What is in store for the Infinite Kitchen? Which chains filed for bankruptcy this week? Answers to these questions and more This Week in Foodservice.

Value meals are not adding much value to the bottom line. So says the members of the North American Association of Subway Franchisees.

In a letter to the sandwich chain outlining the six biggest issues they face, the discounting of food was tops on their list, per a Franchise Times story. The chain launched a $6.99 footlong promotion, which franchisees say made operating at a sustainable profit difficult.

But some chains feel value meals deliver in one key area: generating customer foot traffic. That’s one reason McDonald’s extended its $5 value meal for a second time this year, per an Associated Press story.

Visits to McDonald’s increased 2.5% in June, when the chain rolled out the value meal, and have remained elevated ever since, the AP reports citing data from Placer.ai.

Fast-food restaurants are not the only ones turning to meal deals to generate customer traffic. Domino’s and Olive Garden are among the other restaurant chains traveling this route, the story notes.

Foodservice News

• Mod Pizza will sell some of its corporate locations, per a Restaurant Dive story. The sale is a “comprehensive refranchising effort” that Mod’s new owner, Elite Restaurant Group is undertaking as it implements its growth and restructuring plan.
• Vegan burger chain Hart House has closed all four of its units. The chain was owned by comedian Kevin Hart and former &Pizza executive Andy Hooper. It burst onto the scene attempting to create a new “sustainable employment experience” with higher wages and generous benefits that were designed to reduce turnover and build a stable labor force for growth, as Restaurant Business reports.
• BurgerFi is among the latest chains to file for bankruptcy. In voluntarily filing for Chapter 11 bankruptcy last week, the company says it has assets between $50 million and $100 million and debt between $100 million and $500 million, per a UPI story. The filing impacts only the 67 corporate units. Additionally, California chains Mary’s Pizza Shack and Red Bay Coffee Company filed for bankruptcy, too.
• The Infinite Kitchen is not as infinite as originally thought. Last year, a Sweetgreen executive said the chain expects all its stores to be fully automated within five years. Despite the company’s fully automated store model having higher margins and lower employee turnover, the chain no longer plans to convert every store to this approach, per a Nation’s Restaurant News Story. One reason is that Sweetgreen operates from some smaller locations, which would be difficult to retrofit. The chain now estimates that 50% of its new stores will use the Infinite Kitchen.
• Chipotle continues to move forward with testing its automation initiatives. The chain is testing Autocado, its avocado processing cobot, and Augmented Makeline in some of its restaurants for the first time, per a release.
• Will cashiers soon go the way of the McDLT at McDonald’s? At roughly 2% of its U.S. locations, the chain is rolling out digital ordering stations that can take change and give cash, allowing customers to entirely skip working with cashiers, per multiple published reports, including this one from Yahoo! Finance. Cashiers will be redeployed to other jobs like handling curbside pickup and supporting table service.
• New Starbucks CEO Brian Niccol wasted little time outlining his plans to revitalize the coffee company. The four-pillar approach will empower baristas to take care of the chain’s customers as Starbucks strives to “get the morning right, every morning.” Niccol notes that “people start their day with us, and we need to meet their expectations.” The third pillar calls for “reestablishing Starbucks as the community coffeehouse.” Recently, the chain has placed an increased emphasis on off-premises consumption, including drive-thru locations. The fourth pillar focuses on telling Starbucks’ story again, emphasizing the chain’s coffee expertise and the role it plays in its communities. “We won’t let others define who we are,” Niccol added.

Economic News

• The Consumer Price Index increased 0.2% in August, per the U.S. Bureau of Labor Statistics. Over the last 12 months, CPI increased 2.5%. Both increases were in line with economists' projections, per Reuters. In August, food at home prices (groceries) were flat compared to July, while food away from home prices (restaurants) were up 0.9%. For the past 12 months, food away from home prices are up 4.0% compared to 0.9% for food at home prices.
• The August Producer Price Index increased 0.2%, the U.S. Bureau of Labor Statistics reported. This matched the consensus estimates from Dow Jones economists, per CNBC. Final demand prices were unchanged in July and rose 0.2% in June. On an unadjusted basis, the index for final demand advanced 1.7% for the 12 months ended in August.
• For the week ending September 7, 2024, initial jobless claims totaled 230,000, an increase of 2,000 from the previous week, per the U.S. Department of Labor. The 4-week moving average was 230,750, an increase of 500 from the previous week.
• Small business owners’ outlook remains negative. The NFIB Small Business Optimism Index fell by 2.5 points in August for a reading of 91.2. For the past 32 months, the index has come in at less than its 50-year average of 98. “Historically high inflation remains the top issue for owners as sales expectations plummet and cost pressures increase,” said Bill Dunkelberg, NFIB chief economist.
• August consumer sentiment rose to its highest level since May, per the University of Michigan’s Surveys of Consumers study. At 69.0%, the study is 40% greater than its June 2022 low. Consumers do remain guarded due to the uncertainty associated with the upcoming general election, the study notes.