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SAVE THE DATE: October 29-30, 2024
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You won't
want to miss this year's premier chain distribution event in New Orleans,
Louisiana, when DMA convenes the top operator partners to celebrate a great
year. Conference attendees will be treated to top tier Chain industry insights
from experts including:
- Habits of High Growth Chains – DMA's own Angela Korompilas discusses
best practices with CAVA, Popeye's and other top brands
- Picking Future Winners – Restaurant Business Editor in Chief Jonathan Maze
moderates a panel including Jeff Bernstein from Barclays who share their methods
for choosing the next hot chain
- FSMA 204 is NOW – Katy Jones, Trustwell CEO, leads a distinguished panel
of distributor experts as they share the immediate issues surrounding traceability
for multi-unit operators
- Technology Transformation – McDonald's, Sauce Pricing and Olo discuss future
tech driving transformation for multi-unit operators in the "three D's"
- 2025 Industry Forecast for Chains – what you need to know to plan for the
coming year
While being
a guest at this conference has traditionally been the exclusive territory of
DMA's customers, again this year a very limited number of seats will be made
available to national chain operators interested in learning more. Reach
out to Charley for more information about this opportunity or if you are
interested in becoming an event sponsor.
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Three Key
Trends from NRA 2024
The
food-away-from home industry gathered in Chicago between May 18 and May 21 for
the 2024 National Restaurant Association Show (NRA 2024). Hosted at McCormick
Place, the show served as a vehicle for product samples, in-person
meetings, and a view into the biggest trends coming for the foodservice
industry.
What were
some of the biggest trends at the NRA 2024? Emerging technology, convenience,
and cold beverages were among the biggest themes on display at the show.
Technology
Solutions on Full Display at NRA 2024
Automation,
artificial intelligence, and other robotics featured prevalently at the NRA
2024.
Robo-Cook showcased its back-of-house robotic
arms in an appropriately unmanned display on the show floor. The exhibit showed
how the arms could operate deep fryers and griddles for a restaurants' kitchen
operations and free up labor for other tasks around the restaurant.
Raydiant
Technologies, a
software provider, displayed its technologies on the show floor. The company
provides digital signboards that can be adjusted on the fly to account for
out-of-stock items, as an example.
Raydiant
also displayed its AI-based recognition system that can offer targeted meal
deals for the demographic profile of the person standing in front of the
screen. For example, when a child walked in front of the camera, the display
showcased a kids' meal option.
Additionally,
Middleby Corp. and pointofsale.cloud demonstrated a kiosk and
food locker setup that allowed for efficient ordering of food which would then
be placed in a heated lock box for later consumer pick-up, providing a concept
that could help cut down on labor costs for some operations.
Convenience
is King at NRA 2024
Middleby and
pointofsale.cloud's solution could also fit into this convenience bucket, but
it was far from the only example of how convenience is becoming more and more
important in the restaurant industry.
Wonder showcased its quick-cook ovens that
could create everything from pizza to steak to mac-and-cheese. The company
pivoted from its delivery model to a food hall-style concept featuring multiple
cuisine types that are available for dine-in, delivery, or pick-up service.
Nestle
Professional also
highlighted several easy-to-use solutions that restaurant operators could
leverage back-of-house, including gourmet flatbreads and mac-and-cheese dishes
formulated with Stouffer's white cheddar mac-and-cheese solution.
Cold
Beverages Abound at NRA 2024
Energy-drink
maker Celsius hosted a pop-up bar, providing cans of its signature
product. Booth attendants also made mocktails from the product, however,
showcasing a new way for restaurant operators to create enticing beverages for
guests.
Meanwhile,
beverage industry stalwarts The Coca-Cola Co. and PepsiCo both
had impressive booths highlighting digital marketing and new flavors and
brands. The displays reinforced how the brands are working to remain relevant
with younger generations.
Poppi, a better-for-you soda brand, was
also at the show. The company's formulations combine fruit juice, apple cider
vinegar, and inulin prebiotics to create their products. Food Institute Focus
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The new
solution to plastic pollution™, StrawFish has partnered with DMA to support
sourcing goals for member's sustainable disposables needs. StrawFish cleans up
discarded seashells polluting coastal communities in order to create truly
biodegradable straws, cutlery, and more in development (9-24oz cold cups, lids,
etc.).
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Only 2.6% of industrial compost facilities even accept compostable plastics;
this is after a dedicated team of staff and educated guests are trained to
collect, clean, sort, and send waste (at YOUR expense) to these specific facilities.
With over 90% of plastic waste in the U.S. bound for landfills, StrawFish
provides practical, affordable solutions with quick lead times, low minimums,
and a commitment to exceptional fill rates! Let's team up to save time, money,
and stress sourcing alternatives to single-use plastics; Email
Aaron Kleinert today.
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Fast-Food
Chains Racing to the Bottom to Attract Inflation-Weary Consumers
Whether
spurred by inflation-weary consumers looking to cut their food budgets or
people taking weight-loss drugs eschewing their usual diet of calorie-laden
snacks, retailers and food manufacturers are rolling out deals to try to keep
profits from tanking. All of a sudden, value meals are seemingly everywhere.
McDonald's
and Burger King
announced $5 meal deals; Wendy's unveiled a $3 breakfast; Walmart
came up with a barbecue package for eight for less than $50; Target said
it would cut its prices, and Nestle introduced a line of frozen $5
pizzas and sandwiches targeted at users of Ozempic and Wegovy.
"The
immediate profit may not be substantial with discounted items like McDonald's
$5 meal deal, or Walmart's cookout deal, but these transactions often lead to
additional, more profitable purchases," Nick Drewe, CEO of Wethrift,
told The Food Institute.
"If a customer
opts for a $5 meal package, there's a good chance they might also order a
dessert or a beverage at regular pricing."
No sooner
had McDonald's, whose prices have soared in recent months to as much as $18 for
a Big Mac meal, announced its $5 meal deal, than Burger King rolled out its own
version.
EatThisNotThat
reported Burger King
would start its promotion sooner and keep it in place for much longer. The
McDonald's Golden Arches deal is set to last for about a month after it begins
June 25 while Burger King's Your Way Meal is expected to be available sooner and
last several months.
Wendy's went
for the breakfast crowd with its English muffin sandwiches accompanied by
seasoned potatoes. The promotion began May 20 but the company did not say when
it would end.
Pavel
Naydenov, head of
marketing at Businessmap, told FI meal deals are smart short-term
strategies and that the lower margins to which they lead can be offset by
customer volume and upselling. A side benefit, he said, is increased,
longer-term loyalty.
"Interestingly,
customer behavior showcases an inclination toward add-on purchases when
initially attracted by such sales drivers, which indicates a probable rise in
more profitable purchases," Naydenov said.
Michael
Sawyer, operations
director for UltimateKilimanjaro, said though such deals may get
customers to walk through the door, they're not the ultimate marketing
strategy.
"Offering
deals is a great marketing tool, but in my opinion, they should only be used
weekly (and every couple of months) if financially feasible, not as an entire
sales strategy," Sawyer said, adding, "If a vendor chooses to run specific
promotions, I recommend centering them around yearly seasons and holidays,
creating an incentive for specific customers (such as loyalty programs) to
receive better deals than those available to the general public, and hosting
large discount programs for one week at a time to create a sense of urgency
that compels the public to pay attention."
EatingWell reported Walmart's deal totals $6
per person and includes hotdogs, buns, condiments, baked beans, potato salad,
fruit, sweet corn, chips, soda, frozen treats and cookies.
Target is
going one better, cutting prices on some 5,000 items, including milk, meat and
eggs.
"We know
consumers are feeling pressured to make the most of their budget," said Rick
Gomez, executive VP and chief food, essentials and beauty officer at
Target.
At Nestle,
officials told Reuters the company had been working on foods aimed at
people taking weight-loss drugs for some time and will begin distributing the
first batch in October under the brand name Vital Pursuit.
The Vital
Pursuit products will reportedly contain more protein, iron and calcium than
most of the company's other offerings.
"We moved
real fast on this," said Tom Moe, president of Nestle USA's meal
division. Food Institute Focus
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Top 5
Casual-dining Restaurant Chains by Sales
Throughout
America, many casual-dining restaurant chains lost customers last year as
inflation-fatigued consumers largely stuck to strict budgets. Olive Garden,
however, continued to flourish.
According to
Restaurant Business, the 42-year-old Italian chain, which has 908 U.S.
locations, saw its systemwide sales increase by nearly 9% last year and surpass
the $5 billion mark.
"Olive
Garden provides a predictable experience at a reasonable price – in a time when
you can't always rely on that elsewhere. This will continue to fuel Olive
Garden's growth," Kenny Rose, CEO of FranShares, told The Food
Institute.
"Olive
Garden has done a good job of catering to families of all generations," said Gary
Pryor, senior business consultant at Waters Business Consulting Group.
Italian
cuisine's relatively low production costs have helped Olive Garden sustain high
profit margins, according to Spencer Michiel, a restaurant tech
consultant at Back of House. Michiel added:
"Olive
Garden's "menu simplicity and relaxed, casual service style make it possible to
hire younger, less-skilled employees, keeping labor costs low."
Here's a
look at the largest casual-dining chains' domestic systemwide sales in 2023
according to recent Technomic data:
•
Olive Garden –
$5.1 billion (up 8.8%)
• Texas
Roadhouse – $4.8
billion (up 13.8%)
• Applebee's – $4.4 billion (down 0.1%)
• Chili's – $4 billion (up 6.3%)
• Buffalo Wild
Wings – $4 billion
(up 0.5%)
Two
noteworthy data points from Olive Garden's closest pursuers, per Restaurant
Business: Texas Roadhouse opened 24 locations last year while Applebee's closed
more than 30 locations in 2023 (but still boasts a robust 1,536 American
units).
According to
a new study by Vericast, consumers are eating out less. More than half
of respondents (58%) said they're eating out less frequently compared to 49% in
2023.
Per
Vericast, 67% of consumers say that increased costs are making restaurants too
expensive.
As a result,
experts feel restaurant chains must focus on improving the customer experience.
"While the
industry focuses on consistency – from how each guest is greeted to how each
dish is prepared – it all starts with investing in teaching the ins and outs of
each job to every staff member," Katie Fairchild, the CMO at Restaurant365,
told FI. "Doing so encourages a strong culture, (and) reduces turnover."
Rose,
meanwhile, said casual-dining chains must "take the first step to win
customers' loyalty, reward them, make them feel loved, and give them a reason
to come back." Food Institute Focus
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Store
News:
Burger
King will launch a
$5 meal deal ahead of the McDonald's launch of a similar package. Burger
King will offer a choice of three sandwiches with nuggets, fries, and a drink,
reported Bloomberg (May 23). Full Story
Red Robin
has transformed its
popular loyalty program, Red Robin Royalty, making it easier for members to
earn free food and perks faster. Now, Red Robin Royalty members will earn one
point for every dollar spent on qualifying purchases, not just entrees. Full Story
IHOP is using AI to boost check averages.
The breakfast chain's AI recommendation engine makes menu suggestions based on
what a customer has already ordered. It has proven quite persuasive, reported Restaurant
Business (May 21). Full Story
Meanwhile, Dine
Brands Global, parent company of IHOP and Applebee's, continues to
lean into deals to attract diners and bolster profits. From the $1 margarita
and the $200 date night pass at Applebee's, CFO Vance Chang noted that
enticement may be a win because even if diners stick to deals, they are
designed to make money without additional add-ons, reported The Wall Street
Journal (May 28). Full Story
Fuzzy's
Taco Shop has signed
two deals to open 40 stores in Arizona and Texas, reported Yahoo! Finance
(May 24). Full Story
Starbucks employees say customer wait times
have risen after the algorithm that allocates store labor was changed. The
system considers an array of inputs — such as order forecasts and product
availability — to deliver a recommended staffing plan, reported Bloomberg
(May 29). Full Story
CosMc's has debuted its mobile app. Beverage
consumers tend to be more loyal to specific brands than other concepts, and
many beverage companies from Starbucks to Dunkin' have trained consumers to use
the app, fueling digital growth and mobile-empowered loyalty, reported Restaurant
Business (May 28). Full Story
Can Shake
Shack offer the same high-quality food and reputation as it expands and
embraces drive-thru? The popular fast-food alternative built a $4 billion
business with gourmet appeal and lofty prices, and now that it's expanding with
at least 12 new restaurants this year, Shake Shack hopes to preserve its cult
standing and premium branding while embracing drive-thru, reported The New
York Times (May 30). Full Story
KFC has gone portable and ‘poppable' to
lure the snacking generation. Bite-size Apple Pie Poppers, for example, lend
themselves to line extensions to expand the chain's snack selections, reported Restaurant
Business (May 28). Full Story
Taco Bell has partnered with Cheez-It
to offer the new Cheez-It Crunchwrap Supreme and Tostada. Both feature a single
Cheez-It cracker 16 times larger than the normal square, reported Restaurant
Business (May 30). Full Story
Amazon integrated Grubhub directly
into its shopping app and website. As part of the agreement, Amazon Prime
members will continue to be eligible for free Grubhub+ memberships worth $120 a
year. Full Story
Long John
Silver's recently
unveiled a new loyalty program called Seacret Society. The seafood chain's
loyalty members will earn four coins for every dollar spent, and the coins can
be redeemed for a variety of rewards. Full Story
Red
Lobster could close
more than 100 restaurants if it can't renegotiate leases. It already closed
about 100 sites before filing for bankruptcy, and if it can't get better terms
on lease payments, it may have to close 100 more, reported Restaurant
Business (May 31). Full Story
Taco
John's is adding AI
voicebots to its drive-thrus. The Mexican fast-food chain will bring Presto
Voice technology to more than 350 restaurants after it improved speed and
ticket size at a test location; other competitors testing the technology
include Wendy's, White Castle, Hardee's, and more,
reported Restaurant Business (June 3). Full Story
Denny's has pledged $3.3 million to DEI
organizations. The restaurant chain has formed a five-year partnership with 14
organizations that focus on five key pillars such as civil rights and business
diversity, reported Nation's Restaurant News (May 31). Full Story
Rubio's
Coastal Grill, a
fast-casual chain, has declared bankruptcy. The chain blamed rising costs and
the fast-food wage in California as it made its second Chapter 11 filing in
four years. The chain plans to use the bankruptcy process to find a buyer,
reported Restaurant Business (June 5). Full Story
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Executives
on the Move:
Wendy's named Abigail Pringle U.S.
president. Full Story
Cracker
Barrel has named Cheryl
Henry to its board of directors. Henry formerly served as president and CEO
of Ruth's Hospitality Group, which oversaw over 150 Ruth's Chris
steakhouses worldwide. Full Story
The José
Andrés Group has
named Sam Bakhshandehpour its global CEO, reported bizjournals.com
(May 31). Full Story
Cherry
Bounce Hospitality,
a new restaurant group, has named Scott Taylor its CEO. Cherry Bounce
includes regional restaurant chains Trudy's Authentic Tex-Mex, Cajun
Steamer Bar & Grill, and Live.Eat.Surf Restaurants, reported Restaurant
Business (May 29). Full Story |
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Bird Flu
Approaching Danger Point
With the
confirmation that a third dairy worker recently contracted H5N1 avian influenza
and evidence the virus has spread to cattle in at least nine states, the USDA
is ramping up efforts to stem the outbreak and pharmaceutical firms are
expanding the manufacture of bulk vaccines.
After the
initial outbreak in Texas cattle, it took nearly two months before
veterinarians realized what was sickening the animals, and only then because
farm cats that died were tested for the virus, Scientific American
reported. The report said farmers started realizing there was a problem in
February when data indicated something was interfering with rumination and milk
production.
What made
the cattle infection unusual is that other mammals that have contracted the
disease were carnivores that ate infected birds, Amy Swinford, director
of the Texas A&M Veterinary Medical Diagnostic Laboratory, told Scientific
American. Illnesses among dairy workers initially were presumed to be
seasonal flu.
The Food
and Drug Administration has estimated that as much as 20% of the milk supply now contains
fragments of the virus.
The recently
sickened farmworkers exhibited respiratory symptoms, making it possible the
disease could start spreading human-to-human, The New York Times said,
calling for a "robust national testing strategy." So far, no human-to-human
spread has been detected.
The
Centers for Disease Control and Prevention has ordered 4.8 million vaccines and may order
vaccination of farmworkers, The Guardian reported.
"Right now,
there is nobody for whom vaccination is recommended," David Boucher,
director of infectious diseases preparedness and response at the Administration
for Strategic Preparedness and Response, told The Guardian. "But
that is obviously something we're always looking for."
Meanwhile,
In other ag-related news:
China
beef: Detection of a
banned additive that increases animal weight prompted China to destroy
shipments of JBS USA beef from the company's Greeley, Colorado,
processing plant, Reuters reported. The additive, ractopamine, is added
to feed and has been banned in 160 countries but is legal in the U.S. despite
efforts by environmentalists to ban the substance as a threat to human health.
JBS,
headquartered in Brazil, is the world's largest beef producer. The suspension
was effective May 27. The company said it is working with Chinese authorities
to resolve the situation.
arm
bill: The U.S.
House Agriculture Committee recently advanced a $1.5 trillion farm bill
without resolving partisan disputes concerning nutrition, agriculture and
climate policies. The bill has the support of farm commodity groups but is
opposed by environmental and hunger groups. It has virtually no chance of
becoming law, Reuters reported.
Programs
like the Supplemental Nutrition Assistance Program are operating under a
one-year extension following the expiration of the 2018 farm bill last year.
Only four Democrats supported the bill. Food Institute Focus
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P&G Professional is Ready for Your In-House Laundry |
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P&G Professional announces its new laundry care lineup
with Tide Professional Commercial Laundry Detergent and Downy Professional
Fabric Softener. For your in-house laundry needs, such as uniforms, towels,
linens, and more, Tide Professional and Downy Professional can be used in
commercial or residential machines. This lineup provides businesses with a
trusted clean in one wash. Learn
more at pg.com.
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Restaurants
Post First Y-o-Y Increase of 2024 in March
Comparable
restaurant sales increased 0.6% in April as comparable traffic ticked down 2.3%,
according to Black Box Intelligence.
Black Box noted that while the U.S.
has managed to avoid a recession so far and that employment numbers remained
robust, consumers were still unsure about the economy, which was hurting
restaurant sales.
Additionally, the group said that if chains have no choice
but to raise prices, they need to refocus efforts on delivery other parts of
the value equation. Full Story |
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