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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Gen Z Presents Unique Challenges for Restaurants, Plus More Foodservice News

The Conference Board reports consumer confidence took a hit in June. Grubhub’s parent company is exploring various options for the food delivery firm, while Middleby adds to its portfolio. These stories and more This Week in Foodservice.

Generation Z is here, and The Food Institute asked restauranteur Stephen Schrutt to discuss the opportunities and challenges that come with serving this demographic. Referred to as “Zoomers” by some, this generation consists of those born from 1997 to 2017.

Schrutt says every generation brings change, but Gen Z brings an important distinction in being the first generation that grew up in the digital era. Baby boomers and millennials outnumber Gen Z, which makes up 20% of the population or 68.2 million people. Moreover, members of Gen Z are much more diverse than their elders and will disrupt business approaches that have worked for decades.

Obviously, members of this generation are major users of social media, but they are selective about what they look at online. Schrutt says members of Gen Z have high standards about they spend their time online. They are known to document everything and their experiences quickly become everyone else’s through social media.

Their reviews of a given restaurant via TikTok and Instagram give other people insight into the location and could drive people there or make them not want to go, according to Schrutt. Regardless, Zoomers are the group to target when opening a new dining concept, he adds. They are interested in the total experience when dining out and it all starts with the smells they encounter when entering the restaurant. They are also great travelers, meaning if the restaurant can give them dining experiences they favor Gen Z will go that extra mile, so to speak, to patronize an establishment.

Schrutt predicts there will be fewer chain restaurants in the next 5 to 10 years and more “unique dining that create a memorable cuisine a memorable worth documenting.

Economic News This Week

  • Initial jobless claims totaled 231,000, a decline of 2,000 for the week ending June 25, per data from the U.S. Department of Labor. The 4-week moving average increased by 7,250 claims for a total of 231,750.
  • Real personal disposable income declined 0.1% in May, per the U.S. Bureau of Economic Analysis. Real personal consumption expenditures declined 0.4% in May.
  • Heading north of the border won’t save anyone from the ravages of inflation. Canada’s inflation rate jumped to 7.7% on an annual basis, which is the highest it has been since January of 1983. Without gasoline prices, the May Canadian CPI grew 6.3%, an all-time record.
  • The Chicago Production Manufacturing Index declined to 56.0 in June from 60.3 in May. This is worse than the consensus forecast, which came in at 58.0.
  • Total private construction spending was virtually unchanged in May in comparison to April, per the U.S. Census Bureau. Residential construction spending in May was up 0.2% from April.
  • Consumer confidence declined in June. The Conference Board’s Index of Consumer Confidence came in a 98.7 in June, down 4.5 points from May, bringing the index to its lowest level since February 2021. The Present Situation Index came in at 147.4, down .3 from May. The Expectations Index dropped to 66.4 in June from 73.7 in May. “Consumers’ grimmer outlook was driven by increasing concerns about inflation, in particular rising gas and food prices. Expectations have now fallen well below a reading of 80, suggesting weaker growth in the second half of 2022 as well as growing risk of recession by yearend,” said Lynn Franco, sr. director of economic indicators for The Conference Board.

Foodservice News This Week

  • Just Eat Talkeaway.com faces a dual set of doubts among investors, per published reports. Specifically, investors continue to show concern as to whether the company will successfully sell its U.S. GrubHub operation, and whether it will be able to reach profitability without additional funding. Despite these concerns, leaders at Just Eat Takeaway say they remain focused on ways to grow the company as opposed to an outright sale. Restaurant food delivery firms have found the going difficult lately as more consumers return to restaurant dining rooms. (The current company is the result of the 2019 merger of British Just Eat and the Dutch firm Takeaway.com. which purchased U.S. GrubHub in 2020.)
  • The Another Broken Egg Café is considering increasing its hours of operation, per published reports. The chain, which serves breakfast, brunch and lunch, typically closes its restaurants at 2:00 p.m. but its management is curious about how much revenue locations could generate by extending their business day. The company points out that the first year it added alcoholic beverages, these menu items accounted for 5% of sales. Last year, alcoholic beverages accounted for 15% of total unit sales. This news comes as Another Broken Egg Café is in the midst of a remodeling initiative. Late last year, the chain reported opening 20 locations with its New South design prototype and that those units were outperforming existing restaurants. Another Broken Egg Café plans to open 18 restaurants in 2022
  • A number of McDonald’s franchisees are opting to ditch a longstanding promotion offering customers a cold drink of any size for $1 as they contend with high inflation, per a published report. Some locations have already begun boosting the price of their drinks by “several dimes” to account for higher costs. Overall, McDonald’s raised its prices about 8% during the first quarter compared to the previous year, company executives said in late April.
  • Middleby Corp. has acquired Proxaut, a manufacturer of auto-guided vehicles for the food industry and industrial processing companies. The company is based in Italy near Bologna with approximately $15 million (USD) in annual sales, per a release announcing the deal. Proxaut’s AGV technology is used by manufacturers in a variety of capacities, primarily to move materials and products and operate alongside people. Proxaut automation decreases repetitive movements from traditional labor and ergonomically improves workflows, per a Middleby release. Immediately after announcing this deal, Middleby acquired Icetro, a South Korean manufacturer of ice machines.
  • Growth Chains: Chicken N Pickle, which as the name implies pairs pickleball with a chicken-centric menu, plans to open operations in Grapevine, Texas; St. Charles, Mo. And Glendale, Ariz., by early 2023. Little Caesar’s set a goal of adding more than 16 new units in Hawaii by 2027. New England chain Kelly’s Roast Beef inked development deals to open up to 43 new units. This includes 17 restaurants across various Florida markets.
  • Comparable Store Sales Reports: Bad Daddy Hamburgers up 15.9% and Good Times Burgers & Frozen Custard down 0.9%.

For Comparable Store Sales Reports of other chains please click here for the Green Sheet.