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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Labor Shortages Force Operators to Adjust, Plus More Foodservice News

Operators adjust their businesses due to labor shortages. SAJJ Mediterranean opens in a grocery store. Portillo’s prepares to debut a pickup-only location. These stories and more This Week in Foodservice.

Almost four out of five restaurants are understaffed, according to data from the National Restaurant Association. In a November 2021 survey, 77% of operators told the NRA their restaurant did not have enough employees to support existing customer demand. This applied to both full-service (80%) and limited-service operators (73%).

Among restaurants that were understaffed in November, 75% said their restaurant was more than 10% below necessary staffing levels. And 31% of understaffed operations were more than 20% below necessary staffing levels.

As a result of being understaffed, 65% of operators say their restaurant cut hours of operation on days that it is open for business. Other actions taken by operators include reducing the number of items on the menu (44%) and closing on days when the restaurant would normally be open (also 44%). Finally, 40% of operators reduced seating capacity because of being understaffed.

The good news is that restaurant employment continued to trend higher in December, when eating and drinking places added a net 42,600 jobs, per preliminary data from the U.S. Bureau of Labor Statistics. Restaurants added an average of 56,000 jobs during the last 5 months of 2021, per the NRA. This was less than the average gains of nearly 200,000 jobs during the first 7 months of the year.

In total during 2021, eating and drinking places restored nearly 1.7 million jobs to payrolls. While this was easily the largest calendar-year employment increase on record, it still left the industry roughly 650,000 jobs — or 5.3% — below pre-pandemic staffing levels, per the NRA.

Economic News This Week

  • Private sector employment increased by 807,000 jobs from November to December, according to the December ADP National Employment Report. Small businesses (1 to 49 employees) added 204,000 positions, medium-size businesses (50 to 499 employees) added 214,000 jobs and large businesses (1,000 or more employees) added 389,000 jobs.
  • Total nonfarm payroll employment rose by 199,000 in December, per the U.S. Bureau of Labor Statistics. This was significantly less than 422,000 jobs many economists had forecast. The news was not all bad, though. Unemployment rate declined to 3.9%, which is .2% better than anticipated. Employment continued to trend up in leisure and hospitality, in professional and business services, in manufacturing, in construction, and in transportation and warehousing.
  • Job cuts announced by U.S.-based employers increased 28.1% in December 2021 compared to November, per data from outplacement firm Challenger, Gray & Christmas. The totals for December 2021 were 75.3% less than December 2020. In the final quarter of 2021, U.S. companies announced 56,749 job cuts, up 7.4% from the 52,560 announced in the third quarter, and down 74.5% from the 222,249 cuts announced in the same quarter of 2020. In 2021, employers announced plans to cut 321,970 jobs from their payrolls, down 86% from the 2.3 million jobs eliminated in 2020. It is the lowest annual total on record, since Challenger began tracking in 1993.
  • Initial jobless claims totaled 207,000 for the week ending January 1, 2022, per the U.S. Department of Labor. This represents an increase of 7,000 compared to the previous week. The 4-week moving average was 204,500, an increase of 4,750 from the previous week.
  • Consumer credit increased 11% in November, per data from the U.S. Federal Reserve. Revolving credit (namely credit cards) increased at an annual rate of 23.4%, while nonrevolving credit increased at an annual rate of 7.2%.
  • The NFIB Small Business Optimism Index increased slightly in December to 98.9, up 0.5 points from November. Overall, 22% of small business owners report inflation is their single most important problem in operating their business. This marks a 20-point increase since the beginning of 2021 and the highest level since the fourth quarter of 1981. Business owners’ outlook about the future has declined 23 points over the past 6 months. Labor remains a key issue, with 49% of small business owners reporting they have job openings that could not be filled — 1 point more than November.

Foodservice News This Week

  • Iconic Chicago restaurant chain Portillo’s continues to tinker with new formats. The fast-casual restaurant chain is weeks away from opening its first pickup-only location in Joliet, Ill., which is south of the Windy City. This comes shortly after Portillo’s opened its first triple-drive-thru location in Wisconsin. The pickup-only location will also have three drive-thru lanes but, unlike its Wisconsin sibling, the Joliet restaurant will not have a dining room. Portillo’s anticipates 40% to 50% of its business at the pickup-only unit will come from online orders. The pickup-only location is expected to employ 40 to 50 staff members per shift, according to published reports.
  • SAJJ Mediterranean will open a location in a Los Angeles grocery store. The development emerged from a deal ghost kitchen company Kitchen United inked with Kroger to house national and regional Sajj 4SAJJ’s executive chef, Loay Alhindi, helped the company thrive by improving kitchen design and formalizing operating procedures. restaurant concepts in grocery stores and provide customers with freshly prepared meals. Customers patronizing the Los Angeles SAJJ location will be able to order via in-store kiosks and online for pickup or delivery via the Mediterranean fast-casual chain’s app, the Kitchen United Mix website, or third-party ordering services. SAJJ Mediterranean operates restaurants and ghost kitchens throughout California, food trucks, a catering service, and an e-commerce site.
  • Dickey’s Restaurant Brands has introduced another virtual brand. Trailer Birds Hot Chicken’s menu centers on cooked-to-order Nashville hot chicken with a variety of sides, including fries, tater tots, macaroni and cheese, etc. Other virtual brands operated by the parent company of the Dickey’s Barbecue Pit chain include Wing Boss and Big Burger Deal.
  • To-go alcohol sales could be on the menu once again in New York. Restaurant and bar owners have been clamoring for the return of to-go alcohol sales since the Empire State discontinued this in June 2021. In her 2022 State of the State Address, New York Governor Kathy Hochul said she wants to reinstate this service option. “The drinks to go policy provides critically important revenue streams to struggling restaurants and bars and is extraordinarily popular with the public, unsurprisingly,” says Andrew Rigie, executive director of the NYC Hospitality Alliance. “We commend Governor Hochul for her leadership, and we look forward to toasting her administration and the state legislature once this important policy is reinstated.”
  • The Legacy Companies has acquired the assets of Vinotemp Corp., a Henderson, Nev.-based manufacturer of wine-related products for home use. Terms of the transaction were not disclosed.
  • Growth Chains: Black Bear Diner will continue its eastward expansion by opening six locations in Texas during 2022. The chain plans to open locations in Harker Heights, Ft. Worth, McAllen, Mesquite, Pasadena and San Antonio. The chain’s first Lone Star State location opened in Brownsville last fall. By the end of 2024, the casual-dining chain plans to add 29 new franchise locations. Curry Up Now inked a development deal to open its first location in North Carolina. Under the terms of the deal, the franchisee will open at least five Curry Up Now restaurants in the Research Triangle area of North Carolina. Papa Johns International’s partnership with FountainVest Partners looks to open more than 1,350 new stores across South China by 2040. The franchisee development agreement is the biggest in Papa Johns history. Roll-Em-Up Taquitos continues to expand its presence in the chain’s home state of California. The company plans to add six locations into Ventura County and Glendale, Calif., with the first location set to open by the second quarter of this year. Slim Chickens opened locations in Muscle Shoals, Ala., and Farmington, Mich.