Lots of labor data to digest. A look at some trends that will shape 2022. Shake Shack adds a drive-thru. How managing food waste can help offset some labor woes. These stories and more This Week in Foodservice.

People continuing to return to their offices, schools and travel represent but a few of the developments that bring new opportunities for the foodservice industry as it looks toward 2022. But foundational issues, including labor and supply disruption, make it hard to develop a clear picture of what’s on the horizon for next month, much less next year. Still, Technomic gave it a shot in developing a list of six trends to watch in the coming year. Below we take a more detailed look at four of the six. To see the complete list from Technomic, click here.

The Great Breakfast Boom: As back-to-work and back-to-school recovery scenarios evolve, Technomic expects more consumers to look outside the home to source their morning meals. This may include chains employing subscription deals, multiperson bundles and product innovation that aims to capture morning traffic and establish loyalty. Also expected to make a comeback is 24/7 breakfast offerings as well as competition from casual dining in the form of morning-only virtual brands and later-day breakfast options.

Pain Points Persist: Similar to this year, 2022 will be all about labor, supply disruption and inflation. This goes for restaurants, bars and other operators across the food and beverage ecosystem. These issues will impact nearly every other aspect of the foodservice industry — from menu execution and product mix to marketing, capital expenditures and more.

Delivery Kitchen Hype Gives Up the Ghost: Delivery kitchens have had their 15 minutes of restaurant-trend fame and will garner less attention in 2022, Technomic predicts. They’re not going away, though. The dark kitchen model will retain a permanent place in the industry.

Regional Brands Gain Clout: Independent operators have been hurt badly and global players are looming as a result of the crisis, but there is also new white space for innovators to grow, and quickly, Technomic reports. Keep close tabs on emerging local restaurant brands — these are poised to be strong competition for global restaurants and new customers for global suppliers. While the pandemic created an expansion environment largely friendly to leading global chains, it also cleared a path for players that are more local, nimble and positioned around attributes such as healthfulness, sustainability and technology.

Economic News This Week

• Private sector employment increased by 534,000 jobs from October to November according to the November ADP National Employment Report. Small businesses (1-49 employees) added 115,000 jobs. Medium-sized businesses (50-499 employees) added 142,000 jobs and large businesses (more than 500 employees) added 277,000 jobs. Looking at the data by sector, leisure and hospitality added 136,000 jobs, the largest of any segment. “November’s job gains bring the three-month average to 543,000 monthly jobs added, a modest uptick from the job pace earlier this year,” says Nela Richardson, chief economist, ADP. “Job gains have eclipsed 15 million since the recovery began, though 5 million jobs short of pre-pandemic levels. Service providers, which are more vulnerable to the pandemic, have dominated job gains this year. It’s too early to tell if the Omicron variant could potentially slow the jobs recovery in coming months.”
• Initial jobless claims totaled 222,000 for the week ending November 27, 2021, per data from the U.S. Department of Labor. This represents an increase of 28,000 from the previous week. The 4-week moving average was 238,750, a decrease of 12,250.
• Employers added 210,000 jobs in November, the U.S. Bureau of Labor Statistics reported. This is significantly less than 573,000 positions economists had forecast and less than the 531,000 jobs added in October. Also, most of this happened before the emergence of the omicron variant of COVID-19 in the U.S. Exactly what all this means for the last month of the year is unclear but per some published reports there may be some cause for optimism.
• November job cuts totaled 14,875, a decline of 34.8% compared to October, per data from Challenger, Gray & Christmas. This is the lowest total since 14,086 were recorded in May of 1993. November’s total is 77% less than the same month last year when 64,797 cuts were announced. So far this year, employers have announced plans to cut 302,918 jobs from their payrolls, down 86% from the 2.23 million jobs eliminated through the same period last year. It is the lowest January-November total on record. The previous lowest occurred in 1997 when companies announced 376,057 cuts through November.
• Economic activity in the manufacturing sector grew in October, per the latest Manufacturing ISM Report on Business. The October Manufacturing PMI came in at 60.8%, down 0.3% from September. Despite the decline, this marks the 17th consecutive month of expansion in this economic indicator. The New Orders Index came in at 58.9%, down 6.9% from the previous month. The Production Index totaled 59.3%, down 0.1% from September. The Backlog of Orders Index registered 63.6%, 1.2% less than the previous month. The Employment Index registered 52%, which is 1.8% more than September. The Supplier Deliveries Index totaled 75.6%, a 2.2-percentage point increase from September.
• Economic activity in the services sector reached an all-time high of 66.7% in October, per the ISM Report on Services. This represents a 4.8% increase from September. The previous all-time high was 64.1% in July, per the ISM. Two of the four equally weighted subindexes that directly factor into the composite index set all-time highs: The Business Activity Index reached 69.8%, an increase of 7.5% from September, and the New Orders Index hit 69.7%, up 6.2% from last month. The other two subindexes are Employment and Supplier Deliveries, both also in expansion territory in October.
• Construction spending totaled $1,598.0 billion in October, per an estimate from the U.S. Census Bureau. This represents a 0.2% increase compared to September. The October figure is 8.6% more than the October 2020 estimate.

Foodservice News This Week

• Foodservice industry performance declined to 97.8 in October from 98.9 in September, per the latest TIndex from Chicago-based Technomic. “Based on this data, the industry is down 2.2% over a 2-year basis,” explains Joe Pawlak, managing principal at Technomic. “With that being said, however, foodservice has grown by 18.5% compared to the same month in 2020. It will be interesting to see how the numbers shift going into the holiday season and as concerns of new COVID-19 variants continue to pop up.”
• Shake Shack opened its first-ever drive-thru location in Maple Grove, Minn. Located in an outdoor mall, the restaurant includes a digital menu board, a two-lane ordering system and a separate pickup window. The fast-casual chain plans to add 10 drive-thrus in 2022 as well as 45 to 50 new stores. More than half of Shake Shack’s new stores will be in suburban markets, with an emphasis on locations that can offer drive-thru and drive-up options.
• Looking to enhance speed of service in the drive-thru, Burger King plans to streamline its menu, per published reports. “We're working on eliminating SKUs that – we're simplifying processes that have become a bit too complicated in terms of sandwich builds, and doing a better job in terms of the menu design to make it easier for the customer, at the drive-thru in particular, to make quicker decisions,” says Jose Cil, CEO of Restaurant Brands International, which owns Burger King. The company will also look to leverage technology, including digital menu boards, to help enhance its drive-thru operations. Burger King is not alone in looking to assess speed of service in drive-thrus. With many consumers continuing to prefer to consume their restaurant meals off-premises and the industry’s ongoing labor woes, this area has become a point of emphasis for operators.
• Kitchen Hub, a Canada-based virtual food hall, secured $9 million (CAD) in funding from a series of investors, including Proficio Capital Partners, Harlo Equity Partners, PIK Investments LLC and QSR Group Inc. Kitchen Hub will use the additional capital to open 5 new locations in 2022 with plans for 50 locations across Canada in the next 5 years. The funding will also support the addition of restaurant partners, support existing partner growth and further develop proprietary technology.
• Coming to America: Café concept PappaRoti’s expansion plans now include the U.S. In fact, PappaRoti opened a location in East Lansing, Mich., and plans to open another unit in Naperville, Ill. The company also plans to open up in Nebraska. PappaRoti was first established in 2003 in Malaysia, featuring a menu of coffee-coated buns and beverages. PappaRoti now has more than 400 locations around the world.
• Can focusing on food waste help foodservice operators alleviate some of their labor pressures? Perhaps, according to Leanpath. Most people will equate food waste with the cost of wasted food. But, as Lean Path points out, the true cost of food waste also includes labor components in the form of receiving, prepping, serving and discarding food. Given the tight labor situation and other rising costs, perhaps it makes sense for operators to ensure they are producing only what they need for a variety of reasons.
• This week’s example of restaurant robotics in action comes from Naperville, Ill. There you will find a multi-cuisine robotic kitchen where employees greet customers and take orders, which go directly to the artificial intelligence-powered robot chef. It then pulls the recipe from a database, grabs ingredients from a high-tech pantry, and gets cooking. Employees plate and serve the food. For now, the robot cooks meals for two restaurants but a third one is not too far off.
• Middleby added to its product portfolio, this time on the residential side of its business. The Elgin, Ill.-based company acquired Masterbuilt Holdings, which manufactures outdoor residential cooking products that go to market under the Kamado Joe and Masterbuilt brand names for $385 million.
• Growth Chains: Cinnabon will bring 130 units to the Kingdom of Saudi Arabia (KSA) over the next five years, per a deal with the Inn.ovative Union Company. IUC already operates 120 Cinnabon locations. Shipley Do-Nuts opened a location in Greenwood, S.C., its first in the Palmetto State. Toasted Yolk opened a location in Dothan, Ala., its first in the state. Multiconcept operator FAT Brands plans to open 10 Twin Peaks locations in the Philadelphia market.