A chain bets big on sports gambling. Chipotle moves into the next development phase for its latest concept. And an Oregon-based doughnut chain prepares to land in flyover country. These stories and more This Week in Foodservice.
Restaurant industry performance declined slightly in August, per the National Restaurant Association’s Restaurant Performance Index.
With a reading of 100.5, the RPI came remained in expansion mode, but it was still 0.8% less than in July. The decline was fueled by softer same-store sales and customer traffic readings in August, which led to a sharp decline in the Current Situation Index. Looking forward, restaurant operators remain generally optimistic about sales gains in the months ahead.
The Expectations Index stood at 101.5, down slightly from a reading of 101.6 last month. Although restaurant operators remain cautiously optimistic about sales growth in the coming months, they are less bullish about the economy, per the NRA.
Foodservice News This Week
- Oregon chain Voodoo Doughnut will touchdown in flyover country when it opens a location in Chicago, per an Eater report. The chain with the cult-like following will set up shop in the city’s trendy West Loop area in a location that previously housed a burger concept. The Chicago location joins sibling spots in Oregon, Washington, Arizona, Texas, Colorado, and a sole California outlet inside the Universal Orlando Resort. A Dallas location is in the works and would give the chain 21 shops. Apparently, Voodoo is also looking to open shops in other Chicago neighborhoods.
- Restaurant chains are thriving in India, per a Food Institute story. Right now, quick-service restaurant chains account for 5% of the country’s foodservice market. In contrast, QSRs tend to account for 20% of the restaurant market. Thanks, in part, to a growing middle class and an interest in Western lifestyles, forecasts call for Indian QSRs to experience a 23% compound annual growth rate between 2020 and 2025, the story notes.
- Chipotle is taking its Farmesa Fresh Eatery concept to the next step in its development phase, per a Restaurant Business story The test unit at a Kitchen United Mix location in Santa Monica, Calif., has closed and operations have been moved down to Chipotle’s Cultivate Center in Irvine, Calif., which company officials described as the next step in the brand’s stage-gate process. Chipotle plans to keep refining operations prior to opening a standalone restaurant, per a company spokesperson.
- The Greene Turtle is betting big on sports gambling. The sports bar chain will use the $6 million in equity it just raised to fuel its growth, which includes adding more sportsbooks. The Greene Turtle is now part of ITA Holdings, which plans to use some of those proceeds to also add new Clark Crew BBQ locations. Greene Turtle opened its second sports book in Towson, Md., late last month. At more than 15,000 square feet, the 2-story unit is the chain’s largest location to date.
- The Chicago City Council has taken the next steps toward eliminating the subminimum wage for restaurant servers, bartenders and other tipped workers, as the Sun-Times reports. As a result, the current hourly wage will go from $9.48 per hour to $15.80 over the course of five years. Supporters say the ordinance will level the economic playing field for waitstaff in Chicago’s culinary scene, but industry leaders argue will saddle neighborhood restaurants with untenable labor costs. “Restaurant operators, tipped servers, and local dining scenes will suffer any time the tip credit is eliminated. We are already seeing this play out in Washington, D.C., and Chicago restaurant owners and diners should prepare for similar challenges. Tipping works for owners, servers, and customers, and the National Restaurant Association remains committed to preserving the tip credit system in every community,” said Sean Kennedy, National Restaurant Association executive vice president for public affairs, in a statement commenting on this ordinance. It seems likely that Chicago won’t be the last city to enact such legislation. One Fair Wage, an organizing body that championed this cause, says it hopes the law in Chicago would prompt other jurisdictions to Alaska, California, Minnesota, Montana, Nevada and Oregon to eliminate the tip credit, per a Chicago Eater story.
Economic News This Week
- The U.S. economy added 336,000 jobs in September, per the U.S. Bureau of Labor Statistics. This not only exceeded economists' various projections, it was 100,000 jobs greater than August, which was revised upwardly to 236,000. No doubt, the jobs market remains strong. The unemployment rate was unchanged at 3.8%. Job gains occurred in leisure and hospitality; government; healthcare; professional, scientific, and technical services; and social assistance. Closer to home, eating and drinking places added a net of 60,700 jobs in September. As a result, the restaurant industry’s labor force finally returned to pre-pandemic levels, per the National Restaurant Association.
- Private sector employment increased by 89,000 jobs in September and annual pay was up 5.9% year-over-year, according to the September ADP National Employment Report. This is down from 180,000 positions added in August and less than the 160,000 positions economists had projected for the month, per CNBC. Leisure and hospitality led the way by adding 92,000 jobs. In contrast, the number of jobs declined across a variety of other segments, most notably professional/business services, which posted a decline of 32,000 positions, trade/transportation/utilities saw a decline of 13,000 positions and manufacturing dipped by 12,000 jobs.
- U.S.-based employers announced 47,457 cuts in September, down 37% from the 75,151 cuts announced in August, per data from Challenger, Gray & Christmas, Inc. It is up 58% from the 29,989 announced in the same month one year prior. Despite the drop, September marks the eighth time this year when cuts were higher than the corresponding month a year earlier. Employers announced 146,305 cuts in the third quarter, a 92% increase from 76,284 cuts announced in the same quarter last year. It is down 22% from the 187,793 cuts announced last quarter.
- Initial jobless claims increased 2,000 for a total of 207,000 for the week-ending September 30, 2023, per data from the U.S. Department of Labor. The 4-week moving average was 208,750, a decrease of 2,500 from the previous week.
- New orders for manufactured goods increased 1.2% in August, per the U.S. Census Bureau. This beat economists' projections, which saw orders increasing 0.2%, per US News and World Report. August orders rose 0.5% on a year-over-year basis. Also, August’s gains follow a 2.1% decrease in July. Shipments increased 1.3% as did unfilled orders at a rate of 0.4%.
- Economic activity in the services sector expanded in September for the ninth consecutive month, per data from ISM. The Services PMI registered a score of 53.6%, which is down slightly from August’s reading of 54.5%. Still, any reading greater than 50% indicates expansion in this study. The Business Activity Index registered 58.8%, a 1.5-percentage point increase from August. The New Orders Index hit 51.8% in September, 5.7 percentage points less than in August.
- Consumer credit decreased at a seasonally adjusted annual rate of 3.8% in August, per the U.S. Federal Reserve. Revolving credit increased at an annual rate of 13.9%, while nonrevolving credit decreased at an annual rate of 9.8%. The $15.6 billion decline was the biggest dip since May 2020, per a story from MarketWatch. Economists had expected a $12 billion increase, per a Wall Street Journal forecast. All of the decline was in so-called non-revolving credit such as auto and student loans.