Who is feeling the need for speed? What happens at restaurants when higher labor leads to higher prices? Which chains filed for bankruptcy this week? How do consumers feel about the future? We answer these questions and more This Week in Foodservice.

Add Buca di Beppo and World of Beer to the growing list of chains filing for bankruptcy.

Buca di Beppo has 44 locations and one in development, per a company release, and expects operations to continue as normal. “By restructuring with the continued support of our lenders, we are paving the way toward a reinvigorated future," said Rich Saultz, president, in a statement.

World of Beer was founded in 2007 and took off during the craft beer boom. The company was acquired in 2013 and the new owners added a food and spirit program, as Restaurant Dive points out. Franchisees were reluctant to transition to the program and change kitchen operations due to a variety of factors like lack of capital on hand, unfamiliarity with food programs and a lack of willingness to further engage in its business, per the filing.

Foodservice News

• Restaurant chains continue to feel the need for speed. Take, for example, Starbucks, which plans to retrofit thousands of espresso machines to make drinks more quickly and update software to help speed food service, per a Morningstar report. As part of its growth efforts, Starbucks also plans to start moving into smaller geographic markets. For its part, Shake Shack will focus on enhancing throughput and speed of service as a way to increase sales as it focuses on adding drive-thrus, per a QSR Magazine story.
• Yum! Brands will expand its use of voice-activated artificial intelligence at Taco Bell drive-thru to “hundreds” of locations in the U.S., per a company release. The quick-service restaurant chain is already testing voice-enabled AI in more than 100 locations across 13 states. The use of this technology can “enhance back-of-house operations for team members and elevate the order experience for consumers. Benefits include easing task load for team members, improving order accuracy, providing a consistent, friendly experience, and reducing wait times, while driving profitable growth for Taco Bell, Yum! Brands and their franchisees,” the company said in a release. The company says it has more than two years of experience “fine-tuning and testing” this technology.
• Two months after declaring bankruptcy, Rubio’s Coastal Grill was sold to its lender. The Original Fish Taco LLC, an affiliate of TREW Capital Management restaurant investment firm has acquired Rubio’s for $40 million as part of an uncontested bid, per multiple published reports, including this one from Nation’s Restaurant News.
• The restaurant industry remained in contraction mode in June, per data from the National Restaurant Association. Its Restaurant Performance Index came in at 98.9% in June, down 0.2% from May. Any reading of less than 100% indicates the industry is in contraction mode. Lower same-store sales and customer traffic were key drivers of this decline. Looking ahead, only 28% of operators see their sales improving in the next six months.
• What happens when you force restaurants to pay higher wages and they, in turn, raise their prices? Turns out customers come to the restaurants less, per a Restaurant Business story. That exact scenario appears to be playing out in California, where the state imposed a $20 per hour minimum wage that began back in April and chains raised prices to help offset the higher cost of doing business.
• Chicago’s Lurie Children’s Hospital is teaming up with a restaurant on the city’s Northwest side to help curb type 2 diabetes in children, per the Chicago Sun-Times. A total of seven restaurants are participating in the program and each has the creative license to develop its own diabetes-friendly dish. Although the restaurants are different, there are common threads to the dishes themselves: more protein, more vegetables, and less simple carbs. One participant said the healthier food choices have helped him lower his cholesterol and move away from prediabetes.
• Congratulations to the National Restaurant Association and National Restaurant Association Educational Foundation on winning two 2024 American Society of Association Executives Power of Associations Awards. The NRAEF’s Hospitality Opportunities for People (re)Entering Society program was named one of six Summit Award winners, ASAE’s highest honor. HOPES supports justice-involved individuals on a path to employment and independence. The NRA received a Silver Award in the Advocacy category for its Hill Runner program, which was created in the wake of the pandemic to expand on restaurant operators’ successful grassroots and grassroots advocacy.

Economic News

• Perhaps the jobs market is starting to cool off. Businesses added 114,000 jobs in July, per the U.S. Bureau of Labor Statistics. This is less than 179,000 jobs added in June and less than the 175,000 positions projected by economists polled by Reuters. The leisure and hospitality sector added 41,000 positions in July, which is a significant increase from the previous month’s increase of 1,000 jobs. In addition, the unemployment rate ticked up to 4.3% in July, which is a 0.2% increase from June.
• Private sector employment increased by 122,000 jobs in July, according to the July 2024 ADP National Employment Report. This is less than the 155,000 positions added in June and less than the 150,000 positions economists projected businesses would add in July, per CNBC. Service-providing companies led the way in July by adding 85,000 jobs, including 24,000 from the leisure/hospitality sector. Wages grew 4.8% year over year, which is the smallest growth rate since July 2021, CNBC added. “With wage growth abating, the labor market is playing along with the Federal Reserve's effort to slow inflation,” said Nela Richardson, chief economist, ADP. “If inflation goes back up, it won't be because of labor.”
• The number of job openings was 8.18 million on the last business day of June, the U.S. Bureau of Labor Statistics reported. Although more than what many economists had projected, it’s less than the 8.23 openings posted in May, as CNN points out.
• Initial jobless claims increased by 14,000 for a total of 249,000 for the week ending July 27, 2024, per the U.S. Department of Labor. This represents 13,000 more claims than economists polled by Reuters had projected. The 4-week moving average was 238,000, an increase of 2,500 from the previous week.
• Nonfarm business sector labor productivity increased 2.3% in the second quarter of 2024, the U.S. Bureau of Labor Statistics reported. Output increased 3.3% and hours worked increased 1.0%. Compared to the second quarter of 2023, nonfarm business sector labor productivity increased 2.7%. Unit labor costs in the nonfarm business sector increased 0.9% in the second quarter of 2024, reflecting a 3.3% increase in hourly compensation and a 2.3% increase in productivity. Unit labor costs increased 0.5% over the last four quarters, the lowest rate since the third quarter of 2019, when the measure also increased 0.5%.
• Consumer confidence remains a mixed bag. Overall, The Conference Board’s Consumer Confidence Index increased to 100.3 in July, up from 97.8 in June. Consumers’ assessment of the current business and labor markets declined a bit, but their outlook improved. “Even though consumers remain relatively positive about the labor market, they still appear concerned about elevated prices and interest rates, and uncertainty about the future; things may not improve until next year,” Dana Peterson, The Conference Board’s Chief Economist.