The fast-casual is tapping into data to enhance and personalize each guest’s experience

How Noodles & Co. is Leveraging Data to Weather Economic Instability

As the digital revolution continues to reshape how consumers interact with their favorite brands, restaurants are increasingly finding ways to collect data points that help them drive business from both loyal customers and new ones.
Just look at Noodles & Co. The Denver-based fast casual has evolved its digital storefront and rolled out a customer data platform to better understand how its guests are experiencing the concept — and then using that data to improve and influence their future visits.
Chief marketing officer Stacey Pool joined the latest episode of Take-Away with Sam Oches to talk about how those efforts helped Noodles & Co. weather the instability of the past few years, plus how data is helping to communicate the company’s unique personality.
In this conversation, you’ll find out why:
Your brand position or mission statement should show up wherever you engage with guests
Your rewards program is a data jackpot and backstop against economic volatility
Data can help you convert casual customers into loyal ones
Little acts of kindness inside your restaurants can go a long way
If you take care of your GM, they will take care of everything else
Source: NRN.

The pizza chain’s sales improved last quarter as a lot more of its restaurants worked with delivery aggregators  . . . .

Pizza Hut’s Embrace of Third–Party Delivery Works in It’s Favor

When it could not find enough drivers to deliver its pizzas earlier this year, Pizza Hut decided to embrace a perceived competitor, third-party delivery companies like DoorDash. The move appears to have worked.
The Plano, Tex.-based chain’s U.S. same-store sales rose 1% in the third quarter, parent company Yum Brands announced on Wednesday.
That was a substantial improvement on the 4% decline in the previous quarter, an improvement company executives said was due in part to Pizza Hut’s use of third-party delivery providers. “Pizza Hut has made progress on embracing third-party aggregators to solve some of their delivery challenges,” Yum CEO David Gibbs told analysts. “We saw meaningful improvement in their trends on delivery sales.”
The use of companies like DoorDash and Uber Eats has been a big focus for Pizza Hut this year. Gibbs said 90% of the chain’s U.S. system is now working with at least one third-party delivery company.
Pizza chains have had an uncertain relationship with third-party delivery since that industry’s emergence in 2016 and 2017.
Some of the biggest chains have avoided offering their pizzas for sale on the aggregators’ marketplaces, viewing them as competitors. Domino’s, the world’s biggest pizza delivery company, has made a key point of avoiding them. It has also called aggregators its biggest competitive threat.
Others, such as Papa John’s, embraced their use to get access to the delivery companies’ popular mobile apps and to provide some excess delivery capacity. Little Caesars, the country’s third-largest chain, uses them to give it a delivery business it did not previously have.
Labor challenges that worsened in the back half of 2021, however, have put more pressure on companies to use these providers, simply because they could not employ enough drivers to provide delivery when customers want it.
This issue was accentuated in the first quarter when Pizza Hut’s domestic same-store sales declined 6% and Domino’s same-store sales declined 3.6%, while Papa John’s same-store sales increased 1.9%—on tougher comparisons than either of its two larger rivals.
Papa John’s use of third-party delivery was one of its key points of differentiation. In reaction, Pizza Hut opted to start using those services. “We view this more as a capacity challenge than a demand challenge,” Yum CFO Chris Turner told analysts.
So far, it appears, the effort is working, as aggregators provide some capacity assistance and also access to their app users. Turner said that the gap between Pizza Hut’s carryout sales growth and delivery was 23 points in the second quarter. In the third, it was down to 17 points. “That means delivery was significantly higher,” he said. It’s “giving us more delivery capacity in the system.
“There’s one other benefit from the aggregator platforms. We get incremental customer who sees us on those marketplaces. There’s probably been a bit of an impact there as well.”
As for Domino’s, it remains a holdout. “Staffing remains a constraint, but my confidence in our ability to solve many of our delivery labor challenges ourselves has grown over the past few quarters,” CEO Russ Weiner told analysts last month.   – Source: Restaurant Business.

The Next Generation of Ghost Kitchens is Stepping out from the Shadows

Ghost kitchens and virtual brands in a post-pandemic world will favor more flexible, transparent business models from industry veterans like Reef and Nextbite, to newcomers like Oomi and Meal Outpost
At the height of the pandemic when dining rooms were closed, the phrase “ghost kitchen” entered the public lexicon and new “hot” delivery-only concepts opened their hidden doors almost every day.
But as the post-pandemic dust settles, the off-premises restaurant industry is evolving beyond the rush of flash-in-the-pan celebrity-backed chicken nuggets concepts. Virtual restaurant companies are in it for the long haul: they’re stepping out of the dark kitchen’s shadows to combine off-and-on-premises experiences, and many are avoiding the phrase “ghost kitchen” altogether.

“It feels like in 2020, there was a big gold rush and now everyone is trying to recapture the viral success of MrBeast Burger,” Markus Pinyero, cofounder of upcoming virtual food hall Oomi Kitchen, said, referring to the Virtual Dining Concepts brand. “[…] We want people to order our food instead of ordering a burger that comes from some influencer that you post to your Instagram and never order from again. The return rate on some of these virtual brands is practically non-existent.”
Oomi is a newcomer to the booming delivery-only restaurant space, which includes multi-brand ghost kitchen commissaries, delivery-only concepts that operate out of brick-and-mortar restaurants, and virtual food halls that house several original and licensed concepts in one spot. But Pinyero does not feel he is late to the game. In fact, he’s taking notes and learning from others’ mistakes.
Whereas the first generation of ghost kitchens may have been hidden behind closed doors and delivery app menus, Pinyero encourages customers to come by the neon-lit Oomi virtual food hall opening in a few weeks in Dallas, where they can order from multiple brands at once and pick up their food from a food locker.
“We’re in the middle of a high-density area with extreme visibility, so we are much more customer-forward than many other ghost kitchens,” he said. “It’s much more joyful and hospitable that way instead of walking into the back of a spooky warehouse. We’re very open and brand-centric.”
Oomi further differentiates itself by focusing on food quality and hospitality first and technology second. The company has its own trained culinary staff for both the original and licensed brands, which include Which Which, FlyRite Chicken, and Pinyero’s own brand, Urban Taco. They don’t franchise or license out these concepts for back-of-house operations because they want to oversee quality control.
“A lot of ghost kitchens might have frozen burger patties and pre-made sauces that you can just heat up and put into a delivery bag, but our brands are meant to operate like true restaurants,” Pinyero said.
Transparency seems to be a running theme among the next generation of virtual restaurant companies. Meal Outpost is a more traditional type of virtual brand company that soft-launched in June with operators in Austin, Miami, Charlotte, Durham, Washington, D.C., and Philadelphia. The company is making waves in the ghost kitchen space with an entirely new operations model that doesn’t cost anything for restaurants to sign up. Restaurants just need to purchase the food on their own from their choice of pre-existing emerging brands like Junzi Kitchen and Mono Mono, using the labor in their own restaurant kitchen. The licensor then gets a percentage of the monthly revenue.
Meal Outpost has completely committed to bringing dark kitchens out into the light of day. As a host restaurant, you can sign up on the Meal Outpost website, see and read about which brands are available in your area, and filter your search by cuisine and what type of equipment is needed to operate the brand. Then you fill out a form and upload photos of your kitchen space, and once you’re approved, you can begin operating as a ghost kitchen.
“We wanted to create a very user-friendly, seamless platform where anyone can go do it themselves,” Dustin Mares, cofounder of Meal Outpost said. “We tried to mimic an Airbnb website. […] it’s a straightforward, searchable marketplace […] Once operators sign up, we call them and walk them through the remaining steps, send training videos, and schedule their launch date.”
Mares also believes in the importance of working with established or proven brands to avoid the “one-star Google reviews” from the slew of “made-up concepts” that launched during the peak of the ghost kitchen boom.
As the virtual restaurant industry continues to evolve, even veteran companies in the industry have to keep up with evolving customer needs. Larger companies like Kitchen United, C3, Reef, and NextBite are now focusing on logistics perfection. When Reef Technology started as a ghost kitchen offshoot of a parking solutions company, they owned all of the infrastructure, labor, and kitchens, and now they’ve evolved to become more flexible. Now, Reef works with third-party companies and focuses on multi-brand locations, like the launch of the company’s first-ever virtual food hall inside an airport that opened in Raleigh, N.C. this summer.
As Reef has garnered some negative attention and critical headlines for leaving specific cities and cutting ties with larger brands like Burger King and Jack in the Box, Reef representative Mason Harrison points to the company’s shift toward multi-brand locations as a reasonable explanation.
“We tried to show [the brands we partner with] that flexibility is an important part of this industry,” he said. “Most of the brands came down on our side of the fence, and error rates went down while ratings went up when we were able to focus on multi-branded vessels.”
Many of the larger restaurant brands, however, wanted more control over their ghost kitchen presence and wanted to be the only brand in a specific location. But for Reef, it makes sense to become more efficient and flexible as time goes on and resources become more expensive. For the future, Harrison sees Reef expanding its definition of operations to become more of a mix of franchised locations, local restaurants, and insurgent virtual brands, as well as having a presence in more unconventional locations.
“The future of Reef is going to be one where a new location might be inside a hotel where they’re operating a few of our brands and using our technology,” Harrison said. “Over the past year, Reef went from growing fivefold and getting into as many markets as possible to focusing on our most profitable markets and models and figuring out whether to invest in new vessels or partner with a hotel or airport.”
Veteran virtual restaurant company Nextbite similarly is taking time at this stage in its business lifespan to focus on being more asset-light and use data and analytics to figure out where and when to build its next delivery-only brand.
“A lot of the first wave of ghost kitchens realized it’s very hard to sustain a successful business with a 100% off-premises model,” Nextbite CEO Alex Canter said. “Many of them have switched to a more hybrid approach where your brands are available for delivery but also have a walkup component. They have taken this omnichannel approach, and that makes a lot of sense.”
Nextbite keeps its operations simple: The company does not build new real estate or open new commissary kitchens: they’re operating with restaurants to enable them to sell more food with a new revenue stream out of their own kitchens.
“We’re kind of the opposite of a ghost kitchen,” Canter said. “There are a lot of terms going around, but we don’t set up dark kitchens in new locations. We turn regular restaurants into ghost kitchens.”
The biggest changes Nextbite has made have to do with data analysis. Nextbite’s team can now match their portfolio of brands with new locations. For example, Packed Bowl by Wiz Khalifa does best on or around college campuses, Canter said. His team can also monitor reviews to figure out customer experience and how tastes are evolving.
Although there is clearly a wide spectrum of operational strategies for ghost kitchens and virtual brands, each company we spoke with agreed that the bar has been raised and that not every company or delivery-only brand will be successful, simply because the market was oversaturated in 2020. The best virtual restaurant companies focus on quality and knowing what their customer wants instead of trying flash-in-the-pan gimmicks.
“Gone are the days when you can just create a menu in five minutes and stick it on DoorDash and expect it to do well,” Canter said.  “In the early days, people were creating so many of these virtual brands and expecting them to perform because there weren’t as many options. The space got very crowded very quickly and now a lot of things have to go right for a virtual brand to have success.”  — Source: NRN.

The brand has begun to expand using non-traditional formats . . . .

Capital Tacos Takes on Florida

Josh Luger and James Marcus had big ambitions to find a restaurant concept and do something “truly special” with it.
Rather than start their own business, the two decided to buy an existing concept and expand it. That concept was a hole-in-the-wall taco shop in Tampa, Fla. that didn’t even have a sign on the front yet was ranked by Foursquare as the second-best place to eat in Tampa and one of the country’s three best spots to eat at, according to the company.
Both Luger and Marcus had restaurant experience. Marcus claims to have started the first ghost kitchen with a late-night concept he started in college, Underground Chicken. Luger used to operate a dining newsletter in New York City. They bought the taco shop and renamed it Capital Tacos.
Growth has been a slow process.
“We’d much rather have 25 of the best restaurants serving the best Tex-Mex around than 2,500 serving mediocre ones, even if they’re more profitable,” Luger said.
The difference between those two, he added, is handmade ingredients.
“The differentiator between us and other folks is we grill every single thing to order. We have a true scratch kitchen,” Luger said.
It’s also not a build-your-own place. Everything has been crafted by high-quality chefs to be built for guests’ enjoyment.
“We spent a hell of a lot of time creating each and every one of the [menu items] to make sure they’re perfect,” he said. “And so the result is a menu that has the depth and the breadth that you don’t really see from any other chain.”
While tacos are in the name, Luger said they represent less than half of sales because the Capital Tacos menu is so diverse, including burritos, bowls, nachos, and more.
Capital Tacos now has five locations, and Luger said the company is pursuing additional growth under a variety of formats.
“We’re somewhat agnostic, but literally at the end of the day, we come to market with a very clear statement, which is we want to have a lot of touch points … across a multitude of different real estate types,” he said.
That could include virtual restaurants, food trucks, and traditional brick-and-mortar locations. – Source: NRN.

Spotlight Interview: Na’ama Moran, CEO and Co-Founder, Cheetah

A technology supply chain company operating a wholesale food and restaurant supplies marketplace, Cheetah has maintained a relatively low profile since its founding in 2015. That, however, is now changing with the company’s rapid growth and increased market presence. Earlier this year, the Pleasanton, California-based company closed a Series C round of financing totaling $60 million. In July, as reported here, Cheetah announced that it had concluded three acquisition transactions: Palo Alto Foods, Esteson, and Joseph Martin Foods. The acquisitions mark a major milestone in Cheetah’s plan to build one of the largest local and specialty, product-driven food distribution companies in the United States. Its marketplace app is already used by more than 3,000 restaurant owners and operators, according to its website, with over 350 thousand orders to date. Buyers can browse thousands of local, artisanal, and specialty products and place their orders for next-day delivery.
In this interview, Na’ama Moran, CEO, and Co-Founder of Cheetah, discusses the company’s unique positioning and platform capabilities, how it seeks to empower independent restaurants when it comes to market pricing and her vision for the company going forward. She also shares a bit about her background and career trajectory in the restaurant technology space.
First off, a big congratulations on closing a Series C round of financing, totaling $60 million, earlier this year. What do you think gave your investors the confidence they needed to place such big bets on Cheetah’s future?
Cheetah is addressing a huge market – restaurant supplies is a $300 billion market in the U.S. alone. That is still behind the times from a technology and customer experience perspective. In other words, “the Amazon of restaurant supplies” does not yet exist and that’s what we aim to create. It is a huge opportunity. Secondly, food as a category has been getting a lot of attention in the last few years as the pandemic accelerated consumer adoption of online shopping for food. Restaurant owners are consumers too, and they are now expecting the same level of service from their foodservice vendors; this means a big opportunity for Cheetah to take market share from incumbents and be the leader in technology innovation and the customer experience in our space.
Cheetah bills itself as a technology supply chain company operating a wholesale food and restaurant supplies marketplace. What does that mean, exactly? What benefits does Cheetah offer and what makes it different from other players in this space?
For the restaurant owner, we offer access to a large marketplace of bulk products from food and beverages to cleaning supplies and packaging, with next-day delivery in our temp-controlled vehicles. We also offer access to unique specialty items from local producers with next-day or lead-time delivery. Our entire platform was built from the grounds up on our proprietary technology stack, which enables us to offer unique value-added benefits to customers such as midnight cutoff (we are the only distributor offering this), dynamic delivery windows, real-time inventory, and delivery tracking. Our supply chain is also built on our stack, which enables us a much more efficient demand planning, procurement, and warehouse management when compared to traditional, mom-and-pop distributors.  This way we can pass the resulting savings to our customers and be priced competitively. In the near future, we will be offering next-gen inventory management, cashflow management, food waste reduction, and other value-add services to our restaurant customers, creating more value and deeper differentiation and moats.
Cheetah’s marketplace app is reportedly used by more than 3,000 restaurant owners and operators, with over 350 thousand orders to date. Those are big numbers. Are your customers able to quantify the benefits financially in terms of, say, time or cost reduction for order delivery?
Absolutely! On average our customers save 10% in food and supply COGS and bring the amount of time they spend on supply chain management from an average of two hours per day to 10 minutes per day with Cheetah.
Cheetah aims to democratize the buying process by ensuring that “all customers receive the same fair price, regardless of their size or negotiating skills.” What does that mean, exactly? Is there no bulk order discounting, for example, for larger customers?
In the current foodservice market, independent restaurants do not have access to the same market pricing. Sales reps for incumbent distributors can manage pricing to optimize margins. As a result, two restaurants can be located on two sides of the same street, but still, be paying different prices for the same SKU. It’s as if Amazon showed different prices to different customers depending on who is likely to pay more…. We bring the same pricing to everyone. We are the only foodservice distributor with a radical price transparency commitment. In fact, we are the only foodservice distributor that enables you to download an app and see all our pricing with no need for credit checks, negotiations, etc. within minutes you can place an order for next-day delivery. We do offer bulk order discounts – and here again, everyone gets the same discount!
In July, Cheetah announced the acquisition of Palo Alto Foods, Esteson, and Joseph Martin Foods. What did you find to be attractive about these companies how did the acquisitions come about? How has the addition of these companies enhanced Cheetah’s capabilities and competitive strengths?
We chose to acquire Palo Alto Foods, Esteson, and Joseph Martin Foods because of their loyal customer base, complimentary product assortment, and the potential to both improve their economics and expand their revenue and margins by getting their customers to purchase from the Cheetah app. We were introduced to these companies by one of our Senior Directors who used to lead sales at Palo Alto Foods. The three distributors operated out of the same warehouse and agreed to be acquired together. In today’s post-pandemic environment, where supply chain and labor shortages are the worst they’ve ever been, small companies need to join forces with each other, if they have any hope to survive and thrive in the competition against national broad-line distributors. By acquiring these distributors, we are able to increase our purchasing power, which translates into better pricing and product availability to all of our customers.
Cheetah’s expertise in technology-enabled restaurant supply chain operations is said to run deep. What is the source of that expertise and what do you view as the company’s biggest advantages?
The source of this expertise goes back to the very foundation of the company. One of our co-founders, Alon Har-Tal, who is Cheetah’s Chief Technology Officer, was the software architect for a very successful technology logistics company called Bringg, and from day 1 our customers were ordering on a mobile app with transparent pricing and real-time inventory. The fact that we started our business from scratch on our proprietary technology platform, gives us multiple competitive advantages, one of which, for example, is the ability to run AI models that improve the customer experience in demand forecast, routing, and more.
Who are some of your customers and what categories or types of restaurants are likely to benefit most from your app? Any success stories you can share?
Our customers are independent restaurant owners, with 1-2 locations, and local chains with up to 10 locations. With the acquisition of Palo Alto Foods, we are now servicing corporate foodservice, such as Google and Salesforce cafeterias, frozen yogurt shops, and schools, including Stanford University.
How long does it take for a new customer to get up and running with Cheetah? Is there a setup fee?
Customers can literally down the app from the app store and start ordering for next-day delivery within 5 minutes. There is no setup fee. We also offer a white-glove service with our in-house chef, where we offer both menus and cost analysis, we help set up the restaurant’s shopping list and train the staff on how to use our app. This is a great option for high-volume restaurants or restaurants with a more complex menu and specific sourcing requirements.
You grew up in Israel with a family of farmers and small business owners. How did that background inform your perspective and ultimately influence your career trajectory?
It gave me a lot of empathy for small business owners, given that I saw first-hand how much hardship goes into running a small business. It also gave me a more personal insight into what goes behind the food we eat and the challenges in the food supply chain, and how fragile it is. This is what motivates me to build a next-gen supply chain, because we depend on food for our survival and need a resilient food supply chain for our society to function.
What led you to identify the unmet market need that eventually became Cheetah, in the first place?
Prior to starting Cheetah I was working on a startup in the local commerce space, that was helping restaurant owners understand the ROI they were getting from online marketing such as Groupon. While working on that startup (which eventually got acquired by Groupon) I met with numerous restaurant owners and saw firsthand their struggles in managing their supply chain; how manual and inefficient the sourcing, ordering, and receiving process is, and how much frustration they felt about incumbent’s distributor’s lack of price transparency and sub-par customer service. I realized the same restaurant owners use Amazon for their personal shopping yet in their business shopping their experience is so much poorer. That’s when I realized the opportunity and decided to pursue it.
How were you able to bring the idea for Cheetah to fruition? What was involved in terms of technology development? How were you able to secure financial backing to turn it into a real business?
Bringing the idea of Cheetah to fruition has required a lot of faith and grit, as well as the continuous buy-in of passionate teammates and inspired investors such as Manna Tree, Eclipse, Sator Grove, Hanaco, Floodgate, Iconiq, and Altair Capital.  The technology development started with the customer-facing app, and then expanded into the supply chain backend infrastructure, including the core components that manage our product catalog, purchasing, warehouse operation, and routing. We raise funding from venture capital firms that believe in the vision, the market potential, and the value we bring to independent restaurant owners.
To what extent did your prior experience in having founded and run several other startup companies prepare you for your current role as CEO at Cheetah?
My prior experience has helped me in terms of customer and product roadmap development, working with technology teams, as well as fundraising and people development. However, Cheetah is the first time I am working on a supply chain/logistics company, and learning how to do that has been very challenging – a huge learning curve – and I am just starting.
What do you do on a day-to-day basis as CEO and what do you like most about your work?
I am constantly working with different stakeholders, mostly with our managers, to drive alignment around company goals and shared values. I work to drive accountability and a sense of ownership. I also manage investors and board relations and provide product roadmap guidance. I love to meet with customers and hear about what works and what can be improved with their Cheetah experience.  I love to meet with teammates and get to know them more on a personal, not just a professional level. What gets me most excited is hearing a customer success story, for e.g. how they were able to open a new location or spend more time on personal development because of Cheetah. I also love to see employees growing with Cheetah, for e.g., teammates who started in warehouse picking who grew into managers.
Just out of curiosity, how did you pick the name for your company? A cheetah, of course, is the fastest land animal, able to reach speeds of up to 80 miles an hour. How fast can your trucks go?
We want to be the fastest-growing foodservice distribution company in the United States. That’s the reason for the name Cheetah. We also love that Cheetahs move and hunt in packs, that’s the meaning of a Cheetah Coalition, and we want our platform to enable small restaurant owners to join forces, and form a “Coalition” that will enable them to stay competitive, especially when faced with the economies of scale of national chain restaurants.
What was the impact of the pandemic on business planning and operations? How does the volume of food orders now compare to pre-pandemic performance levels?
It was pretty devastating. Overnight we lost more than 80% of revenue, while we had two warehouses with millions of dollars of inventory, half of which is perishable. We were working against the clock, trying to continue to provide service to our restaurant customers, who were forced to shut down their in-person operations, while also figuring out how to save our own business, so we can continue to execute on our vision despite this once-in-a-lifetime crisis. We are finally back to pre-pandemic revenue levels, also thanks to the acquisitions we made. We used the pandemic slowdown to dial in our operations KPIs and improve our margins, and in that regard, we are now much better off than we were pre-pandemic.
Cheetah reportedly aims to become “the sustainability leader” in foodservice distribution. What does that mean, exactly, and how does the company plan to achieve that goal?
As an industry, we must take this topic seriously for numerous reasons. Not only is it critical for our planet, but it’s also what our customers are demanding. We’ve decided to make this an integral part of our brand because it is the right thing to do. The first step is commitment, the second is the process. We’ve identified a number of steps we can take immediately to make a strong impact on our progress. This includes the installation of solar at our warehouse, upgrading our fleet of delivery trucks to EVs, and taking steps within our business to eliminate waste by getting buy-in from our entire team. We’ll be working with each and every one of our vendors on these initiatives in addition to identifying new products and companies that echo our vision.
It’s no secret that Cheetah has its sights set on growing both nationally and internationally. In what countries or regions outside of the United States do you plan to establish a strong market presence going forward and over what period of time?
We are currently focusing only on the US. We currently operate in Northern California and have so many markets we would love to grow into in the US before we set our eyes on international growth.
Anything else new and noteworthy in terms of big customer wins, strategic partners, new platform capabilities, etc. we may have missed?
Our Marketplace technology is now allowing small vendors, farmers, and producers access to broadline distribution. This is a game-changing tool that allows these smaller artisanal brands access to last-mile distribution, which would otherwise be prohibitively costly. The technology allows us to open up a robust range of products for our customers not previously available. This amazon-like functionality gives customers and vendors a new type of access to the market.  Over time, we will be releasing a host of new tools which will allow for automatic ordering and inventory replenishment, giving our customers more control over their business.
What’s next for Cheetah? What will be the company’s primary focus areas over the next year or so?
Our biggest focus is our marketplace of local and specialty vendors. We want to drive more automation in our backhaul program; this will enable us to use our trucks to pick up products from local vendors on their way back to the warehouse, such that our customers can order these local specialties with as short a lead time as possible. We also continue to be on the lookout for like-minded foodservice distributors who want to join forces with Cheetah in becoming the innovation and sustainability leader in foodservice.  – Source: Restaurant Technology News.

AUV HAS GROWN BY MORE THAN $500,000 IN THE PAST FIVE YEARS, AND THE CHAIN IS CLOSING FEWER UNITS THAN IT HAS IN A DECADE

Applebee’s is on the Greatest Run in Company History

Applebee’s is in its “glory years,” says brand president John Cywinski. He argues the chain is in a better position now than it’s ever been across 42 years of history.
No one is likely to challenge him on that take. Same-store sales grew 3.8 percent in Q3 year-over-year and 16.9 percent against 2019—the best three-year sales performance in the history of Dine Brands, which formed in 2007. Average weekly sales per restaurant were $53,000, equating to $2.76 annualized AUV. When Cywinski began his tenure as brand president in 2017, AUV was at $2.2 million.
He lauds the team Applebee’s has built in the past few years. COO Kevin Carroll joined in June 2017 after years with Brinker International. CMO Joel Yashinsky, who had a long career at McDonald’s, entered in January 2018. Jill Marchick, vice president of consumer insights and business analytics, came on board in September 2021 with experience from McDonald’s, Starbucks, Aramark, and Hershey. Melissa Hariri, executive director of communications, has been with the brand since June 2016 and was promoted to her current position in March 2020. Duane Aldridge, vice president of IT, has been around since 2014, but similar to Hariri, was elevated to his current role under Cywinski’s tenure. Most recently, Scott Rodriguez, with experience at Papa John’s and BJ’s Restaurants, joined as chief culinary officer.
The U.S. footprint has been optimized as well. Applebee’s spent five years closing roughly 300 low-volume, nonviable restaurants. That strategy ended in 2021. This year, 15 stores are expected to shut down, representing the fewest closures in a decade. The portfolio—comprising 1,571 U.S. outlets—was refined to 31 well-capitalized franchise partners, many of whom have been a part of the brand for several years.
“The portfolio of franchisees is best-in-class, and the portfolio of restaurants is really healthy and vibrant as evidenced by that movement on average unit volumes,” Cywinski says. “You combine that with restaurant-level excellence and scale and world-class marketing, and we are extraordinarily well-positioned, even in a tough environment. And it’s not only evident in our Q3 results. It’s been evident over the past several years here at Applebee’s. We’re just beginning.”
The executive says Applebee’s is continuing to lead the casual-dining industry in convenience, affordability, variety, and brand awareness. To elaborate on a couple of those points, off-premises exceeds $1 billion annually. It still mixes 24 percent, equally split between car side to-go and delivery. In terms of absolute dollars, average weekly off-premises sales per unit were $12,800 in the third quarter. Applebee’s recently opened its 10th drive-through pickup window, further demonstrating its commitment to sales outside the four walls.
As for the chain’s recognition in the marketplace, its unaided brand awareness attained an all-time high in Q3 thanks to value propositions, like all-you-can-eat boneless wings. The company has returned to 12-18 months of marketing lead time with contingencies and flexibility built in. This means the brand has a healthy portfolio of propositions it can market and deploy as needed, in case the economy becomes tougher and lower-income consumers become more cash-strapped.
Cywinski says the company will benefit from customers trading down from fine-dining concepts. He also acknowledged that some may likely trade out of Applebee’s and into quick service, but not as many as you may think. He points out that Applebee’s is on the lower end of the full-service average check spectrum and its customer demographics resemble fast-food and fast-casual players, with Gen Z, millennials, and Gen X accounting for 80 percent.
Applebee’s has opened 10 stores with drive-thru pickup windows.
“We win on variety,” Cywinski says. “So there’s no veto vote with the Applebee’s brand, and we steamroll the competition when it comes to brand awareness, meaning we are far and away the category leader on brand awareness. It positions us very well moving forward. With that said, a recessionary environment is a tough environment for a guest with $77,000 average household income, and so we have to be very thoughtful and creative and always mindful of the fact that this guest has a very modest discretionary income. And so we’ve got to earn that, and I believe it will be a challenging environment moving forward. It will not be easy, and we’ll have to compete hard, and we do have many formidable competitors who I respect as well.”
The beauty of having only 31 franchise partners, Cywinski says, is that everyone is able to meet frequently and change course on short notice in reaction to the marketplace. The group of operators gives him more confidence and optimism than he’s ever had at Applebee’s, and that’s in the midst of a potential recession. The company recently held its annual conference in Beaver Creek, Colorado, where the brand not only framed its 2023 business plan but also spent much time recognizing performance. Team Schostak Family Restaurants, an operator of 62 stores in Michigan, was named Franchisee of the Year.
Applebee’s is completely franchised after selling 69 company-owned restaurants in North Carolina and South Carolina to Thrive Restaurant Group. The operator is the second-largest Applebee’s franchisee with 148 restaurants, behind only Flynn Restaurant Group, which oversees 439 units.
“I now know what this team and these partners are capable of, and they genuinely love one another,” Cywinski says. “… We’ve got a lot to celebrate. With that said, it’s a tough environment. Commodities are still at an all-time high and ‘23 will remain challenging. So brands have to be really great at what they do to thrive in this type of environment. So we’re very fortunate and thankful for those partnerships with our franchisees and for the team members that we have here. I wouldn’t trade those two groups of folks out for anyone in this industry.”
On previous earnings calls, Cywinski said Applebee’s will return to U.S. new unit growth in 2023, but that prediction was flexed to either 2023 or 2024 during October’s call, likely because of the impending economic downturn. The brand president said the business environment in general, with its skyrocketing costs and supply chain delays, is worth rebuilding the new restaurant development pipeline, and that will take time. He’s confident, however, that net expansion will happen no later than 2024, through a combination of traditional outlets and ghost kitchens. Going forward, the closure rate will be roughly 1 percent, which is the historical norm.
Cywinski says Applebee’s classic “Eatin’ Good in the Neighborhood” tagline has played particularly well during the pandemic. According to the brand president, customers find the positioning familiar, comfortable, welcoming, and inviting.
“We’re not a pretentious brand,” the executive says. “We’re kind of like a good friend. That’s how we like to talk about Applebee’s, and that’s how guests view us. And we may not be the prettiest new building on the block. May not be the sexiest brand out there, but gosh, we’re about as reliable as they come, and we think earning the trust of our guests throughout everything that we’ve been through together over the past two years is really important. Some brands have done that well, like Applebee’s, and some haven’t and that will be important to future success as well.”  — Source: FSR.

THE CASUAL-DINING CHAIN REVAMPED ITS ‘3 FOR ME’ VALUE PLATFORM TO ENCOURAGE MORE TRADE-UP AND HIGHER AVERAGE CHECKS

Chili’s Eyes Increased Profits with New Menu

Brinker International CEO Kevin Hochman, with just a few months under his belt, identified excessive deep discounting as one of Chili’s most concerning issues.
In the chain’s fiscal fourth quarter, discounted items mixed 37 percent, and that was simply too high for his blood. In response, the chain reconfigured its “3 for Me” value platform, which has only been around since June. The menu—which bundles a beverage, appetizer, and entrée—had four pricing tiers, with $10.99 being the entry. The newer version cuts the number of offers available on the 3 for Me platform from 12 to nine and reduces the number of pricing tiers from four to three. Chili’s kept the $10.99 level, and added more premium price points of $13.99 and $15.99.
The goal is to retain the value-conscious consumer, but also drive trade-up within the Three for Me platform and make the a la carte menu more competitive. Previously, customers were pushed toward the 3 for Me because the bundles (beverage, appetizer, and entrée)  were cheaper than the a la carte menu (entrée and side). That was corrected with the latest menu update; all bundled items on the Three for Me menu are now higher priced.
Discounting now mixes in the low 30s, and Chili’s has seen significant increases in average checks for those buying off the Three for Me menu. Additionally, more customers are opting to order off the a la carte menu to find items that were removed from the 3 for Me platform—the Cajun Chicken Pasta, Chicken Fajitas, and Margarita Grilled Chicken.
The menu launched on October 25, so the brand is early into the change, but the company expects lower costs, higher sales, and increased profitability. Chili’s is implementing the same actions to its rewards program by rightsizing the number of promotional offers. CFO Joe Taylor said that doesn’t necessarily mean removing a deal entirely; it may just be offering something for $1 or $2 instead of a freebie.
Chili’s same-store sales grew 3.8 percent year-over-year, including 7.4 percent pricing. Mix-shift was 3.4 percent, but traffic slipped to negative 6.6 percent after the initial reduction of discounts.
“In the move, we’re making, we’ll probably see some traffic losses as it relates to the discounting side of the equation,” Hochman explained during the brand’s Q1 earnings call. “But again, we’re trying to create a stronger, profitable model on an ongoing basis. We think that’s worth the trade-off right now. We’re seeing a nice net positive benefit as we move through the first four months really of continuing on through October. … Through some of the moves we’ve made on the discounting side of the equation, while you typically will see an initial traffic reaction, we saw that gap narrow as we move farther through, in particular in October, when I look at traffic gap to the industry.”
The company believes these strategies will allow it to reinvest in marketing, starting in its fiscal Q3 (or essentially the new year). With increasing concerns over inflation and an impending recession, Hochman said customers will be on the lookout for value deals, making it the perfect time for Chili’s to build its awareness. Right now, the brand allocates 1 percent to marketing. Prior to COVID, Chili’s dedicated 4 percent; the CEO doesn’t want to return to that level, but there will be an increase in spending. The company will incrementally add back marketing dollars and monitor the return on investment.
If the advertising works, Chili’s will keep building on it. If not, the concept will retool. Details haven’t been fleshed out quite yet. During COVID, the company has directed its limited spending toward digital channels, but Hochman hopes the restaurant can make a return to TV.
“We’ve done some pretty good things on the business that we think we could advertise,” Hochman said. “So we’ve got like these margaritas of the month that are incredibly attractive. We’ve obviously got this unbeatable value in the industry at Three for Me on the menu, but we’re not invested dollars to make customers aware of those amazing offers. And so, any of the incremental spending that we put into the business next in the back half will be funded by removing some of this deep discounting and removing the menu mix that we talked about on Three for Me. And we’ll be putting dollars into really focusing on the value components of our business just because we think that’s going to be a thing that resonates with a cash-strapped customer coming out of the holidays, looking for not just low prices, but high-quality and abundant value.”
In conjunction with these shifts, Chili’s is working toward stabilizing turnover and reducing complexity in restaurants. A recent example is bringing back users in all restaurants so servers can focus on greeting and fulfilling guests’ needs. Looking further ahead, the chain is looking at back-of-house equipment to automate processes. The company has experienced improvements in manager and hourly turnover, but Hochman said they’re still not at pre-pandemic levels. To quicken this process, Chili’s brought “critical people functions” closer to operations, which involved former Chili’s co-COO Aaron White—a 21-year veteran of the brand—moving to chief people officer of Brinker.  Wage rate increases have moderated, but they were still in the mid-single digits in the first quarter.
Brinker saw commodity inflation of 24 percent in Q1 year-over-year, driven by chicken and beef. However, CFO Joe Taylor noted that most of the company’s commodity markets are moving to lower cost levels.
Maggiano’s comps rose 18.2 percent year-over-year, including 5.8 percent pricing, 3.1 percent mix-shift, and 9.3 percent traffic. Brinker overall reported sales of $946.1 million in the first quarter as compared to $865.6 million last year. There was an operating loss of $19.8 million, versus an operating income of $25.6 million in the year-ago period. The primary driver of the operating loss was the significant increase in food and beverage costs. The restaurant’s operating margin was 6 percent versus 11 percent last year, fueled by high commodity inflation.
Chili’s finished Q1 with 1,592 stores globally, including 1,228 in the U.S. and 364 internationally. Maggiano’s had 53 units domestically.  – Source FSR.

CUSTOMER ENGAGEMENT BEGINS WITH GREATER CULTURAL UNDERSTANDING . . . .

Understanding the Latino Restaurant Consumer

Already an integral customer base for restaurants, Latino consumers are poised to become even more influential in driving trends and market growth. According to the Pew Research Center, Hispanic Americans accounted for more than half (52 percent) of the U.S. population growth between 2010 and 2021—surpassing any other ethnic or racial group.
In a recent survey, market research firm Numerator found Latino households are 72 percent more likely to dine out six or more times a week compared to the national average. Although quick-service chains, including McDonald’s, Wendy’s, Chick-fil-A, and Taco Bell, were cited as favorites, opportunities abound for full-service restaurants.
Last year, data from The NPD Group indicated that since Q2 2020, Hispanic spending at sit-down establishments had surpassed the amount spent at limited-service ones. And as of 2020, Latino consumers accounted for an annual average of 9.8 billion visits—representing about a quarter of total restaurant foot traffic.
But in order to engage with these communities, operators must first understand that Hispanic Americans are far from a monolith.
“Many brands are missing out on a huge market opportunity by not knowing how to connect with this expanding and diverse population,” wrote Gerry Ramirez, vice president of partnership development at digital media firm My Code, in an opinion piece for AdAge.
The Numerator survey didn’t delve into country-specific characteristics, but it did distinguish between larger regions. For example, consumers of South American heritage were more likely to seek out deals, while those of North and Central American descent were 40 and 30 percent, respectively, more likely to make impulse purchases.
Still, building long-term relationships goes beyond discounts and deals. Fifty-eight percent of Hispanic households report their cultural heritage is central to their identity—this is compared to 52 percent of Black consumers, 47 percent of Asian consumers, and 27 percent of white consumers.
Experts advise brands to be intentional in their outreach, warning that consumers will see through marketing attempts that are mere lip service.
“Major brands try to do these things without really attempting to understand our diverse culture, and they often miss the mark,” Trinidad Aguierre, a Hispanic marketing consultant, told NPR in September. “If you’re going to mess up, don’t do it. But if you’re going to attempt it and do it right, it’s going to pay dividends.”
for restaurants, Latino consumers are poised to become even more influential in driving trends and market growth. According to the Pew Research Center, Hispanic Americans accounted for more than half (52 percent) of the U.S. population growth between 2010 and 2021—surpassing any other ethnic or racial group.
In a recent survey, market research firm Numerator found Latino households are 72 percent more likely to dine out six or more times a week compared to the national average. Although quick-service chains, including McDonald’s, Wendy’s, Chick-fil-A, and Taco Bell, were cited as favorites, opportunities abound for full-service restaurants.
Last year, data from The NPD Group indicated that since Q2 2020, Hispanic spending at sit-down establishments had surpassed the amount spent at limited-service ones. And as of 2020, Latino consumers accounted for an annual average of 9.8 billion visits—representing about a quarter of total restaurant foot traffic.
But in order to engage with these communities, operators must first understand that Hispanic Americans are far from a monolith.
“Many brands are missing out on a huge market opportunity by not knowing how to connect with this expanding and diverse population,” wrote Gerry Ramirez, vice president of partnership development at digital media firm My Code, in an opinion piece for AdAge.
The Numerator survey didn’t delve into country-specific characteristics, but it did distinguish between larger regions. For example, consumers of South American heritage were more likely to seek out deals, while those of North and Central American descent were 40 and 30 percent, respectively, more likely to make impulse purchases.
Still, building long-term relationships goes beyond discounts and deals. Fifty-eight percent of Hispanic households report their cultural heritage is central to their identity—this is compared to 52 percent of Black consumers, 47 percent of Asian consumers, and 27 percent of white consumers.
Experts advise brands to be intentional in their outreach, warning that consumers will see through marketing attempts that are mere lip service.
“Major brands try to do these things without really attempting to understand our diverse culture, and they often miss the mark,” Trinidad Aguierre, a Hispanic marketing consultant, told NPR in September. “If you’re going to mess up, don’t do it. But if you’re going to attempt it and do it right, it’s going to pay dividends.” – Source: FSR.

Specialty Food Association identifies top trends for 2023

Convenience will be at the forefront of consumers’ minds in 2023, according to the Specialty Food Association’s (SFA) Trendspotter Panel.
The panel, comprised of culinary professionals from diverse industry segments, researches numerous specialty food items and companies to predict key emerging trends for the upcoming year.
“Specialty food consumers are looking to make their meal prep easy but exciting and that is driving many of this year’s trends regarding convenience, packaging improvements, and global flavors,” said Denise Purcell, vice president of resource development at the SFA. “At the same time, they continue to care about how their food is grown and the health benefits it offers, giving rise to evolving sustainability, plant-based, and better-for-you trends.”
As consumers have begun to increasingly cook at home during the pandemic, the panel predicts brands will focus on providing tools and recipes for at-home chefs looking to make simple meals that don’t sacrifice “authenticity, convenience, or taste,” said Kantha Shelke, a panel member and founder of Corvus Blue LLC.
Examples of the trend were found in action at SFA’s annual Summer Fancy Food Show, with companies like Bella San Luci offering sauce starters to help consumers create restaurant-quality meals at home. Meal kit popularity also led the New York Times to release a series of home cooking kits in September through NYT Cooking. Each kit was designed by a guest chef to focus on one type of cuisine made with non-perishable specialty ingredients.
The panel also believes consumers will look for innovative packaging that can offer increased portability while lessening messiness. Brands should similarly look to improve messaging on their labels and tap into consumer values like sustainability.
In addition to its importance in messaging, continued sustainability and environmental concerns led environmentally friendly foods to rank No.2 on the panel’s 2023 trends.
“With growing unrest over climate issues and their impact on the future food supply, products that feature some aspect of sustainable ingredients, upcycled ingredients, or environment-friendly packaging, are leading the way,” said Jonathan Deutsch, a panel member and founding director of the Drexel Food Core Lab.
Plant-based foods and unique ingredients are helping drive the trend as innovative applications like mushroom, seaweed and jackfruit-based products are on the rise.
The panel similarly found a growing demand for alternative kinds of seafood amid emerging technologies that can provide traditional tastes and textures. Better-for-you and functional foods also will continue to grow in 2023, with consumers seeking to balance their interest in healthy and indulgent foods.
The panel also predicted there will be an increased interest in bold and intense flavor experiences in the upcoming year, building on the hot sauce renaissance that started offering consumers nuanced taste experiences equally prioritizing heat and flavor.
“What began in the hot sauce category is exploding into honey, spreads, confections, beverages, and snacks, snagging new markets like younger consumers, especially, and inspiring specialty food companies to introduce heat and spice into existing product lines,” said Mikel Cirkus, global creative director at Firmenich Inc. and a member of the SFA trends panel.
Other major trends for the panel include an increased desire for globally inspired condiments, sauces, and oils; interest in international fruit beverage and snack applications; and a continued shift toward naturally occurring sweeteners. – Source: Food Business News.

Hatco Buys FWE

Hatco Corp. continued to add to its portfolio as the Wisconsin-based company has acquired Food Warming Equipment Company, a manufacturer specializing in heated holding cabinets, cook and hold ovens, smokers, refrigerated cabinets, transport carts, and more, with locations in Crystal Lake, Ill., and Portland, Tenn. Terms of the deal were not disclosed.
“Like Hatco, FWE has been serving its customers for close to 70 years. Their product quality, combined with their ability to customize their offerings to meet their customers’ needs is exceptional,” said Lorne Deacon, president of Hatco in a statement announcing the deal. “This strategic acquisition strengthens Hatco’s offerings in multiple industry segments and we are excited about our strong future together.”
This is Hatco’s second acquisition in as many months. In October, Hatco acquired American Range, a manufacturer of commercial and residential cooking equipment. Source: FER

Diversified Foodservice Supply Announces Leadership Restructuring

Diversified Foodservice Supply LLC, the leader in private branded parts and supplies for the food industry, announced a new organizational structure to best serve its growing customer base of service professionals, resellers, operators, and manufacturers. Dale Barina, President & Chief Operating Officer. In this newly created role, Dale will have commercial responsibility across all customer segments and continued responsibility for the supply chain. Dale joined DFS in 2020 as Chief Supply Chain Officer, leading the integration of key supply chain functions to support the go-to-market commercial structure. He has a strong distribution background with GE, Grainger, and Reinhart Foodservice, and delivers consistent business results year after year. Keith Kelly, Chief Development Officer M&A. Keith will lead the company’s acquisition pipeline development and lead industry relations and enterprise-level customer and supplier engagement. Keith’s background as President for both TundraFMP and Ice-O-Matic, in addition to his long-term industry knowledge, positions him as an important growth enabler for the company. Andrew Klein, Senior Vice President of Digital Commerce. In this role, Andrew will lead all digital enablement and digital commerce initiatives at the company. Andrew recently led category management, pricing, and product information within DFS. He also brings a strong background in digital commerce from his time spent at McMaster-Carr and Grainger. Lucas Rogers, Vice President of Category Management & Procurement. Lucas will oversee the expansion of the private branded parts and supplies assortment through low-cost sourcing and efficient purchasing that will result in outstanding service levels and great prices. Lucas brings extensive purchasing and category management experience from his various roles at American Hotel Register. “Our new structure will enable the company to sustain the rapid growth we’ve experienced over the past two years, and positions us to take advantage of additional growth opportunities moving forward,” said Jeff King, CEO of DFS. “I’m thrilled that Dale, Keith, Andrew, and Lucas will be leading the next phase of growth at DFS. They move quickly, get things done, and are constantly thinking about how we can improve the customer and supplier experience,” said King. DFS will continue to service customers from their five locations in MT Prospect, IL, Lumberton, NJ, Boulder, CO, Atlanta, GA, and Houston, TX.
All About Diversified Foodservice Supply
About Diversified Foodservice Supply LLC Diversified Foodservice Supply, LLC, based in Mt. Prospect, IL, is the leader in private branded parts and supplies for the food industry, serving over 250,000 foodservice customer locations in the U.S. and globally. DFS is uniquely positioned in the industry due to its strength in sourcing high-quality parts and supplies direct from factories around the world as well as from national branded and original equipment manufacturers. DFS product brands include Mavrik (parts), Franklin (supplies), and KNG (apparel) and are consistently recognized for their high quality and competitive prices. The company markets its products to service professionals, resellers, operators and equipment manufacturers through a network of captive go-to-market banners and third-party seller relationships. SOURCE: Diversified Foodservice Supply

 DRG Promotes Hanson to VP Role

Multiconcept operator Davidson Hospitality Group promoted Bill Hanson to vice president, of food and beverage within Davidson Restaurant Group, the company’s dedicated food and beverage operating vertical. He previously served as corporate director of food and beverage operations for DRG.
Prior to joining DRG in 2018, Hanson launched the food and beverage division of Milkboy in Philadelphia. Milkboy started as a recording studio which eventually led to the opening of a restaurant, bar, coffeehouse, and live music venue. Subsequent locations were opened in Philadelphia and College Park Maryland. Earlier in his career, Hanson led operations and openings with Stephen Starr, including Buddakan, Alma de Cuba, Continental Midtown, and Washington Square.
“Since joining the Davidson family in 2018, Bill and the DRG team have played an integral role in the transition of more than 60 hotels transitions growing from 80 restaurants and bars to 230 at present – plus banquets and catering,” said Davidson Restaurant Group Senior Vice President Greg Griffie. “Based on Bill’s steadfast leadership and dedication, the company’s food and beverage culture has shifted to a truly inspired entrepreneurial, restaurant-focused operation.”

Restaurant Industry Performance Improves in September

The number of restaurants has declined. Breakfast is back. Plus, a look at how the humble hot dog epitomizes the challenges operators face with inflation. These stories and more This Week in Foodservice.
Restaurant industry performance improved during September, per the Restaurant Performance Index. Published by the National Restaurant Association, the study showed a 1.0% increase from August for a reading of 101.0. Any reading greater than 100 indicates the industry is in a period of expansion.
The current situation index totaled 101.5 in September, an increase of 0.6% compared to August. While same-store sales grew, customer traffic declined for the fourth consecutive month.
The expectations index totaled 100.6 in September, a 0.4% decline from August. This marks the second consecutive month where less than one in ten operators expect the economy to improve in the next six months.
As for operators’ willingness to spend money, 68% said they made a capital expenditure for equipment, expansion, or remodeling in the September survey. This is a slight increase from the 66% who answered similarly in August. This is the ninth consecutive month that at least 60% of the respondents say they have made an investment in their businesses. So even though a lot of operators have little confidence in the economy, they continue to invest in their own businesses.
As for what the future may hold, 63% of operators reported they intend to make a capital expenditure for equipment, expansion, or remodeling in the next 6 months which is an increase compared to the 60% who had similar plans in August.
While the industry continues to face significant pressures, there are some positive points.

Economic News This Week
Gross domestic product increased by 2.6% in the third quarter of 2022, per an advance estimate from the U.S. Bureau of Economic Analysis. For the two previous quarters, the BEA reported GDP had contracted, including a 0.6% decline in the second quarter. On the surface, this is a dramatic improvement in the economy, but as the BEA reported, the substantial increase was due in part to the “effects of selected Federal pandemic response programs on personal income” and other factors. One of those factors was a narrowing trade deficit, which economists expected but don’t believe will be repeated in future quarters, per published reports. Gains also came from increases in consumer spending, nonresidential fixed investment, and government spending. Spending on services increased by 2.8% while spending on goods spending dropped by 1.2%.
Personal income increased 0.4% for a total of $78.9 billion in September, per estimates from the U.S. Bureau of Economic Analysis. Disposable personal income also increased by 0.4% for a total of $71.3 billion and personal consumption expenditures increased by 0.6% for a total of $113.0 billion. As a result, the PCE price index increased by 0.3%. Excluding food and energy, the PCE price index increased by 0.5%. Real DPI increased by less than 0.1% in September and real PCE increased by 0.3%.

Sales of new, single-family homes totaled 603,000 in September, per data from the U.S. Census Bureau. This represents a 10.9% decline from August and 17.6% less than September 2021.
Manufacturing activity in the New York area posted a modest decline in October, per the New York Federal Reserve. The general business conditions index came in at -7.6, a 9.1-point decline. The shipments index declined 19.9 points for a reading of -0.3. The unfilled orders index totaled -3.7 in October, which represents an improvement compared to September’s reading of -7.5. The new orders index was unchanged.
The Conference Board’s Leading Economic Index declined 0.4% in September for a reading of 115.9. This comes after it was unchanged in August. The LEI declined 2.8% over the 6-month period between March and September 2022, a reversal from its 1.4% growth over the previous 6 months. The Conference Board believes this decline sends a message a recession is “increasingly likely.”
The University of Michigan Index of Consumer Sentiment totaled 59.9 in October, a 1.3-point increase from September. The survey now remains just 10 points greater than its all-time low, which it reached in June. A spokesperson from the university’s research department the risk of a recession has been reinforced.

Foodservice News This Week
The number of restaurants has shrunk by 3.9% since February 2020, per Chicago-based market research firm Datassential. Of course, given the industry’s well-documented woes over the past few years, this decline should come as no surprise to anyone. Only seven restaurant/food service operator segments have had positive growth rates since the onset of COVID. Buffets are the segment that lost the most locations, per Datassential. In contrast, the segment adding the most units were vegetarian and special dining restaurants. Of course, this was a smaller group compared to other segments, making it easier to post larger growth rates. Make no mistake, though, consumers’ appetites for plant-based menus remain strong. In terms of restaurant operating hours since COVID, 19.8% of operators have reduced their hours, 21.6% report no change in hours and 58.6% have reduced their hours of operation, per Datassential.
Customer traffic during the breakfast daypart grew 4% in August compared to the same month one year ago and is now within 1% of recovering pre-pandemic traffic levels, per The NPD Group. Quick-service-restaurant breakfast, representing 87% of restaurant breakfast traffic, increased visits by 5% in the month compared to a year ago. The August traffic growth for QSR breakfast was 1% greater than what it was in August 2019. Total QSR traffic was flat in August, with lunch visits down 2%, and dinner traffic up 1% in the month compared to August 2021. “Breakfast at restaurants was adversely affected in the early stages of the pandemic, and it’s recovering now that more consumers have returned to more out-of-the-home routines,” says David Portalatin, NPD food industry advisor. “Breakfast is an important daypart for the U.S. restaurant industry, and it’s encouraging that consumers have found new reasons and ways to get breakfast away from home.”
McDonald’s quarterly financial results exceeded the number of forecasts. Global same-store sales increased by 10% with U.S. same-store sales up 6.1%. McDonald’s attributed the performance in the U.S. to “strategic menu price increases and positive guest counts.” Wall Street evidently liked what it heard as McDonald’s stock hit an all-time high.
The next big restaurant franchise could be ramen, per The Food Institute. No, TFI is not referring to the dry noodles sold in grocery stores. Rather, it sees an opportunity for restaurants to prepare an Asian dish that pairs rich broth with meat, vegetables, and flat easy-to-eat noodles. TFI notes this type of dish has considerable appeal to diners and culinary staff can prepare it in various commercial kitchens.
Thousands of New York City Restaurants claim outdoor dining saved them from extinction during the pandemic. Now 12,000 restaurants and bars are pressing New York City to open more sidewalks and streets for tables and chairs for their customers, per published reports.
It seems no menu item is immune to the ills of inflation, including the humble hot dog, per a report in the Chicago Tribune. Chicago dogs, for example, are known for the many toppings they feature, including mustard, onions, pickles, relish, sport peppers, tomatoes, and celery salt. Each of these ingredients has gone up considerably over the past year, forcing one Chicago operator to raise the price of its hot dogs by 20% compared to the same time last year. While the price has gone up, margins have gone down, making the hot dog another good example of the challenges operators face.
The National Restaurant Association added Jordan Heiliczer to its public policy team, serving as labor and workforce policy director. In this role, Heiliczer will spearhead the NRA’s efforts to “protect the restaurant business model, rebuild the workforce, and drive innovative training and workforce initiatives.”
Growth chains: Philadelphia-based fast-casual chain Honeygrow opened its 30th location in the Keystone State. Twin Peaks will open a restaurant at the Texas Motor Speedway in December. Carrabba’s opened a location in Tampa, Fla. It is the first restaurant the Italian restaurant chain has opened since 2015.

Webb Foodservice Design buys Dieli Murawka Howe

Webb Foodservice Design Consultants has acquired Dieli Murawka Howe, a foodservice design firm with offices in San Diego and Las Vegas. The financial terms of the deal were not disclosed.
Costel Coca, design principal, Webb Foodservice Design, Gina Brinegar, managing principal, Webb Foodservice Design were named FE&S 2021 Top Achiever—ConsultantsAnaheim, Calif.-based Webb specializes in higher education and business and industry foodservice design. DMH specializes in foodservice design in such foodservice segments as K-12 schools, large centralized production kitchens, culinary arts design, and healthcare. As a result of this transaction, DMH will expand the K-12 and Healthcare Divisions of Webb Foodservice Design.
Richard Dieli, FCSI, MA, MBA, president of DMH, will continue to lead that team while working with current and prospective clients. Dieli also became a principal of Webb. “Just as important as our commitment to design, as a firm we focus on the continued improvement within our design studio. Richard, with his expertise and experience in the K-12 and Healthcare Markets, will provide additional ongoing mentoring to our entire team,” said Costel Coca.

Nemco Announces Organizational Changes
Nemco Food Equipment, a Hicksville, Ohio-based, commercial foodservice equipment manufacturer, made a series of personnel moves, notably promoting Michelle Wibel, CFSP to chief executive officer from president and Luke Moffatt, CFSP to president from sales manager, retail position. In addition to these promotions, Nemco made five other personnel moves.
Other Nemco personnel updates include:
Pat Blad was promoted to engineering manager from project engineer.
Joe Carcione, CFSP was promoted to vice president of sales and marketing from director of sales.
Michelle Rumpz was promoted to vice president of human resources and finance.
Jacey Schroeder was promoted to customer experience manager from customer experience, and team leader.
Todd Urig was promoted to vice president of operations from the director of operations.

FED Global Thought Leadership 2022 . . . .

Right Here. Right Now. Right Future.
From the current macroeconomic challenges of the day to the disruptions of the past two years, there’s no shortage of distractions that can cause us to take our eyes off the “now” ball and fret about what the future may bring. Despite all this chaos, the fundamentals of foodservice have not changed. The so-called new reality is nothing new. Reality shifts constantly. Foodservice professionals have long known that we are unique among industries; every day can typically throw a curve ball. We must constantly re-clarify our vision for the future. The irony is that remaining fully present, with eyes open and attention keen, allows us to organically carve a better future. Doing the right things with the right people at the right time remains the most powerful road to success. We can’t stand still and ignore the issues of the day but going back to the basics that drove success in the first place can uncomplicate the fury and worry. As psychologist Bill Crawford aptly notes, “There are two times that we will never be able to control … what has happened in the past, and what will happen in the future. Better to focus on the only time we can truly influence, which is now.”
Karen founded Culinary Options consultancy in 1997 after departing Starbucks where she had been Food, Beverage, and Menu Development Director. Prior to that time, she had been vice president of Food, Beverage, and Product Development for Larry’s Markets, an upscale multi-unit supermarket in Seattle, WA. For six years prior to that Karen was Senior Director of concept and menu development for Satisfaction Guaranteed Eateries, a multiunit restaurant group in Seattle, WA. Her efforts led to the development of concepts and menus for four new locations as well as the reengineering of three legacy operations.
Karen’s earliest foray into the foodservice world, after shifting her career from psychiatric social work to food, was establishing one of the first cooking schools in Seattle, which later also provided highly reputed catering services. During that time, she wrote a weekly food column for the Seattle Times and co-founded the Northwest Culinary Alliance.
Karen’s consulting approach is based on this pyramid of fundamental principles:
Vision drives greatness
Authenticity is golden
Bold thinking creates big results
The menu Drives Everything!
All her development work begins with the initial Visioning. In these sessions, the client’s goal clarity is illuminated. Synergy of purpose amongst all project stakeholders is attained. From that clarity and goal definition, a fully articulated concept is created. The menu follows as it is through the menu composition that a concept is given life. Karen’s passion for global flavors and intrinsically healthful cultural cuisines drives her product development. Food done right is her mantra.
Karen has received the Excellence in Management Advisory Services from the Foodservice Consultants Society International, Top Achiever Consultant of the year from Foodservice Equipment & Supplies and the Industry Service Award from Restaurant Equipment Reports. She has been a featured speaker at multiple foodservice industry conferences, chaired FCSI’s Council for Professional Standards for six years, and contributes articles frequently to various foodservice publications.

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