From AI to robots there’s lots of tech to talk about. Burger King prepares to close hundreds of locations while Portillo’s may be poised for takeoff. Economic news includes many labor updates plus small businesses share their perspective. These stories and more This Week in Foodservice.
Lots of tech talk dominating the foodservice industry of late.
Sweetgreen acquired through its purchase of Spyce back in 2021. Spyce first rolled out its automated kitchen in 2020 in Massachusetts. At that time the technology automated meal assembly. Spyce still had members of its culinary team prep meal ingredients. Since the deal, sweetgreen has spent some time adapting the Spyce technology so it works with its menu. This represents the latest digital development for sweetgreen. Last year the salad-centric fast-casual chain opened its first “sweetlane” concept. The Schaumburg, Ill, pilot restaurant sought to push digital ordering to the forefront with a drive-thru lane designed to increase convenience for digital customers.For example. sweetgreen is about to open its first Infinite Kitchen, which will automate key aspects of meal production. The Naperville, Ill., location will use the technology
In addition, a robot is tossing grab-and-go salads for a Michigan-based healthcare foodservice operator. Corewell Health is in the midst of a 12-week pilot program that involves using one robot attached to a salad refrigeration unit and programmed with six different salad recipes, per a Food Management report. The unit grabs a container, assembles the salad and then drops it into a chute that can hold 10 salads. The robot’s assistant places lids on the salad and labels them. This is not Corewell Health’s first foray into automation or robotics. The operator uses TUGS to tote trays from the kitchen to patient rooms, self-checkout technology and recently it began using autonomous floor scrubbers.
Multiconcept operator CKE Restaurants is testing artificial intelligence in some of its drive thrus, per a company release. Upon arriving at the drive thru, guests place their orders thru a digital interaction with “Tori,” the name given to the AI interface, and then pay the CKE associate for their meal at the pickup window. The parent company of Hardee’s and Carl’s Jr. reports using this AI technology has already “positively impacted drive thru times thru improved order accuracy and better customer interaction.” The company also reports using AI in this way allows “Carl's Jr. and Hardee's associates to focus more on providing better customer service and preparing timely and freshly made orders.”
Add Wendy’s to the list of companies testing AI-powered drive thru technology. The fast-food chain will begin working with Google’s AI technology at a company-owned restaurant in Columbus, Ohio, starting in June. In a release announcing the test project, Wendy’s said 75% to 80% of its customers place their orders via its drive thrus. Known as Wendy’s Fresh AI, the program will be able to have conversations with customers. It will also have the ability to understand made-to-order requests and generate responses to frequently asked questions. Google's large language modules will power these features. The LLMs have the data from Wendy's menu, established business rules and logic for conversation guardrails, and integration with restaurant hardware and the point-of-sale system. By leveraging generative AI, Wendy's seeks to take the complexity out of the ordering process so employees can focus on serving fast, fresh-made, food.
Finally, while delivery robots seem inevitable, implementation will be pretty complicated, per a report by The Food Institute. A total of 23 states have laws on the books on how delivery robots can transport food within their jurisdictions. It should come as a surprise to no one that the laws can vary greatly from one state to another. This state-by-state approach will slow the adoption of this technology.
All in all, plenty of operators continue to test robotics but widespread implementation seemingly remains elusive.
Foodservice News This Week
- In a whopper of a development, Burger King plans to close up to 400 restaurants during 2023, per various published reports. Already three Burger King franchisees have filed for bankruptcy and the company has closed 124 locations since January, per a WGN report. Burger King still has roughly 7,000 units in the U.S., so closing locations is not out of the norm. Potentially closing 400 restaurants in one year, though, is pretty significant. Burger King is not the only chain whose franchisees face some challenging economic times. One of Hardee’s largest franchisees has filed for bankruptcy and closed 39 restaurants, per a Restaurant Business report.
- Three franchisees operating 62 McDonald’s locations across Indiana, Kentucky, Maryland and Ohio were found to have violated federal labor laws, per a CNBC report. The story alleges these franchisees were found to be employing more than 300 minors, including two ten-year-old children. These franchisees could face up to $200,000 in fines.
- Is Portillo’s poised for takeoff? Figuratively speaking, perhaps. The Illinois-based chain known for its iconic Windy City-themed cuisine, including Chicago-style hot dogs and Italian beef sandwiches, is considering adding locations in airports and even abroad, per a report in Crain’s Chicago Business. As Crain’s story points out, expanding abroad has not always treated Chicago-based chains well, citing Potbelly’s struggles opening in international markets. Stay in tune with current trends, though, Portillo’s plans to open another pick-up only location, per a Nation’s Restaurant News report. The chain opened its first location without on-premises dining back in 2022.
- BradyIFS continues to grow via acquisition. The distributor of foodservice disposables and janitorial/sanitation has acquired Southern Janitor Supply, which serves the Florida market. Terms of the transaction were not disclosed.
- One virtual brand is closing, while another chain mulls expansion via ghost kitchens. Citing weakening demand for virtual brands following the end of pandemic restrictions, Brinker plans to phase out its Maggiano’s Italian Classics virtual brand by the end of this quarter, which is also the end of Brinker’s fiscal year, per a Restaurant Dive report. In contrast, Wienerschnitzel is testing its brand reception in new markets with three ghost kitchens in Frisco, Texas, Santa Barbara, California and Smyrna, Georgia, also per Restaurant Dive. Wienerschnitzel sees potential to open more than 1,000 U.S. ghost kitchens.
- Growth chains: Arby’s opened its first location in Saudi Arabia. The restaurant in Riyadh features a menu that “that mixes U.S. favorites with exclusive items guests can’t get anywhere else in the world.” Black Bear Diner opened a location in Menifee, Calif. Famous Toastery, a 25-unit better brunch franchise chain, inked a franchise development agreement to open 5 units in Northeast Florida over the next 4 years. Salad and Go opened two locations in Las Vegas. Later this month Salad and Go will open a location in Spring and Katy, Texas. Velvet Taco will open its first-ever casino restaurant with Choctaw Casino & Resort at the District Food Hall in Durant, Ok.
Economic News This Week
- Total nonfarm payroll employment increased by 253,000 in April, per the U.S. Bureau of Labor Statistics. This significantly beat economists' projections, which called for the U.S. economy to add approximately 178,000 jobs. The unemployment level remained relatively consistent at 3.4%. This unexpected surge in job creation, according to some, undermines the U.S. Federal Reserve’s case for raising interest rates again. The restaurant industry added 24,800 jobs for the month, per the National Restaurant Association. And through the first quarter of 2023, the industry has added more than 180,000 positions.
- Private sector employment increased by 296,000 jobs in April and annual pay was up 6.7% year-over-year, according to the April ADP National Employment Report. The unexpected hiring surge was led by hospitality and leisure, which added 154,000 positions, by far the most of any category. By business size, small businesses (49 employees or less) and medium-sized businesses (50 to 499 employees) led the way by hiring 121,000 and 122,000 employees respectively. Businesses with more than 500 employees added 47,000 employees.
- Initial jobless claims totaled 242,000 for the week ending April 29, per the U.S. Department of Labor. This represents a decrease of 13,000 from the previous week. The 4-week moving average was 239,250, an increase of 3,500 from the previous week.
- S.-based employers announced 66,995 cuts in April, per data from outplacement firm Challenger, Gray & Christmas. This represents a 25% decline from the cuts announced in March but a 176% increase from April 2022. So far this year, employers have announced plans to cut 337,411 jobs compared to the 79,982 cuts announced in the first four months of 2022.
- Nonfarm business sector labor productivity decreased 2.7% in the first quarter of 2023, the U.S. Bureau of Labor Statistics reported. Output increased 0.2% and hours worked increased 3.0%. From the same quarter a year ago, nonfarm business sector labor productivity decreased 0.9%, reflecting a 1.3% increase in output and a 2.3% increase in hours worked. The 0.9% productivity decline is the first time the four-quarter change series has remained negative for five consecutive quarters; this series begins in the first quarter of 1948.
- Economic activity in the services sector expanded in March for the third consecutive month, Services ISM Report on Business. Overall, the Services PMI registered 51.2%. The services sector has grown in 33 of the last 34 months, with the lone contraction in December.
- Small business optimism reached a 10-year low in April. The NFIB Small Business Optimism Index declined 1.1 points for the month for a reading of 89.0. April was the 16th consecutive month where the index came in at less than its long-run score of 98. Labor quality was the top business problem at 24%, with inflation in second place by one point at 23%.