This Week In Foodservice

Jerry Stiegler aggregates key industry information and provides brief analysis to help foodservice professionals navigate the data.


Automation is on the menu at Krispy Kreme, more Foodservice News

Freshii gets new owners. One operator bets on technology to improve efficiencies, while a restaurant technology company had to lay off some of its staff. Chick-Fil-A plans a new distribution center. FCSI adds to its Americas’ headquarters team. Tensions between Starbucks and its unions continue to percolate.

Consumer spending at restaurants totaled $90.4 billion in November 2022, per data from the National Restaurant Association and the U.S. Census Bureau. After adjusting for menu price increases, eating and drinking place sales rose 2.7% during the last four months. And November this represents the fourth consecutive month where restaurant industry sales increased by at least 0.9%, per the NRA.

Restaurant industry growth came while other retail segments struggled. For example, department stores, (-2.9%), furniture stores (-2.6%), building supply stores (-2.5%) and vehicle dealers (-2.3%) all saw sharp declines.

While restaurants are clearly rolling, the question remains how long will that last? The consumer mindset is pretty complicated at the moment and how they view the economy, their job status and inflation will vary greatly by region and individual. So it’s only right to expect the broader foodservice operating environment to be complicated in 2023.

Foodservice News This Week

  • As part of an all-cash deal valued at $74.4 million, Foodtastic will acquire Freshii Inc. Founded in 2005, Freshii serves a menu of better-for-you products from its 343 locations, all but one of which are run by franchisees. In recent years, Freshii expanded its omni-channel footprint in the health and wellness business lines, including in consumer-packaged goods, nutritional supplements, and e-commerce, which happened after it acquired a majority interest in a leading Canadian online health and wellness product retailer, Natura Market. Foodtastic is a franchisor of restaurant brands in Canada. Including the acquisitions of Quesada and Freshii, Foodtastic’s Canadian system exceeds 1,200 restaurants and $950 million in sales, per a company release. Foodtastic also has more than 150 restaurants outside of Canada.
  • Automation is on the menu at Krispy Kreme. The company continues to test technology that has the ability to fill doughnuts and to take them off the line and box the sweet treats, per published reports. Over the next 18 months, Krispy Kreme plans to have at least 18% of its doughnuts produced on an automated line. The company still fills doughnuts by hand. Krispy Kreme also plans to close or convert low-production stores into hubs without spokes, or doughnut-creation factories, by closing the lobby space to focus on getting more doughnuts in and out to access points. As a result, Krispy Kreme will likely close more stores next year.
  • Chick-fil-A plans to open a 100,000 square foot distribution center in Missouri in 2023, per a report in Supply Chain Dive. The location will give Chick-fil-A greater control over its supply chain and the ability to support up to 40 restaurants in the St. Louis area. Once operational, this distribution center will provide these units with not only access to food and products, but also to delivery service technology.
  • Nathan’s Famous has launched an aggressive campaign to help drive location growth. The iconic New York-based restaurant chain is offering discounted franchise fees for owners of existing restaurants to convert their units into a Nathan’s Famous, per a company release.
  • Tension between Starbucks and its union continues to percolate. First, there was a 3-day strike across 60 units in response to Starbucks’ decision to close several unionized stores. About 40 other locations were expected to strike at least 1 day, too. What’s even more interesting is this strike was said to include a fairly high-profile location: Starbucks’ Seattle reserve roastery. The reserve stores are a key part of Starbucks’ brand building efforts. But that’s not all. The union was urging customers not to buy gift cards this year, per a report in Restaurant Dive. Unused gift cards and money loaded onto the Starbucks app boost the company’s profitability — funds accounted for $196 million in revenue for Starbucks in the last year, according to Starbucks’ 10-K. All in all, it seems Starbucks’ labor woes won’t subside anytime soon.
  • Restaurant technology company ChowNow has laid off 10% of its workforce, per various published reports. This is the company’s second round of layoffs in less than six months. In July ChowNow laid off roughly 100 people, per a report by TechCrunch. ChowNow is not alone in having to reduce its workforce. In November, for example, Door Dash laid off 1,250 employees. Some industry observers feel the woes tech companies face are due to softening demand for delivery.
  • The Foodservice Consultants Society – The Americas hired Aaron McEvoy, CAE to serve as director of administration. McEvoy, who has been in association management for more than a decade, will work closely with the Council for Professional Standards and FCSI The Americas Education Providers. He will also assist with event programming, planning and execution.
  • Growth chains: Philadelphia-based fast-casual chain honeygrow will open a location in Owings Mills, Md. The 2,418 square-foot location at Mill Station is honeygrow’s fifth restaurant in the Maryland area. Pokemoto, Muscle Maker’s Hawaiian poke bowl restaurant concept, inked its first franchise agreement in Northern California. This represents the chain’s entrance into the West Coast and the state of California. The Habit Burger opened a location in Granada Hills, Calif. Zaxby’s opened a restaurant in Tallahassee, Fla. The 3,287-square-foot farmhouse-style restaurant features Zaxby’s new prototype design and will have indoor seating available for up to 55 guests. The location offers expedited drive-thru service with a new, roof-covered double drive-thru layout for faster pay and pickup. Dessert concept The Dolly Llama will open a location in Winter Garden, Fla., in January. This will be the second Florida location for the concept which specializes in waffle and artisanal ice cream, with the other being in Jacksonville.

Economic News This Week

  • November retail sales in the U.S. declined 0.6% compared to October, per the U.S. Census Bureau. This represents the steepest decline in retail sales in 11 months. Retail sales grew by 6.5% compared to November 2021. Total retail sales for the September 2022 through November 2022 period were up 7.7% from the same period a year ago. If there is a bright spot within this data, it’s the fact that sales at foodservice and drinking places increased 14.1% from last year.
  • Initial jobless claims totaled 211,000, for the week-ending Dec. 10, 2022, per the U.S. Department of Labor. This represents a decrease of 20,000 from the previous week and the lowest level of weekly unemployment claims since September of 2022. The 4-week moving average was 227,250, a decrease of 3,000 from the previous week.
  • Industrial production declined 0.2% in November, per the U.S. Federal Reserve. Decreases of 0.6% for manufacturing and 0.7% for mining were partly offset by a rebound of 3.6% for utilities following three months of declines. At 104.5% of its 2017 average, total industrial production in November was 2.5% more than its year-earlier reading. Capacity utilization moved down 0.2% in November to 79.7%, a rate that is 0.1%greater than its long-run (1972–2021) average.