what comes next. “The focus now must be on developing a permanent outdoor dining program,” says Andrew Rigie, executive director of the New York City Hospitality Alliance, “so restaurants can transition out of the temporary emergency program that was created quickly in response to the pandemic.”
  • Robots are delivery food on the campus of the University of Illinois-Chicago. About the size of a large cooler, each six-wheeled vehicle contains a compartment that holds the food or grocery order. In 2020 vision automation 4In 2020, FE&S reported that Bowling Green State University had a fleet of robots that deliver food items to students on campus.addition, each unit has multiple cameras, which theoretically means the robot shouldn’t run into anyone or anything. The manufacturer also claims an alarm will sound if someone tries to interfere with one of its robots.
  • Cousins Subs opened a storefront at its previous delivery-only commissary location in downtown Milwaukee. The 5,300-square-foot location now features a small storefront with seating for 14 guests. The location also now offers pickup options in addition to delivery and dine-in. The commissary and storefront encompasses the brand’s signature ‘Milwaukee Sub Shop’ design complete with natural wood, stone and metal accents, decor.
  • Restaurant chain Portillo’s has a big appetite for growth. In Portillo’s filing with the Securities Exchange Commission to become a publicly traded company, the 67-unit chain says it could grow to more than 600 restaurants in the next 25 years. Renowned for its Chicago-style hot dogs and Italian beef sandwiches, the chain reported a 19% increase in revenues for the first 6 months of 2021.
  • Yogen Früz plans to open 70 U.S. locations and 30 Canadian locations by the end of 2022 through a deal with Ghost Kitchen Brands, which owns and operates a network of kitchens across North America. Ghost Kitchen Brands will offer a select menu of Yogen Früz’s most popular menu items.
  • Growth Chains: Multiconcept operator FAT Brands Inc. opened a Fatburger location in Arlington, Texas. This marks the 100th Fatburger location systemwide. Breakfast, lunch and brunch concept First Watch opened a location in Richmond, Texas. Marco's Pizza plans to bring 15 new stores to the Tampa, Fla., market by the end of 2024. The chain has inked more than 125 franchise agreements thus far this year. Its goal is to grow its 1,000-plus unit footprint by more than 10% this year. The Peach Cobbler Factory opened franchised units in the Georgia cities of Savannah, Pooler, Tybee Island and Richmond Hill. Nashville hot chicken concept The Red Chickz will open a location in Culver City, Calif., later this fall. Over the next 18 months chain plans to add 40 more locations in California, 25 locations in Texas, 10 in Nevada, and 10 in Arizona. Shipley Do-Nuts inked development deals that will lead to 20 new locations in West Texas and Tampa, Fla.