What do reduced interest rates mean for the restaurant industry? How can telling its story help a restaurant withstand the tests of time? What can chain restaurants learn from independent operators? How has inflation impacted school foodservice spending? Answers to these questions and more This Week in Foodservice.

What does the U.S. Federal Reserve’s plan to cut interest rates mean to the restaurant industry? Turns out, plenty.

The rate reduction suggests that the Fed remains committed to achieving a “soft landing,” with lower interest rates helping support more economic growth, as the National Restaurant Association notes in its analysis. Lower interest rates should help maintain employment rates, which means consumers will continue to create the convenience that restaurants will contribute to their busy schedules.

Second, reduced rates will lead to lower borrowing costs, which should lead to more investment for both consumers and businesses. It will also make it easier for foodservice operators to continue to invest in their businesses.

It should be noted that it will take some time before the restaurant industry feels the effect of the interest rate reductions. Still, this represents a step in the right direction.

Foodservice News

• Olive Garden will soon offer delivery through a partnership with Uber Eats. While many chains offer delivery and have for a longtime, what makes this development notable is the fact that Olive Garden was one of the few that did not offer this option to customers, as Restaurant Business notes. This is a testament to the staying power of delivery. Other Darden restaurants will follow.
• The Starbucks leadership shakeup continues. Last week it was revealed that Michael Conway, the company’s North American CEO will retire effective November 30, 2024, per multiple published reports. Conway had been with the company for 11 years, previously serving as group president of international and channel development. He became North American CEO six months ago as part of a Starbucks reorganization effort by former CEO Laxman Narasimhan earlier this year. Sara Trilling, Starbucks North American president, will oversee operations in the area.
• Restaurant design is equal parts art and science. In the latest Foodservice for Thought podcast restaurant development + design editor colleague Rebecca Kilbreath talks about how restaurants address lighting, noise levels and storytelling all by design.
• Story time. As companies evolve it becomes easy to drift from their origin story and the practices that helped them earn a loyal customer base. Menus can lose focus or try to become all things to all people. Or companies can fall too much in love with technology, etc. But, as consultant Matthew Mabel points out, that getting to the basics of what mad a company successful can resonate with customers and it withstand the tests of time.
• Red Lobster’s transition from bankrupt company to new ownership is complete. Last week the seafood chain was acquired by RL Investor Holdings, which was one of its largest creditors, and as a result exited bankruptcy. As previously reported, Damola Adamolekun now serves as CEO of Red Lobster.
• What is with all the restaurant chains filing for bankruptcy? It’s a question many people in the foodservice industry have asked and consultant Rudy Miick, FCSI, decided to take a deeper look at this trend and offer a few ideas on ways companies can combat this.
• Inflation has impacted foodservice operators from all segments and schools are no exception. Isle Data looks at just how inflation has affected what Illinois schools have spent on foodservice supplies, materials, purchased services and more.
• Restaurant chains can learn plenty from independent operators. From how to make the bar stand out to including unique furniture to telling a subtle story, this piece from restaurant development + design shares ten tips that chains can consider using in their units.

Economic News

• S. retail and foodservice sales for increased 0.1% in August 2024 compared to the previous month, per an estimate from the U.S. Census Bureau. This also represents a 2.1% increase from August of 2023. Economists had projected a 0.2% decline in retail sales for August 2024, per CNN. Sales at eating and drinking places were essentially unchanged for the month of August at $94.5 billion, per an analysis from the National Restaurant Association. After adjusting for menu price inflation, though, restaurant sales declined 1.3% in real terms between August 2023 and August 2024, the NRA added. Total sales for the June 2024 through August 2024 period were up 2.3% from the same period a year ago.
• Industrial production increased 0.8% in August, per the U.S. Federal Reserve. This reverses a 0.9% July decline. Output increased 0.7% in August after declining 0.7% the previous month.
• Privately-owned housing starts in August were 4.9 more than in July, per data from the U.S. Census Bureau. But they were 6.5% less than August of 2023. Single-family permits in August were this is 2.8% greater than in July.
• Sales of existing homes declined 2.5% in August compared to the previous month, per data from the National Association of Realtors. August sales were also down 4.2% from the same period in 2023. The August inventory of unsold homes improved by 0.7% from the previous month.
• Initial jobless claims totaled 219,000 for the week ending September 14, 2024, per the U.S. Department of Labor. This represents a decrease of 12,000 from the previous week and the lowest number of claims in four months, per Reuters. The 4-week moving average was 227,500, a decrease of 3,500 from the previous week.