annual conference moves to Arlington, Texas from last year's hotspot in
Nashville. Conference attendees will be treated to top tier Chain industry
insights from experts including:
Habits of High Growth Chains – Restaurant Business Editor
in Chief Jonathan Maze will record his podcast "A Deeper Dive"
with a special guest from one of America's hottest brands on the DMA Live
Placer.ai Talks AI in Foodservice – RJ Hottovy returns
to DMA's stage to highlight the nation's top markets for growth chains
Being a Customer or Distributor of Choice – DMA's own Amy
Snook will lead a distinguished panel of operator and distributor execs
as they define "partnership" in today's supply chain environment
2024 Industry Forecast for Chains – Datassential's Megan
Lynberg shares their customized segment forecasts from IFMA Scope
The Chain Distribution Landscape – Technomic's Dave
Henkes interviews an expert panel and reveals an update to DMA's "Chain
a guest at this conference has traditionally been the exclusive territory of
DMA's customers, this year a very limited number of seats will be made
available to national chain operators interested in learning more. Reach out to
Charley for more information about this
Fast Food Making a Comeback
snackers rejoice! Late night is back. With the resurgence of late-night
activities, such as concerts and sporting events as the Covid pandemic eases,
people are out and about later and looking to snack – which some restaurateurs
are taking advantage of.
restaurant chains have reported a recovery of late-night business and,
according to an article by Nation's Restaurant News, traffic during this
timeframe has increased 7.5% in Q2 2023 versus a year prior.
that Americans' growing fondness for late-night snacks has spawned from remote
work. Many jobs now offer hybrid or remote work options, which allow
individuals to set their own working hours," Starr Douglas, the CEO of FrontHouz,
a restaurant staffing solution, told The Food Institute. "Those who
previously were limited to a 9-5 can now start their work later in the day and
finish later at night."
seen the potential for this daypart and recently started advertising its
late-night business aggressively.
pleased with the opportunity that we see at late night," Wendy's CEO Todd
Penegor said during a recent earnings call. First and foremost, we want to
make sure that we've got our restaurants open till midnight or later.
"We now have
90 percent of our system's [restaurants] open midnight or later. What we really
want to do is make sure there's awareness that we're open ... so we can build
into customers' routines."
Sign for Labor Shortage?
success of late-night indicate that the labor shortage is coming to an end?
members willing to work those hours has declined," Neil Newcomb, CEO of Kelly's
Roast Beef, shared with The Food Institute.
"The rise of
this ‘late-night daypart' doesn't allude to any strong correlation with the
labor shortage," Douglas contended. "In fact, QSRs are struggling more than
ever to staff their late-night shifts, as they're viewed as less desirable and
unsafe compared to daytime shifts.
back to a basic economic principle: demand doesn't directly affect supply, and
supply doesn't directly affect demand," Douglas added. "There are way more
factors at play here. Just because America wants more burgers at 2 a.m., it
doesn't mean that more foodservice workers want to serve burgers at 2 a.m. And
with more freelancing options available to this labor pool than ever before,
the labor shortage for QSRs continues to persist." Food Institute Focus
Spate of Restaurant Closures Confounds Industry
was not kind to T.K. Pillan and his Veggie Grill, a small chain
of 31 restaurants in the West and Boston. Now there are just 17 – and Veggie
Grill isn't the only chain to deal with restaurant closures.
supply chain. Blame remote work. Blame fickle restaurant-goers.
recently completed closures were a byproduct of reduced traffic patterns in
high-density office trading areas," Pillan, co-founder and CEO of the chain,
told The Food Institute. "As the shift to home offices and flex
schedules has continued following the pandemic, restaurants across all segments
have been forced to re-evaluate their location strategies, and Veggie Grill is
called the restaurant closures a strategic move to "lay the foundation for
Chains Feel the Pain
Grill is not alone
when it comes to restaurant closures. The situation was even more dire for Fatz
Café, the Southern food chain founded in 1988. Fatz Café hit its peak in
2011 when it numbered 50 locations. Restaurant Business recently reported it
has now closed its remaining 18 locations after years of negative sales.
restaurant closures come despite increasing sales for the sector overall. Data
from the U.S. Census Bureau shows eating and drinking establishments saw
$91.1 billion in sales in July, up 1.4% from June and the third straight month
of solid sales growth. The figure was up 11.8% from July of last year before
adjusting for inflation.
upward trend in restaurant sales was even more impressive considering that it
occurred during a period of slowing menu-price growth. In other words, sales
growth wasn't primarily driven by higher menu prices, as it was for much of the
past year," the National Restaurant Association noted in a statement.
reported large restaurant chains are benefiting from the increased spending
with Darden reporting profit growth of 11.7% and Chipotle up
34.2%. Yum Brands and Starbucks also reported solid growth.
Factors at Play
director at Power EPOS, told The Food Institute a recent survey
indicates restaurants overall chose to absorb the recent food inflation rather
than raising prices and alienating customers.
EPOS's recent study highlights a significant challenge: the intense food
inflation which peaked at 19.2% in March 2023. Remarkably, restaurants and
cafes have seen an inflation rate that's 78% less than food and non-alcoholic
beverage inflation from July 2022 to July 2023," Goodall said.
this is having an even greater effect on niche restaurants such as those in the
plant-based sector as they fight twice as hard to compete."
Reid of the
marketing firm DR and Associations said location and supply chain are
business owners ... were not prepared for supply chain issues and didn't have
contingency planning in place. Restaurants are having to find new vendors, deal
with quality issues, and more from suppliers ranging from local/regional
farmers to commercial cleaning services," Reid said.
particularly true of vegetarian restaurants like Veggie Grill, said Grant
Gordon of Pure Greens in Phoenix.
why these types of restaurants are unable to succeed is the extent to which
they must rely upon each of their main ingredients to serve their customers. Food Institute Focus
Chatbots Are Coming to a Food Delivery App Near You
The race to
integrate AI chatbots into third-party food delivery apps is on, but major
players like DoorDash and Uber Eats are holding their cards close
to their chest, for now.
company has publicly shared the full capabilities of their new AI chatbot
feature, but software developers have uncovered some details via code hidden
within the Uber Eats and DoorDash apps.
Personal AI Assistant
bot will offer food-delivery recommendations and help customers place orders
more quickly, reported Bloomberg. According to wording discovered within
the code, when a user launches the chatbot, they will see a message that says
the "AI assistant was designed to help you find relevant dishes and more."
launches, the Uber Eats chatbot will prompt customers to enter their budget and
food preferences to help them place an order. But while Uber CEO Dara
Khosrowshahi has confirmed that the AI chatbot does, indeed, exist, it is
unclear when the software will go public.
Uber's biggest competitor, DoorDash – the leading online food delivery company
in the U.S. with 65% of the market share – has its own AI chatbot in
software, called DashAI, was first discovered in the DoorDash app and is
currently testing in a limited capacity in some markets, according to Bloomberg.
Presently, the system includes a warning message that the technology is
experimental and accuracy may vary.
chatbot, DashAI is designed to provide customers with personalized restaurant
recommendations based on simple text prompts. To demonstrate how one might
interact with the AI chatbot, the code includes examples of questions that
users could ask:
- "What's a place
that delivers burgers that also has really good salad options?"
- "Can you show me
some highly rated and affordable dinner options nearby?"
- "Where can I get
authentic Asian food? I like Chinese and Thai."
Scrolling, More Ordering
390,000 restaurants and grocery stores available to order delivery from via
DoorDash, and some 900,000 partnered with Uber Eats, a massive appeal of AI
chatbots would be the end of scrolling through this seemingly endless array of
options. Instead, customers can ask for exactly what they want and AI will
answer, almost immediately.
these AI chatbots as an automated in-app concierge, available at all hours to
make personalized recommendations.
too, has its own chatbot powered by generative AI called Ask Instacart. The
grocery delivery company began rolling out the AI-driven search tool in May of
Instacart leverages the language understanding capabilities of OpenAI's ChatGPT
and our own AI models and unique catalog data that spans more than a billion
shoppable items across more than 80,000 retail partner locations," wrote JJ
Zhuang, Chief Architect at Instacart in a statement.
Uber Eats and DoorDash chatbots, Ask Instacart is less about deciding where to
shop and more about deciding what to shop for. The search tool is intended to
help discover new recipes and ingredients by fielding questions like, "What can
I use in a stir fry?'"
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Subway sold to private equity firm Roark
Capital for an undisclosed amount, but prior reports put the purchase price
well over $9 billion. Roark also controls Inspire Brands, which
owns restaurant chains Jimmy John's, Dunkin' Donuts, Arby's,
Baskin-Robbins, and Buffalo Wild Wings, reported Reuters (Sept.
6). Full Story
sandwich and coffee chain Pret a Manger will bring its monthly coffee
subscription service to the U.S. and France. The company plans to launch in the
U.S. in September, France in November, and all other markets in 2024, reported Reuters
(Aug. 24). Full Story
restaurants are expanding throughout the U.S. Fish and chips restaurants like The
Wee Chippy and seafood boil chains like SEA Crab House are
experiencing more growth than previously expected, reported Seafood Source
(Aug. 24). Full Story
Cava is betting big on its unique menu of
hard-to-create-at-home dishes to attract customers and build revenue after its
IPO launch earlier this summer. Cava's menu is full of items like spicy falafel
and harissa honey chicken, upscale dishes that hover around $11, reported The
Wall Street Journal (Aug. 24). Full Story
You can add
another casualty to the rash of restaurant closures of late: Fatz Café.
The chain of 18 Southern Food restaurants—which had endured negative sales in
recent years—has permanently closed all 18 of its remaining locations, reported
Restaurant Business (Aug. 24). Full Story
has added salami and
barbecue sauce to its menu to appeal to the non-salad crowd. The chain also
recently hired former Burger King Corp. and Chipotle Mexican Grill
Inc. executives to help dream up what's next for the menu, reported Bloomberg
(Sept. 5). Full Story
Corral has pulled
off a rather improbable comeback. After the Covid pandemic shut down the
system, the buffet giant bounced back with record sales, net store growth, and
a new fast-casual concept, reported FSR Magazine (Sept. 1). Full Story
Popeyes is overhauling its kitchens in an
effort to win the chicken sandwich wars. The kitchens had not changed in at
least a decade, largely because many at Popeyes were afraid of jeopardizing
food quality. But after the chicken-sandwich boom faded, it became clear a fix
was needed, reported Bloomberg (Sept. 11). Full Story
Meatheads Burgers is set to be absorbed by Epic Burger. The
acquisition will allow Epic Burger to more than double its location count and
bring drive-thru locations into the fold, reported Restaurant Business
(Sept. 7) Full Story
McDonald's will begin holding focus groups with
owners and operators as part of an ongoing civil rights audit. In 2022,
shareholders approved a proposal from SOC Investment Group to conduct
the audit in a close vote to determine whether the company's policies have an
adverse effect on American stakeholders, including franchisees, employees,
suppliers, and customers, reported CNBC (Sept. 11). Full Story
restaurant chain is attempting a renaissance by embracing nostalgia. The
chain aims to remind lapsed customers of what they once enjoyed and hopes
they'll bring younger members of their family back with them, reported
Restaurant Business (Sept. 8). Full Story
on the Move:
Former Starbucks CEO Howard Schultz is stepping down from its
board of directors and now holds the title of chairman emeritus. Former Alibaba
executive Wei Zhang will take his seat, reported CNBC. Full
Dog Haus has named Michael Montagano
CEO. The industry veteran will become the first CEO in the California-based
chain's history, reported fastcasual.com (Aug. 28). Full Story
Pokeworks, a 60-unit poke chain, has named Regina
Cheung as its CEO. The company said its next move will be to expand beyond
the U.S. for the first time, with multiple locations planned for the Toronto
area, reported Restaurant Business (Aug. 30). Full Story
SUPPLY CHAIN NEWS
Next in Precision Fermentation?
growing number of food tech companies are using precision fermentation to
create animal-free proteins in pursuit of a more sustainable future. Although
still in its infancy, the market shows strong potential for future growth
across multiple categories.
global precision fermentation market is predicted to grow at a compound annual
rate (CAGR) of 40.5% between 2022 – 2031, per Research Dive, with the
North American market predicted to be the most profitable by the close of the
dairy sub-segment is expected to be the most dominant, due to growing
utilization by the dairy sector for producing cheese products. The industry is
also making significant strides in animal-free egg substitutes — a noteworthy
trend at this year's IFT First expo — while increasing consumer preference for
plant-based meat is anticipated to fuel growth over the long-term.
August, precision fermentation company New Culture reached a
manufacturing milestone for its animal-free casein, enabling it to reach price
parity on factory-farmed cheese within three years, reported The Spoon.
research published in International Food and Agribusiness Management Review
Journal suggests that even with a 25% price premium, a sizable number of
consumers will adopt animal-free cheese, accounting for an initial 22% market
question of whether society will embrace the next generation of food has loomed
over the cell-ag space for quite some time," Associate Prof. Peter Slade
of the University of Saskatchewan told Green Queen. "As long as
precision-fermentation dairy can achieve competitive prices, it is poised to
Challenges to Price Parity
present, scale is the major limiting factor for precision fermentation.
to Jack Ellis, Senior Associate of Agriculture & Food at Cleantech
Group, many existing precision fermentation facilities have been designed
with pharmaceutical production as a template.
such facilities can work for early-stage exploratory work and pilot-scale food
production, they do not fit the cost structure for commercially manufacturing
food products at mass scale," Ellis told The Food Institute.
contract manufacturing facilities that are optimized for food production are
limited in number, "meaning that precision fermentation startups often have to
compete for limited capacity."
key barrier to entry from the food industry side is cost of goods sold, says Monica
Bhatia, a biochemistry PhD and co-CEO of food technology company EQUII.
fermentation-derived products would have a hard time creating ingredients at
less than $25/kg in the next several years, whereas traditional food is for the
most part using extremely cheap ingredients," Bhatia told The Food Institute.
scalability hurdles, Ellis notes that contract manufacturers have begun
tailoring offerings for the industry, and in some cases, building structures
into contracts to help startups with financing along the way.
industry efforts and government support initiatives are also helping to create
strategic partnerships and shore up funding. For instance, in February 2023,
nine precision fermentation leaders across the globe united to from the
Precision Fermentation Alliance, a trade organization created to serve as a
voice and global convener for the industry.
precision fermentation technologies ever become accessible enough to curb
escalating demand for animal-based protein across the globe?
believes that the precision fermentation-derived products will most likely
remain confined to highly niche or specialty ingredient categories due to
overall cost of goods. "For EQUII, we have reduced cost of our protein to
<10$/kg yet we face an enormous cost burden to navigate traditional retail."
reaching a level in which precision fermentation becomes more sustainable and
economically efficient depends upon multiple factors.
and modernization of manufacturing capacity is one part of this; feedstock
availability and sustainability is another," said Ellis. "If all of this comes
together then precision fermentation can certainly become a major part of the
future food system alongside plant proteins and cellular agriculture." Food Institute Focus
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Comparable Sales Up 2.8% in July
saw comparable sales increase 2.8% year-over-year in July despite a 2.6%
downturn in comparable traffic, according to guestXM by Black Box Intelligence.
Sales were up compared to April and May, and summer 2023 has proven to be
strong for restaurant activity despite inflationary pressures affecting
was the best performing region during the month as the Western region was the
worst; quick-service did well in July while fine dining had its issues. Italian
cuisine was tops for the month, as Asian concepts were among those struggling. Full Story
For regional chains looking to grow quickly and selectively across the US, DMA Offers the one national network that can be customized specifically to your needs to serve your long term expansion plans.