Foodservice industry outlook. More artificial intelligence news. Plus, the National Restaurant Association offers its take on how to help offset labor and supply chain challenges. These stories and more This Week in Foodservice.

How did the foodservice industry fare in September? Depends on who you ask.

Foodservice industry performance improved slightly in September, per Technomic’s TIndex. The study came in at 98.9 in September, up 0.8 from August. According to this data, the industry declined 1.1% over a 2-year basis but has grown by 17% when compared to the same month in 2020. “A few key drivers are to thank for this small uptick,” explains Joe Pawlak, managing principal at Technomic. “Among the explanations are continued price increases on menus, a strong Labor Day weekend for restaurants and the return to live classroom education in colleges and K-12 schools.”

In contrast, the National Restaurant Association’s Restaurant Performance Index totaled 102.9 in September, down from 104.2 in August. This marks the third consecutive monthly decline posted by the RPI. The NRA blames the struggles largely on broad-based declines in the forward-looking indicators. The Current Situation Index stood at 104.2 in September, down 0.5 from August. The Expectations Index stood at 101.6, the third consecutive monthly decline and lowest level in 10 months. The good news is that a solid majority of operators continued to report sales and traffic exceeded their early-pandemic levels. The bad news is a decreasing number of operators expect this trend to continue.

The one consensus from all this: The current operating environment is uniquely challenging, to say the least, and operators will continue to face significantly complex challenges for the foreseeable future.

For another look at what to expect for the foodservice industry in the coming year, read the FE&S 2022 Outlook article, which includes data from the magazine’s readers and other sources that shows how complex things may be. 

Economic News This Week

• Initial jobless claims declined 10,000 for a total of 281,000 for the week ending Oct. 23, 2021, per the S. Department of Labor. Once again, this marks the lowest level of initial claims since March 14, 2020, when they totaled 256,000. The 4-week moving average was 299,250, a decrease of 20,750 from the previous week. This also represents the lowest level for this average since March 14, 2020, when it was 225,500.
• Real gross domestic product increased 2.0% for the third quarter of 2021, per the advance estimate released by the Bureau of Economic Analysis. This marks a 4.7% decline from the second quarter. Consumer spending decreased during the quarter amid a resurgence of COVID-19 cases. This led to new restrictions and delays in the reopening of some businesses in some parts of the country, per the BEA analysis of the data. Also in the third quarter, government assistance payments in the form of forgivable loans to businesses, grants to state and local governments, and social benefits to households all decreased.
• New orders for manufactured durable goods decreased 0.4% percent for a total of $261.3 billion in September, per the U.S. Census Bureau. This decrease comes after four consecutive monthly increases. Excluding transportation, new orders increased 0.4%. Transportation equipment orders declined 2.3%. Shipments of manufactured durable goods increased 0.4% in September.
• Personal income decreased 1% in September, per the Bureau of Economic Analysis. Disposable personal income dipped 1.3% as personal consumption expenditures increased 0.6%. Real DPI decreased 1.6% in September and Real PCE increased 0.3%. The PCE price index increased 0.3%. Excluding food and energy, the PCE price index increased 0.2%. The decrease in personal income primarily reflected the winding down of pandemic-related assistance programs, per the BEA.
• The manufacturing sector grew for the 17th consecutive month in October, per ISM. But the news was not all good. The October Manufacturing PMI’s reading of 60.8 represents a 0.3 decline from September. The New Orders Index totaled 59.8 in October, down 6.9 points from the previous month. Production Index registered 59.3, a 0.1 decrease compared to September. The Prices Index registered 85.7, up 4.5 points from September. The Backlog of Orders Index registered 63.6, 1.2 points less than September.

Foodservice News This Week

• On a nominal basis, the industry will surpass its 2019 sales level, with a 10.4% increase in sales forecasted for 2022, per Technomic. The company quickly notes, though, menu price inflation has driven and will drive a significant portion of sales growth in 2021 and 2022, respectively. From a segment perspective, senior living facilities, supermarket foodservice and limited-service restaurants will continue to fuel this upsurge, while the full-service segment will take a slower road to resurgence due to a plethora of issues, including the soft performance of business and leisure travel, Technomic projects. Next year, the top priority for operators will be to offset the primary pain points related to prices, labor and product availability.
• The growing influence of artificial intelligence in restaurants became further pronounced when McDonald’s agreed to sell its McD Tech Labs to IBM. In turn, the burger giant will enlist the help of the tech titan to help the fast-food chain further automate its drive-thru lanes. The McD Tech Labs was formerly known as Apprente when McDonald’s acquired it in 2019.
• Cousins Subs purchased six Wisconsin locations from one of the chain’s franchisees, making it the company’s largest acquisition to date. The company purchased the locations from Jim and Linda Valentine, who were the chain’s first franchise partners and have been a part of the Cousin’s franchise system for more than 30 years.
• The National Restaurant Association offered some ideas on how to alleviate supply chain shortages and delays that continue to slow the industry’s recovery. The Washington, D.C.-based association sent a four-page letter to President Biden suggesting a handful of solutions that it feels would positively impact the supply chain, including expanding immigration reform and expanding employment opportunities to help offset labor challenges; addressing transportation and shipping constraints by allowing more young people to enter the trucking industry as drivers and using trade and import capabilities, including removing tariffs on food and beverage products and equipment used in the supply chain. “Faced with these very challenging times, our industry is doing its level best to protect employees and customers, while restaurants are struggling to keep their doors open,” said Sean Kennedy, executive vice president of Public Affairs for the National Restaurant Association. “Taken together, these recommendations can work to help our nation’s restaurants that are being crippled as the pandemic rages on and supply chain challenges grow.”
• Growth Chains: The expansion plans for Nathan's Famous will take the chain across the pond to the United Kingdom and Ireland. The company seeks to work with restaurants, convenience stores, pubs and taverns to add Nathan’s Famous hot dogs to their menus. The company has had success growing in France as well as the Middle East. Muscle Maker Grill plans to open 40 locations in Saudi Arabia courtesy of a master franchise agreement for the region. The company had previously signed a deal to open 10 locations in Kuwait. Rise Southern Biscuits and Righteous Chicken will enter the California market by opening a location in Thousand Oaks. The chain plans to open additional units in Santa Clarita and parts of the San Fernando Valley. Fast-casual concept Rush Bowls plans to add three more units in its home market of Denver. The chain expects the first of these three units to open around the middle of 2022. Wayback Burgers plans to open 60 locations in 20 years in Asia. To facilitate this growth, the company has inked a master franchise agreement with WB Burgers Asia Inc. (WBBA), the publicly traded holding company of WB Burgers Japan Co. Ltd. The chain intends to open its first Asia location in early 2022 in Japan.