DMA Annual Meeting to be Held October 25-27 in Southern California
DMA will convene again in person for the first time since the fall of 2019 for this year’s Leadership Summit at the beautiful Renaissance Esmeralda in Indian Wells. This gathering celebrates the culmination of more than a year of virtual events and will deliver both exceptional content and connectivity. If you are interested in attending or sponsoring, please contact Charley Orwig as soon as possible. Opportunities are extremely limited as the organization eases back into in-person activities.
Rethinking Value Meals as Costs Rise Fast-food chains,
such as McDonald's and KFC, appear to be cutting discounts and
pushing more expensive meals post-pandemic.
cutting back on $5-and-under "value” menu items in favor of $10-$30 meal
combinations in order to lift sales and offset rising food costs, reported Reuters
(June 22). Full Story
are Fast-Food Prices Spiking?
for labor and ingredients are pushing menu prices higher at chains across the
country. Recently, Chipotle said it was boosting wages for its workers and
raising menu prices by nearly 4% to cover those raises.
Price Index gained 0.6% in May on a seasonally adjusted basis after rising 0.8%
in April, the U.S. Bureau of Labor Statistics reported last month. The
food away from home index rose 0.6%, following a 0.3% increase in April.
Meals Lift Sales
meals,” or those typically priced at $5 or less, have long been staples at
fast-food establishments which use them to drive traffic. However, these deals
have become less and less common in the last 18 months, according to Datassential.
KFC stopped marketing $5 Fill Ups and now promotes family meal deals
that cost as much as $30. At McDonald's, the "$1 $2 $3 Dollar” campaign
has been pared down to 8 items instead of the 12 it included when it launched
in 2018. Recently, the company has been heavily promoting its $10 "BTS Meal” as
part of its strategy to reach younger customers.
appear to be working so far, lifting comparable sales at limited-service
restaurants by 11.5% this May compared to the same month in 2019, according to
Black Box Intelligence. Profit margins are also up at several chains. Food Institute Focus
Heatwave in Pacific Northwest Causes Concern Over Crops You thought 2020 was
bad? This year has featured extreme drought conditions. Then, cicadas and
grasshoppers. Now, the Pacific Northwest is getting walloped by a nearly
Seattle, and swaths of western Canada crushed all-time heat records for the
second straight day on June 28, reported The Washington Post (June 28). Full Story
Seattle hit all-time highs of 116 and 108 degrees, while a town in Canada surged
to a national record of 118 degrees.
is Causing the Heatwave?
of the "heat dome,” or sprawling zone of high pressure centered near the
U.S.-Canada border, responsible for these temperatures is breaking records that
might be expected once every several thousand years on average.
change has, according to some reports, made events such as this more possible.
"The past is no longer a reliable guide for the future. These events are
becoming more frequent and intense, a trend projected to continue,” tweeted the
Oregon Climate Office.
worry the intensity and duration of this heat wave will lead to dramatic
increases in heat-related illness and fatalities in a region where many lack
on Agriculture and Foodservice
It's currently peak harvest season in the Pacific Northwest, but it's too
hot to be in the fields and groves, reported NPR (June 28). Full
million people were recently put under an excessive heat warning, covering
nearly all of Washington and Oregon, plus five other states. The recommendation
was to stay out of the sun, but that's hard for farmworkers.
The heat is
also negatively affecting crops. Across the region, wheat crops were already
suffering from drought prior to the heatwave, reported OPB (June 29). Full Story
Pacific Northwest cherry growers are concerned for their crop amid the
scorching hot weather during the harvest. Some growers are preparing for
predawn harvests while others start at sunrise, but the 100-plus degree
temperatures could damage crops despite these efforts, reported Fresh
Fruit Portal (June 28). Full Story
Oregon restaurants and food carts must choose to remain open amid the heat wave
or close. For a region that doesn't typically rely on air conditioning like the
rest of the U.S., carts and restaurants may simply have to close through the
heat wave, reported The Oregonian (June 25). Full Story
is stressed, it stops making grain, so the heat wave will most likely reduce
the number of kernels of wheat products and shrivel many of the wheat berries
making them lighter weight, according to USDA wheat expert Craig Morris.
three-quarters is probably pretty realistic from what I'm hearing,” Morris told
OPB. "But again, until the combines roll and the trucks get filled up
and go across the scales, and go to the elevator ... we aren't going to know for
certain.” Food Institute Focus
How Food Businesses are
Fighting Inflation The Federal Reserve
raised its median forecast for inflation this year, projecting consumer prices
will rise 3.4% in the fourth quarter compared to a year prior.
Since the pandemic
began, grocery bills have gone up 8%-9% and, relative to 2019, the average
consumer can expect to pay 10% or more for food this year. This could mean
paying an extra $6,000.
CFOs of food companies
are using various strategies to curb the impact of inflation on their
businesses, as noted by The Wall Street Journal (July 9). Full Story
Forecasting and Planning
Some companies are using an inflation
forecast to get a better understanding of how costs might develop in the months
ahead. This allows them to prepare and take actions if needed to offset
J.M. Smucker Co., for example, expects higher inflation
rates for this year and the beginning of next, according to finance chief
Tucker Marshall. The company is increasing consumer prices across the product
portfolio while also looking for productivity savings.
Other companies, such as General
Mills, have also announced price increases for some or all of their
products in recent months. However, executives must make sure the changes are
in line with what competitors are doing to avoid losing customers.
Additionally, companies must determine
whether the new price covers expected cost increases in the coming quarters.
CFOs are also making operations more
efficient by cutting or reallocating certain spending, often in combination
with other steps.
"The traditional way of combating
inflation is by controlling expenses,” said Hardik Sheth, a partner at Boston
Consulting Group and leader of the consulting firm's CFO excellence
Making a Sales Push
Food businesses are increasing efforts
to boost revenue to shield their bottom lines.
For example, restaurant chain Red
Robin Gourmet Burgers will likely consider new sales initiatives,
cost-cutting measures, and more price increases if inflation persists,
according to CFO Lynn Schweinfurth. Efforts would include loyalty programs and
expanding partnerships with other businesses.
Some companies are trying to limit their
inflation exposure by making strategic purchases of goods or raw materials when
the price is low.
McCormick is one example of a company that looks
to buy when the price is right. The strategy helps it secure supply and
moderate product cost cycles, according to CFO Mike Smith.
Dollar Tree's Strategies
Dollar Tree is still selling everything
for $1, despite lurking inflation. How? The majority of its products are store
brands, which gives it flexibility in an inflationary environment,
reported The Wall Street Journal (July 11).Full Story
Just 37% of products are from national
brands. When large consumer-goods companies raise prices, the chain can replace
those items with a new assortment, according to CEO Michael Witynski.
In 2020, the retailer also implemented
new cost-saving measures such as shipping $1 gift bags, a big seller, in boxes
of 72, up from 24, to save on shipping costs. Food Institute Focus
Chick-Fil-A Ranked Top Fast-Food Restaurant Again; Subway and
McDonald's Stumble Chick-fil-A
was rated America's top fast-food restaurant for a seventh straight year,
according to the latest American Customer Satisfaction Index (ACSI),
which provides customer satisfaction benchmarks for major companies in the
foodservice sector. At the same time, Subway had the biggest drop among
limited-service restaurants, and McDonald's ranked last.
Chick-fil-A and QSR segment performance
Chick-fil-A, ranked by Franchise Times Magazine as the ninth-largest
franchise company in the U.S., reported record free-standing franchised
restaurant sales last year as it added drive-thru lanes, dispatched outdoor
order-takers with tablets, and expanded both curbside pickup and third-party
delivery amid the pandemic. Sticking to its dedication to customer service and
specialized menu, revenue was $4.3 billion in 2020 compared to $3.8 billion in
2019, an increase of 13%. The Atlanta-based company reported comprehensive
earnings of $715.9 million in 2020 versus $647.2 million in 2019, an increase
of 10.6%, reported Restaurant Finance Monitor (April 11). Full Story
general, the quick service restaurant segment fared quite well during the
pandemic. For the 12 months ending in March, fast-food chains dominated the
restaurant market – taking in 70.2% of dollars spent eating out and 82.9% of
all restaurant traffic, according to data from The NPD Group.
new crispy chicken sandwiches and "family meal” deals helped draw customers
that other restaurants lost. During the year ending in March, Americans spent
nearly $281.6 billion on fast food – which gained the 7.1% of market share by
dollars that full-service restaurants shed, NPD data show, reported Reuters
(April 30). Full Story
as the ACSI suggests, not all QSRs are making it out of the pandemic with their
company has struggled to find its footing for years, even before founder Fred
DeLuca's death in 2015. The success of its $5 footlong deal during the 2008
financial crisis fueled massive expansion, helping the chain become the largest
in the U.S. by number of units. But rivals lured consumers away, while the
company's large footprint led to sales cannibalization among its remaining
customers. And as sales slid, ugly fights with franchisees played out in courts
and splashed across headlines, reported CNBC (July 6). Full Story
recently, the chain has been contending with claims that the tuna served at its
restaurants isn't actually tuna.
is now hoping that upgrading its ingredients and mobile app will help draw
customers back. Starting July 13, the company's U.S. restaurants will offer
nearly a dozen new or improved ingredients, as well as 10 revamped or original
is also facing reputational challenges.
fast-food chain has been under fire for allegations of sexual harassment of
workers in its restaurants, which have become a growing and more high-profile
issue as groups like the ACLU provide legal support to plaintiffs.
company is also facing a number of lawsuits from Black franchisees who have
accused the chain of racial discrimination. McDonald's has disputed the
allegations, calling the suits without merit, and has sought to have them
dismissed, reported Fortune (April 14). Full Story
recently, McDonald's had also been feuding with franchisees over certain
technology fees but cut a deal with operators reducing a one-time charge by
more than 60%, or about $42 million.
on the customer satisfaction front, McDonald's is looking to boost the customer
experience, launching its first-ever loyalty program nationwide this week. In
addition to several rewards options, workers will greet loyalty members by name
as they move through the drive-thru lane, and customers will also get a
personalized email after they pick up their orders that includes upcoming deals
tailored to them. Food Institute Focus
Gourmet Burgers and Brews plans to add Donatos pizza to approximately 120 additional
restaurants by the end of 2021, resulting in more than 200 locations. Full Story
Cafeteria will be
sold to entrepreneur Calvin Gin in a deal valued at $28.7 million, reported Restaurant
Business (June 21). Full Story
Salad chain Sweetgreen
made its plans to file an IPO official, submitting a draft registration
statement with federal regulators. It marks the third such filing for a
restaurant company in the last two months, following IPO announcements from
Krispy Kreme and Dutch Bros Coffee, reported Restaurant Business (June
21). Full Story
QDOBA is launching a new line of salsa
sauces, and toppings. Full Story
Mexican Grill is
tapping into TikTok. The company is among the first piloting TikTok's
new Resumes feature as the restaurant industry grapples with a major labor
shortage, reported Forbes (July 9). Full Story
Chipotle is introducing Rewards Exchange, the biggest update to the Chipotle Rewards
program since its debut in 2019. Members can now choose to exchange points for
more than 15 different options, including free guac, drinks, and Chipotle
introduced its first-ever loyalty program nationwide on July 8 as fast-food
chains look to rewards programs to maintain the digital customers they gained
during the pandemic. McDonald's also indicated it wants to use the loyalty
program to add a personal touch to the customer experience, reported CNBC
(June 22). Full Story
also attempting to attract workers with expanded benefits. Franchise
owners are adding benefits like emergency childcare and paid time off, and
McDonald's corporate parent says it is backing those efforts with a
multi-million-dollar investment, reported The Wall Street Journal (July
Barbecue Pit is
offering its seasonings and rubs at select Savemart stores. Full Story
is testing the Naked
Chalupa with crispy plant-based shell at a location in Irvine, California. Full Story
and Company is
testing three salads--the Asian apple citrus, Mexican street corn, and quinoa
chop--in Colorado, Maryland, Virginia, Florida, and California. Full Story
Caesars is launching
Planteroni Pizza, becoming the largest national chain to offer
plant-based peperoni in the U.S.Full Story
Ceasars is seeking franchisees amid plans to open 25 new locations in the
Charlotte, North Carolina, market by 2024. Full Story
Chicken agreed to
buy Lee's Famous Recipe Chicken from Famous Recipe Group. Lee's
has over 130 locations across the U.S. and Canada and LFR plans to grow the
brand's footprint. Full Story
Papa Murphy's is
remaking its image. The take-and-bake pizza chain introduced its first new
logo in more than a decade and its first store redesign since 2014 on the heels
of a 2020 run during which its U.S. system sales rose 6.5%, reported Restaurant
Business (June 23). Full Story
Dunkin' Donuts has pulled the Beyond Sausage breakfast sandwich off its U.S.
menu and no longer has it listed among the food items posted on the company's
website. Dunkin' says it will continue to work with Beyond Meat
to explore other plant-based options, reported Seeking Alpha (June
23). Full Story
acquiring Village Inn and Bakers Square from VIBSQ.
Village Inn is a 135-location family restaurant concept, and Bakers Square is a
pie and comfort food concept with 13 locations. Full Story
Starbucks may be allowing too many customers to place
orders via its mobile app, according to current and former staff who say the
system is bogging down stores, reported Insider (June 26). Full
FAT Brands has
reached an agreement to acquire Global Franchise Group for $442.5
million in cash and stock. Global Franchise Group franchises and operates a
portfolio of five quick-service restaurant concepts: Round Table Pizza, Great
American Cookies, Hot Dog on a Stick, Marble Slab Creamery and Pretzelmaker. Full Story
operator Ampex Brands acquired Au Bon Pain from Panera Bread. Ampex
said the acquisition will save the Au Bon Pain brand, which Panera was phasing
out through closures and conversions to its namesake brand, reported The
Wall Street Journal (June 30). Full
Papa John's will open 250
restaurants in the German market over the next seven years. Full Story
Papa John's loyalty program has accounted for half of the company's sales so
far in 2021. Full Story
Pizza will open 20
locations in the Denver market by the end of 2024. Full Story
Krystal unveiled a prototype
in Atlanta designed to cater to on-the-go customers. Full Story
Restaurant Group plans
to sell Taco Cabana to YTC Enterprises for $85 million, minus
certain costs. Full Story
Meat launched Beyond
Chicken tenders for foodservice. Full Story
stockpiling poultry as it prepares to launch a new nugget product at a time of
industrywide chicken shortages. The business, owned by Restaurant
Brands International, has been building its frozen-chicken inventory for
more than six months, Popeyes Americas President Sami Siddiqui said in an
interview. The company wants to be confident it has sufficient supplies when
the nuggets roll out nationwide July 27, reported Bloomberg (July 13). Full Story
Panda Express is adding Beyond Meat Orange Chicken to its
menu at select locations starting July 26, reported TechCrunch (July
on the Move:
Dunkin' appointed Rafael
Acevedo chief marketing officer. Full Story
George Evans COO and Kathy Buckley as CFO. Full Story
promoted Mark Graff to SVP of business development and financial planning. Full Story
hired Kathy Krenger as chief communications officer to replace the retiring
Michael Mullen. Full Story
Brendan Whitworth zone president of North America and CEO of Anheuser-Busch,
reported CSP (June 30). Full Story
Red Lobster has
appointed Kelli Valade as chief executive officer. Full
named John Tonnison EVP, chief information and digital officer. Full Story
Trojan will retire as CEO of the BJ's Restaurants casual-dining chain on
Sept. 1, with the title passing to current president and CFO, Greg Levin,
reported Restaurant Business (July 6). Full Story
Finazzo, president of Burger King Americas, has left the company after
nearly seven years. He'll be replaced on an interim basis by chief Marketing
Officer Ellie Dotyport, reported Restaurant Business (July 6). Full Story
promoted Jim Perkins to EVP of international sales and support. Full Story
Small Sliders has tapped Joe Lewis as
the brand's first chief executive officer.Full Story
SUPPLY CHAIN NEWS
Insider: Global Shipping Problems to Persist into 2022
the world looked to the second half of 2021 as the "Great Reopening,” it seems like
the "Great Backlog” is a more appropriate name for the current shipping
paradigm. From sweatpants to semiconductors, supply constraints are causing
shortages and adding inflationary pressures.
No Relief in Sight Until 2022
global shipping situation is likely to remain complicated into at least early
2022, according to Camerican International senior director of global supply
chain Michael Murphy, who was featured on a recent edition of The Food Institute
said it was clear that ships were full and likely would remain so through the
peak season near the winter holidays. However, the current situation has caused
the company to rethink every part of the supply chain to find ways to alleviate
recent report from The Institute of International Finance found much the same,
arguing that supply constraints pushing up the price of goods would likely
extend well into 2021.
is unique about this episode is the global spread of supply
disruptions...inflation has never had to contend with a similarly global scale to
disruptions,” the report said.
Impact on the Food Industry
president Josh Gellert, who also joined the aforementioned podcast, noted the
food industry is contending with higher-margin consumer products for share of imports.
As Americans were limited in what experiences they could pay for during the
pandemic, many decided to spend their money on goods, including expensive
electronics shipped from overseas.
us, a couple-thousand-dollar increase, or even more, in ocean freight is really
punitive on the food side, where someone with better margins in clothing,
electronics, things like that, they can manage those higher costs a little bit
better,” he said.
crop export shipments are being delayed due to backlogs at U.S. ports. Paramount
Export Co. said agricultural exporters are "living in a world of
uncertainty,” and fresh fruits and vegetables are at risk of decay if port
slowdowns don't improve, reported AgAlert (June 23). Full Story
looking for relief via airfreight will likely be disappointed, according to
Solange Colonna, director of operations and logistics for The Fresh
only so much we can ship by air,” she told AgAlert. "It's very expensive
and you don't get to ship much volume at a time.”
Contending with Clogged Ports, Restocking Supplies
said shipping issues are a global crisis, and that earlier backlogs at
California ports are spreading to the rest of the West Coast. East Coast ports are
also contending with a capacity crunch.
do you unload this product when a port is 100% full?” he asked.
said that most reserves had already been depleted due to the COVID-19 pandemic and
restocking them would be important for operations in the future. A Wall
Street Journal report indicated the same, citing Census
Bureau figures that showed retail inventories as a share of sales in
April hit the lowest level since record-keeping began in 1992. Food Institute Focus
restaurant industry posted its 16th consecutive week of positive sales in the
week ending July 4, according to Black Box Intelligence. Additionally,
same-store sales growth for each of the three weeks ahead of July 4 were higher
than any week during the eight-week period preceding them.
number of adults working or looking for work was flat in June, with
quick-service restaurant jobs down 20% compared to pre-pandemic norms and
sit-down restaurant jobs 41% lower. This was contrasted by growth in the
grocery sector (+82%) and the hospitality sector (+279%). Full Story
Meanwhile, U.S. restaurant industry recovery will
depend on the strength of key dayparts. Each daypart — morning meal, lunch,
dinner, and P.M. Snack — will recover differently depending on the new rhythms
of home, school, and work-life, according to NPD Group.
dayparts, the motivations for visiting restaurants are evolving, necessitating
a refocus on how restaurant operators target consumers,” says David Portalatin,
NPD food industry advisor and author of Eating Patterns in America.
"Quality, value, and innovation will always be relevant to the consumer, but we
also need to recognize that in many ways the world has fundamentally changed.” Full Story
Join Cleveland Research later this summer when we host our annual Foodservice Forum.
We’ve curated a virtual program that will bring foodservice focused insights for manufacturers, distributors, and operators. If you’re looking for actionable intelligence and fresh ideas to consider for your business, CRC’s interactive event will offer that and spotlight what you should hone in on to make better, smarter, and more profitable business decisions over the next 1-2 years.
Attendees can expect robust dialogue, high-level thought leadership, and ground-level action items to prepare foodservice professionals for the post-COVID world. Sessions will include: macroeconomic overview, restaurant industry, convenience store food & beverage, foodservice distribution, non-commercial foodservice, top consumer trends, and more.
unprecedented demand for hand sanitizer caused by COVID-19 has resulted in the
market being flooded with unsafe products. Recently the former CDC chief of
staff wrote an Opinion Editorial in the Atlantic
Journal Constitution about the importance of FDA guidance related to alcohol-based
hand sanitizers, stressing that "it is critical only FDA and CDC-approved hand
sanitizers are used as a matter of public health.” Make sure you are educated
about the risks posed by bulk hand sanitizers and the practice of refilling
dispensers or bottles.
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.