Consumers' complicated mindsets. Chipotle tests a robotic make line. Two more chains test off-premises-only units. Another coffee-related lawsuit percolates. These stories and more This Week in Foodservice.

Consumers represent a driving force in the health of the foodservice industry. Unfortunately, as the industry turns the corner and heads toward the end of the year, the consumer mindset seems to be in a somewhat fragile state, per two separate studies.

For example, consumer confidence declined again in September, per The Conference Board. The organization’s Consumer Confidence Index came in at 103.0 in September, down from 108.7 in August. The Present Situation Index increased by 0.4 for a reading of 147.1. In contrast, the Expectations Index came in at 73.7, down 9.6 points from the previous month.

A variety of factors continue to drive this decline, per The Conference Board.

“Write-in responses showed that consumers continued to be preoccupied with rising prices in general and for groceries and gasoline in particular,” said Dana Peterson, chief economist at The Conference Board. “Consumers also expressed concerns about the political situation and higher interest rates.”

Given consumer concerns about those factors, it should come as no surprise that it will impact their spending habits in the coming months.

Specifically, U.S. consumers plan to continue cutting back on their spending through the holiday season, per a CNBC study conducted by research firm Morning Consult. In fact, 92% of adults surveyed said they reduced their spending over the past six months. The most common categories for spending cuts over the past six months were clothing and apparel (63%), restaurants and bars (62%), and entertainment outside the house (56%), a pattern that held steady from a similar study fielded in June. The next biggest categories for cuts were groceries (54%), recreational travel and vacations (53%) and electronics (50%.).

Indeed, the coming months promise to be filled with many twists and turns economically speaking.

Foodservice News This Week

• Chipotle is testing a robotic kitchen line to make off-premises orders placed via its digital channels, per a Business Insider story. Chipotle sees a variety of potential benefits of this test, saying it “will enable us to be even more accurate,” said Brian Niccol, the chain’s CEO. “I think probably go a little bit faster, and I think give people more consistent experiences.” In July, Niccol told investors that Chipotle expects to install this automated kitchen line in restaurants “in the next 12 to 18 months.”
• Jack in the Box and Zaxby’s are the latest quick-serve restaurants to open off-premises-only units. Jack in the Box’s Ogden, Utah-based location uses the chain’s CRAVED design package, which includes new color, signage and other graphics, per a company release. The location features a walk-up window for ordering as well as parking for mobile and pick-up orders. Zaxby’s Griffin, Ga., location has a double drive-thru layout, new digital menu boards, a payment window, as well as a drive-thru delivery door for faster pay and pickup. The new design also includes a walk-up window for guests to place take-out orders.
• McDonald’s finds itself in hot water over a hot coffee spill. A customer at a San Francisco customer claims to have gotten severe burns after the customer was handed a cup with a lid that hadn’t been properly secured, per various published reports including this one from the Washington Post. When trying to take a sip, the lid came off, drenching the customer’s legs, groin and stomach with hot coffee, according to the lawsuit, which does not specify the temperature of the spilled drink. If this sounds familiar, it should. McDonald’s faced similar charges back in 1992.
• Shake Shack is shaking up its fryer oil. In two New York locations, the chain is testing sugarcane oil instead of its usual soybean oil, per CNBC. The chain says it is making the switch in part because sugarcane oil is more environmentally sustainable as well as is better for consumers. It also says this oil will make its fries feel lighter and less greasy.”
• Portillo’s growth plans are as beefy as the chain’s legendary sandwiches. The chain, known for its Chicago-style hot dogs and Italian beef sandwiches, told investors it hopes to add 920 restaurants over the next 20 years, per published reports. Of those 920 units, 800 would be full-service restaurants, and 120 would be off-premises only units that Portillo’s has slowly added in recent months. The chain has 77 units open systemwide.
• Growth chains: The Big Biscuit plans to enter the Arkansas market by opening a location in Fayetteville in early 2024. Chef Jose Garces plans to take his fast-casual concept Buena Onda national via franchising. Per the chain’s website, it currently has four locations. Buena Onda inked development deals to add restaurants in the Washington, D.C., Maryland and Virginia region, per a release. Fast-casual chain District Taco inked a ten-unit development deal to add units in Hudson County, N.J., and Richmond and Kings Counties, N.Y. This will bring the chain’s first New Jersey and New York locations. Fajita Pete’s opened its third location in the Austin, Texas, market. Fazoli’s opened a second location in Little Rock, Ark. Fogo de Chão inked a deal to open a location in Richmond, Va. The chain expects this restaurant to be operational by the end of 2023.

Economic News This Week

• Initial jobless claims declined by 20,000 to a level of 201,000 for the week ending September 16, 2023, per the U.S. Department of Labor. The 4-week moving average was 217,000, a decrease of 7,750 from the previous week's average. Some observers feel a rebound is likely as a partial strike by the United Auto Workers (UAW) union forces automobile manufacturers to temporarily lay off workers because of shortages of some materials, per a Reuters story. It’s worth noting that this week’s totals represent the lowest level of initial jobless claims since January.
• Sales of existing homes dipped 0.7% in August for a seasonally adjusted annual rate of 4.04 million, per the National Association of Realtors. This represents a 15.3% decline from the previous year. The median sale price of existing homes increased 3.9% to $407,000. The inventory of unsold existing homes dropped 0.9% from the prior month to 1.1 million at the end of August, or the equivalent of 3.3 months' supply at the current monthly sales pace.
• Sales of new single‐family houses in August 2023 declined 8.7% compared to the previous month, per data from the U.S. Census Bureau and the Department of Housing and Urban Development. August’s sales were 5.8% percent greater than the same period in 2022. The median sales price of new houses sold in August 2023 was $430,300. The average sales price was $514,000. The seasonally adjusted estimate of new houses for sale at the end of August was 436,000, which represents a supply of 7.8 months at the current sales rate.
• Building permits issued in August for privately owned housing units increased 6.9% from July, per the U.S. Census Bureau. This level is 2.7% less than the August 2022 rate. August housing starts came in at 11.3% less than July and 14.8% less than the same period in 2022.