Pollo Tropical gets new owners. Starbucks plans to add more stores. Uber Eats says “take me out to the ballgame,” while another third-party delivery company gets deeper into brick and mortar. Plus, introducing Strata GPO. These stories and more This Week in Foodservice.
The U.S. unemployment rate continues to hold steady, despite plenty of consternation about the economy. While the U.S. Federal Reserve continues to hike interest rates to slow inflation and other business conditions continue to fluctuate, the unemployment rate has ranged from 3.4% to 3.7% percent since March 2022, per the U.S. Bureau of Labor Statistics.
In fact, total nonfarm payroll employment rose by 187,000 in July, which led to an unemployment rate of 3.5%. changed little at 3.5%, the U.S. Bureau of Labor Statistics reported. Job gains occurred in health care, social assistance, financial activities, and wholesale trade.
Unfortunately, July’s jobs data missed the estimate of many economists, which had projected the economy would add 200,000 jobs for the month, per CNBC.
In July, employment in leisure and hospitality was little changed (+17,000). The industry has shown little employment change in recent months, following average monthly gains of 67,000 in the first quarter of the year. Employment in leisure and hospitality remains below its February 2020 level by 352,000, or 2.1%.
Looking more closely at eating and drinking places, in July these businesses added 134,000 net positions, per the National Restaurant Association. This growth came after a flat June.
Overall, jobs data continues to be a mixed bag for the U.S. economy and the restaurant industry.
Foodservice News This Week
- Multiconcept operators Authentic Restaurant Brands has reached a deal to acquire Pollo Tropical parent Fiesta Restaurant Group in an all-cash deal. ARB’s other restaurant concepts are Primanti Bros Restaurant & Bar, P.J. Whelihan’s Pub & Restaurant and Mambo Seafood. When the deal closes Fiesta will operate as a privately held company and Pollo Tropical will remain based in Miami, Fla. Fiesta’s leadership team will continue to operate Pollo Tropical as an independent brand within the ARB platform.
- Although it still has more than 16,000 units systemwide – and counting – Starbucks still feels it has plenty of room to add locations, per a Restaurant Business story. The Seattle-based coffee giant feels some markets are underserved and sees an opportunity to use various formats, like delivery-only units, to grow in other markets. First, urban areas fueled Starbucks' growth and that was followed by placing units in retail areas that generate high foot traffic. So, it will be interesting to see how this next growth chapter develops.
- Uber Eats has expanded its platform that delivers food to spectators at Major League Baseball games, per a Restaurant Dive report. It started by working with the New York Yankees and now includes a deal with the San Francisco Giants. MLB added a pitch clock this year which has sped up the pace of play across the league. In response, some teams have extended beer sales. For their part, the Giants and Yankees want to offer convenience while making sure fans attending games in their stadiums are well fed, too, hence this partnership with Uber Eats. Other stadiums have offered food delivery to seats for a while now, with varying degrees of success.
- Wetzel’s Pretzels continues to test its street side concept. The concept, known as Twisted by Wetzel’s, opened a location in Surprise, Ariz., its second such unit systemwide. Wetzel’s Pretzels unveiled this concept in April of this year and sees it as a way to expand its reach beyond its traditional mall food court base. This approach offers a variety of advantages, including making it easier to capitalize on the opportunities presented by delivery and drive-through sales.
- DoorDash has expanded its brick-and-mortar footprint by opening a food hall in San Jose, Calif., per a Nation’s Restaurant News report. This is DoorDash’s second customer-facing location. The company opened its first unit in Brooklyn in 2022. The company describes DoorDash Kitchens San Jose as a “delivery-forward kitchen” featuring 10 local and regional food vendors. Two years ago DoorDash tried its hand at a popup location in two years ago in the San Jose area.
- Excell and Nissco have rebranded under the singular name Strata GPO. Despite now going to market under the same name, the two dealer-based foodservice equipment and supplies buying groups remain independent entities. Here’s some additional information about the rebrand.
Economic News This Week
- New orders for manufactured goods increased 2.3% in June, the U.S. Census Bureau reported. This comes after a 0.4% May increase. Shipments, up two consecutive months, increased $0.7 billion or 0.1%. This follows a 0.4% May increase. Unfilled orders grew by 1.8% in June following a 0.8% May increase. The unfilled orders-to-shipments ratio was 6.74, up from 6.64 in May.
- Economic activity in the manufacturing sector contracted in June for the eighth consecutive, per the Manufacturing ISM Report On Business. The June Manufacturing PMI totaled 46%, 0.9% less than May. The New Orders Index remained in contraction territory at 45.6%, 3% greater than May, though. The Production Index reading of 46.7% represents a 4.4% dip from May.
- Economic activity in the services sector expanded in July for the seventh consecutive month, per the Services ISM Report On Business. The July Services Report came in at 527%, which is 1.2% greater than June. The Business Activity Index registered 57.1%, which is a 2.1% decrease from June.
- U.S.-based employers announced 23,697 cuts in July a 42% decrease from June, per data from global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc. July’s total is also 8% less than the 25,810 cuts announced in the same month in 2022. This marks the first-time cuts were less than the previous year’s corresponding month. So far this year, employers have announced plans to cut 481,906 jobs, a 203% increase from the 159,021 cuts announced in the first seven months of 2022.
- Initial jobless claims increased 6,000 for the week-ending July 29, 2022, per the U.S. Department of Labor. This brought the weekly total to 227,000. The 4-week moving average was 228,250, a decrease of 5,500 from the previous week.
- Private sector employment increased by 324,000 jobs in July and annual pay was up 6.2% year-over-year, according to the July ADP National Employment Report. The service sector led the way by adding 303,000 positions, of which 201,000 came from leisure/hospitality businesses. Looking at the data by company size, businesses with less than 50 employees added 237,000 positions, while companies with 50 to 499 employees also added a solid 138,000 positions. The growth of those two segments offset the 67,000 positions lost by companies with more than 500 employees.
- Nonfarm business sector labor productivity increased 3.7% in the second quarter of 2023, the per data from U.S. Bureau of Labor Statistics. Output increased 2.4% and hours worked decreased 1.3%. The decline in hours worked is the first decline since the second quarter of 2020 and was the result of a 1.3% decline in average weekly hours; employment was unchanged. From the same quarter a year ago, nonfarm business sector labor productivity increased 1.3%, reflecting a 2.6% increase in output and a 1.2% increase in hours worked; this is the first increase in the four-quarter productivity measure since the fourth quarter of 2021.
- Consumer credit increased 4% during the second quarter, the U.S. Federal Reserve reported. Revolving credit increased at a rate of 7.1%, while nonrevolving credit at a rate of 3%. In June, consumer credit increased at an annual rate of 4.3%.