Market intelligence firm Mintel has revealed four trends for the foodservice industry in 2018.
- The high cost of entry into the market will cause chefs to share spaces in food incubators.
- Diners will continue to demand convenience and affordability and speed of service will shape consumers’ perceptions of their experiences moving forward. Operators need to use all available technology to enhance speed of service.
- Mintel calls them foodceuticals while others use the term nutriceuticals. Whatever the name, Mintel believes the number of consumers interested in healthy eating will continue to rise.
- The line between social media aspiration and reality will continue to blur, challenging operators to meet both expectations.
Given the points above, it appears like 2018 will be an interesting year.
Economic News This Week
- Initial-jobless claims dipped by 2,000 to a final level of 236,000 for the week ending Dec. 2. The 4-week moving average fell 750 to a final reading of 241,500. The Department of Labor also reported that claims processing in the Virgin Islands remains disrupted due to hurricane damage and processing claims in Puerto Rico still has not returned to normal.
- ADP reports the U.S. private sector added 190,000 jobs in November. Mid-size companies accounted for better than half of the new jobs, per the payroll accounting firm. The leisure and hospitality sector, which would include restaurants, increased by 25,000 jobs.
- The Bureau of Labor Statistics reported the U.S. economy added 228,000 jobs in November. This is significantly better than most estimates and well above the 174,000 jobs the economy had been adding on average each month this year. Unemployment was unchanged at 4.1 percent. The only disappointing part of this month’s report was that the average wage increased just 5 cents an hour. (For foodservice hiring, please see the This Week in Foodservice section below.)
- Labor productivity increased 3.0 percent in the third quarter, per the U.S. Department of Labor. Output increased 4.1 percent while hours worked increased 1.1 percent. Unit Labor Cost declined 0.2 percent since the increase in produc
- The Institute for Supply Management’s Non-Manufacturing Index retreated in November to 57.4 from 60.1 in October. This is well within the expansion area seeing as any reading of more than 50 shows growth. The New Orders Index dropped to 58.7 from 62.8 in October as did the Order Backlog Index, which declined to 51.5 from 52.5 in October. The Employment Index also dropped, to 55.3 from 57.5 in October. Of the 14 industries studied by the institute, 12 reported increased activity for the month, including the Foodservice and Accommodation sector.
- New orders for manufactured goods declined 0.1 percent in October according to the U.S. Census Bureau’s full report for the month. Shipments increased 0.6 percent while unfilled orders were virtually unchanged. New orders for manufactured durable goods fell 0.8 percent driven by a decline in transportation equipment orders.
- Consumer credit climbed 6.5 percent in October according to the U.S. Federal Reserve. Revolving credit, mostly debt from credit cards, increased 9.9 percent and non-revolving credit (auto loans, student loans, etc.) increased 5.3 percent.
- The Preliminary December University of Michigan Index of Consumer Sentiment receded slightly from November. The Index reading was 96.8 down from 98.5 in November. The Current Economic Conditions Index rose from 113.5 in November to 115.9 in December. The Index of Consumer Expectations, however, fell to 84.6 from 88.9. A university spokesman said consumers expressed concern about inflation, which the university found somewhat surprising.
Foodservice News This Week
- Foodservice and drinking places added 18,900 employees to their payrolls last month. Thus, the foodservice industry accounted 8.5 percent of the private sector hiring in November.
- Customer traffic increased 1.0 percent for the quarter ending Sept. 30. The NPD Group reported the increase was the first in six quarters and was driven by more traffic at quick serve burger chains and gourmet coffee chains. The rise in traffic at these operations was the result in “marketing initiatives” including deals, new products and delivery service. Fast-casual restaurants also saw an uptick in traffic.
- Pizza Inn introduces a new type of operation. Known as Pizza Inn Express, the new concept targets convenience stores but it will also work in a travel centers and airports. The model has an ordering kiosk for grab and go or for pickup at a given spot. The first Pizza Inn Express locations will open within 90 days.
- Dave & Buster’s will downsize. The entertainment chain will build 2 locations that measure 15,000 to 20,000 square feet, the first of which will open in Rogers, Ark., early next year. The typical Dave & Buster’s consumes roughly 40,000 square feet. The chain also plans to open a couple locations measuring 30,000 – 40,000 square feet.
- Papa Murphy’s tests delivery. Long known as a take-and-bake pizza concept, Papa Murphy’s is toying with the idea of dropping the “take” part by working with GrubHub, DoorDash, and some smaller third-party delivery firms. Papa Murphy’s CEO said the delivery option will be available at a quarter or so of their stores by the end of the year.
- The Wall Street Journal includes some restaurants on its list of the top 250 most effectively managed companies. Starbucks was the highest rated foodservice operators coming in at No. 25. Darden Restaurants was No. 123 and YUM Brands was No. 169. The Drucker Institute used data from a dozen sources to compose the rankings.
- Krispy Kreme will open offices in Charlotte and London but cut 90 jobs in Winston Salem, N.C. Some employees in Winston Salem, N.C., will be asked to move to the new offices. Most employees in the Winston Salem location will remain in place. Krispy Kreme is owned by the German private equity firm of JAB Holdings.
- Corporate Stirrings: Restaurant Brands International Inc. files suit against seven Tim Hortons operators in Minnesota for breech of contract. Specifically, the parent company charges the franchisees with non-payment of franchising fees and other contractual payments. Meritage Hospitality Grouppurchased 2 Wendy’s restaurants in Virginia and signed 3 agreements that will lead to its purchasing 55 more Wendy’s locations. The company expects these operations to generate more than $100 million in sales annually. McDonald’s Franchisee Lane Enterprises is buying seven McD’s units in the Wichita, Ka., area. The original owners, Connie and Steve Brend, are retiring. Upon completion of the sale, Lane will own 38 McDonald’s restaurants, including 20 of the 26 McDonald’s locations in the Wichita market.
- Growth Chains: Bojangle’s will open up to 20 restaurants in the Louisville, Ky., market. Starbucks continues to open stores in China at the rate of one every 15 hours. ONE Hospitality Group opened the first of four STK Restaurants planned for Dubai. Dunkin’ Donuts’ new and existing franchisees will open a total of nine locations in Sacramento, Calif. Rise Biscuits & Donuts, which currently has 15 stores with 6 more scheduled to open in the first quarter of 2018, plans to expand to 1,000 locations through franchising. Dave & Buster’s opened 14 restaurants this year, has 11 under construction and a total of 27 signed leases. Papa John’s plans to open 20 restaurants in Southern France. Little Caesar’s continues its expansion in Central and South America with 2 locations set to open in Nicaragua and one in Peru.
- Comparable Store Sales Reports: Dave & Buster’s down 1.3 percent, Jack in the Box (System down 1.0 percent, Company owned down 2.0 percent and Franchised down 0.7 percent and Qdoba (System down 2.1 percent, Company owned down 4.0 and Franchised Flat.)
For details and same store sales of other chains, please click here for the Green Sheet.