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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Restaurant Operators Continue to Face Significant Challenges

Operators' profits continue to shrink. Touchless concessions come to a Seattle arena. Plus a c-store accelerates its QSR plans. These stories and more This Week in Foodservice.

The fact that restaurants and foodservice operators continue to come to terms with various supply chain challenges is nothing new. They’ve been dealing with it for many months now and these challenges show no signs of abating. But the depth and breadth of these supply chain challenges and the way they’re impacting other areas are coming into sharper focus, thanks to a study from the National Restaurant Association.

In a September 2021 survey fielded by the association, 95% of operators said their restaurant experienced supply delays or shortages of key food or beverage items in recent months. Among operators experiencing supply delays or shortages in recent months, 75% said they made changes to their menu offerings as a result. These challenges impacted operators across all segments.

As if the supply chain challenges were not enough, restaurant operators report paying higher prices for many food items. In the NRA’s study, 91% of operators said their total food costs (as a percent of sales) are higher than they were prior to the pandemic. Only 3% said their food costs make up a smaller proportion of sales.

The Producer Price Index for All Foods, which represents the change in average prices paid to domestic producers for their output, jumped 12.9% between September 2020 and September 2021, per the U.S. Bureau of Labor Statistics. That represented the largest 12-month increase in more than 4 decades.

Considering all of this, it should come as no surprise that 85% of operators report their profit margins are less than they were prior to the pandemic, per the NRA. Only 5% of operators report an increase in profitability.

All in all, restaurant operators continue to face significant challenges as they strive to move forward from the pandemic.

Economic News This Week

  • Initial jobless claims totaled 290,000, a decrease of 6,000 for the week ending October 16, 2021, per data from the U.S. Department of Labor. This is the lowest level for initial claims since March 14, 2020, when it was 256,000. The 4-week moving average totaled 319,750, a decrease of 15,250 from the previous week. Also the lowest level for this average since March 14, 2020, when it was 225,500.
  • Manufacturing activity in the Philadelphia area continued to expand in October, per data from the Philadelphia Federal Reserve. The Manufacturing Business Outlook Survey’s current activity component totaled 23.8, a 7-point decline. More than 40% of the firms report increases in general activity this month, a 6-point increase from September. In addition, 17% report decreases, which was up significantly from 3% last month. The current shipments index was essentially unchanged at 30.0 in October. The index for new orders rose 15 points to a reading of 30.8. More than 47% of the firms reported increases in new orders this month, while 16% reported decreases. The survey’s future indexes suggest that the surveyed firms remained generally optimistic about growth over the next six months.
  • Sales of single‐family houses totaled 800,000 in September 2021, per data from the S. Census Bureau and the Department of Housing and Urban Development. September’s level represents a 14% increase compared to August 2021 but a 17.6% decline compared to September 2020.
  • Consumer confidence increased in October, stopping a streak of three consecutive monthly declines, per data from the Conference Board. The Consumer Confidence Index came in at 113.8 for October, 4 points from September. The Present Situation Index rose to 147.4 from 144.3 last month. The Expectations Index improved to 91.3 from 86.7. “While short-term inflation concerns rose to a 13-year high, the impact on confidence was muted. The proportion of consumers planning to purchase homes, automobiles, and major appliances all increased in October—a sign that consumer spending will continue to support economic growth through the final months of 2021,” says Lynn Franco, senior director of economic indicators at The Conference Board. “Likewise, nearly half of respondents (47.6%) said they intend to take a vacation within the next six months—the highest level since February 2020, a reflection of the ongoing resurgence in consumers’ willingness to travel and spend on in-person services.”

Foodservice News This Week

  • Seattle’s Climate Pledge Arena features touchless concessions that leverage technology from Amazon. As this video shows, guests entering can insert a credit card. If they are Amazon customers enrolled in this program, guests can scan their palms upon entering the space, grab what they want and go. The cameras in the space document what the customers take and charge their credit cards.
  • This week’s restaurant robotics news comes from Buffalo Wild Wings, which is testing a robotic chicken wing fryer. The pilot began at parent company Inspire Brands’ Innovation Center in Atlanta earlier this fall. If all goes as planned, the company will install one of the chicken-wing-frying robots in a Buffalo Wild Wings location later this year.
  • Convenience store chain 7-Eleven has big plans to grow fast in the quick-service restaurant space. The company has 3 QSR concepts and plans to open 150 locations. To help plan its growth 7-Eleven opened yuwen peng 7 11Food prep is done in front of the customer at 7-Eleven’s new in-store QSR. Designer Yuwen Peng shared details about the 7-Eleven design process as well as tips for blending restaurants with retail here.what the company refers to as its Evolution stores. One 7-Eleven executive referred to them as “more like a laboratory store that allows us to test different platforms.”
  • Great Plains Capital made an investment in Toppers Pizza. The quick-service pizza chain says it will use the “long-term minority equity investment” to accelerate its growth plans. Toppers has more than 70 corporate and franchised units systemwide.
  • Peter Piper, LLC will acquire nine Tucson, Ariz., and one Phoenix-area Peter Piper Pizza restaurants owned by franchisee Southwest Pizza. A family-owned company, Southwest Pizza has been a Peter Piper Pizza franchisee for nearly 40 years and decided to sell all its locations earlier this year. The terms of the sale were not disclosed Peter Piper, LLC is a subsidiary of CEC Entertainment, LLC, which also owns Chuck E. Cheese and Pasqually’s Pizza & Wings.
  • Growth Chains: Bad Ass Coffee of Hawaii plans to add 18 units in Tennessee via a development agreement with Rothwell Development Co. This will include 4 units in Knoxville, 2 in Gatlinburg and the 12 in the Nashville market. Dave’s Hot Chicken, the late-night pop-up turned hot chicken chain, opened a restaurant on the northwest side of Chicago. Peach Cobbler Factory plans to add six new locations in the Louisville market. Sweet Paris Creperie & Café plans to enter the Florida market with four new units, including two in the Miami market.