This Week In Foodservice

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


Restaurant Operators Continue to Invest Despite Economic Uncertainty

Subway suitors may try a financial value meal. Mall dining gets a makeover in Los Angeles, while a legacy QSR brand leans more heavily into robotics and AI. These stories and more This Week in Foodservice.

Despite posting a slight decline, restaurant industry performance remained in growth mode during March, per the National Restaurant Association’s Restaurant Performance Index. The study came in at 101.7, which represents a 1-point decline from February. Still, any reading greater than 100 indicates the industry is in a period of expansion.

A majority of operators reported positive same-store sales in March, but the NRA described the results for this metric as “a mixed bag.” Driving the decline in the study was operators’ uncertain outlook for the next six months. Their expectations both for the U.S. economy and sales softened.

Despite anticipating challenges in the coming months, operators continue to invest in their businesses. In fact, 64% of operators report making a capital expenditure for equipment, expansion or remodeling during the past three months. This represents a 4% increase from February, Also, 69% of restaurant operators plan to make a capital expenditure during the next 6 months. That was up from 64% in February.

Foodservice News This Week

  • A different kind of value meal option for Subway suitors? Selling a restaurant chain that comes with a $10 billion asking price would be challenging enough under normal circumstances. But trying to do so in the midst of rising interest rates aimed at slowing inflation and other economic headwinds only makes things even more challenging. Such is the position the bankers charged with selling Subway find themselves in at the moment. To their credit, the bankers are starting to get a little creative and are offering up to $5 billion in financing, per a CNBC report.
  • Robots and AI will be part of White Castle’s development plans moving forward. The chain has been testing both and appears poised to take things to the next level, per a QSR Magazine story. What’s interesting is that the chain’s leaders finally acknowledged what so many quick-serve restaurants have been reticent to admit: the use of robotics and AI is not replacing employees because few operators can fill all their positions. Rather, these solutions help operators get the most of what labor they do have.
  • What’s in store for mall dining options? You might get a glimpse later this week when Topanga Social opens in Los Angeles. Operating in a former Sears location, Topanga Social is a dining-and-drinking complex with a stacked collection of Los Angeles culinary stars. With more than 20 restaurants, the facility promises to have a little something for everyone, as Forbes reports.
  • The merger between SPB Hospitality and Krystal Restaurants is complete, per a release. Krystal will continue to operate independently, just as the other brands in the SPB portfolio do. Krystal has more than 300 restaurants across 10 states.
  • Private equity firm L Catterton has made an investment in Urban Egg, a nine-unit breakfast and brunch concept based in Colorado, per a report in FSR Magazine. Although the terms of the deal were not disclosed, the casual-dining chain plans to use the capital to fuel growth in new and existing markets. Eight of its nine locations are in Colorado. The ninth store opened in Overland Park, Kansas in 2022.
  • Melting Pot Restaurants plans to remodel one restaurant a week in 2023. The 94-unit fondue concept says that remodeled stores perform 16 percentage points better than non-remodeled units, per a piece in Nation’s Restaurant News. The remodeled units offer a more open dining room layout, the company said, a more defined bar area and elements like candles and fireplaces.
  • MOD Pizza has launched a national program dedicated to hiring and supporting people with barriers to employment. Known as the MOD Opportunity Network (MOD O.N.), this program builds on MOD’s track record of employing overlooked populations by connecting the company and its stores with national non-profit organizations that support the readiness, placement and retention of job seekers deserving of a second chance or a first start. At launch, MOD O.N. will be dedicated to two underserved populations: individuals who have been “justice-involved and people with intellectual and developmental disabilities (IDD),” per a company release.
  • Wendy’s is the latest restaurant chain to enter the consumer-packaged goods arena. The quick-service restaurant chain is working with food manufacturer Con Agra to make Wendy’s chili available in grocery stores later this spring. The Ohio-based chain first began making chili in 1969 as a way to use leftover hamburger meat, per a USA Today report.
  • Growth Chains: The Alley opened a location in Greenwood Village, Colo. It’s the chain’s second unit in the Rocky Mountain State. The Alley is a global franchise tea shop specializing in handcrafted boba tea, a Taiwanese drink. The chain’s first Colorado location operates in Aurora. Caribou Coffee signed several multi-unit franchise agreements to develop more than 300 domestic units, per a Restaurant Dive report. The company has more than 750 units systemwide, including 50 of its drive-thru-focused Caribou cabin format. Texas-based quick service chain Golden Chick opened a location in Dallas and another in Mt. Vernon, Texas. The chain has opened six restaurants thus far in 2023. Johnny Rockets opened a location in the United Arab Emirates’ capital city of Abu Dhabi. This marks the first brick-and-mortar opening for franchise partner, Kitopi, who has a master franchise agreement with the global restaurant franchising company to open 136 brick-and-mortar locations in addition to 70 ghost kitchens throughout the Middle East. To date, FAT Brands’ concepts Fatburger, Johnny Rockets, Elevation Burger and Buffalo’s Express have opened in 15 of Kitopi’s existing ghost kitchens in the region. In the coming weeks, the franchise partner will also open another brick-and-mortar Johnny Rockets location in Dubai. Toasted Yolk opened a restaurant in Findlay, Ohio, its first in the Buckeye State.

Economic News This Week

  • Real gross domestic product increased at an annual rate of 1.1% in the first quarter of 2023, per the advance estimate from the U.S. Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.6%. Economists point to higher interest rates as one of the main reasons that growth slowed during the first three months of the year, per a New York Times story.
  • The number of job openings decreased to 9.6 million on the last business day of March, per the U.S. Bureau of Labor Statistics Job Openings and Labor Turnover Survey. During the course of the month, the number of hires and total separations changed little at 6.1 million and 5.9 million, respectively. Within separations, quits (3.9 million) changed little, while layoffs and discharges (1.8 million) increased. The decline in job openings was unexpected by many economists and represents the lowest level in two years, per a CNBC report.
  • Initial jobless claims decreased 16,000 for a total of 230,000 for the week ending April 22, 2023, per the U.S. Department of Labor. The 4-week moving average was 236,000, a decrease of 4,000 from the previous week.
  • New orders for manufactured durable goods increased 3.2% in March, per the U.S. Census Bureau. This comes after a 1.2% decrease during February. Transportation sales, up 9.1%, drove the March increases. That’s because excluding transportation, new orders for durable goods increased by only 0.3%. According to many economists, the key takeaway from this data is that businesses are starting to curtail investment after periods of significant growth, per a Morningstar report.
  • Economic activity in the manufacturing sector contracted in April, per the ISM Report on Business. This represents six consecutive months of contraction following a 28-month period of growth, per ISM. The April Manufacturing PMI registered 47.1%, up 0.8% from March.