Restaurants and consumers share their outlook for the summer season. Another chain adds an off-premises-only location, while a legendary restaurant entrepreneur plots a comeback. These stories and more This Week in Foodservice.
With Memorial Day behind it, the restaurant industry can turn its attention to the unofficial start of summer. This season tends to be one that sees an uptick in consumer use of restaurants and in anticipation of this seasonal uptick in sales and customer foot traffic, operators plan to add 502,000 seasonal positions this summer, per National Restaurant Association’s 25th annual Eating and Drinking Place Summer Employment Forecast. If that comes to fruition, it will be the most seasonal jobs since 2017, when the industry added 530,000 positions for the summer.
Despite operators’ strong hiring plans, it’s also important to note their outlook on the future is relatively uncertain. In fact, the National Restaurant Association’s Restaurant Performance Index fell 1.0% in March, due largely to a deterioration in restaurant operators’ outlook for business conditions in the months ahead. Despite this decline, the index remains in expansion territory at 101.7. A majority of restaurant operators reported positive same-store sales in March, but customer traffic readings were a mixed bag. The 6-month outlook remains uncertain, as restaurant operators’ expectations for both sales and the economy softened during the April survey fielding period.
Consumers are not so sure about their economic future, too. In fact, consumer confidence took another hit in May as The Conference Board’s Consumer Confidence Index declined 1.4 points for a total of 102.3. The Present Situation Index hit 148.6 in May, down from 151.8 last month. The Expectations Index decreased slightly to 71.5 in May from 71.7 in April.
Notably, consumers’ perception of the jobs market is what drove the decline in their confidence. And the stronger the employment picture, the more likely consumers are to use restaurants because of the convenience these businesses can offer so this decline is worth noting. “Their assessment of current employment conditions saw the most significant deterioration, with the proportion of consumers reporting jobs are ‘plentiful’ falling 4 ppts from 47.5% in April to 43.5% in May,” says Ataman Ozyildirim, senior director, economics at The Conference Board. “Consumers also became more downbeat about future business conditions, weighing on the expectations index. However, expectations for jobs and incomes over the next six months held relatively steady.”
Although consumer confidence fell across all age and income categories in the past three months, The Conference Board reports consumer expectations about inflation remain elevated and stable. “Consumers in May expected inflation to average 6.1% over the next 12 months — essentially unchanged from 6.2% in April, though down substantially from the peak of 7.9% reached last year,” Ozyildirim says. “Nonetheless, consumers continued to view inflation as a major influence on their view of the U.S. economy.”
Last year, consumers pulled back on their restaurant visits in May, June and July due to inflation concerns, per a CNBC story. So maybe, just maybe, a more stable outlook on inflation can help restaurants have a better summer in 2023 than they did in 2022. Only time will tell, though.
This Week in Foodservice
- Add Biscuitville to the growing list of restaurant chains opening off-premises-only locations. The chain’s latest North Carolina location includes a single drive-thru lane and a walk-up window, per a Restaurant Dive story. Biscuitville says roughly three out of every four customers use the chain’s drive-thrus.
- Will Chipotle founder Steve Ells return to the restaurant scene riding a robot? Ells has been pitching potential investors on a plant-based, robot-powered restaurant concept, per the New York Post. The restaurant, which has the name Kernel, can operate with as few as three employees, per the story, and promises to change the way operators look at menu, real estate and more.
- Can the revenues from a virtual restaurant concept surpass those of a traditional brick-and-mortar concept? One restaurant executive thinks this could become a reality. Dog Haus co-founder André Vener reports the chain’s virtual breakfast concept, which goes to market as Bad-Ass Breakfast Burritos, generates more than $1 million and 15% of sales, per a Nation’s Restaurant News story. “If I was a betting man, I do think it could be bigger than Dog Haus itself within the next three years,” Vener said.
- Could ChatGPT’s first foodservice job be in human resources? Per a Restaurant Business report, some operators now use chatbots to help screen job applicants and keep them engaged when hired.
- A former barbecue executive apparently has a taste for the fast-casual café business. Former Famous Dave's CEO Jeff Crivello is showing interest in purchasing the bankrupt Corner Bakery Café, per a FSR Magazine report. He’s working with Wexford Capital, a former investor of Famous Dave's, to buy the chain.
- Commercial kitchen ventilation manufacturer Halton plans to expand its capacity. The company is making a $7.4 million investment to its Allen County, Ky., manufacturing facility that will add 50,000 square feet to the location. The company expects to complete the project during the first quarter of 2024. At that time, the space will measure 91,000 square feet.
- Growth Chains: The Habit Burger Grill opened a restaurant in Dinuba, Calif. Velvet Taco will open a location in Waco, Texas, on June 5. That will mark the chain’s 41st restaurant in the Lone Star State. Jersey Mike’s opened a restaurant in Wasilla, Alaska, giving the chain locations in all 50 states.
Economic News This Week
- Both personal income and disposable personal income increased 0.4% in April, per the U.S. Bureau of Economic Analysis. Personal outlays increased 0.8% and consumer spending increased 0.8%. The personal saving rate, personal saving as a percentage of disposable personal income, was 4.1% in April.
- Riding the strength of the transportation and defense sectors new orders for manufactured durable goods increased 1.1% in April, per the U.S. Census Bureau. This unexpected increase represents two consecutive monthly increases, after March saw growth of 3.3%. Excluding transportation, new orders decreased 0.2%, Excluding defense, new orders decreased 0.6%.
- Real gross domestic product increased 1.3% in the first quarter of 2023, according to the second estimate from the U.S. Bureau of Economic Analysis. This is 0.2% greater than the initial estimate. In the fourth quarter, real GDP increased 2.6%.
- Initial jobless claims increased 4,000 for a total of 229,000 for the week ending May 20, 2023, per the U.S. Department of Labor. The 4-week moving average was 231,750, unchanged from the previous week.