Investment activity in the restaurant industry has gained momentum. Drive-thru times improve. These stories and more This Week in Foodservice.
Despite facing some significant economic headwinds, the restaurant industry continues to attract some high-profile and, often times repeat, investors.
Emerging Fund is a Chicago-based venture capital fund that seeks to invest in restaurants with one to six locations as well as restaurant tech companies, per Crain’s Chicago Business story. It’s led by Matthew Focht, a restaurant industry consultant who has worked with a variety of high-profile chains over the years. Other investors include Randy DeWitt, founder of the Twin Peaks chain; Taylor Katzman, founder of online alcohol ordering platform Provi and Sterling Douglass, founder of restaurant software company Chowly.
In addition, Punch Bowl Social founder Robert Thompson has secured more than $200 million to feed his up-and-coming eatertainment projects, per an FSR Magazine story. He will use the cash to develop Camp Pickle, a pickle ball concept, and Jaguar Bolera, a concept that merges food, a bar program and social activities like duckpin bowling, karaoke, darts, etc. He attracted investments from some heavy hitters including Bill Allen, co-founder of Fleming’s Prime Steakhouse and former CEO of Bloomin’ Brands, and Stephen King, who served as CEO of eatertainment chain Dave & Buster’s for more than a decade.
Foodservice News This Week
- There may be a few more chapters to write in the storied history of Chicago’s Signature Room Restaurant. For decades the restaurant operated from the 95th and 96th floors of the Magnificent Mile skyscraper formerly known as the John Hancock Center. It was a destination for people who wanted to mark special occasions, like getting engaged and celebrating Valentine’s Day; enjoy a cocktail while drinking up some spectacular views of the city and Lake Michigan or even spot a celebrity visiting Chicago. Citing “severe economic hardship,” though, the owners abruptly closed the Signature Room September 28, 2023. To spice things up a bit, union workers have filed a lawsuit against the Signature Room’s owners saying they violated Illinois labor laws by closing so abruptly, per multiple published reports. Unfortunately, the Signature Room saga provides a sobering reminder of the post-pandemic challenges restaurants and the foodservice industry face. Foot traffic in urban areas has been a mixed bag and operating expenses, ranging from food to labor to occupancy costs, continue to climb.
- Despite the industry’s ongoing labor challenges, the speed of service in restaurant drive-thrus has improved. In fact, the average wait time decreased by 29 seconds over the past year, per a CNBC story. Wait times to order were 25 seconds shorter, as the average number of cars in line to place orders fell from 2.76 to 1.27. A handful of factors likely contributed to this improvement, including better use of technology and consumers placing orders in advance via chains’ apps.
- Virtual food hall company Wonder has acquired meal kit company Blue Apron for $103 million, per a Restaurant Business story. The deal will create “a leading platform for mealtime” encompassing Wonder’s restaurant delivery concept and Blue Apron’s meal kit service.
- One main idea behind digital sales is to create a frictionless experience for the guest. Sometimes, though, getting to that point is anything but frictionless when franchisees and chains work together. The latest example comes courtesy of Subway, which faces some pushback from franchisees as it strives to get them all offering its digital discounts by December 28, per a Restaurant Business story. Subway says 90% of its franchisees accept its digital discounts but the franchisees say that’s too high.
- “When you give somebody a meal, you allow them to smile for that moment.” Those are the words of Chicago restauranteur Faraz Sardharia. Sardharia and other members of the Chicago hospitality community continue to come together to provide hot meals to migrants arriving in the Windy City, as Eater reports. With political leaders scrambling to address the migrant crisis in the U.S. and winter looming, there’s no doubt the efforts of Sardharia and countless others will become even more important in the months to come. And despite the many headwinds the restaurant industry faces, it’s great to see these organizations clinging to their hospitality- and culinary-driven roots.
- The University of Houston’s Conrad N. Hilton College of Global Hospitality Leadership is expanding its global footprint. Through a partnership with the Ferriéres Hospitality and Luxury Management School in France it created a reciprocal exchange program, summer internship opportunities for students and a micro-credentialing program for industry executives in France and Spain.
- Growth Chains: Black Rock Coffee Bar opened a location in Gilbert, Ariz., giving the company 35 units across the state. Mr Gatti's Pizza opened a location in Oklahoma City. The Habit Burger Grill opened a restaurant with a drive-thru in Mooresville, N.C., its sixth location in the Tar Heel State. Ruth’s Chris opened a location in Lakewood, a planned community in Sarasota, Fla. With the opening of a location in Elkhart, Neb., drive-thru chain Scooter’s Coffee has 700 units systemwide. Taziki’s Mediterranean Café opened locations in the Central Tennessee areas of Murfreesboro and Franklin. C-store chain Wawa plans to open approximately 40 units in Kentucky over the next 8 to 10 years. It expects to break ground on the first units in 2024 and projects they will open by mid-2025. Similarly, Wawa plans to develop 60 stores in Ohio, with the first locations being open for business by 2025.
Economic News This Week
- The number of job openings increased to 9.6 million on the last business day of August, the U.S. Bureau of Labor Statistics reported. In July, the number of openings totaled 8.92 million. This increase was not expected and many view it as another example of the strength of the jobs market. The number of hires and total separations changed little from July, coming in at 5.9 million and 5.7 million, respectively. Within separations, quits (3.6 million) and layoffs and discharges (1.7 million) changed little.
- Initial jobless claims totaled 204,000 for the week-ending September 23, 2023, per the U.S. Department of Labor. This represents an increase of 2,000 from the previous week. The 4-week moving average was 211,000, a decrease of 6,250 from the previous week.
- New orders for manufactured durable goods increased 0.2% in August, per data from the U.S. Census Bureau. This follows a 5.6% July decrease. Excluding transportation, new orders increased 0.4%. Excluding defense, new orders decreased 0.7%. Machinery led the increase at 0.5%. August’s overall performance beat many economists’ expectations, per a Reuters report.
- Consumer data hints the U.S. Federal Reserve’s efforts to slow inflation may be starting to pay dividends. Personal income increased 0.4% in August and disposable personal income increased 0.2%, per data from the U.S. Bureau of Economic Analysis. The core Personal Consumption Expenditures index rose 3.9% for the 12 months ending in August. It’s the lowest annual increase that the index has seen in two years, per a CNN story, and represents “a positive step toward the Fed’s target of 2% inflation.”