Wendy’s takes the wraps off a new kitchen design. Chicken chains rule the roost when it comes to one key metric. These stories and more This Week in Foodservice.

U.S. retail and foodservices sales increased 0.7% in July 2023 compared to the previous month, per data from the U.S. Census Bureau. This also marks a 3.2% increase compared to July 2022. Total sales for May 2023 through July 2023 period were up 2.3% from the same period a year ago.

Overall, these results exceeded most economists' expectations, and many interpret this as another example of the resilience of the U.S. economy, per this Reuters report.

Closer to home, restaurant industry sales grew by 1.4% in July, marking the third consecutive monthly increase, per data from the U.S. Census Bureau. Sales growth in May and June totaled 1.6% and 0.8%, respectively.

The recent upward trend in restaurant sales was even more impressive considering that it occurred during a period of slowing menu-price growth. In other words, sales growth wasn’t primarily driven by higher menu prices, as it was for much of the past year, per the National Restaurant Association. In fact, after adjusting for menu price inflation, eating and drinking place sales were up 4.4% between July 2022 and July 2023. Despite the uptick in real sales growth, July’s sales volume remained below January’s reading in inflation-adjusted terms.

Foodservice News This Week

Wendy's new design will include additional sandwich production areas, dedicated space for digital orders and more prep areas. Image courtesy of Wendy's

• Wendy’s is finalizing a new kitchen design as part of its ongoing restaurant development process. The Global Next Gen High-Capacity Kitchen design will include additional sandwich production areas, dedicated space for digital orders and more prep areas, per a company release. The design promises to reduce travel distances for crew members with strategically placed front counter, drive-thru and expanded storage capacity which will ultimately enhance overall operational flow while improving crew comfort and speed of service. Other notable features include self-order kiosks, passthrough order pick-up shelving, and dedicated parking for mobile order pick-up help to create a more convenient experience for what the restaurant describes as “digital-first customers.” In 2022, Wendy’s unveiled its Global Next Gen restaurant design standard and has since opened locations in Kansas and Oklahoma. Wendy’s projects these latest kitchen updates will deliver roughly a 50% increase in output capacity compared to other designs.
• Is Bloomin’ Brands underperforming? One investor thinks so. That’s why Starboard Value has set its sights on the multiconcept operator, amassing nearly 10% stake in the company, per a Restaurant Business report. As an activist, Starboard will put pressure on Bloomin' to do things to improve its performance and its share price. That could include some significant changes. This is not the first time Starboard has done this sort of thing. It took a similar approach with Darden Restaurants and Papa John’s in recent years.
• Chicken chains top the list of the top 30 quick-service restaurants with the highest average unit volume, per data from QSR Magazine. Chick-fil-A and Raising Cane’s lead the way with AUVs of $6.7 million and $5.4 million each. Burger concepts are well represented on the list, too, with Shake Shack ($3.8 million), Whataburger ($3.7 million) and McDonald’s ($3.6 million) claiming the next three spots on the list.
• A family-run restaurant in Washington state provided the latest unfortunate example of the important role cleaning equipment plays in running a food-safe operation. Washington State Department of Health released a report confirming that listeria bacteria were found in all milkshake flavors sold at a restaurant in Tacoma, per numerous published reports. The report attributed the presence of the listeria due to the milkshake machine not being properly cleaned. The department reported that the bacteria led to six hospitalizations and three deaths. The role of proper cleaning and maintenance of foodservice equipment, including those that handle dairy products, cannot be overstated.
• A lawsuit alleges the owners of a Chicago steakhouse misused Payment Protection Plan funds for their own benefit, Eater reports. As part of the lawsuit, a group of estranged investors who sunk $3 million into Maple & Ash, a popular steakhouse in the city’s Gold Coast area, accuse restaurant co-founders Jim Lasky and David Pisor of fraud. Instead of spending $7.6 million in PPP funds on workers at their Chicago and Arizona restaurants, the investors allege the money went toward personal expenses. By no means is this the first time Lasky and Pisor have faced legal troubles in recent months. In fact, the duo took each other to court accusing one another of locking the other out of financial records and more. That legal drama was settled.

Economic News This Week

• The Conference Board Leading Economic Index declined for the 16th consecutive month in July. The study declined 0.4% in July, which came after a 0.7% June decline. The LEI is down 4.0% over the 6-month period between January and July 2023. In the previous 6 months, it declined 3.7%. Despite these declines, The Conference Board Points out its coincident index continues to grow slowly and inconsistently, and there’s still somewhat of a favorable growth environment at the moment. So, what’s this all mean for the future? The Conference Board projects “a short and shallow recession in the Q4 2023 to Q1 2024 timespan.”
• Initial jobless claims declined by 11,000 for a total of 239,000 for the week ending August 12, the U.S. Department of Labor reported. The 4-week moving average was 234,250, an increase of 2,750 from the previous week.
• Total industrial production increased 1.0% in July, the U.S. Federal Reserve reported. This comes after declines in the previous two months. Manufacturing output rose 0.5% in July; the production of motor vehicles and parts jumped 5.2%, while factory output elsewhere edged up 0.1%. At 102.9% of its 2017 average, total industrial production in July was 0.2% below its year-earlier level. Capacity utilization moved up to 79.3% in July, which is 0.4% below its long-run (1972–2022) average.
• The number of building permits and housing starts showed some promise in July, per data from the U.S. Census Bureau. Privately‐owned housing permits increased 0.1% compared to June and housing starts increased 3.9% for the month. Permits declined 13% compared to July 2022 but starts were up 5.9% for the same month last year.