This Week In Foodservice

The editorial team aggregates key industry information and provides brief analysis to help foodservice professionals navigate the data.


Inflation's Impact on Consumer Restaurant Spending, and More Foodservice News

Consumers trade down. A New Jersey restaurant updates its guest policies. Culinary Depot opens a new location. Easy Ice expands in California. Structural Concepts gets a new partner. These stories and more This Week in Foodservice.

While much has been written about the way consumer habits changed due to the pandemic, one thing has remained constant. When inflation restricts cash flow, consumers tend to trade down when using restaurants. That explains why fast-food chains like McDonald’s posted strong same-store sales for the last quarter while fast-casual and casual dining chains like Chipotle and Chili’s did not.

The short of it is, with unemployment still at a relatively low level of 3.4% consumers still value, and in many cases need, the convenience restaurant food offers. But with pricing remaining stubbornly high, consumers will continue to look for ways to stretch their dining dollars. That’s why so many fast-food chains are starting to emphasize their value meals again. This approach served chains well during previous challenging economic periods, which has operators embrace what they feel is a tried-and-true approach.

It’s worth noting that early in the pandemic when there was tons of economic concern, chains resisted turning to value meals to help weather their challenges. Clearly, the thinking has changed.

Further, it would not be surprising to see consumers lean deeper into ordering ahead and picking up their orders from restaurants, including those in the casual dining segment. This approach can help lessen the pressure to tip, which can help keep check averages down from a consumer perspective.

  • Starbucks well-documented tussle with labor unions is making its way to Capitol Hill. The U.S. Senate Health, Education, Labor and Pensions Committee sent a letter to Schultz on Tuesday demanding he testifies at a March 9 hearing on his company’s compliance with federal labor laws, Fortune reported. If CEO Howard Schultz ignores or refuses the request, committee member Vermont Senator Bernie Sanders said he’s willing to use the committee’s subpoena power to force him to appear. “This is corporate greed,” said Sanders. “Workers have a constitutional right to organize. And even if you are a large, multinational corporation owned by a billionaire you don’t have the right to violate the law. And we intend to be asking Mr. Schultz some very hard questions.” Grab yourself a latte and tune in. This exchange promises to be interesting.

Culinary Depot Lakewood NJ LocationCulinary Depot continued its expansion by opening a location in Lakewood, N.J.

  • Culinary Depot continued its expansion by opening a location in Lakewood, N.J. The New York-based foodservice equipment and supplies dealer now has a total of five retail locations, with the others being in Spring Valley, N.Y.; Oakland Park, Fla.; Boca Raton, Fla.; and West Palm Beach, Fla. The Lakewood location includes both retail and warehouse space, to better serve customers in the region.
  • Easy Ice, a full-service provider of ice machine subscription solutions, acquired the ice machine division of San Diego Ice Co. This marks an expansion of Easy Ice’s footprint in the San Diego area, following its acquisition of Cube Aire late last year. As part of this partial acquisition, Easy Ice assumes control of San Diego Ice Company’s ice machine sales, leasing, and service accounts. San Diego Ice Company will now focus exclusively on ice manufacturing and delivery, merchandising, and carving, per a release.
  • Structural Concepts Corp. has partnered with Instant Retail Systems LLC to develop a “fully integrated autonomous retail solution.” The partnership will pair a refrigerated door merchandiser made by Structural Concepts with Instant Retail Solutions’ automated checkout technology. Customers will be able to browse menu items, make their selection and pay pretty much at their own pace. Operators will be able to track inventory and service customer without adding labor.
  • Children less than 10 years old will not be able to dine at one New Jersey restaurant starting next month. In explaining its decision, Netty’s House of Spaghetti in Tinton Falls said “…between noise levels, lack of space for highchairs, cleaning up crazy messes, and the liability of kids running around the restaurant, we have decided that it’s time to take control of the situation.” Naturally, some people on social media applauded such a move while this decision left others aghast.
  • A Madison, Wis.-based restaurant has implemented a no-tipping policy, per a published report. The owner of the Pakistani restaurant says he’s opposed to the tipping culture and added, “If I, as a business owner, can’t afford to pay my employees what they’re worth, then I shouldn’t be in business. It’s not the customer’s job to subsidize my employee’s wages.”
  • In a sign that shows the strength of the plant-based menu trend, Chick-fil-A is testing a cauliflower sandwich. The chicken chain began offering a fried cauliflower sandwich in Denver, Charleston, S.C. and North Carolina’s Greensboro-Triad region. “Guests told us they wanted to add more vegetables into their diets, and they wanted a plant-forward entrée that tasted uniquely Chick-fil-A,” said Leslie Neslage, director of menu and packaging at Chick-fil-A. Why cauliflower and not a plant-based meat substitute? Some consumers are starting to favor actual plants instead of plant-based meat alternatives, per a CNBC report.
  • High schools participating in the National Restaurant Association’s ProStart culinary arts program can applying for $5,000 grants from The Rachael Ray Foundation. Up to 25 ProStart schools or those with culinary arts programs who want to be part of the ProStart program have until March 14, 2023, to apply. The winners will receive a 2023 Rachael Ray Foundation ProStart Grow Grant of $5,000. The funding supports upgrades or the purchase of new resources, the building up of classrooms and supplies, and supporting teachers with what they need to help their students learn career-building skills in the restaurant, foodservice, and hospitality industry.
  • Growth Chains: The Habit Burger opened locations in Mountain View and Roseville, Calif. The Roseville location includes a drive-thru. Charcuterie chain Graze Craze opened locations in five new states: Delaware, Illinois, Nevada, Pennsylvania, and Washington. The chain opened its first franchise location in February 2022 and has since grown to 16 states and counting. SONIC Drive-In will open its first Hawai’i location in Kahului, Maui.

Economic News This Week

  • The Consumer Price Index rose 0.5% in January, per the U.S. Bureau of Labor Statistics. This is 0.4% greater than December’s increase. Over the last 12 months, the CPI’s all-items index increased 6.4%. This was the smallest increase since October 2021, per the BLS. Housing costs were the primary driver of the January increase. January food-at-home prices increased 0.4%, while food-away-from-home prices increased 0.6%. For the 12-months ending in January 2023, food-at-home prices are up 11.3% while food-away-from-home prices are up 8.2%.
  • To nobody’s surprise, labor and inflation remain center-of-the-plate issues for small businesses, per data from the NFIB. The organization’s January 2023 Small Business Optimism Index notes 57% of owners reported hiring or trying to hire in January. Of those hiring or trying to hire, 91% of owners reported few or no qualified applicants for the positions they were trying to fill. In addition, 26% of owners reported inflation was their single most important problem in operating their businesses. Owners expecting better business conditions over the next 6 months improved six points from December to a net -45%. The NFIB Small Business Optimism Index declined 0.5 points in January for a reading of 90.3, which is less than its 49-year average of 98.
  • Initial jobless claims increased by 13,000 for the week-ending February 4, 2023, per data from the U.S. Department of Labor. The 4-week moving average was 189,250, a decrease of 2,500 from the previous week.
  • Easing inflation and a pretty strong labor market continue to lift consumers’ spirits. The University of Michigan’s Consumer Sentiment Index for February hit 66.4, up from 64.9 in January. That’s the best reading since January 2021, when the index read 67.2. While recent news, like the economy adding 517,000 jobs in January and lower inflation rates, had economists anticipating an increase in consumer sentiment, this even exceeded their expectations, per various reports.