Two chains test new concepts, while two other chains explore the sale process. Economic news remains mixed. Plus, a new study quantifies the economic impact of working from home on downtown areas and business districts.

The time is ripe for new concept development. And, in doing so, restaurants can use tried and true operational approaches to drive menu innovation.

Image courtesy of ChipotleThose were a couple of takeaways from Chipotle’s unveiling of its plans to test a new bowl-based concept called Farmesa with food hall operator Kitchens United. Indeed, now that restaurant industry sales are growing, chains will start to look for ways to grow beyond their traditional offerings. In Chipotle’s case, the new concept will leverage its brand pillars of a simple menu, high-quality ingredients and straightforward operational parameters.

Located in Santa Monica, the initial Farmesa location features a menu of bowls that include proteins, greens, grains and vegetables. Customers will be able to choose from five sauces and select a topping for their bowls, too.

Part of the group leading this initiative is James Beard Award-winning Chef Nate Appleman, who serves as director of culinary innovation for Farmesa. He previously led menu innovations for Chipotle in the mid to late 2000s.

“Launching Farmesa in the Kitchen United Mix food hall in Santa Monica and partnering with third-party partners for pickup or delivery will allow us to reach a large number of consumers, learn quickly, and evolve our concept and menu so that we can deliver on our goals before expanding,” said Nate Lawton, vice president of new ventures at Chipotle.

Foodservice News This Week

• How big of an impact is working from home having on restaurants’ lunch business? Turns out a lot. That’s according to a study from WFH published by Crain’s Chicago Business. In Chicago, the average worker is spending $2,387 less per year on food, shopping and entertainment near their workplace compared to 2019. And that number climbs higher in other cities such as New York City ($4,661), Los Angeles ($4,200), Washington, D.C. ($4,051), and Atlanta ($3,938). Chicago workers spend 26.8% fewer days in the office now than in 2019, according to the study. That ranks ninth among the studied cities, with Washington, D.C., seeing the highest in-office decline, at 37%.
• Fine dining is back, and its future is bright. That’s the only way to interpret the news that Rosebud Restaurants will shutter its high-profile Carmine’s Chicago location for a 15-month rebuild that’s expected to cost $4 million. The project calls for the demolition of the existing restaurant and placing it with a 10,000-square-foot operation featuring an expansive, all-weather, outdoor terrace overlooking Chicago's Gold Coast neighborhood, “stunning” dining rooms and multiple bar areas.
• Has menu innovation come full circle? What else is one to think when plant-based chicken restaurant Project Pollo decided to test a new concept called Side Chicks featuring a menu made from, you guessed it, actual chicken. Sort of reminds me of Lewis Black’s comedy routine about finding the end of the universe.
• Subway shareholders are exploring a possible sale of the ubiquitous sandwich chain, the company announced in a release. Subway provided no timeframe for a sale and noted this process does not even guarantee such a sale might happen. The chain is working with J.P. Morgan, which will conduct the sale exploration process. This very topic had been the subject of rumors before the chain made this announcement on Feb. 15.
• C-store chain Kum & Go is also mulling a sale, among other options, per Reuters. The chain is considering exploring refinancing, real estate leasebacks or other forms of recapitalization as potential alternatives. This comes as the c-store segment goes through a period of consolidation. If sold, Kum & Go could fetch up to $2 billion, per some estimates. Kum & Go has recently invested in updating its foodservice offerings, too.
• As part of a planned transition, the three former owners of Kitchens to Go stepped away from the company and went into full retirement on February 1, 2023, per a company release. They are Ralph Goldbeck, Steve Rubin, and Fred Stowell. Kitchens to Go was acquired by Mobile Modular Management Corp. in April 2021.
• Aramark was named a Top 50 Employer by CAREERS & the disabled For the ninth consecutive year the publication recognized Aramark for providing a positive working environment for people with disabilities.
• Growth Chains: Roy Rogers Restaurants plans to open a location in Cleves, Ohio, on February 27. This opening is part of a 10-unit development deal with One Holland Corp. Great American Cookies, which is owned by FAT Brands, added a location in the Illinois municipalities of Orland Park and Schaumburg. Both are considered suburbs of Chicago. The Habit Burger opened its second location in Ontario, Calif. Paris Baguette opened a location in Montvale, N.J. The chain now has eight restaurants in The Garden State.

Economic News This Week

• The Conference Board Leading Economic Index checked in at 110.3 for January. The bad news is that the LEI continued to trend downward. The good news is that its rate of decline softened. January’s 3% decline was 0.5% less than the 0.8% decline in December. Still, the LEI declined 3.6% for the 6-month period between July 2022 and January 2023. This is a steeper rate of decline than its 2.4% contraction over the previous 6-month period.
• The Producer Price Index increased 0.7% in January, per the U.S. Bureau of Labor Statistics. This comes after a 0.2% decline in December 2022 and a 0.3% gain in November. On an unadjusted basis, the index for final demand rose 6.0% for the 12 months that ended January 2023. This was higher than the 0.4% increase many economists had projected.
• S. retail sales rebounded nicely in January, increasing 3.0%, per the U.S. Census Bureau. This comes after a 1.1% decline in December. This also represents a 6.4% increase compared to January 2022. Total sales for November 2022 through January 2023 period increased 6.1% from the same period a year ago. Sales at foodservice and drinking places increased 7.2% from December and 25.2% from January 2022.
• Industrial production held steady in January, per the U.S. Federal Reserve. This came after declines of 0.6% and 1.0% in November and December, respectively. In January, manufacturing output increased 1.0%. At 103.0% of its 2017 average, total industrial production in January was 0.8% greater than its year-earlier level. Capacity utilization declined 0.1% in January to 78.3%, a rate that is 1.3% less than its long-run (1972–2022) average.
• January building permits for privately owned housing units declined 0.1% compared to December, per the U.S. Census Bureau. The 1.33 permits issued in January were 27.3% less than the same month in 2022. January housing starts were 4.5% less than December and 21.4% less than January 2022. It seems the higher interest rates will continue to impact the housing market.
• Initial jobless claims decreased by 1,000 for a total of 194,000 for the week-ending February 11, per the U.S. Department of Labor. The 4-week moving average was 189,500, an increase of 500 from the previous week.