Is the value meal making a comeback? Is the salad segment ready to sprout? What’s GDP look like for the third and fourth quarters of 2024? Answers to these questions and more This Week in Foodservice.

Will 2024 be the year of the value meal? Things are starting to shape up that way, particularly in the quick-service restaurant segment.

It’s well documented that last year food-away-from-prices increased at a much faster pace than food-at-home prices. During the pandemic restaurants felt they could not take price increases for a variety of reasons. So, the thinking is they spent a lot of time catching up last year.

With pricing a little more in line, operators will now focus on value creation. QSRs like Burger King and Taco Bell continue to update their value menus. But these value meals will not be the exclusive domain of QSRs. In fact, nearly half of restaurant operators plan to provide more special offers this year, per a Restaurant Dive story.

Foodservice News This Week

• Is the salad category ready to sprout? That was one of the observations Restaurant Business took away from the recent ICR Conference. There’s only a handful of players doing big business in this segment and there’s plenty of opportunity for any operator that can capture the attention of health-minded Millennials. Another interesting point the RB story makes is that operators don’t seem too phased by a California law that raises minimum wage to $20 per hour come April. Most franchisees know how to navigate these challenges, the story interestingly notes.
• Just like other operator segments, technology continues to play a prominent role in c-store foodservice. Kiosks, for example, continue to come into their own in this segment. And operators continue to leverage digital menu boards as well as artificial intelligence when serving customers, per this C-Store Dive story. All of these developments have one thing in common: they seek to enhance the user experience. Making the ordering process as frictionless as possible is paramount.
• Subway is getting a little help from other concepts while trying to build traffic in other dayparts. The chain’s “Sidekick” line of snackable, footlong items includes the Cinnabon Footlong Churro and the Auntie Anne’s Footlong Pretzel, along with Subway’s previously released Footlong Cookie, per a Restaurant Business story. Auntie Anne’s and Cinnabon are both owned by the Atlanta-based Focus Brands, which is owned by Roark Capital, the very same private-equity group that is trying to buy Subway. But Subway executives say that connection is a mere coincidence.
• A restaurant in suburban Chicago was reminded that winter weather can impact business in a variety of ways. The Pita Bowl had a pipe rupture and subsequently flooded the dining room, per various published reports. The restaurant had to close its doors to fix the pipe and clear up. Luckily, the incident did not damage the restaurant’s equipment.
• Growth Chains: Drive-thru chain Beans & Brews Coffeehouse opened a location in San Antonio. Micro food hall Local Kitchens will open a location in San Bruno, Calif., on January 31, 2024. Local Kitchens focuses on emerging concepts as well as up-and-coming chefs. Concepts available at this location include The Melt, Square Pie Guys, Boba Guys, Sushirrito, Proposition Chicken and Nopalito Taqueria. McAlister’s Deli plans to enter the Minnesota market later this year when it opens a location in Mankato. It’s part of a 10-unit development deal that will also bring sibling concepts Auntie Anne’s, Cinnabon and Jamba to Mankato. Pepper Lunch inked a development deal that will bring five units to Utah. Smalls Sliders, an emerging cheeseburger slider concept, will open a location in Metairie, La., on February 1, 2024. Fast-casual sushi concept Yakumi opened a location in LAX’s Delta Airlines Terminal.

Economic News

• Consumer sentiment is the strongest it’s been in nearly three years, per a University of Michigan Study. The university’s Index of Consumer sentiment soared 13.1% in January compared to the previous month. At 78.8% this is the study’s highest level since July 2021. Consumer views were supported by confidence that inflation has turned a corner and strengthened income expectations. Over the last two months, sentiment has climbed a cumulative 29%, the largest two-month increase since 1991 as a recession ended.
• Retail and foodservices sales increased 0.6% in December 2023 compared to the previous, per data from the U.S. Census Bureau. This represents a 5.6% increase from December of 2022. Total sales for the 12 months of 2023 were up 3.2%. Total sales for the October 2023 through December 2023 period were up 3.9% from the same period a year ago. Overall, consumer spending at restaurants and foodservice operations increased 11.3% in 2023.
• Industrial production increased 0.1% in December yet declined 3.1% in the fourth quarter, per data from the U.S. Federal Reserve. Manufacturing output grew 0.1% in December after increasing 0.2% in November. The index for utilities declined 1.0% in December, while the index for mining rose 0.9%. At 102.5% of its 2017 average, total industrial production in December was 1% greater than its year-earlier level. Capacity utilization was unchanged in December at 78.6%, a rate that is 1.1 percentage points below less than its long-run (1972–2022) average.
• Initial jobless claims declined 16,000 for a total of 187,000 for the week ending January 13, 2024, per the U.S. Department of Labor. This is the lowest level of initial claims since September 24, 2022, when it was 182,000 and it beat the Dow Jones estimate of 208,000 claims, per CNBC. The 4-week average was 203,250, a decrease of 4,750 from the previous week. Indeed, the job market’s resiliency is pretty amazing.
• Housing was a mixed bag in December. Private housing permits increased 1.9% in December compared to the previous month, per data from the U.S. Census Bureau. December 2023 also came in at 6.1% greater than the same month in the previous year. In contrast, single-family permits increased 1.9%, too. December housing starts were 4.3% less than November but 7.6% greater than the same period in 2022. Further, sales of existing homes declined 1.0% in December, per the National Association of Realtors. For the year, sales of existing homes declined to 4.09 million from 5.03 million in 2022. This was the lowest level since 1995, per a Barron’s report.
• The Conference Board Leading Economic Index for the U.S. fell by 0.1% in December 2023 to 103.1. This follows a 0.5% decline in November. The LEI contracted by 2.9% over the six-month period between June and December 2023, a smaller decrease than its 4.3%. “Despite the overall decline, six out of ten leading indicators made positive contributions to the LEI in December. Nonetheless, these improvements were more than offset by weak conditions in manufacturing, the high interest-rate environment, and low consumer confidence,” said Justyna Zabinska-La Monica, senior manager, business cycle indicators, at The Conference Board. “As the magnitude of monthly declines has lessened, the LEI’s six-month and twelve-month growth rates have turned upward but remain negative, continuing to signal the risk of recession ahead. Overall, we expect GDP growth to turn negative in Q2 and Q3 of 2024 but begin to recover late in the year.”