Recently the term “stagflation” has popped up. A burger chain turns to AI to offer customers suggestions on what to order. These stories and more This Week in Foodservice.
A month or so ago there was some guarded optimism that the Federal Reserve’s interest policy would control inflation and the economy have a so-called soft landing. But in the last few weeks pessimism has risen and the word “recession” has appeared more frequently. One economist was quoted in the Wall Street Journal as saying it will be very difficult for some countries to avoid a recession
More recently the term “stagflation” has popped up. This is the worst of both worlds — high-interest rates and a slow economy.
Be it inflation or recession, it is going to be a bumpy ride.
Economic News This Week
The U.S. Federal Reserve reported that consumers increased their borrowing in April by 10.1% on an annual basis. Revolving credit, which is mostly credit card debt, rose by a record 19.6%. Non-revolving credit, such as auto loans, student loans, etc., increased by 7.1%. Outstanding consumer credit hit an all time high of $4.57 trillion in April.
Foodservice News This Week
- Compared to energy prices, food appears to be a bargain. But, in reality, foodservice operators are facing double-digit increases on many items they buy. Overall, food prices increased 1.0% in May over April and are up 10.1% in the last 12 months. Prices for food at home were up 1.4% in May from April and have risen 11.9% in the past 12 months.
- Wahlburgers is using kiosks equipped with artificial intelligence-driven software to offer customers suggestions on what to order. Cameras in the kiosks detect age, gender, attention level and even the mood of the customer. The software then uses the data to match it with menu items.
- Shake Shack has cut expansion plans for this year. The chain originally planned on opening 50 stores in 2022 but due to staffing difficulties and supply chain problems has cut back to adding a maximum of 45 units. The company made the decision despite rising digital sales and increased volume from the suburbs.
- YELP reports that consumers are very much aware that menu prices have risen. And, as you can probably guess, consumers are not happy about it. But there is a catch. Based on their own data, YELP reported that consumers don’t appear to be acting on their displeasure and are continuing to eat out and continuing to eat at expensive restaurants as well. In fact, YELP said that the number of requests for recommendations for the least expensive restaurants has actually declined. It is quite common for consumers to say one thing then act in another way. Eating out is ingrained in a lot of people’s lifestyles and about the last thing they’ll give up.
- It seems almost every week at least one chain is announcing they are making a commitment to drive-up windows. Last week it was Schlotzsky’s Deli. This week the Fuzzy Taco joins the club.
- Cracker Barrel reported increases in same-store sales and total revenue while dealing with higher than expected inflation. The 600-unit chain also found out that one of its key demographic targets — over 65 — has been slow to return to in-person dining. Second, inflation is causing customers to limit frequency and the amount spent. Finally, high gasoline prices negatively impacted spring break traveling. One move taken by Cracker Barrel is to increase menu prices by approximately 7.0% in 2022.
- The California Restaurant Foundation has awarded $3,000 grants to more than 356 independent restaurants throughout the state. The grants can be used to purchase new equipment or employee retention bonuses. And restaurants also receive yearlong support services from Wells Fargo. The grants are financed by donations from California utilities and Wells Fargo.
- The Velvet Taco is planning on moving its corporate staff into a new headquarters office with five times the space as their current facility. The move is planned for August. The Velvet Taco has opened 4 of 12 stores planned for this year and is planning 13 more locations for 2023.
For comparable store sales of other chains, please click here for the latest Green Sheet.