College foodservice shows signs of improvement. Starbucks continues to wrestle with numerous challenges. A Notre Dame chef scores a big culinary touchdown. These stories and more This Week in Foodservice.

Supply chain issues have remained a center-of-the-plate challenge for all aspects of the foodservice industry, including the manufacturing of equipment and supplies. Inflation and labor issues are part of the challenges but there is more to it than that.

More than 85% of North American Association of Food Equipment Manufacturers members participating in a recent survey report tariffs continue to impact their abilities to control costs, and 60% report that Section 232 and 301 tariffs continue to cause severe economic harm to their companies. NAFEM shared this information with the U.S. International Trade Commission (ITC) to inform its ongoing investigation of the impact of the tariffs on U.S. industries.

“The Section 232 and 301 tariffs have negatively affected U.S. foodservice equipment and supplies production, raised costs for producers and consumers, and lowered the availability of completely U.S.-manufactured products,” NAFEM said in its comments to the ITC. “Specifically, NAFEM’s U.S. manufacturing member companies have struggled with securing adequate steel and aluminum raw material inputs at competitive prices since the imposition of Section 232 tariffs in 2018.”

Additionally, since the implementation of the Section 301 tariffs on imports from China, NAFEM members have experienced a lack of supply and/or higher prices on critical components needed for their primarily U.S.-manufactured products. “Most NAFEM members are small and medium-sized businesses, and many are family-owned. They are instrumental in providing vital U.S. manufacturing jobs for thousands of American families, fueling the success of the U.S. economy,” said Charlie Souhrada, CFSP, NAFEM vice president of regulatory & technical affairs. “The tariffs have caused significant economic issues for NAFEM members with respect to procuring raw material inputs, manufacturing finished equipment, and ultimately increasing prices for the U.S. consumer,” NAFEM concluded in its comments.

The ITC initiated its investigation at the direction of the Omnibus Appropriations Act, which was signed into law on March 15, 2022. The law directed the ITC to prepare a public report that provides: 1) background information on Section 232 and 301 tariffs and an overview of the tariffs that were in effect as of March 15, 2022; and 2) an economic analysis of the impact of those tariffs on U.S. trade, production, and prices in the industries most affected by these tariffs.

In addition to its written comments, NAFEM will testify at the ITC hearing on July 21. The Commission’s final report on the impact of Section 232 and 301 tariffs on U.S. industries is due to be published March 15, 2023.

Economic News This Week

• Initial-jobless claims increased by 9,000 for a total of 244,000 for the week ending July 9, per the Department of Labor. The 4-week moving average increased by 3,250 claims for a total of 235,750.
• Inflation shows no signs of retreating with the June Consumer Price Index rising 1.3%, per the U.S. Bureau of Labor Statistics. This is the largest monthly increase so far in 2022. In the 12-month period ending in June of this year the index for all items is up 9.1%. Gasoline prices rose 11.2% in June and are up 59.9% un the last 12 months.
• Total retail sales grew by 1.0% in June from May, per data from the U.S. Census Bureau. Total retail sales increased 8.4% in June of this year over June of 2021. In the first 6 months of this year total retail sales are up 8.4% over the same period in 2021. The advance estimate for May Total Retail Sales April was revised to down 0.1%, which is a 0.2% improvement from the initial estimate. Sales at foodservices and drinking place sales were up 1.0% in June over May. In June of this year sales of foodservices and drinking places rose 13.4% over June of last year.

• Apparently fears of a recession are starting to impact the job market. Earlier this year there was talk of the great resignation as employees quit in large numbers showing dissatisfaction with low pay, long hours and a perceived lack of respect. As projections arose about a possible recession, some wondered if the great resignation would morph into the great regret. Now it appears that the fear of recession is slowing down resignations, particularly in the last two months, per published reports.

• Total industrial production declined 0.2% in June but advanced at an annual rate of 6.1% for the second quarter as a whole, per the U.S. Federal Reserve. Manufacturing output declined 0.5% in June but was up at an annual rate of 4.2% in the second quarter. The index for mining rose 1.7% while the index for utilities fell 1.4%. At 104.4% of its 2017 average, total industrial production in June was 4.2% greater than it was one year earlier. Capacity utilization decreased 0.3% in June to 80.0%, a rate that is 0.4% greater than its long-run (1972-2021) average.
• The Empire State Manufacturing Survey improved in July, per data from the Federal Reserve Bank of New York. The General Business Conditions Index rose to 11.1 in July from minus 1.2 in June. The New Orders Index and the Unfilled Orders Index both changed little from June. The Shipments Index advanced by 21.3 points.
• The University of Michigan’s Survey of Consumer Sentiment remains near an all-time low. The July study totaled 51.1, which was 1.1 points greater than June. The Current Economic Conditions Index did show slight improvement increasing to 57.1 in July from 53.8 in June. In contrast, the Index of Consumer Expectations remained unchanged at a historical low of 47.3 in July, down 0.2 from June.

Foodservice News This Week

• Starbucks continues to deal with challenges on multiple fronts. The Seattle-based coffee chain introduced a chicken breakfast sandwich and then pulled it from its stores less than one week later, per published reports. While there were numerous reports of the sandwich causing illness, Starbucks denied these and only spoke of quality issues. Starbucks also announced plans to close 16 units, all in urban areas. In doing so, Starbucks cited safety reasons. But the closures come as the chain continues to deal with numerous unionization efforts which some feel is the real reason for this move, per published reports. All of this comes as Starbucks plans to write the next chapter in its reinvention.
• Can a restaurant chain grow via vending machines? Wow Bao says yes. The company has launched 50 vending machine kiosks. Wow Bao’s menu items do require reheating in the vending machines. The potential for the kiosks limitless, per Geoff Alexander, CEO of the fast-casual concept with an Asian-inspired menu.
• College and university foodservice continues to come back. Case unit shipments from broadline foodservice distributors to college and university foodservice operators increased by 47% in the 12 months ending May 2022, compared to the previous year when shipments were down by 33%, per data from The NPD Group. Broadline foodservice dollar shipments to colleges and universities rose by 72% versus last year when dollars shipped declined by 35%. “After a couple of challenging years, it’s good to see foodservice operations on campuses coming back in full swing,” says Tim Fires, president of NPD’s SupplyTrack. “Campus foodservice directors work hard to understand the latest food trends that appeal to college and university students and rely on foodservice manufacturers to help them in their effort.”
• Food insecurity is spreading around the globe due to concerns about food shortages caused by Russia’s invasion of Ukraine. Here in the U.S., the group most affected by food insecurity is generation Z with 30% showing concern about food, per research shared by The Food Institute. Millennials are the next most at-risk demographic, per the study, with 17% showing concern about being food insecure.
• Perhaps the University of Notre Dame needs to consider changing one of its more popular catchphrases to reflect its culinary prowess. Fans of the school’s football undoubtedly know of its “Play Like a Champion” slogan that players pass before taking the field. Well thanks to Chef Jeremy Cantwell, Notre Dame may want to adapt it to read “cook like a champion.” Cantwell took home top honors in the National Association of College & University Food Services 2022 Culinary Challenge. Cantwell also took home a silver medal from the American Culinary Federation. Also earning recognition in the NACUFS competition were Chef James Zeisler, Jr. of Virginia Tech, who earned a silver medal both for this event as well as from the ACF and Chef Leslie LaScola of the University of Utah, who placed third and earned an ACF bronze medal. Other participating chefs earning ACF bronze medals include Thomas Dodd of the University of Washington Bradley Shannon of Boston College. Chef Jorge Noriega, from the University of Georgia, received a certificate of participation.
• Growth Chains: Happy Joe’s Pizza & Ice Cream franchisee in Egypt will open a restaurant in July and another in August with an additional 8 locations planned to open in the next 5 months. Salad & Go will open three restaurants in the company’s home market of Arizona. The new owner of Snappy Tomato Pizza hopes to add 10 restaurants in the next 3 Years. Fajita Peres has singed deals for five units in Chicago.

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