Apparently, the ghost kitchen business was a little too spooky for Kroger. The grocery chain has shuttered Kitchen United’s virtual food courts in its stores, per a Grocery Dive report. Kitchen United says it plans to move away from physical locations to become a software company. Despite this development, expect grocers to continue to develop and update their prepared food offerings for customers. Per multiple industry studies, this remains an important area for grocers.
This, however, speaks to a larger issue surrounding ghost kitchens. At one point during the pandemic ghost kitchens were quite possibly the fastest-growing segment of the restaurant industry. Now they seem to be in full retreat, as this Food Institute story discusses.
Why? A variety of reasons, really. First, society is generally more mobile and that means there’s been a slight uptick in foot traffic at restaurants. Also, restaurant chains and others are finding ways to better integrate the many forms of off-premises dining into their operations, thus reducing the need for ghost kitchens.
Foodservice News This Week
- A multiconcept operator is taking a unique run at food halls. Apex Brand Collection opened an outdoor food hall in San Diego, per Restaurant Business. Named Mission + Garnet, the food hall features six of the company’s limited-service restaurant brands and all of the food is made from one kitchen. The space features a plug-and-play design that allows Apex to easily swap one concept for another, should it decide to do so. This idea is the brainchild of company founder Scott Slater, who also founded Slater’s 50/50.
- McDonald's next restaurant concept continues to take shape in the Chicago suburb of Bolingbrook. What appears to be the company’s first CosMc’s location drew a lot of attention from social media users as well as local print and broadcast media last week. While no open date has been announced, one can discern a few things from what’s visible from the outside. With four drive-thru lanes, off-premises dining customers will clearly be a priority. Also, some of the menu boards are in place and showcase a collection of specialty iced drinks and some unique food items. McDonald’s leadership first discussed the concept during a July 2023 earnings call.
- The restaurant industry slipped into contraction mode in October, per the National Restaurant Association’s Restaurant Performance Index. The October RPI posted a 0.7% decline from September coming in at 99.7. (A reading of more than 100 indicates expansion.) This represents the third consecutive monthly decline. Operators reported monthly declines in same-store sales and customer traffic, though that was influenced partially by stronger sales during October 2022, the NRA points out. In addition, 56% of restaurant operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months. That was down from 64% of operators who reported similarly last month. Looking ahead, 62% have capital expenditures in their plans for the coming months.
- Consumer dining habits continue to evolve in interesting ways in this post-pandemic world. Data from Placer.ai shows quick-service chains drawing a higher share of late-night visits, for example, as younger consumers stay out later. Also, smoothies are driving weekend visits at some chains, as consumers embrace perceived better-for-you menu options.
- Roughly two months after announcing a deal that sent shock waves through the foodservice industry, Sysco has completed its purchase of Edward Don & Company. Private equity firm Vestar, which purchased Edward Don & Co. back in 2017, issued a press release confirming the transaction had wrapped up but did not disclose the terms.
- Kudos to Boston Showcase Co. as the Newton, Mass.-based foodservice equipment and supplies dealer was named a Top Place to Work by the Boston Globe. BSC was founded in 1913.
Economic News This Week
- Food prices are expected to continue to decelerate but not decline in 2024, per the USDA. All food prices are predicted to increase 2.9%. Food-at-home prices are predicted to increase 1.6% percent. Food-away-from-home prices are predicted to increase 4.3%.
- The number of job openings decreased 6.6% for a total of 8.7 million on the last business day of October, the Bureau of Labor Statistics reported. Over the month, the number of hires and total separations changed little at 5.9 million and 5.6 million, respectively. This was the lowest level since March 2021, per a CNBC story. Economists’ projections had estimated 9.4 million openings.
- Initial jobless claims totaled 218,000 for the week ending Nov. 25, 2023, per the Department of Labor. This represents an increase of 7,000 claims from the previous week. The 4-week moving average was 220,000, a decrease of 500 from the previous week.
- The U.S. economy was hotter than originally thought in the third quarter. Real gross domestic product increased at a rate of 5.2% in the third quarter, according to data from the Bureau of Economic Analysis. That is 0.2% greater than the BEA originally reported and 3.1% greater than the second quarter. The increase in real GDP reflected increases in consumer spending, private inventory investment, exports, state and local government spending, federal government spending, residential fixed investment, and nonresidential fixed investment, per the BEA.
- Personal income increased 0.2% in October, per an estimate from the Bureau of Economic Analysis. Disposable personal income increased 0.3% and personal consumption expenditures increased 0.2%. The PCE price index increased less than 0.1%. Excluding food and energy, the PCE price index increased 0.2%. Real DPI increased 0.3% in October and real PCE increased 0.2%.
- Economic activity in the manufacturing sector remained relatively flat in November, per the latest data from the Manufacturing ISM Report On Business. The monthly study came in at 46.7% which is the same as it was in October. The New Orders and Production Indexes both remained in contraction mode.
- Economic activity in the services sector expanded in November, per the Services ISM Report on Business. This marks the 11th consecutive month of growth for this index. In November the Services PMI came in at 52.7%, which is 0.9% greater than October.
- New orders for manufactured goods decreased 3.6% in October, per data from the U.S. Census Bureau. The decline was 0.8% greater than what economists had projected, per a Reuters report. The October decline follows a 2.3% September increase. Shipments, down two consecutive months, declined 1.4%. Unfilled orders, up ten of the last eleven months, increased 0.3%.