Can McDonald’s franchisees repair their ice cream machines? Which trade association changed its name? Answers to these questions and more – lots more – This Week in Foodservice.

Another week and another restaurant chain files for bankruptcy.

TGI Fridays voluntarily filed for bankruptcy in a Texas court. For anyone following TGI Fridays the past few months, this news is anything but surprising. The chain has been trying to find a buyer and had a deal fall through with its largest franchisee. As a result, TGI Fridays will use the protections that come with Chapter 11 to “explore strategic alternatives in order to ensure the long-term viability of the brand,” per a company release. The company has 39 corporate locations in the U.S. as well as 56 franchisees operating in 41 companies.

“The primary driver of our financial challenges resulted from COVID-19 and our capital structure. This restructuring will allow our go-forward restaurants to proceed with an optimized corporate infrastructure that enables them to reach their full potential,” said Rohit Manocha, executive chairman of TGI Fridays.

In recent weeks, foot traffic has been down more than 30%, consistently, on a weekly basis, per data from Placer.ai. The chain had already closed between 20% and 30% of its locations over the past year, which has put a serious dent in foot traffic, Placer.ai notes. But visits per venue have fallen, too.

“TGI Fridays – like most full-service restaurants – has faced an increasingly challenging environment in 2024. Visitation trends are down year-over-year–due to a combination of store closures and fewer visits per existing location – at the same time food, labor, and other restaurant operating costs remain high. Additionally, we’ve seen consumers move away from many key TGI Fridays markets in the Northeast and Midwest, putting further pressure on visitation trends,” said R.J. Hottovy, Head of Analytical Research at Placer.ai.

While TGI Fridays just entered bankruptcy, sibling brands BurgerFi and Anthony’s Coal Fired Pizza & Wings were sold out of bankruptcy to lender TREW Capital Management Private Credit 2 LLC in a credit bid for $44 million, per Restaurant Business.

Foodservice News

• The restaurant industry remained in contraction mode in September, per data from the National Restaurant Association. Despite inching up for two consecutive months, the NRA’s Restaurant Performance Index came in at 98.8 in September, which is slightly better than August’s reading of 98.6. Any reading less than 100 indicates contraction.
• Shake Shack cited improved process flows as a key factor in helping drive a 4.4% increase in same-store sales for the three month period ending September 25, 2024, per a BNN Bloomberg story. Factors the chain said helped drive these results include data reporting, improving food flow in kitchens and new worker schedules to better serve guests. These changes helped reduce customer wait times to the lowest level in more than five years.
• Sometimes you need to prune a plant to make it stronger. Such is the thinking at Wendy’s, which will shutter 140 restaurants during the fourth quarter of 2024, Restaurant Dive reported. The units are considered outdated and underperforming areas where average unit volumes are about $1.1 million and operating margins are less than the system average. Total closures in 2024 will offset new restaurant openings, making net unit growth about flat.
• McDonald’s franchisees can now repair their ice cream machines. Previously, the Digital Millennium Copyright Act made it illegal for third parties to break the digital locks installed by manufacturers in their equipment, per an NPR report. As a result, equipment like the ice cream makers used by McDonald’s could only be repaired by the manufacturer. An exemption to this rule, though, now allows outside vendors to fix “retail-level commercial food preparation equipment.”
• Starbucks will embrace a back-to-basics approach in trying to improve its performance. The chain’s top priorities include making drinks in four minutes or less, providing employees with proper tools and equipment and bringing back personal touches, per a Yahoo! Finance story. The chain also plans to update its store designs to encourage customers to linger and it will look to fix a cumbersome mobile ordering experience. Other changes include a menu makeover to focus on fewer but better items, per CNBC.
• FAT Brands is getting closer to spinning off its Twin Peaks and Smokey Bones chains. The multiconcept operator filed notice with the Securities and Exchange Commission of its plan to list Twin Hospitality Group, the company that owns Twin Peaks and Smokey Bones, on Nasdaq as an independent publicly traded company.
• The Cheesecake Factory will remain a multiconcept operator. Despite overtures from an activist investor, the company plans to keep North Italia, Flower Child and Culinary Dropout, which came under its control when Cheesecake Factory acquired Fox Restaurant Concepts in 2019, per a Restaurant Business report. The firm’s thinking was that separating the brands would allow the concepts to grow faster while freeing up Cheesecake Factory to focus on its 215-unit namesake concept, thus creating more value for shareholders in the process. Instead, Cheesecake factory officials feel the company is doing a respectable job of developing these concepts.
• The International Foodservice Manufacturers Association has changed its name to IFMA The Food Away from Home Association. The name change will more accurately reflect the way the association approaches “the entire food-away-from-home marketplace,” per a release. IFMA is broadening its membership to include operators, members of the supply chain and service providers.
• If you’ve been dreaming of a Mariah Carey Christmas-themed bar, then you can sleep easy tonight knowing your dream is about to come true. The pop singer, known for her holiday hit “All I Want for Christmas Is You,” is partnering with Virgin Hotels to open Mariah Carey’s Black Irish Holiday Bar at Virgin Hotels in Chicago, Dallas, Nashville, New Orleans and New York City, per an Eater story. Drinks include an espresso martini made with Carey’s Black Irish liqueur with a candy cane rim.

Economic News

• Real gross domestic product increased by 2.8% in the third quarter of 2024, per the advance estimate released by the U.S. Bureau of Economic Analysis. This is slightly less than the 3.1% Dow Jones economists had projected, per a CNBC story. In the second quarter, real GDP increased 3.0%.
• Personal income increased 0.3% in September, according to estimates released by the U.S. Bureau of Economic Analysis. Disposable personal income increased 0.3% and personal consumption expenditures increased 0.5%.
• The U.S. added 12,000 jobs in October which is essentially unchanged from the prior month, according to the U.S. Bureau of Labor Statistics. The unemployment rate was unchanged at 4.1%. Employment continued to trend up in health care and government. Temporary help services lost jobs. Employment declined in manufacturing due to strike activity.
• Private sector employment increased by 233,000 jobs in October and annual pay was up 4.6% year-over-year, according to the October ADP National Employment Report. This was significantly more than the 113,000 positions economists had projected, per CNBC. The top three job-producing business segments were education/health services with 53,000 positions, trade/transportation/utilities with 51,000 positions and leisure/hospitality with 37,000 positions. “Even amid hurricane recovery, job growth was strong in October,” said Nela Richardson, chief economist, ADP. “As we round out the year, hiring in the U.S. is proving to be robust and broadly resilient.”
• S.-based employers announced 75,891 cuts in August, a 193% increase from the 25,885 cuts announced one month prior. It is up 1% from the 75,151 cuts announced in the same month in 2023, according to a report released by Challenger, Gray & Christmas, Inc. For the year, companies have announced 536,421 job cuts, down 3.7% from 557,057 announced through August of last year.
• Initial unemployment claims increased 12,000 for a total of 216,000 for the week ending October 26. 2024, per the U.S. Department of Labor. The 4-week moving average was 236,500, a decrease of 2,250 from the previous week.
• Worker compensation costs increased 0.8% for the 3-month period ending in September 2024, the U.S. Bureau of Labor Statistics reported. Wages and salaries increased 0.8% and benefit costs increased 0.8% from June 2024. Compensation costs for workers increased 3.9% for the 12-month period ending in September 2024, down slightly compared to the 4.3% increase in September 2023. Wages and salaries increased 3.9% for the 12-month period ending in September 2024, which 0.7% less than the 12-month period ending in September 2023.
• Manufacturing activity contracted in September, per the Manufacturing ISM Report on Business. The Manufacturing PMI came in at 47.2% in September, which is the same as it was in August. Economic activity has contracted for six consecutive months, per the ISM.
• Economic activity in the services sector expanded for the fourth consecutive month in October, per the Services ISM Report On Business. The Services PMI registered 56%, which is the highest reading since July 2022 and indicates sector expansion for the 50th time in 53 months.