Understanding the impact of environmentally friendly solutions. Design mistakes to avoid. These stories and more This Week in Foodservice.

Labor costs have been a pain point for operators, and it seems poised to remain that way heading into 2024.

In Chicago, for example, Mayor Brandon Johnson and the restaurant industry reached an agreement that will abolish the tipped minimum wage, Crain’s Chicago Business reports. The original measure called for raising the tipped minimum wage, which now stands at $9.48 an hour for tipped workers at companies with 21 or more employees and $9 an hour for smaller employers, to meet the standard minimum wage of $15.80 an hour or $15 an hour for smaller companies over the course of two years. Crain’s reports the compromise will bring the tipped minimum wage to meet the standard minimum wage by 2028 with an 8% increase in the base wage each year starting in 2024.

The issue is scheduled to be brought before the Chicago City Council on Wednesday, September 20 for a vote, per the Chicago Tribune. If passed Chicago would be the largest American city to move on its own to abolish a subminimum wage for tipped workers, the Tribune story notes.

In the weeks leading up to this agreement, some industry experts in Chicago predicted the elimination of a tipped minimum wage had the potential to initiate significant changes in the industry, as this Chicago Eater story notes. It may lead operators to raise prices. Some operators may choose to apply a service charge or even increase a service charge, while others may rethink staffing levels.

In California, fast-food workers will receive pay hikes next year after the restaurant industry and unions reached a compromise over a bill that had been debated for years, per various published reports, including this one from CNBC. The compromise creates a nine-person council that will decide on future wage hikes for the fast-food industry in California through 2029. The deal will mean a wage floor of $20 for California workers at fast-food chains with at least 60 locations nationwide, starting April 1, 2024. From 2025 through 2029, the appointed council will have the authority to raise the hourly minimum wage annually by whichever is lower: 3.5% or the annual change in the consumer price index.

And none of this takes into account the many unionization efforts affecting the industry across the country. In Las Vegas, for example, members of The Culinary Workers Union say they have until late September to reach a deal on their current contract negotiations with the resort companies or the union will hold a strike vote, per a report from television station KTNV.

So, without a doubt, expect labor-related issues to remain a focal point for all operators for the foreseeable future.

Foodservice News This Week

• A handful of restaurant chains are testing using drones to deliver food orders. The participating chains include Papa Johns, Freddy’s Frozen Custard and Steakburgers, and Little Caesars, per a Restaurant Dive report. The technology allows drones to pick up orders from restaurants using dropdown wires, and then fly to a customer’s home for drop off, removing any human elements from the delivery process.
• Sometimes environmentally friendly options can have their own drawbacks, too. In response to environmental concerns and even local edicts, many restaurant operators continue to swap plastic straws for paper- and bamboo-based ones. Researchers at Belgium's University of Antwerp have some bad news: They've found paper- and plant-based straws were more likely to contain PFAs (Per- and polyfluoroalkyl substances, a/k/a "forever chemicals," because they take forever to break down) than plastic straws, per the Core77 newsletter. Further, the researchers point out that it's not clear where the PFAs enter the paper/plant-based straw manufacturing chain.
• Seemingly small design mistakes can have a big impact on how a foodservice operation performs. Everything from not enough storage space to trying to get too much out of the kitchen to poor lighting can have a significant impact on the guest experience and staff performance, as this restaurant development + design article Avoiding such missteps may seem like common sense, yet it’s amazing how they continue to happen time and again.
• Apparently, humans aren’t the only ones who will go to great lengths for a Krispy Kreme doughnut. Bears were spotted in the back of a Krispy Kreme delivery truck in Anchorage, Alaska, where they consumed 20 packages of doughnuts, as this CNN video clip shows.

Economic News This Week

• Advance estimates of U.S. retail and foodservices sales increased 0.6% in August 2023 from the previous month, per the U.S. Census Bureau. This represents a 2.5% increase from August of 2022. Total sales for the June 2023 through August 2023 period grew 2.2% from the same period a year ago. Eating and drinking places* registered total sales of $90.8 billion on a seasonally adjusted basis in August. That represents a 0.3% increase compared to July’s revised sales volume of $90.5 billion. August represented the sixth consecutive month of sales gains, with total restaurant spending rising 4.0% during this period, per the National Restaurant Association. In comparison, total sales in the non-restaurant retail sectors were up 1.0% during the last six months.
• Gasoline fueled inflation’s flames in August. The Consumer Price Index increased 0.6% for the month, per the U.S. Bureau of Labor Statistics. This represents a 0.2% increase compared to July. The BLS said the index for gasoline accounted for more than half of the increase. The food index increased 0.2% in August, as it did in July. The index for food at home increased 0.2 percent over the month while the index for food away from home rose 0.3% in August.
• The Producer Price Index increased 0.7% in August, per the U.S. Bureau of Labor Statistics. This represents a 0.4% increase from July and it is greater than what most economists had projected, per published reports. The August advance represents the largest increase in final demand prices since moving up 0.9% in June 2022, per the BLS. In August, 80% of the rise in final demand prices is attributable to a 2.0% jump in the index for final demand goods. Prices for final demand services advanced 0.2% The index for final demand less foods, energy, and trade services increased 0.3% in August, the same as in July.
• Initial jobless claims increased by 3,000 for a total of 220,000 for the week-ending September 9, 2023, per the U.S. Department of Labor. The 4-week moving average was 224,500, a decrease of 5,000 from the previous week. This represents the lowest level of claims for the four-week moving average since February, per a MarketWatch story.
• Consumer sentiment declined slightly in September, per data released by the University of Michigan. The Consumer Sentiment Index came in at 67.7 in September, 1.8 points less than the previous month. Consumer sentiment is about 35% greater than the all-time historic low reached in June of 2022 but remains shy of the historical average reading of 86. Notably, though, both short-run and long-run expectations for economic conditions improved modestly this month, though on net consumers remain relatively tentative about the trajectory of the economy.
• Industrial production increased 0.4% in August, per the U.S. Federal Reserve. Manufacturing output ticked up 0.1%. The August reading for manufacturing was held back by a drop of 5% in the output of motor vehicles and parts; factory output elsewhere rose 0.6%.