Avsnitt
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A recent CNN study of earnings calls and analyst notes finds that the word of the summer – on Wall Street, at least – is “bifurcation,” or the division of something into two parts. In this specific instance, bifurcation means that high-income consumers are plugging along just fine, while low-income consumers are really starting to struggle.
Indeed, 80% of American households have less cash available than they did in 2019, while credit card debt has reached a historic high. Meanwhile, a JP Morgan survey found that over 70% of low-income consumers are having a hard time making ends meet. Notably, middle-income households are also feeling pinched; 67% believe their income is falling behind the current cost of living.
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The fast-casual category first became a thing in the 1990s (about the time Chipotle emerged) and came of age in the 2010s following the Great Recession, when consumers wanted more bang for their buck in the form of value, speed, and quality. The category came to be defined as a sort of elevated QSR but without the full-service component of casual dining.
Fast forward to this post-pandemic environment and fast casual has become a rare sweet spot of growth for the industry as price point lines continue to blur between segments. In the past several quarters, as inflation-weary consumers pull back on visits to most casual-dining concepts and some quick-service concepts, fast-casual players like Potbelly, Chipotle, Wingstop, CAVA, and Shake Shack have enjoyed traffic lifts — in some instances quite significant. The segment has also outperformed on sales. According to recently released Technomic data, fast-casual sales in 2023 grew by 11.2%, followed by quick-service sales at 7.9%. Family-dining restaurants grew by 5.7% and casual-dining chains grew by 4.7%.
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Saknas det avsnitt?
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No matter how it’s defined, growth in any capacity requires capital and capital remains expensive; the Fed raised interest rates 11 times between March 2022 and July 2023 to combat relentlessly high inflation. A cooldown has yet to happen, which has kept a lot of investors on the sidelines.
Of course, there’s an ironic twist at play here. Those rates remain high because demand remains high. Driving much of this environment is a sturdy set of consumers with more wages in their pockets and a continued pent-up demand from the pandemic. Those consumers, especially younger ones, have also proven that they really, really like to frequent restaurants. And so here we are, with a murky understanding of what exactly growth means at this post-pandemic juncture.
The consensus is that most of the industry’s growth from this point will come from higher demand concepts focused on convenience. High rates haven’t derailed the quick-service or fast-casual segments, for instance, or many bigger players in general. According to Technomic data, the top 500 chains increased sales in 2023 by $31 billion, or nearly 8%. During the recent Restaurant Leadership Conference, Technomic Managing Principal Joe Pawlak called it a “very, very strong growth year” for those at the top.
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The most popular technology tool on display at the 2024 National Restaurant Association Show in Chicago was mostly invisible. What do the robotic arms, POS systems, back of house analytics tools, and more booth gadgets have in common? Most of them are powered by and supported by data. Data — whether it’s collected by machine learning or AI — has proven to be the universal currency of restaurant technology in 2024 and beyond.
Operators are waking up to the significance of data collection and optimization in operational decision-making, from employee scheduling and inventory management, to marketing data about customers. This was especially evident at the Restaurant Show, where almost every booth at the tech pavilion went into detail about the data their software (and sometimes hardware) provides.
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The restaurant industry has a labor shortage problem. That is certainly not breaking news. Employee engagement is at an 11-year low. That might surprise some folks.
Gusto founder/CEO Nate Hybl said this conversation about employees is long overdue.
The bigger companies are already focusing more on the employee proposition, but smaller brands need to make people development a part of their budget, Hybl added. He suggested taking 1-2% off the topline to invest in people.
Hybl said acknowledging and understanding the Gen Z mindset of work/life balance and diversity and inclusion are more important than they’ve ever been, in fact, he added that the pandemic changed the employee mindset and gave more leverage to hourly workers.
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There have been many iterations of eatertainment over the years. It began with stalwart chains like Chuck E. Cheese and Dave & Buster’s, places to play arcade games and win tokens that would lead to prizes.
Over the past 10 years, that idea has been flipped. Eatertainment had moved onto larger-scale games like bowling and pool. Chains like Punch Bowl Social, founded in 2012, were also focused on offering upscale food and drink in a hipper environment.
Following the struggles of Punch Bowl Social, which filed for bankruptcy in December 2020, a new class of eatertainment venues have arrived. For the most part, they are concepts based on sports ranging from golf to pickleball to bowling. They’re just as focused on elevated food and drink offerings as their predecessors, but the concepts focus on just one or two larger-scale games rather than several.
With the focus on just one game, these eatertainment concepts have been able to drill into what makes each brand special. For most of them, it’s technology that elevates gameplay.
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Restaurant value used to be a much simpler calculation: Discount-driven customers would seek out dollar meals at quick-service restaurants, call for pizza delivery on Friday nights (sans delivery fees), and then splurge on full-service meals on rarer occasions. But in 2024, with dollar menus all but extinct, and newer variables like convenience pricing, service fees, shrinkflation, and dynamic pricing in the mix, the consumer value equation has never been more complex.
Or has it? Customers may have more options than ever before, from ordering almost any food they want from the comfort of their own home to choosing to dine out “the old-fashioned way” (and every “channel” in between), but spending habits have not changed as much as we might think they have. According to data from Technomic, customers are roughly as price-conscious now as they were just before the pandemic. In a survey, half of customers said that they picked restaurants with lower prices in Q1 2020, while 52% of customers said they do so in Q1 2024, and the exact same percentage of customers (68%) said they pay close attention to menu prices in both Q1 2020 and Q1 2024.
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Red Lobster abruptly closed some 87 restaurants on Monday as the chain faces apparent cash-flow issues and loss of confidence from its largest owner. USA Today compiled a list of all of the shuttered restaurants listed on the chain’s web site. The closed locations are in 28 states, with the largest number, 16, in its home state of Florida, including three in Orlando.
Auction site Tagex has listed 48 closed Red Lobster locations and has put all of their contents up for sale in an auction scheduled to end on Tuesday. They’re “Winner Takes All” auctions, meaning buyers are bidding on the total contents of each restaurant.
Thai Union, which has long been a large minority shareholder in Red Lobster, said in January it would sell its stake in the company and has reportedly been looking for buyers ever since.
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Since we’re officially more than halfway through Q1 earnings reports, it’s fair game to derive some of the winners from the start of 2024. Unquestionably among them is Chipotle, which experienced a 7% increase in same-store sales driven in large part by a 5.4% increase in traffic.
To understand the secret of Chipotle’s momentum of late, it’s important to understand its sharpened focus on throughput. Indeed, the word “throughput” was mentioned 33 times during the company’s earnings call April 24. Unsurprisingly, several brands, from Cheesecake Factory to Starbucks to Portillo’s, have noted a more intentional prioritization of throughput, because why wouldn’t they want to emulate Chipotle’s recent success? That said, they all have some catching up to do to get on the same playing field as Chipotle.
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TikToker “MiriTheSiren” was known for posting her creative Chick-fil-A meals, videos that were meant to inspire consumers to think of innovative ways to eat fast food. The TikToker, whose real name is Miri, was a Chick-fil-A employee, sharing how she mixed items at the store for her free meal every day.
Quickly, Miri gained a following with her videos going viral, garnering tens of millions of views on her videos between January and April of this year. But Chick-fil-A wasn’t happy.
The Atlanta-based chicken chain made Miri stop posting videos because they violated the employee handbook, as she explained, and the company would not be making an exception for her or collaborating on any future posts.
“People do that stuff as it’s convenient, and they back-burner more often,” said Lena Katz, lead, creator-integrated services at Ampersand (AOI-Pro). “Once one side begins to feel exploited, the relationship sours or ends.”
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Los Angeles-based Sweetgreen is besting many of its restaurant competitors in the first quarter. The fast-casual chain reported 5% same-store sales increases and a 26% revenue increase year-over-year.
Sweetgreen CEO Jonathan Neman stated that while January was tough with weather, the benefit of two holidays in the first quarter was a boon to business.
The quarter, ended March 31, saw most of its success from 41 net new store openings over the past year, resulting in $21.1 million in additional revenue.
CFO Mitch Reback mentioned that Sweetgreen was impacted by AB1228, increasing wages in late February. While it’s too early to see the full results, he said, the brand has made some adjustments.
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Papa Johns’ customers are spending less than they had previously, and when they do spend money on pizza, they are more likely to choose third-party aggregators over the company’s first-party delivery channels. This shift in mix balance was a primary driver behind the Atlanta-based pizza chain’s 2% decline in North America same-store sales, as well as revenue and overall sales deflation for the first quarter ended March 31, 2024.
Sales from aggregator channels have grown to 16% this quarter, as compared with 12% the same quarter of 2023, meanwhile organic delivery has declined year-over-year, while carryout remains flat. This highlights the quandary operators face when utilizing third-party apps: they are crucial to pull in new and non-regular customers, but operators lose revenue from these transactions.
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Dine Brands’ first quarter results included same-store sales declines at both Applebee’s (-4.6%) and, for the first time in 11 quarters, IHOP (-1.7%), highlighting a continuing narrative across the industry about increasing consumer sensitivity. Despite a few exceptions, that narrative has impacted concepts across segments, from McDonald’s and KFC to First Watch and Starbucks.
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At a time when many restaurant companies are struggling to get customers in the door, Dutch Bros is one of the better success stories for the first quarter of 2024. In Q1, the Oregon-based coffee chain saw 10% same-store sales growth, attributable mostly to menu pricing increases, discounting, and positive traffic trends.
Traffic will likely continue an upward growth trajectory after Dutch Bros starts accepting mobile order and pay, which the company will begin offering for the first time by the end of 2024, in partnership with Olo. The new partnership and mobile order and pay solution is currently in test mode at seven locations, and is meant to boost operational efficiency, especially for guests that want to cut down on wait times at the drive-thru lane.
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Whataburger is upgrading its coffee offerings with new hot and iced coffee, a new sweet cream, and a limited-time shake to promote the change. They’re being rolled out on May 7.
The same blend of Arabica coffee beans from Colombia, Nicaragua, Guatemala, and Honduras are being used for both hot and iced coffees, but the roast is different.
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Squash doesn’t seem like the most charismatic of vegetables. Even the name sounds like a failure. But many chefs are into them. They say each one has its own unique qualities, with summer varieties offering fresh, clean tastes and winter ones providing sweetness and a sort of implied richness, despite their low fat content, that can help lighter dishes seem more satisfying.
The difference between chefs’ love for squash and consumer perception might be reflected in Technomic’s Ignite menu data, which indicates that mentions of squash on United States menus overall decreased by 7% between the end of 2022 and the end of 2023. But butternut squash soup mentions are up by 19.6%, and squash mentions in fine-dining restaurants are up by 8%.
One big squash advocate is Dan Barber, chef of Blue Hill at Stone Barns in Pocantico Hills, N.Y., and Family Meal at Blue Hill in New York City.
Barber also is the founder of a seed company, Row 7, that essentially got its start developing new squash varieties, including the popular koginut, a variation of butternut that is now grown nationwide.
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Starbucks reported a same-store sales decline for the second quarter of 2024, for the first time in almost three years since the peak of the pandemic, as shares of the Seattle-based coffee chain plummeted 16% over the past day.
According to CEO Laxman Narasimhan, the global same-store sales drop of 4% was driven by declining traffic in North America, issues in China and the Middle East, bad weather, and “a more cautious consumer overall.” Additionally, Starbucks revised its annual fiscal guidance to reflect a more reserved growth outlook as the company attempts to reverse this negative sales trend.
Besides reaching these occasional guests, Starbucks leadership emphasized that many of the issues over the past quarter came down to challenges with meeting demand, particularly during peak morning hours.
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During Yum Brands’ earnings call Wednesday morning, executives were somewhat upbeat, touting the resiliency of the company’s brands in a challenging operating environment and pointing to core operating profit gains and digital sales increases as reasons for their optimism. Additionally, executives cited sequential improvements from January’s weather impacts, as well as easing headwinds from tension in its Middle East markets.
Technology was the focal point of that optimism, with CEO David Gibbs noting that Q1 marked the first time the Yum system surpassed over 50% in digital sales, representing about $30 billion in annualized, digital sales. These sales were driven by the continued rollout of Click and Collect and kiosks.
One example is voice AI at the drive-thru, which Yum has been testing at five Taco Bell restaurants in California. The company is expanding the test into 30 restaurants in Q2 based on positive feedback. Yum is also piloting AI in its proprietary app, which makes it easier for general managers to access information to make decisions.
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Domino’s Pizza is starting the fiscal year off strong with Q1 earnings highlights that include 5.6% same-store sales growth driven by transaction growth from the company’s new loyalty program.
In a Q1 earnings call, Domino’s CEO Russell Weiner discussed how the loyalty program is synergistic with other elements of the company’s previously announced “Hungry for More” strategy for 2024, including menu innovation. For example, the new New York Style pizza launching this week, made with thinner crust and a provolone cheese blend, is now available as a rewards deal.
All roads lead back to the loyalty program: Domino’s highly successful “Emergency Pizza” promotion, which gave away $1 million of free pizzas last fall, was effectively a rebranded “BOGO” coupon, that allowed customers to come back and cash in their free pizza at a later date. For Domino’s, it allowed the company to welcome new customers and lapsed customers back into the fold.
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Chipotle reported first quarter results after market close Wednesday and the company once again bucked the industry’s declining traffic trends, turning in a plus-5% increase in transactions. Credit Chicken Al Pastor, barbacoa, and improved throughput to meet demand for both.
The company also generated 7% comp sales growth, while system sales grew 15% to reach $2.7 billion. CEO Brian Niccol said in-store sales were up by nearly 20% as throughput reached its highest level in four years. That throughput improvement has stemmed from the company’s Project Square One, first put into place during the summer of 2022 to prioritize a focus on operational fundamentals for a workforce that largely dissipated during the pandemic. The company improved its throughput by nearly two entrees during its peak 15-minute timeframe versus last year, with sequential improvements each month. Niccol said its operations initiative focuses on four areas, including expediting the bagging and payment process and ensuring the manager supplies both lines with food to avoid interruption.
- Visa fler