Restaurant mergers and acquisitions gain momentum, but will it hold? Who’s the recording artist behind the latest vegan restaurant opening in Los Angeles? Did consumer confidence improve in November? Which foodservice designer just became a hall of famer? We answer these stories and more This Week in Foodservice.
Could 2024 see merger and acquisition activity among restaurants accelerate? Perhaps.
According to a Restaurant Business story restaurant M&A activity started to gain momentum toward the latter part of 2023. But if M&A activity does, in fact, accelerate expect the market to be more selective as buyers seek concepts that have shown strong performance in recent years, particularly when it comes to customer traffic.
Speaking of M&A activity, fast-growing concepts Dom’s Kitchen & Market and Foxtrot plan to merge, per various published reports. While Dom’s is considered a grocery store and Foxtrot a convenience store, they both share several important traits. Specifically, each concept operates mainly in urban areas, and both have a heavy emphasis on prepared food items. In fact, both offer on-premises dining that spans multiple dayparts. Once the merger is complete, the company will go to market as Outfox Hospitality with Foxtrot CEO Liz Williams in the same position within the new organization. Bob Mariano, co-founder and co-chairman of Dom’s, will continue to hold advisor and board roles within the organization.
But it’s not smooth sailing for all deals. For example, the U.S. Federal Trade Commission is investigating Roark’s pending purchase of Subway, per various published reports including this one from Restaurant Dive. The investigation is evaluating whether Roark’s purchase would lead to a sandwich chain monopoly since Roark also owns Arby’s, Jimmy John’s, McAlister’s Deli and Schlotzsky’s under Inspire Brands. Roark agreed to purchase Subway for $10 billion back in August. This is not an unprecedented move. Several years ago, the FTC nixed a deal that would have seen broadline distributor Sysco acquire US Foods.
This Week in Foodservice
- Can working from home be good for growing a restaurant chain? The leadership at eatertainment concept Pinstripes believes that’s the case. The 14-unit chain believes it can grow to 150 locations both in the U.S. and abroad, per an FSR story. Since fewer employees are working in person, corporations are figuring out better ways to maintain culture. That’s where Pinstripes comes in—a place for team-building events and weekday corporate retreats where workers can once again spend time together. The work-from-home shift also means a lift in suburban markets, a trade area where Pinstripes thrives. All of its locations are based in suburban malls and lifestyle centers.
- A Chick-fil-A franchisee in Florida is testing drone delivery, per a Nation’s Restaurant News story. Right now the store’s delivery radius is 1.2 miles but that could soon grow to 2 miles.
- A new Los Angeles vegan restaurant has some star power behind it. Singer Billie Eilish and her producer brother Finneas O’Connell are investing in a restaurant named Argento with restauranteur Nic Adler, per an Eater story. The restaurant’s menu will feature an Italian-American menu as well as a chef’s table and an outdoor patio. Eilish is not the first singer to invest in a restaurant operating from this space, though. Recording star Moby previously owned a restaurant there.
- Kudos to Ed Doyle, president of RealFood Hospitality, Strategy & Design on his induction into the Massachusetts Restaurant Association Hall of Fame. Massachusetts Restaurant Association Hall of Fame nominations were submitted from around the state for both operators and business partners. Hall of Fame candidates possess a track record of operational success and execution of the dining experience while also being pillars of their communities, per a release announcing this accolade.
- Growth Chains: Fast-casual chain Crave Hot Dogs & BBQ opened a location in Lakeland, Fla. Multiconcept operator FAT Brands inked a development deal to open 10 co-branded Great American Cookies and Marble Slab Creamery locations across Texas during the next five years. Philadelphia-based fast-casual chain honeygrow opened a location in Alexandria, Va. By opening a location in Parker, Colo., Mountain Mike’s Pizza is now in eight states.
- Consumers showed some optimism in November. The Conference Board Consumer Confidence Index came in at 102.0, up from 99.1 in October. The Present Situation Index declined 0.4 in November for a reading of 139.2. The Expectations Index rose to 77.8 in November from 72.7 in October. This represents the third consecutive month where the Expectations Index came in at less than 80, which historically signals a recession in the coming year, per The Conference Board.
- Initial jobless claims declined 24,000 for a total of 209,000 for the week-ending November 18, 2023, per the U.S. Department of Labor. The 4-week moving average was 220,000, a decrease of 750 from the previous week. This represents the first declines since mid-September but first-time unemployment claims remain near the highs for this year, per Reuters, which adds that the drop in both initial and continuing claims likely reflected ongoing challenges ironing out seasonal fluctuations from the data.
- Due in large part to weakness in the transportation segment, new orders for manufactured durable goods decreased 5.4% in October, per data from the U.S. Census Bureau. This followed a 4.0% September increase. Excluding transportation, new orders were virtually unchanged. Excluding defense, new orders decreased 6.7%. Transportation equipment, down three of the last four months, drove the decrease by dipping 14.8%.
- Existing-home sales declined 4.1% in October, per the National Association of Realtors. This represents a 14.6% decline from October 2022. A NAR spokesperson attributes the decline to the one-two punch of higher interest rates and lower numbers of homes for sale. Total housing inventory registered at the end of October was 1.15 million units, up 1.8% from September but down 5.7% from one year ago (1.22 million). Unsold inventory sits at a 3.6-month supply at the current sales pace, up from 3.4 months in September and 3.3 months in October 2022.