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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Consumer Prices hit a 40 Year High in February

Restaurant companies pull out of Russia in response to the Ukrainian invasion. Lots of activity these days at Famous Dave’s parent company BBQ Holdings. These stories and a whole lot more This Week in Foodservice.

In 2022 the restaurant industry will recover 98% of its 2019 visits according to data from The NPD Group. In releasing what it terms as “The 2022 Definitive Restaurant Ranking” NPD reports online and physical restaurant visits increased 9% in 2021 compared to the 12% decline they experienced in the 12-months ending December 2020.

Consumer spending at restaurants grew 16% in the year ending December 2021, compared to a 12% decline in 2020, per NPD. As a result, consumer spending was 2% more than the pre-pandemic year ending December 2019.

Aggregate sales for the Top 50 chains hit $269 billion in 2021, up 15% from the previous year. The Top 5 chains retained their rank in terms of dollar sales: McDonald’s, Starbucks, Chick-fil-A, Taco Bell, and Wendy’s. Subway displaced Burger King as the sixth-largest chain in the country. 

Economic News This Week

  • Inflation hit a 40-year high in February with the Consumer Price Index increasing 0.8% for the month, per the U.S. Bureau of Labor Statistics. This came on the heels of 0.6% January increase. In the past 12 months, the CPI is up 7.9%. Energy prices represent the main culprit as they are up a whopping 25.6% in the last 12 months. That said, food prices have played a role, too, increasing 7.9% in 12 months. Food-at-home prices rose 8.6% and food-away-from-home prices increased 6.8% in 12 months. The Wall Street Journal has noted that the Federal Reserve had previously referred to inflation in the U.S. as transitory but stopped doing so in March.
  • Initial jobless claims hit 227,000, an increase of 11,000 for the week ending March 5, per the U.S. Department of Labor. The 4-week moving average edged up 500 claims for a total of 231,250.
  • Consumer sentiment continued its decline, per the preliminary March reading of the University of Michigan Survey of Consumer Sentiment. The index hit 59.7, a decline of 4.9%. This an all-time low for consumer sentiment, per this study which began in the ’40s. The Current Economic Conditions Index hit 67.8, a 0.6% decline. The Consumer Expectations Index hit 54.4, a decline of 8.4%. This dip was driven by high gasoline prices and an overall uneasiness due to Russia’s invasion of Ukraine. 

Foodservice News This Week

  • Restaurant chains are among the nearly 330 companies that have withdrawn from Russia due to its invasion of Ukraine. Most U.S.-based restaurants have said they will eliminate or reduce their activities in Russia. Other American-based companies closing their Russian operations include Ford, Amazon, Microsoft, Apple, and all of the big four accounting firms. BP, the largest foreign investor in Russia, also said it will leave the country, too. Turning back to restaurants, Burger King and Dunkin say while they cannot force their franchisees to close, they will cease any corporate support. Some firms say they are closing permanently while others seem to be hedging their positions by saying their actions are temporary. The overall impact of the companies losing their Russian business is uncertain and probably varies significantly from organization to organization. Burger King says less than 1% of its total revenue comes from Russia.
  • It appears almost certain that funding for the Restaurant Revitalization Fund is off the menu for the remainder of this year and maybe longer. The program was excluded from an Omnibus spending package passed by the U.S. Congress. The National Restaurant Association, clearly surprised and angry, called it “a punch in the gut.” Equally dismayed is the International Restaurant Coalition.
  • Despite the end of the vaccine mandate, New York City’s restaurants remain starved for diners, per N.Y. Post. Citywide table reservations were down 53.2% on Monday, the first day since August they were open to all diners, compared with the same date in 2020, according to OpenTable. “Restaurants feel like they had been singled out by countless mandates that were confusing, didn’t make sense and unfairly targeted the industry,” said Andrew Rigie, executive director of the NYC Hospitality Alliance. “There is still a very long road to recovery.” Only Seattle (-54.0%) and San Francisco (-56.9%) were at lower dining capacity than New York City. Seattle’s restaurant vaccine mandate ended March 1. San Francisco is still enforcing the policy.
  • IHOP commits to off-premises growth with two new virtual brands. Thrilled Cheese offers six heavy-on-cheese sandwiches while Super Mega Dilla’s menu has sweet and savory quesadillas. Both concepts were developed by Nextbite, a company that develops delivery menus for restaurants. IHOP is also expanding flip’d, it’s off-premise fast-casual operation. These developments are part of a larger movement by IHOP to become a more digital operation.
  • Lots of things happening within BBQ Holdings. In a deal valued at $28 million, BBQ Holdings acquired the Barrio Queen restaurant group, a Phoenix, Ariz.-based seven-unit fine-dining chain with a Mexican-themed menu. The chain plans to open another unit by the end of 2022. Famous Dave’s, which is BBQ Holding’s flagship concept, may have a future as a limited-service concept. CEO Jeff Crivello feels the company’s current 6,500-square-foot full-service restaurant is too big and believes that the company’s pre-smoked barbecue menu would work well in a quick-service format. Along those lines, Famous Dave’s opened its first smaller location with a drive thru.
  • Comparable Restaurant Sales Reports: Bad Daddy Hamburgers up 24%, Good Times Burgers down 2.5% and Noodles & Company up 16.3%.