McDonald’s to suspend self-serve drinks. Another chain adds a to-go-only prototype. These stories and more This Week in Foodservice.
Despite some positive signs, the business environment remains pretty complicated for operators. To nobody’s surprise, operators still rank rising food costs (63%), labor (41%) and inflation (38%) as their three highest concerns, per Datassential’s 2024 Forecast presentation.
As a result: in 2023 the industry will report annual sales of $845.7 billion in sales, up from $790 billion in 2022, per Datassential’s forecast. (These figures do not include alcohol sales.) And in 2024, the industry will grow to $889.7 billion in consumer spending. After factoring in inflation and menu price increases, the industry will grow at a rate of $0.6 billion in 2023 and $1.8 billion in 2024, per Datassential.
When Datassential asked consumers where they cut spending, the top five areas in order were restaurants, clothes/apparel, groceries, travel and entertainment. Placer.ai also reported that customer traffic at limited-service restaurants continues to outpace that of full-service restaurants, seeing this as an indication of consumers continuing to trade down during a fairly uncertain economic period.
Of course, no two consumers or regions are affected by the current business environment in the same way. When Datassential’s Jack Li tossed out the term “rolling recession” during the forecast presentation it seemed to resonate with his company’s 2024 Forecast webcast, Datassential’s Jack Li tossed out a term that seemed to be perfect for the moment: a rolling recession. By that, he meant different industries will shrink at different times while the overall economy continues to stay above water.
Despite some ongoing headwinds, a few tailwinds remain to help operators, per Datassential. These include pent-up consumer demand, consumers who crave experiences that only restaurants can provide, the use of technology and artificial intelligence can better engage customers and drive efficiencies and upgrades to off-premises service are here to stay.
Foodservice News This Week
- McDonald’s plans to retire its self-serve soft drink stations by 2023, per published reports from Yahoo! and other media outlets. Dine-in customers at most locations can still top off their own beverages for now, but a few franchisees have already begun the transition. In a statement released to various media outlets, McDonald’s says it’s making the change to create a more consistent experience for customers dining both off-premises and on-premises. The crew pour system will use automated beverage systems to mechanically fill drink orders. Plus, having fewer dine-in customers makes it easier to offer such an approach.
- Add Whataburger to the fast-growing number of chains testing a to-go-only design. Dubbed Whataburger Digital Kitchen, the unit includes a digital pickup lane instead of a drive-thru. To reduce wait times, customers place their orders in advance via the chain’s app or website. Guests can also opt to pick up their orders through onsite food lockers. Located in Austin, Texas, this unit is a completely cashless operation.
- Chick-fil-A is testing robots to deliver food to customers who choose to dine on-premises, per a Business Insider report. "While the robots are delivering meals, friendly Team Members spend their time refreshing beverages, clearing tables, and providing guests the genuine hospitality Chick-fil-A is known for," the chain told Insider.
- Multiconcept operator Starpoint Brands has launched Big Flavor Brands, a division that provides “additional support and a framework for shared services” for its portfolio of concepts, which includes The Great Greek Mediterranean Grill and Graze Craze. Part of the United Franchise Group, Starpoint Brands also launched a new concept, Cannoli Pizza Kitchen, which provides quick-service style Italian cuisine. Cannoli Pizza Kitchen has seven locations systemwide.
- Asian food delivery platform HungryPanda has developed a resource to help support its delivery riders. Panda Care Boxes strive to mirror a first aid kit, containing supplies such as band-aids, hand sanitizer, sunscreen snacks, and other self-care items, all tailored to enhance to support on-the-go delivery drivers.
- Growth Chains: The Greene Turtle opened a Baltimore location that also includes the chain’s first sports book. The Halal Guys plans to open five locations this fall, including one in London. Shawarma Press opened a location in the arts district in downtown Dallas, running the chain’s total to seven locations in Texas. Velvet Taco entered the Florida market by opening a location in Ft. Lauderdale.
Economic News This Week
- While prices rose slightly in August, inflation remains a top concern for small business owners, per the NFIB Small Business Optimism Index. In August the NFIB’s Small Business Optimism Index totaled 91.3, a 0.6 decline from July. As part of the study, 23% of small business owners reported that inflation was their single most important business problem, up 2 points from last month. The net percent of owners raising average selling prices increased 2 points to a net 27%, still at an inflationary level. Small business owners expecting better business conditions over the next 6 months deteriorated 7 points from July to a net negative 37%. This is 24% better than last June’s reading of a net negative 61% but still at recession levels.
- Initial jobless claims totaled 216,000 for the week ending September 2, 2023, per the U.S. Department of Labor. This represents a decline of 13,000 claims from the previous week. The 4-week moving average was 229,250, a decrease of 8,500 from the previous week.
- Nonfarm business sector labor productivity increased by 3.5% in the second quarter of 2023, the U.S. Bureau of Labor Statistics reported. This represents a 0.2% decline from the preliminary estimate. Output increased 1.9% and hours worked decreased 1.5% for the period. The decline in hours worked is the first decline since the second quarter of 2020 and was the result of a 1.5% decline in average weekly hours; employment was unchanged. From the same quarter a year ago, nonfarm business sector labor productivity was unrevised, increasing 1.3%. This is the first increase in the four-quarter productivity measure since the fourth quarter of 2021.