Drone deliveries prepare for takeoff. Although small businesses remain cynical about the economy, many restaurant chains continue to grow. The employment picture remains, well, complicated. These stories and more This Week in Foodservice.

U.S. employment grew by 236,000 in March, and the unemployment rate changed little at 3.5%, the U.S. Bureau of Labor Statistics reported. Notably, employment continued to trend up in leisure and hospitality, government, professional and business services, and health care.

While some will interpret this data as the jobs market cooling slightly and the proof that the U.S. Federal Reserve’s efforts to curb inflation by raising interest rates are working, it’s just as important to note the overall employment market remains very solid. This data seems to counter concerns that the economy was weaker than previously thought, the New York Times reports.

The fact that leisure and hospitality continued to hire should come as no surprise given the way the restaurant industry has slowed chipped away at job losses it incurred as a result of the pandemic. In fact, the National Restaurant Association reports total eating and drinking place sales in January and February increased by more than 19% compared to the first 2 months of 2022. The association attributes this to “continued consumer spending supported by a healthy labor market” and notes that 6 of 10 of the operators it recently surveyed predict higher sales in six months.

Operators have also experienced some financial relief in recent months, per the NRA, with the cost of certain food commodities continuing to trend downward; however, average wholesale food prices remain significantly greater than their pre-pandemic levels. Menu prices, meanwhile, rose 8.4% during the last 12 months, with the Midwest and West regions registering the highest gains in recent months. This growth was still well below recent gains in grocery store prices, which increased 10.2%.

This Week’s Foodservice News

• McDonald’s made headlines last week due to corporate restructuring and a series of layoffs but there’s even more to the story. Fortune Magazine reports these efforts also include promotions, demotions and even pay cuts for some remaining employees. These moves are part of McDonald’s “Accelerating the Organization” plan it announced in January. While the exact number of layoffs is still unknown, these changes also involve moving to a single, central organizational structure from one that centered on field offices, per a Restaurant Business report. In some respects, these moves are a bow to the post-pandemic reality. Specifically, the chain’s field officers were out of the office, often visiting restaurants or working remotely. It’s also not clear when those offices will close.
• Is drone delivery of restaurant food ready for takeoff? One investor thinks so. Flyby Robotics, a drone delivery startup received a $4 million funding round led by MaC Venture Capital, along with a series of partnerships with foodservice brands, Restaurant Dive reported. Flyby will deliver goods from Nekter Juice Bar, Mad Greens and Tokyo Joe’s as part of a pilot that will last for several weeks and involve a single drone making deliveries from three stores in the Mesa/Gilbert, Arizona area.
• A private equity firm has acquired Port of Subs. Area 15 Ventures is the new owner of the 50-year-old chain. As part of the deal, Adam Contos, RE/MAX Holdings’ most recent CEO, will join Port of Subs as the brand’s CEO. Contos has been with Area 15 Ventures since early 2022. In addition, Healey Mendicino, Port of Sub’s former executive vice president, will now serve as the chain’s president.

• What’s in a name? Apparently, plenty. Sweetgreen renamed its Chipotle Chicken Burrito Bowl to the Chicken + Chipotle Pepper Bowl as part of a tentative agreement to resolve Chipotle’s lawsuit, Restaurant Dive reported. Chipotle took exception with Sweetgreen originally naming this menu item a Chipotle Chicken Burrito Bowl.
• Bad Daddy’s Burger Bar reopened a company-owned location in Greenville, S.C. Parent company Good Times Restaurants acquired the unit from a franchisee in March of 2022 and remodeled the unit. The restaurant now includes a designated pickup area for to-go orders, an updated interior and new cooking equipment.
• Growth Chains: Black Rock Coffee Bar opened a location in Pasadena, Texas. It is the chain’s 10th in the Houston market and 21st in the Lone Star State. The 2,000-square-foot store Incorporates Black Rock’s signature industrial modern design and features a large Texas-themed mural “to connect to the region.” The Habit Burger Grill opened a restaurant in St. George, Utah, its second in the city, and the 14th in the state. With the opening of a location in Rocky River, Ohio, Handles Homemade Ice Cream now has 100 locations systemwide. Handles plans to open 40 units in 2023. Micro food hall concept Local Kitchens is on the precipice of opening a location in Granite City, Calif. This will be the company’s third location in the Sacramento, Calif., area, and will feature the following restaurant concepts: Sushirrito, The Melt, Oren’s Hummus, Rooster and Rice, Nash and Proper and Square Pie Guys. Local Kitchens has 12 locations systemwide. Hawaiian-themed chain Mo’ Betthas opened a location in Lee’s Summit, Mo. Toasted Yolk, a breakfast, brunch and lunch concept, opened a restaurant in Elizabethtown, Ky. 

This Week’s Economic News

• Small business owners remain cynical about the current economic conditions, according to the NFIB Small Business Optimism Index for March 2023. The good news: the index increased 0.8 from February for a reading of 90.1. The bad news: March marks the 15th consecutive month where NFIB Small Business Optimism Index was less than its 49-year average of 98. Further, 24% of owners say inflation is their single most important business problem, down 4 points from last month. Small business owners expecting better business conditions over the next 6 months was -47%. “Hiring plans fell to their lowest level since May 2020, but strong consumer spending has kept Main Street alive and supported strong labor demand,” notes Bill Dunkelberg, NFIB’s chief economist.
• U.S.-based employers announced 89,703 job cuts in March, up 15% from the 77,770 announced in February, per outplacement and business and executive coaching firm Challenger, Gray & Christmas. March’s total represents a 319% increase from the 21,387 cuts announced in the same month in 2022 and it marks the third time this year when cuts were higher than the corresponding month a year earlier. For additional context, U.S. employers announced 270,416 cuts during the first quarter of 2023, which is only 46% of the total announced during the same period in 2009, which was part of a recession.
• Initial jobless claims totaled 228,000 on a seasonally adjusted basis for the week ending April 1, per the U.S. Department of Labor. It’s important to note the DOL has updated its methodology for tracking unemployment. Find an explanation and more data here. This marks a decrease of 18,000 claims from the previous week's revised level. The 4-week moving average was 237,750, a decrease of 4,250 from the previous week. And in light of these adjustments, some economists noted that there may be more people than previously thought receiving unemployment benefits, as Reuters explains. 
• The number of job openings decreased to 9.9 million on the last business day of February, the U.S. Bureau of Labor Statistics reported. During the month, the number of hires and total separations changed little coming in at 6.2 million and 5.8 million, respectively. Within separations, quits (4.0 million) edged up, while layoffs and discharges (1.5 million) decreased. This marks the first time since May of 2021 that the number of vacancies was less than 10 million, per published reports.
• New orders for manufactured goods declined 0.7% in February, per the U.S. Census Bureau. This follows a 2.1% January decrease. In addition, shipments decreased 0.5% in February after a 0.3% decrease in January. The unfilled orders-to-shipments ratio was 6.10, up from 6.09 in January.