Lunchtime
Rush Coming Back for Restaurants
Online and
physical restaurant visits during lunch rose 4% in the year ending September
2021 compared to a year ago when visits were down 11%, based on The NPD
Group's U.S. foodservice industry tracking.
"Consumers
are on-the-go now, and the lunch rush is coming back," said NPD Group food and
beverage industry analyst Darren Seifer in a press release.
Though lunch
traffic hasn't fully recovered to pre-pandemic levels, down 8% from September
2019, the increase is a significant improvement over the double-digit declines
seen in 2020. Against this backdrop, restaurant lunch visits are now forecast
to grow by double-digits through 2024, according to NPD's Future of Lunch
study.
With
workplaces starting to reopen, consumers have also returned to convenient ways
to prepare or source lunch. Easily transported categories, like packaged lunch
and snack kits, are positioned to do well through 2024, while consumers will
also look to retail for ready-to-eat foods for convenient lunches.
QSR
Boost
Quick
service restaurants (QSR), which represented 79% of lunch restaurant orders in
the year ending September, are benefiting from the lunchtime rebound.
Lunch orders
increased 4% in the period compared to same period year ago when visits were
down 9%. However, QSR lunch visits haven't fully recovered to pre-pandemic
levels and in the year ending September 2021 are still down 12% from the same
period in 2019.
"In order to
attract during lunchtime with much of the population still working from home,
restaurants need to offer convenience to consumers, and at lunch, it's about
saving time," Kim McLynn, executive director, The NPD Group, told The Food
Institute. "The more a restaurant can offer convenience, speed, and quality
food during lunch, the more they will attract customers."
Breakfast
Rebound
Morning meal
is also recovering.
NPD found
that online and physical visits to restaurants during the breakfast and AM
snack period increased by 7% in the year ending September 2021 compared to a
year ago when visits declined by 13%, but the daypart is still 7% below the
pre-pandemic period of year ending September 2019. Food Institute Focus
Restaurant
Acquisitions Remain Red Hot
The sandwich
market's potential appears to be underscored by recent quick-service restaurant
acquisitions.
In the span
of two weeks, a pair of QSR parent companies expanded their culinary offerings
via acquisitions of established brands. Restaurant Brands International (RBI)
made headlines Nov. 15 after it said it would acquire Firehouse Subs for
$1 billion, which followed the Nov. 2 news that FAT Brands would acquire
Fazoli's for $130 million.
Consolidation
among QSR parent companies, a category that also includes Yum Brands and
Inspire Brands, is likely to continue as capital is easy to get right now and
these companies look to protect their share of franchisees, according to Dan
Rowe, the CEO of Fransmart.
Rowe told The
Food Institute these companies were "leveraging existing franchisees to
develop other in-house brands as non-competitive expansion vehicles, instead of
their franchisees expanding outside the network...It's both defense and offense
for these strategic buyers."
Targeting
Sandwich Shops
The sandwich
sector has a fair number of operators, ranging from QSRs like Subway to
fast-casual concepts like Panera Bread to delivery-driven operators like
Jimmy John's, which was acquired by Inspire Brands in 2019.
Rowe noted
Subway was by far the largest operator in the space, estimating its footprint
at about 40,000 locations. In comparison, he said Jimmy John's, Jersey
Mike's, and Firehouse Subs each had less than 10% of Subway's footprint,
but the ubiquitous demand for sandwiches and falling prospects for Subway
cleared a lane for the smaller operators to grow.
"All that
market share is still wide open," he said. "The good news for all the other
sandwich guys is that Subway is falling apart."
Potential
for Ghost Kitchens
A potential
reason for acquiring established brands in different cuisine categories could
be their use of ghost kitchen concepts, much like Inspire Brands deployed in
the Atlanta market, reported CNBC (Nov. 11). Full Story
Alliance
Kitchen, billed as
the first ghost kitchen launched, owned, and operated by a multi-brand
restaurant company, will offer products from its signature brands, which also
include Arby's, Buffalo Wild Wings, Rusty Taco, Dunkin',
and Sonic.
Under such a
model, RBI would be able to provide cuisine from four different brands, and FAT
Brands would be able to leverage 15 unique banners when offering products via a
ghost kitchen.
RBI,
FAT Brands Continue to Grow
RBI was
formed by the merger of Burger King and Tim Hortons in 2014, but
it did not take long for the company to expand from burgers and breakfast to a
different cuisine: It acquired Popeyes Louisiana Kitchen for $1.8
billion, giving it a competing banner for Yum Brands' KFC unit.
The
acquisition has largely been seen as a boon for the company, and its
performance during the chicken sandwich wars would back that up. However, it
also expanded the company's culinary footprint, adding a pure play into the
fried chicken arena.
The Fazoli's
acquisition by FAT Brands followed two other purchases it made in 2021. In
June, the company acquired Global Franchise Group from Serruya
Private Equity Inc. and Lion Capital LLP for $442.5 million.
The purchase
gave it access to a variety of restaurant concepts, including Round Table
Pizza, Great American Cookies, Hot Dog on a Stick, Marble
Slab Creamery and Pretzelmaker. Additionally, in September, the
company announced it would acquire the Twin Peaks sports lodge concept
from Garnett Stations Partners for $300 million. Food Institute Focus
Store
News:
- McDonald's
plans to offer $250
million in low-interest loans over the next five years to increase diversity
among franchisees. McDonald's said Hispanics, Asians, and Blacks made up 29.6%
of all U.S. franchisees at the end of 2020, while women made up 28.9% of domestic
owners, reported The Wall Street Journal (Dec. 8). Full Story
- Starbucks is opening a pick-up cafe in midtown
Manhattan with Amazon that uses the retail giant's cashierless
technology to attract busy consumers who want to buy coffee or snack quickly.
The partnership with Amazon is the latest step in Starbucks' plan to adapt its
locations to consumers' new habits, reported CNBC (Nov. 18). Full Story
- IHOP opened its first virtual location in
Toronto in partnership with Ghost Kitchens Brands. Full Story
- Jif, Goldfish, and Pizza Hut
have been named to TikTok's first-ever Culture Drivers list, which
highlights 14 brands doing the best, most engaging, and entertaining work on the
platform. Full Story
- Burger King will cut some of its menu items to
help workers process drive-thru orders more quickly, according to Restaurant
Brands International CEO Jose Cil. He also said new technology for
preparing sandwiches and digital menu boards are helping make drive-thrus more
efficient, reported USA Today (Dec. 1). Full Story
- Meanwhile, Burger
King has re-introduced the Italian Original Chicken sandwich for a
limited time. Full Story
- Jimmy
John's will waive
all or most initial franchise fees and discount royalty rates in an effort to
incentivize development starting in 2022 and beyond. Full Story
- FAT
Brands agreed to buy
Arizona-based Native Grill & Wings for $20 million. The purchase gives
FAT Brands three separate chicken wing concepts, reported Yahoo! (Nov. 22). Full Story
- MOD Pizza joined the growing parade of
restaurant companies to announce plans to go public. The Seattle-based chain
announced it has confidentially submitted a draft registration to the Securities
and Exchange Commission for a proposed initial public offering, reported
Nation's Restaurant News (Nov. 22). Full Story
- Logan's
Roadhouse launched
its first loyalty program and mobile app. Full Story
- Papa
John's International is
entering Sub-Saharan Africa with plans to open 60 locations in Kenya and
Uganda. Full Story
- MOOYAH
Burgers, Fries & Shakes is seeking to close out key markets in Texas by adding 54 new
locations across Austin, Waco, San Antonio, and Houston. Full Story
- Twin
Peaks will open 10
locations in Philadelphia. Full Story
Executives
on the Move:
- Cal-Maine
Foods named Matt
Glover VP of accounting, Jia Scott VP of treasury, and Rhonda Whiteman VP of
operational accounting. Full Story
- Krystal
Restaurants appointed
Dan James VP of real estate and construction. Full Story
- Hungry
Howie's Pizza named
Steve Clough director of franchise development. Full Story
- McLane
Company appointed
Chris Smith president of McLane Grocery. Full Story
- MOOYAH
Burgers, Fries & Shakes named Doug Willmarth president. Full Story
- Domino's
Pizza is promoting
Kate Trumbull, Christopher Thomas-Moore and Juan Joachin to senior vice
president roles. Full Story
