NAFEM provides an update on factories’ supply chain issues. Another iconic restaurant closes, while a North Carolina association looks to boost industry employment through a marketing campaign. These stories and more This Week in Foodservice.
Have supply chain issues eased for foodservice equipment and supplies manufacturers? Maybe. Maybe not.
Earlier this summer, the North American Association of Food Equipment Manufacturers surveyed its members and 50% said they had fewer supply chain issues compared to last year and 42% said they had the same concerns as one year ago.
These issues impact factories in a variety of ways, most notably controlling costs (72%) and fulfilling orders (70%). As a result of these ongoing supply chain challenges, NAFEM member companies are investigating new, local suppliers (72%), relocating/offshoring to new countries (36%), increasing reshoring (34%) and increasing offshoring (24%).
Overall, retaining and recruiting employees (37%) represents the biggest challenge NAFEM member companies face, followed by addressing government regulations (30%), supply chain issues (15%), raw materials costs (9%) and taxes/tariffs (9%).
Looking specifically at government compliance costs, they can range from as low as $10,000 for a company to as high as $800,000. Forty-two percent of NAFEM members report spending between $20,000 and $40,000 on compliance issues.
Foodservice News This Week
- Alto-Shaam will expand its global presence by opening a manufacturing facility in India. Located in the industrial park in the city of Pune, Maharashtra, the facility will include manufacturing, office, and warehouse space. In addition, Alto-Shaam made a few updates to its team in India, including the promotion of JK Raghavan to senior vice president of global supply chain and international manufacturing operations.
- The owner of casual-dining chain Wagamama is being sold to Apollo Global Management for a reported $623 million, per an FSR magazine story. The London-based Asian concept, operated by The Restaurant Group, has eight locations in the U.S.—three in New York, two in Boston, and one each in Atlanta, Dallas, and Tampa.
- Citing a lack of customers and a decline in tourism, one legendary San Francisco restaurant will close at the end of December, Eater reports. North Beach Restaurant has operated from San Francisco’s Stockton Street for more than 50 years, building a relationship with the community and hosting a parade of politicians along the way. COVID closed the restaurant for 18 months and it eventually reopened with a refreshed design and updated menu. But like other restaurants in major metropolitan areas, the 6,400-square-foot restaurant faced too many challenges beyond its control, per the owner.
- To help attract and retain talent, the North Carolina Restaurant and Lodging Association (NCRLA) has developed an omnichannel marketing recruitment campaign called Serving Careers. Funded by a $5 million grant from the state’s portion of the American Rescue Plan, the plan highlights the skills that can be learned working in the hospitality industry and the diverse career paths available. The campaign features a dedicated website that connects job seekers to pre-filtered job postings. The website also includes a link to resources provided by NCRLA, including more than 60 free industry-specific training and certification courses, a unique offering in the job recruitment space.
- Can a deal with Uber accelerate Domino’s sales? One of the pizza chain’s executives certainly believes that will happen. In addition to revamping its loyalty program and upping its marketing efforts, Domino’s has listed its products on delivery platforms for the first time via a partnership with Uber. The pizza purveyor is expanding a test that started in Las Vegas to Houston, Miami, Detroit and Seattle in the next few weeks, per a Bloomberg report.
- Marco’s Pizza presented its Equipment MVP Award to Burkett Restaurant Equipment & Supplies, an Ohio-based dealer. “They help us to navigate the many supply chain challenges and are often the entity introducing us to new available technologies,” said Eric Adams, general manager for Marco’s Pizza Distribution.
- Growth Chains: Breakfast and lunch concept The Big Biscuit opened a location in Midwest City, OK., its sixth restaurant in the state. BurgerFi will open a new concept in New York City in December. The “Better Burger Lab” experience will include Angus beef, fresh sides, draft beer and frozen custard desserts. The space will also offer a yet-to-be-announced lineup of limited-edition menus, tastings, and other items not available at any other location. The fast-casual Indian chain Curry Up Now inked a 60-unit development deal to bring the brand across the U.K. Fuzzy’s Taco Shop signed a 20-unit development deal that will expand the chain’s footprint into Nevada. The Habit Burger Grill opened a restaurant in Mesa, Ariz., giving it 20 restaurants in the state. JARS by Fabio Viviani reached a seven-unit development deal that will bring the single-serve dessert concept to the Kansas City market. Fast-casual Japanese concept Pepper Lunch signed its first North American development deal which will see the opening of 10 restaurants over the next five years in Arizona. Pretzelmaker plans to add 25 franchised locations in Canada over the next 10 years.
Economic News This Week
- U.S. retail and foodservice sales increased 0.7% in September 2023 compared to the previous month, per data from the U.S. Census Bureau. Sales were 3.8% greater than September 2022. Total sales for the July 2023 through September 2023 period were up 3.1% from the same period a year ago. Sales at eating and drinking places totaled $91.9 billion in September, up 0.9% from August. This marks the seventh consecutive month of sales growth, per the National Restaurant Association. Consumer spending in restaurants increased 9.7% in the third quarter of 2023 compared to the same period in 2022.
- The Consumer Price Index increased 0.4% in September, per the U.S. Bureau of Labor Statistics. This is 0.2% less than the August increase. Over the last 12 months, the Consumer Price Index increased 3.7%. The index for shelter was the largest contributor to the monthly all-items increase, accounting for more than half of the increase. An increase in the gasoline index was also a major contributor. The food index increased 0.2% in September, which is the same growth rate as the past two months. The index for food at home increased 0.1% in September, while the index for food away from home rose 0.4%. Overall, consumer prices continue to rise but at a much slower rate, leading some economists to describe the current climate as being deflationary, as CNBC explains.
- The Producer Price Index for final demand increased 0.5% in September, per data from the U.S. Bureau of Labor Statistics. This increase, driven by food and gasoline prices, was greater than economists had forecasted, Reuters reports. Final demand prices rose 0.7% in August and 0.6% in July. On an unadjusted basis, the index for final demand advanced 2.2% for the 12 months ended in September, the largest increase since moving up 2.3% for the 12 months ended in April. Leading the increase in the final demand index in September, prices for final demand goods rose 0.9%. The index for final demand services advanced 0.3%.
- Small business owners remain pessimistic about the future of their businesses. The NFIB Small Business Optimism Index decreased by half of a point in September to 90.8. September’s reading marks the 21st consecutive month below the 49-year average of 98. Further, 23% of owners reported that inflation was their single most important problem in operating their business, unchanged from last month and tied with labor quality as the top concern. Small business owners expecting better business conditions over the next six months deteriorated six points from August to a net negative 43% seasonally adjusted, however, 18 percentage points better than last June’s reading of a net negative 61% and definitely at recession levels.
- Initial jobless claims totaled 209,000 for the week ending October 7, 2023, per the U.S. Department of Labor. The number of claims was unchanged from the previous week. The 4-week moving average was 206,250, a decrease of 3,000 from the previous week.