Restaurant IPOs heat up with the weather. A full-service chain prepares to exit the fast-casual space. Does on-premises or off-premises dominate weekday lunch? What’s it like to dine like Barbie? Lots and lots of jobs data, including how many positions the restaurant industry added last month. These stories and more This Week in Foodservice.
Weekday lunch is making a comeback…in Kansas City and Charleston, S.C.
In fact, those two metropolitan areas are the only ones that increased their weekday lunchtime transactions in the first quarter of 2023 compared to the same time period in 2019, per the latest Toast Restaurant Trends Report.
In contrast, larger commuter metro areas like New York City, Philadelphia, Chicago, and San Francisco still haven’t fully returned to their pre-pandemic level of weekday lunchtime transactions.
Dine-in still dominates workday lunches, accounting for 70% of lunchtime transactions in the first quarter of 2023 compared to 79% in the same period in 2019. Takeout transactions rose to 27% from 20% for the same period.
Foodservice News This Week
- Initial public offerings are starting to heat up among chain restaurants. Multiconcept operator FAT Brands plans to take its Twin Peaks concept public. FAT Brands acquired FAT Brands acquired Twin Peaks in 2021 and the sports bar concept has since grown to 100 units systemwide doing business across 26 states. In addition, 32-unit chain Gen Korean BBQ plans to go public, seeking to raise up to $25 million, per a report in FSR. These announcements come during a period when Cava’s IPO continues to make headlines. The company, which owns a chain of Mediterranean-themed restaurants, seeks a valuation of up to $2.12 billion with its IPO.
- A Wendy’s franchisee is about to get into the café business. Citing court documents, Restaurant Dive reports Corner Bakery has accepted a $15 million bid from SSCP Restaurant Investors that was proposed during an auction last week. SSCP outbid Wexford Capital, which originally proposed buying the chain for $12 million. SSCP operates 80 Applebee’s restaurants and 43 Sonic restaurants and is the parent company of Cici’s Pizza and Roy’s. Corner Bakery filed for bankruptcy earlier this year.
- Papa John’s International acquired the restaurants previously operated by the M25 division of Drake Food Service International in the United Kingdom. The transition of restaurants will establish a portfolio of 91 company-owned restaurants across London and other parts of the U.K. DFSI may be exiting the U.K. market, but it remains a part of the Papa John’s network as it continues to hold master franchise rights in Spain, Portugal, Chile and Central America.
- Red Robin Gourmet Burgers completed an approximately $29 million sale-leaseback transaction with Essential Properties Realty Trust to sell and simultaneously lease-back nine owned properties. Proceeds from the transaction will be used to repay debt and fund capital investments, pursuant to the Company’s Credit Agreement, and support repurchasing shares of company stock.
- Barbie has been part of the pop culture scene for a long time and now she is part of the dining scene. Mattel and Bucket Listers are partnering to produce a pop-up Barbie-themed restaurant in Chicago and New York City. The restaurant’s design draws inspiration from 1970’s Malibu, Calif., including a sea of Barbie colors and some “retro glam,” per a report in Block Club Chicago. The menu features Barbie-inspired fare like Pacific Paradise Pancakes, West Coast Wedge Salad and a California Dreamin’ Club Sandwich. Cocktails include the Think Pink Margarita, French “71” and Beach Mojito. One can only wonder if Ken will serve as the maître de.
- IHOP is getting out of the fast-casual segment, per a report in FSR magazine. The company is closing the Maryland location of its Flip’d fast-casual concept in the coming days. This comes after the chain closed locations in Lawrence, Kans., and New York City.
Economic News This Week
- Nonfarm payroll employment increased by 339,000 in May, the U.S. Bureau of Labor Statistics reported. The restaurant industry accounted for 33,100 of the jobs added last month. This is greater than the industry employment gains posted in March (32,900) and April (22,400), per the National Restaurant Association. Overall, this performance beat economists' forecast, which projected the economy would add 190,000 positions in May, per a CNBC report. The economy also added 253,000 positions in April.
- Private sector employment increased by 278,000 jobs in May and annual pay was up 6.5% year-over-year, according to the May ADP National Employment Report. Hospitality and leisure added 208,000 positions, by far the most of any business segment. Small businesses (those with 49 employees or less) led the way by adding 235,000 jobs. Medium sized companies (50 to 249 employees) added 140,000 positions. In contrast, large employers, those with more than 500 employees, saw the number of positions decline by 106,000.
- U.S.-based employers announced 80,089 cuts in May, a 20% increase from the 66,995 cuts announced one month prior, per data global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc. So far this year, companies have announced plans to cut 417,500 jobs. It is the highest January-May total since 2020 when 1.41 million cuts were recorded. With the exception of 2020, it is the highest total in the first 5 months of the year since 2009, when 822,282 cuts were tracked through May. “Consumer confidence is down to a six-month low and job openings are flattening. Companies appear to be putting the brakes on hiring in anticipation of a slowdown,” said Andrew Challenger, a labor expert and a sr. VP at the firm.
- The number of job openings edged up to 10.1 million on the last business day of April, the U.S. Bureau of Labor Statistics reported. This is up slightly from 9.8 million openings reported in March. The number of hires in April changed a little to 6.1 million. Total separations decreased to 5.7 million. Within separations, quits (3.8 million) changed little, while layoffs and discharges (1.6 million) decreased. This release includes estimates of the number and rate of job openings, hires, and separations for the total nonfarm sector, by industry, and by establishment size class. The continued strong jobs data leads many economists to believe the Federal Reserve will hike rates again in the near term, per a Yahoo! Finance report.
- Nonfarm business sector labor productivity decreased 2.1% in the first quarter of 2023, the U.S. Bureau of Labor Statistics reported. Output increased 0.5% and hours worked increased 2.6%. Compared to the same quarter a year ago, nonfarm business sector labor productivity decreased 0.8%, reflecting a 1.4% increase in output and a 2.2% increase in hours worked. The 0.8% productivity decline is the first time the four-quarter change series has remained negative for five consecutive quarters since the study’s inception in 1948.
- Economic activity in the manufacturing sector contracted in May for the seventh consecutive month, per the Manufacturing ISM Report on Business. This extended period of contraction comes after a 28-month period of growth. The May Manufacturing PMI registered 46.9%, 0.2% less than April. The New Orders Index remained in contraction territory at 42.6%, 3.1% less than April. The Production Index reading of 51.1% is 2.2% better than April. The Prices Index registered 44.2%, down 9% from April. The Backlog of Orders Index registered 37.5%, 5.6% less than April.
- Economic activity in the services sector expanded in April for the fourth consecutive month, per the Services ISM Report On Business Report On Business. The Services PMI increased 0.7% from May, totaling 51.9%, per ISM. The Business Activity Index registered 52%, a 3.4% decrease compared to the reading of 55.4% in March.