Chipotle reaches a milestone. Examining Domino’s recent success. The staying power of the value meal. These stories and more This Week in Foodservice.

Foodservice News

• The latest example of how challenging the market has been comes courtesy of Restaurant Business’ list of the Top 100 Independent operators. While the group grossed nearly $2 billion in revenue in 2023, 25% of the restaurants on this list experienced a sales decline from the previous year. To try to combat the stiff headwinds of rising inflation, higher labor costs and changing consumer tastes, resourceful independents turned to hosting private events, increasing operational efficiency, and buckling down on staff training.
• Shake Shack’s latest partnership has the potential to really take off. Starting Dec. 1, 2024, on Delta Airlines on flights out of Boston customers sitting in first class on flights longer than 900 miles will be able to pre-select a Shake Shack Cheeseburger as their meal option. The Shake Shack Cheeseburger will be available via pre-select, meaning customers can make and edit their entrée selection up to 24 hours in advance using the Delta app. There are plans to roll this out to other markets in 2025, per a Delta release.
• Twin Peaks’ acquisition of Smokey Bones continues to propel the company’s growth but not in the way you might think. The company has been converting some Smokey Bones units into Twin Peaks locations. This is beneficial in two ways. First, the conversion saves about 18 months in construction time, as FSR Magazine notes. Second, and more importantly, the converted Twin Peaks locations are generating $8.3 million in sales compared to $3.6 million for Smokey Bones.
• What’s the secret of Domino’s success? The pizza chain reported a 5.1% increase in global retail sales in its third fiscal quarter as well as 3.0% same-store sales growth. All of this is happening while other chains, including those in the pizza segment, continue to struggle. So, what gives? For starters, the chain’s use of GPS tracking and real-time order updates is a big hit with customers, as a report from The Food Institute points out. Second, the chain optimizes its menu and refreshes it based on customer feedback.
• Expect value meals to be a main point of emphasis for operators in 2025 as they will continue to look for ways to lure inflation-weary consumers to their restaurants. McDonald’s provides the latest example of the current staying power of the value meal. The Chicago-based burger giant plans to continue its $5 Meal Deal and in January will add a new wrinkle where customers who buy one full-priced menu item from the McValue menu can add one more item of their choice for $1, per a company release. Another notable aspect of this promotion is the fact that McDonald’s seemingly has the buy-in of its franchisees and that’s not always the case when a chain rolls out a value meal.
• Chipotle has hit a significant milestone in its off-premises business. The chain opened its 1,000th Chipotlane, the company’s signature digital order drive-thru pickup lane, at a unit in Kansas City, Kans. The fast-casual chain has more than 3,600 restaurants, of which 30% feature a Chipotlane. The chain plans to open 315 to 345 restaurants in 2025 of which 80% will have a Chipotlane per a company release.

Economic News

• Consumers continue to grow wary of higher prices. The latest example comes from California, where residents voted down another proposed increase to the state’s minimum wage to $18 per hour as part of Proposition 32. Opponents and economists said striking down the proposed minimum wage increase indicated consumers were nervous about businesses raising their prices to offset added labor expenses, the Los Angeles Times notes. The restaurant industry may have served as a recent example of what would happen if the minimum wage hikes were passed. Even before the wage hike kicked in, several chains warned of higher prices. Earlier this year, a California law requiring fast-food restaurants to pay workers a minimum of $20 per hour took effect. As a result, the Employment Policies Institute surveyed nearly 200 restaurant operators after the state’s fast-food wage law was implemented in April and found 98% had raised prices, 89% reduced employee hours and 70% cut staff or consolidated positions, per a FSR magazine story. While the California Restaurant Association opposed the measure, it was joined by various other trade groups.
• The Conference Board Leading Economic Index declined by 0.4% in October 2024 for a reading of 99.5. This follows a 0.3% decline in September. Over the six-month period between April and October 2024, the LEI fell by 2.2%, slightly more than its 2.0% decline over the previous six-month period. Weakness in manufacturer new orders was the largest factor in the decline, per a spokesperson for The Conference Board.
• Initial jobless claims declined by 6,000 for a total of 213,000 for the week ending November 16, 2024, per the U.S. Department of Labor. This represents the lowest number of new claims in seven months, per a Reuters story. The 4-week moving average was 217,750, a decrease of 3,750 from the previous week. The news was not all good, though, since it is taking unemployed people longer to find work, the Reuters story adds.
• Building permits for privately owned housing units issued in October 2024 declined 0.6% compared to the previous month, per data from the U.S. Census Bureau. October’s 1.41 million permits is 7.7% less than the same month in 2023. Privately owned housing starts in October came in at 3.1% less than in September and 4.0% less than in October 2023. Higher interest rates remain the main culprit for the decline, per multiple published reports.