Plus, c-stores are brewing better coffee programs. What’s next for Subway? Lots of jobs data. These stories and more This Week in Foodservice.
The sad news of Jimmy Buffett’s death represents the silencing of one of the music industry’s most iconic voices. During a time when our society remains so bitterly divided over various political and social issues, it was nice to see so many finding common ground by describing what Buffett’s music meant to them and sharing so many fond memories from attending his concerts over the years.
The Chicago Cubs even got into the act, having the organist play various Buffett tunes in between innings of Monday’s win over the San Francisco Giants and rolling a video of Buffett himself singing Take Me Out to the Ballgame from all the way back in 1998.
But even if you were not a fan of Buffett’s beachside rock and roll, one has to admire not only his ability to bring people together but also his entrepreneurial spirit, which burned brightly bringing beach vibes to consumers across the country.
Like so many, I found it impressive that Buffett was able to take a song like Margaritaville and turn it into a brand. In fact, Buffett’s Margaritaville remains a multiconcept operator, which includes such brands as Margaritaville restaurants, Landshark Bar & Grill, Air Margaritaville (airport locations) and 5 O’Clock Somewhere Bar. The company is also involved in a series of Margaritaville-themed resorts. More than 20 million people visit a Margaritaville-branded business a year and the company has annual system-wide sales of $1.7 billion, per a story by The New Yorker. And this Business Insider piece does a good job of outlining how Buffett made his money.
And since nobody likes to see a party end, fans flocked to Buffett’s various restaurants that are still in operation to celebrate the man and his music. No doubt, there were plenty of bartenders in plenty of other establishments who poured plenty of booze in the blender as they sought to render that frozen concoction that helped Buffett fans hang on and pay homage to him.
So, yes, the music industry has lost one of its more popular recording artists, but the restaurant industry has lost one of its most dynamic entrepreneurs. Here’s wishing Jimmy Buffett and his legion of fans many more cheeseburgers in paradise.
Foodservice News This Week
- Subway has new owners. So, what’s next for the ubiquitous chain? Roark has a lot of experience with large acquisitions and operating in the very competitive sandwich segment and that could benefit Subway. Some analysts feel Roark will continue to build on the progress Subway has made in recent months, including menu enhancements and store designs. And don’t rule out continued expansion, particularly in international markets, as this Restaurant Dive story notes. It’s also interesting to note that Subway was the restaurant chain that closed the most locations (571) during 2022, per data from Restaurant Business’ Top 500 Chains report.
- With consumers’ finances remaining tight, some may be cutting back on ordering food to go from full-service restaurants. And the restaurant operators may not mind, per a Restaurant Business story. When ordering for delivery from a full-service restaurant, consumers may have to pay higher menu prices in addition to a delivery fee, which can make things a little pricey. Plus, operating a to-go business continues to become more complex for some full-service restaurants, particularly when virtual brands are part of the equation. For that reason, operators may not mind seeing off-premises business decline as it gives them the chance to focus more on those guests who choose to dine on premises.
- Convenience stores seek a jolt from their coffee programs. Such chains as 7-Eleven, Circle K, Arko and GetGo continue to refresh their offerings with new machines, flavors and specialty options, per a C-Store Dive story. The enhancements at 7-Eleven include bean-to-cup coffee and an increased focus on specialty and iced options, along with more baked goods to accompany them. And other chains are taking similar steps. These enhancements allow c-store operators to further strengthen an already strong segment while appealing to younger generations which tend to favor craft brews, specialty drinks and the like.
- Consumers are starting to require more truth in advertising from restaurant chains. Take, for example, the $1.4 million settlement of a class action lawsuit brought forth by customers who ordered delivery from Panda Express, per a Yahoo! story. The complaint accused the fast-food chain of advertising a “low-price” delivery fee, typically $2.95, on its website and app and instead charged customers an additional 10% service fee on deliveries. Affected customers have their pick of a cash payment or free food. The deadline to file a claim is Jan. 10, 2024. As it tangles with its own class action lawsuit, no doubt the executives at Burger King were paying attention to the outcome of the Panda Express case. Customers allege Burger King misrepresented the size of its world-renowned Whopper sandwich in advertisements, causing consumers to buy food based on an inaccurate estimate of its size, per a Restaurant Dive story.
- Freddy’s Frozen Custard & Steakburgers plans to open a national training and innovation center in Wichita, Kan. The chain also plans to expand its executive offices in the Fort Worth, Texas, area by creating an executive office there. The innovation center will feature dedicated classrooms and collaboration spaces with a simulated Freddy’s restaurant, per published reports. In developing such an operation in Wichita, represents a homecoming of sorts for Freddy’s, which was founded there in 2002.
Economic News This Week
- Total nonfarm payroll employment increased by 187,000 in August, and the unemployment rate rose to 3.8%, per data from the U.S. Bureau of Labor Statistics. Employment continued to trend up in healthcare, leisure and hospitality, social assistance, and construction. Specifically, restaurants added 14,900 jobs in August, marking the 32nd consecutive month where the industry showed positive job growth, per data from the National Restaurant Association. The NRA also noted that job growth is starting to slow but that employee retention for the industry is showing signs of improvement. As a result, the restaurant workforce is inching closer to a full recovery to pre-pandemic levels. As of August 2023, eating and drinking places were 32,400 jobs – or 0.3% – less than their February 2020 employment peak.
- Initial jobless claims decreased by 4,000 for a total of 228,000 for the week ending Aug. 26, 2023, per the U.S. Department of Labor. The 4-week moving average was 237,500, an increase of 250 from the previous week's revised average. The previous week's average was revised up by 500 from 236,750 to 237,250. The fact that initial jobless claims continue to remain so low shows that many companies have either been hiring or holding on to employees and seeking other ways to cut costs, one economist told MarketWatch. Citing a variety of factors, though, this same economist feels labor market conditions are likely to cool.
- U.S.-based employers announced 75,151 cuts in August, up from the 23,697 cuts announced one month prior, per data from Challenger, Gray & Christmas, a global outplacement and business executive coaching firm. In August 2022, there were 20,485 job cuts announced. “Job openings are falling, and American workers are more reluctant to leave their positions right now. The job market is resetting after the pandemic and post-pandemic hiring frenzy,” said Andrew Challenger, labor expert and senior vice president of Challenger, Gray & Christmas.
- Personal income increased 0.2% in July, per data from the U.S. Bureau of Economic Analysis. Disposable personal income was essentially flat, increasing less than 0.1%, while personal consumption expenditures increased 0.8%. The PCE price index increased 0.2%. Excluding food and energy, the PCE price index increased 0.2%. Real DPI decreased 0.2% in July and real PCE increased 0.6%.
- New orders for manufactured goods decreased 2.1% in July, per the U.S. Census Bureau. The unfilled orders-to-shipments ratio was 6.80, up from 6.74 in June. Inventories, up following two consecutive monthly decreases, increased 0.1%.
- Economic activity in the manufacturing sector contracted in August for the 10th consecutive month, per the Manufacturing ISM Report On Business. The news was not all bad, though, the August Manufacturing PMI increased 1.2 percentage points from July for a total of 47.6%. New orders came in at 0.5% less than July while production increased 1.7%. “The August composite index reading reflects companies managing outputs appropriately as order softness continues, but the month-over-month increase is a sign of improvement,” said Timothy R. Fiore, CPSM, C.P.M., chair of the Institute for Supply Management Manufacturing Business Survey Committee.
- Economic activity in the services sector expanded in July for the seventh consecutive month as the Services PMI came in at 52.7%, per the Services ISM Report On Business. Still, the news was not all positive. “There has been a slight pullback in the rate of growth for the services sector, notes Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, chair of the Institute for Supply Management Services Business Survey Committee. “This is due mostly to the decrease in the rate of growth for business activity, new orders and employment, as well as ongoing faster delivery times. The majority of respondents are cautiously optimistic about business conditions and the overall economy.”