The restaurant industry remains in expansion mode despite facing some challenges. Ghost kitchens’ appeal is anything but spooky. A casual dining chain prepares for a 2024 IPO. A c-store chain tries to perk up its coffee service. These stories and more This Week in Foodservice.
Is the agreement reached between the United Auto Workers union and two Detroit automakers a sign of things to come for other industries? Perhaps.
History tells us that deals like the one UAW just struck have a tendency to force business leaders in other business segments to put better deals on the table, as this Reuters story notes.
There’s no denying unions have been aggressive across a variety of industries, including hospitality, of late. And experts say gains won by unions could spur more organizing. The story notes the tentative Ford and Stellantis deals could result in pay hikes of more than 33% when compounding and cost-of-living increases are factored in. It should come as no surprise, then, that business leaders in other segments could be equally as motivated to stave off any unionization efforts.
Closer to home in the foodservice industry, the story notes that employee-led unionization efforts at places like Starbucks reflect a consensus that workers see unions as a way to secure better wages and more.
Organizations such as One Fair Wage remain particularly active in the restaurant space. The organization played a prominent role in Chicago’s efforts to eliminate the subminimum wage and now it’s aligning with some recently laid-off workers at a restaurant owned by multiconcept operator Boka Group, per an Eater report.
The temperatures outside may be falling but don’t expect that activity surrounding the labor market to cool down any time soon.
Foodservice News This Week
- The restaurant industry remained in expansion mode in September despite the National Restaurant Association’s Restaurant Performance Index posting a modest decline. RPI came in at 100.4 in September, down from 100.5 in August. One of the main reasons for the decline is the Expectations Index, which dipped by 1.5 points. Although operators have a positive sales outlook for the coming months, they are decidedly less optimistic about the overall direction of the U.S. economy, per the NRA. Restaurant operators reported mixed same-store sales and customer traffic results in September, continuing a trend that has been in place for much of the past year. Overall, though, the Current Situation Index did increase 1.2% from August. Operators continue to invest in their businesses, too. Specifically, 64% of restaurant operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, which was up 3% from August. Not surprisingly, operators planning to make capital expenditures in the next six months came in at 56%, down from 64% in August.
- Why do some chains like ghost kitchens as a growth vehicle? Two reasons, really. First, the cost of opening a ghost kitchen can be significantly less than a traditional restaurant, Second, the ghost kitchen model often requires less labor. Take, for example, Bonchon. The Korean fried chicken chain says its ghost kitchen units cost between $202,557 to $369,312, and require up to 17 workers to operate, says a Restaurant Dive story citing data from the chain’s 2023-24 Franchise Disclosure document. Meanwhile, stores can require investments up to $1.2 million and need between 14 and 49 workers to keep things running.
- The HIX Corp. has acquired the Quik n' Crispy Greaseless Fryer product line. Based in Pittsburgh, Kan., HIX is widely known for its doughXpress product line.
- PopUp Bagels has raised $8 million to fund its unit growth and expand its leadership team, per a Restaurant Business story. PopUp Bagels was founded during the pandemic by Adam Goldberg in Westport, Conn., who started making bagels in his home kitchen and sharing with neighbors. It soon grew into a business, and now PopUp has six pickup locations in Connecticut and New York City and an active social media following.
- FAT Brands made news for a couple of reasons last week. The multiconcept operator confirmed the rumors that it plans to take its Twin Peaks chain public via an IPO in early 2024, per a Nation’s Restaurant News report. And FAT Brands opened its first co-branded Fatburger and Round Table Pizza location. The Dallas restaurant measures 3,500 square feet and offers a full-service, full-bar, casual-dining experience. It is the first of four co-branded Fatburger and Round Table Pizza locations planned for the greater Dallas area operated by SNM Management Group, per a company release.
- The parent company of sibling concepts Mrs. Fields and TCBY has new owners. Pearl Street Equity has acquired Famous Brands International, per a release. In a related move, Joe Lewis was appointed president and chief operating officer of Famous Brands Franchising. His background includes working with such companies as Smoothie King, Twist Brands, and Smalls Sliders.
- 7-Eleven is trying to perk up c-store coffee service. The chain’s doing so by testing a machine it created in conjunction with an appliance design company, per a C-Store Dive report. The unit provides a fully automated experience, allowing customers to pick their brews, type of milk and flavor syrups. The unit is also self-cleaning.
- Real gross domestic product increased 4.9% in the third quarter of 2023, per the advance estimate released by the U.S. Bureau of Economic Analysis. In the second quarter, real GDP increased 2.1%. The increase in real GDP reflected increases in consumer spending, private inventory investment, exports, state and local government spending, federal government spending, and residential fixed investment that were partly offset by a decrease in nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased. The third quarter performance beat economists’ estimates by 0.2%, per CNBC.
- September sales of new single‐family houses increase 12.3% compared to August, per the U.S. Census Bureau and the Department of Housing and Urban Development. This also represents a 33.9% increase compared to September 2022. The seasonally adjusted estimate of new houses for sale at the end of September was 435,000. This represents a supply of 6.9 months at the current sales rate.
- Small business owners remain pessimistic about the future. The NFIB Small Business Optimism Index decreased half of a point in September to 90.8. September’s reading marks the 21st consecutive month below the 49-year average of 98. Twenty-three percent 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. “Sales growth among small businesses have slowed and the bottom line is being squeezed, leaving owners few options beyond raising prices for financial relief,” said Bill Dunkelberg, NFIB chief economist.
- Initial jobless claims increased 10,000 for the week ending Oct. 21, per the U.S. Department of Labor. The 4-week moving average was 207,500, an increase of 1,250 from the previous week.
- New orders for manufactured durable goods in September increased 4.7%, per the U.S. Census Bureau. This comes after a 0.1% August decrease and a 5.6% July decline. Further, September’s performance exceeded some economists projections by 2.7%, per a Morningstar report.