See You in May at the Restaurant Show!

We look forward to seeing so many of you Friday, May 19th at DMA's Party at the Post Office to kick off the 2023 Restaurant Show in Chicago! More than 500 people have RSVP'd for this outdoor event already and we'll likely hit capacity soon. You don't want to miss this...Chain Operators can still sign up today!

Thank you to our supplier Partners and event Sponsors for making this such a great experience as well! Your support not only enhances this event, but also makes the monthly newsletter more engaging. We are so grateful to collaborate with each of you! Explore product videos and promotions on DMA's website highlighting many of the items you'll see (and taste) at this year's event.

Be Ready for GA4

Google's Universal Analytics is sunsetting in less than two months and it's time to get movin' on implementing Google Analytics 4! If you can say "yes" to one of the three points below, you should probably be feeling a bit worried about Google's sunset of Universal Analytics:

1. You haven't migrated to GA4 yet.

2. You're considering letting Google migrate to GA4 for you.

3. You've been led to believe GA4 is anything but a necessary evolution in how to track your users' journey on today's modern web.

Regardless of where you're at with GA4, we're here to help with a live webinar hosted by BFO CEO & Co-Founder Steve Krull and our Associate Director of Analytics, Maggie Sauer. We can't wait to showcase this amazing tool for you! Register Today


The State of the Restaurant Industry

On March 29, The Food Institute hosted a webinar with some of the most dynamic operators in the QSR space today. Hosted by Lazard's managing director John Goldasich, the panel included Kim Malek, founder and CEO of Salt & Straw; Aaron Noveshen, founder and CEO of The Culinary Edge and Starbird Chicken; and Riley Lagesen, chair of Greenberg Traurig's Global Restaurant Industry Group.

They covered many topics with prime examples of what works in the industry today and what doesn't, including (but not limited to) labor and supply chain challenges, finding good real estate, an update on the California FAST Act and Prop 22, as well as the modern consumer and what makes their businesses and employees happy and successful.

"The national landscape is as diverse as ever and continues to evolve," Goldasich noted.

"The pandemic turned the industry on its head. When would you see so many employees not return to work? The pandemic changed the way restaurants engaged the workforce, incentivizing them to stick around. Also, how do operators money against COVID and a political and regulatory landscape? Coupled with rising wages, interest rates, and benefits coupled with inflation and layoffs, many restaurants are still doing well all over the country. There's a healthy amount of development and cautious optimism despite pressure and challenges."

From there, the panelists dove into several topics; select excerpts are summarized below.


Goldasich noted that 75% of operators see labor costs increasing in 2023 amid the ongoing foodservice worker shortage, the changing workscape of recruitment and retention, and perpetual cost increases from a world teetering on recession. How have the guests responded?

Kim Malek – To say it's been fascinating on this front is putting it lightly. [Salt & Straw] has been fortunate to be fully staffed. From a culture perspective, we're cashing in our chips. It's a fun job in a good environment and people like that. There's lots of open communication – I'm missing our monthly company-wide town hall as we speak.

We're doubling down and investing in online training systems that people can do on their phones, TikTok-style. We're trying to stay competitive from a pay perspective. We manufacture our own ice cream and that's been harder on the manufacturing side and the competition is unbelievable. We've had to get creative with scheduling, flexibility, and training a culture that people don't see in other places. We've added additional languages to training programs and focused on folks in non-seeing/non-hearing environments, and we're looking for folks for first-time employment or who are re-entering the workforce. We need a work environment that supports people; I'm excited to do that.

Aaron Noveshen – Starbird has a similar philosophy. How do you be an employer of choice? It's a conscious effort – it's not "if you build it, they will come." We have to pay our managers well in the San Francisco Bay area.

We feature a bonus structure with no limited upside that we call superbonuses. If people achieve and exceed their budget, they take a share of every extra dollar they make. There's an entrepreneurial spirit and everyone receives tips no matter their role. Sales cures all ills!

Starbird was also voted one of the best places to work in America. We always battle food costs; we rarely battle labor costs.

We also offer $5,000 per year for employees for education benefits. Not everyone will work here and we want to make an investment in their futures, not just our own bottom lines. We have great educational training and many ESL folks. We invest in language training through mobile technology.

The FAST Act

Riley Lagesen – The Fast Act was passed in September ‘22 to potentially increase the California state minimum wage to $22/hr. It's characterized as a fast-food restaurant proposition, but if wages are raised in one segment it will move into all other segments. These are significant problems and issues for operators and employees alike; there was a motion to impose joint employer liability between franchisor and franchisees, but that was ultimately removed.

Expect to see similar legislation in other states despite Virginia striking it down. Unionizing a restaurant has to be on a location-by-location basis; it usually occurs in businesses where people want to stay and want to work long-term.

Supply Chain

Same store sales are up yet margins are down for many operators. How can operators mitigate supply chain challenges?

Malek – Dairy was up 40% this past year; it's about halfway back and we hope to see it move to a more reasonable place. To get ahead of that, we adjusted pricing and are investing in efficiencies. We invested in our kitchen and automation to increase output. We saw margins increase, which we were really fighting for. Yes, sales kills all ills and we were living in a pretty envious position before the pandemic without minding our Ps and Qs; today, we're managing every line item within our stores and kitchens to make sure every decision is approved and we try to find savings and efficiencies at every turn. We switched suppliers, doubled down on services, and it's really paying off. We'll be stronger operators. Sales are rebounding and prices are coming down.

I'm grateful for the diligence we've been through. On the other side, the buildout prices of our supply chain were skyrocketing and it was terrifying; we couldn't have opened seven new stores by June at that rate. We really fought for every dollar to get out ahead. Interestingly, we got through it all and we're standing and ready to go.

Noveshen – We increased some pricing but didn't want to overdo it; we don't want to lose guests. We made up a 20% increase in food costs for sales through everything else. We haven't lowered prices; we're promoting more tactically but we're seeing incredible flow-through.

A new processing partner helped with growth; packaging came down in 2022, and we re-negotiated packaging contracts and got some wins there. We shifted to wings quickly – one of the first items to drop in price during football season – and we're also known for salads, so we were able to promote items like salads with less of the more promotional items and sold them anyway.

We did a promotion on truffle sandwiches and fries, charged an extra dollar, and brought more margin dollars in that way. This buildout cost has been more problematic than food costs. I have not seen one inch of movement in the cost of construction coming down. We're paying 50% more for a fryer than we did two, three years ago – there's no refuge in sight on that end. We're going line item by line item – do we need this? Do we need custom tile in the bathroom for a business that does 80% of business off-premise?

Real Estate

Noveshen – Real estate is not going down. Real estate is tough; when you're a brand looking for quality real estate you have to hyper selective – we use analytics and try to understand our consumers. Competition drives up price so we don't just leap at every site we like.

Malek – We've had a similar experience. Deals aren't less expensive but there are more available. We have to be ready to move quickly. We look at sites and neighborhoods two and three years in advance – which block? Which side of the street? We develop relationships with landlords so we can move with them when we grow. It's mind-boggling how long it takes to get municipality permits when we're ready to go. It's something important to figure out.


The restaurant business has never been easy, never for the meek or timid. Similar to what we saw coming out of the great recession, there's a tremendous amount of innovation and development in the restaurant space. Strongly influenced by COVID, restaurants moved to different development options (virtual/ghost, delivery-centric), but now the pendulum is swinging back to what's always worked – company-owned, high-quality brick and mortar. We're seeing gravitation back to some level of normal, but in a very different atmosphere. Everyone has changed a little in how they view the foodservice experiment, when and where they want to eat, and how much they'll pay for it.

In dealing with real estate, as Kim and Aaron said, it is competitive. Good real estate always is. It's more expensive than anyone wants to pay and you hope the results justify it. As a lawyer, you want exit provisions in your leases!

Patience in real estate is so important in site selection. Make sound real estate decisions; it's critical to your mental health, well-being, and happiness. People who pick poor sites deal with it for years. It takes so much time and resources. Making good decisions and building a good team has always worked. You have to stay ahead of the game; you have to pay attention.

Per, sales and traffic growth is plummeting after a brief bump in January. Average guest checks are down as commodity and labor costs are beginning to ease. The average check grew by only 6.5% year-over-year in February – the lowest since 2021.

Checks are down as commodity and labor costs are beginning to ease. The average check grew by only 6.5% year-over-year in February – the lowest since 2021.


Malek – The whole country is challenged with labor and staffing. Let's make sure we're staffed. What are the team satisfaction scores? What are the customer satisfaction stores? Not only did we hit our sales target, but what could drive that? If there's a jump in turnover, you'll see a negative sales impact in a month. We reformatted our bonus program and focused on the work people are doing that we can control. The positive outcomes will follow.

Noveshen – We look at a lot of data. As long as it's accurate, it'll fly. We look at sales every day, but we look at guest counts versus average checks; where are sales coming from? What channels? Virtual brands/web apps/walk-in/kiosk? We have so many different ways to order at Starbird. We look at speed-of-service, even on an hourly basis. If something goes over 10 minutes we can identify what went wrong.

Stability among general managers is key and critical; not every GM is going to have a regional or district manager opportunity. We survey them on a quarterly basis. We look at menu mix, social scores, internal monitoring scores, chicken markets and the forecast of chicken. LTO and promotional scores we look at daily. Catering trends, loyalty trends, and controls; we look at comps and assess where our controls are going. We do 2% of transactions in cash; it's required by law.


Malek – Automated inventory has saved hours per week. We're working on other innovations in this space when it comes to product; the ice cream industry is famous for not having any innovation on a scoop-shop level.

Noveshen – Regarding higher food costs and unprecedented rainfall and flooding out west, it's still TBD on many of the California crops. We promote heavily in the summertime around salads. This year we're doing a big switch and re-launching the sandwich category; it's the most competitive part of the chicken business.

 We're trying to win the sandwich category, too; when competing against the $5 or $6 sandwich, there's no salad that cheap. We've spent the last 6 months with new breads, new chicken, new saucing techniques, new packaging. We'll launch new sandwiches – a little less produce-dependent – and the timing should be good this year with the produce market. Food Institute Focus

The Teens Have Spoken: Chick-fil-A Remains Favorite Restaurant

Three things remain constant in life: death, taxes, and Chick-fil-A.

In Piper-Sandler's recent survey of teen spending in the U.S., the Georgia-based restaurant chain still struts its stuff above Starbucks and Chipotle and accounts for 13% of teens' pocket cash, according to the report. Starbucks came close with 12% and Chipotle was a distant third at 7%. Piper Sandler is an investment bank which conducts the semi-annual poll of more than 5,000 American teens in 47 states.

Since the pandemic, Chick-fil-A has enjoyed quite the sales boon. The chicken sandwich specialist enjoys almost twice as many cars in drive-thru lines than its competitors according to QSR (5.45), followed by McDonald's (3.13) and Wendy's (2.67). The motor queue also moves faster than its competitors, slinging chicken at a clip of 107 seconds per vehicle, followed by McDonald's at 118 seconds and Taco Bell at 127 seconds.

And, last week, Chick-fil-A released some truly staggering numbers, approaching almost twice the sales revenue since before the pandemic. It generated $18.814 billion in sales in 2022. Its last four years look like this:

Chick-fil-A Sales Revenue (billions)

  • 2022: $18.814
  • 2021: $16.674
  • 2020: $13.7
  • 2019: $12.2

Where Do Teens Shop? On Their Phones

Other key takeaways from the Piper Sandler report: food was the No. 1 spend for men (24% of their wallet). Specific to food and beverage, SQ's Cash App was the most popular peer-to-peer money transfer app with 41%, coming in just above Venmo at 39%. Apple Pay ranked No. 1 for payment apps within the past month (39%) followed by Cash App (25%).

More than half of American teenagers cite Amazon as their favorite e-commerce site (57%). Forty percent of teens are at least part-time employed.

Following nationwide trends regarding plant-based food, less than half of teens are willing to try plant-based meat (42%). During spring 2021, that number was 49%. Plant-based dairy didn't fare much better; just 40% answered they consume it or are willing to try it. Goldfish remains the most popular snack brand (12%), followed by Cheez-It and Lay's (10% each), and Doritos (6%).

Perhaps most telling about this year's survey is how teens are consuming media (and the influencers and brands upon them). In the year of TikTok everything, TikTok usership actually declined as the favorite social media platform (37%), followed by SNAP (27%) and Instagram (23%).

For customer service interaction, the mobile phone is the preferred method with multi-year gains via texting and SMS messaging. Top social causes are the environment (19%), followed by racial equity (9%). Inflation was the top concern for just 4% of survey respondents.

The top influencers were Alix Earle, Andrew Tate, and Selena Gomez. YouTube streamer and food/bev influencer Mr. Beast ranked No. 5. Food Institute Focus

Restaurants Struggling to Secure Chicken Sandwich Supplies

The growing popularity of chicken sandwiches has pitted chicken producers against restaurant chains as the latter increasingly seeks birds in the 4-pound range, The Wall Street Journal reported.

Restaurants are finding it tougher and more expensive to secure supplies of smaller birds, especially in the wake of the pandemic, which saw the slaughter of small birds halved between 2005 and today, the Journal reported.

Chicken producers say it's more expensive to grow smaller birds and years ago switched to developing 8-pound, big breasted varieties. Dan Shapiro, chief executive of Krispy Krunchy Foods, which supplies C-stores and stadium concession stands with chicken products, told the Journal smaller birds are needed to satisfy consumer demand for chicken sandwiches.

The Journal reported KFC and Chick-fil-A, the two biggest chicken chains, also prefer the smaller birds. KFC has warned franchisees about supply pressures. The two biggest suppliers, Tyson Foods and Pilgrim's Pride, say they're reluctant to switch facilities to small bird production despite the demand. Food Institute Focus

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Store News:

  • Burger King is making good on its greenhouse gas reduction commitment and electric fleet. The fast-food chain wants to transition 100% of its field team fleet to EVs by 2030, and it has already replaced 1/3 of its North American fleet thus far. Burger King joins a slew of other QSRs in the segment, reported Restaurant Business Online (March 23). Full Story
  • Fogo de Chao is dropping "Steakhouse" from its name, which is fine – it doesn't function like one anyway. Known for meat, Fogo features a broad menu for its 87% millennial customer base. Fogo de Chao focuses on experience and logged nine straight years of traffic growth and average unit volumes, reported Restaurant Business Online (March 28). Full Story
  • IHOP has overhauled its menu. It cut its old menu by one third during the pandemic and has now brought back Cinn-A-Stack pancakes due to popular demand, reported CNBC (March 29). Full Story
  • Arby's has launched a new King's Hawaiian Sweet Heat Sandwich. The product comes in two flavors – chicken and beef ‘n' brisket. Full Story
  • Yum Brands has a $50 million investment fund for underrepresented franchisees of its brands. The program, Franchise Fast Start, is designed to help qualified franchisees to become multi-unit operators and "help level the playing field," reported Restaurant Business Online (March 30). Full Story
  • Duck Donuts debuted a new small-format layout built for scale, speed, and convenience. The Pennsylvania-based made-to-order donut chain is focusing on mobile pickup and self-order kiosks to entice customers and lower franchise fees for operators, reported Restaurant Business Online (April 5). Full Story
  • As Chipotle Mexican Grill is poised to almost double in size, its new responsible restaurant format will debut an all-electric design to get away from gas, cut emissions, and operate more efficiently. The format will debut this summer in Virginia, Florida, and Colorado, reported Restaurant Business Online (April 11). Full Story
  • Subway announced agreements with five new multi-unit restaurant franchisees. The five groups comprise more than 230 restaurants and are located in Texas, Florida, Arizona, and the mid-Atlantic region, reported Restaurant Business Online (April 17). Full Story
  • McDonald's is improving its Big Macs and classic Cheeseburgers and the Hamburglar is returning. The chain believes a hotter sear, melted cheese, softer buns, more sauce, and caramelized onions will drastically improve burger quality (and sales). The Hamburglar is returning for the launch, reported Restaurant Business Online (April 17). Full Story
  • Meanwhile, the Battle for the Arches escalates once more – McDonald's franchisees are backing bills in legislation that would give them more control over how they run their businesses and how they sell them after recent moves by McDonald's to limit their operations, reported The Wall Street Journal (April 20). Full Story


Executives on the Move:

  • Church's Texas Chicken has named Roland Gonzalez its U.S. COO. Full Story
  • Blaze Pizza has ousted its culinary chef and co-founder Brad Kent after 12 years, reported Restaurant Business Online (March 22). Full Story
  • US Foods Holding Corp. named Andrew Iacobucci as SVP, field operations and chief commercial officer, reported The Produce News (March 30). Full Story
  • Don Fox, longtime CEO of Firehouse Subs, is stepping down and COO Mike Hancock is taking over day-to-day operations, reported Restaurant Business (March 31). Full Story
  • Dine Brands hired Susan Cannon-Foster as chief people officer, reported Restaurant Business Online (April 3). Full Story


Analysts: Global Rice Shortage Likely to Last for Months

The ramifications of weather and war have resulted in a global rice shortage, which could be among the worst in nearly a quarter century. Rice production for 2023 appears destined for a severe shortfall.

"The world rice supply will not be completely corrected in one growing season. It will carry over into 2024, even if the world has average rice production this year," Tim Luginsland – Wells Fargo's Agri-Food Institute sector manager – told The Food Institute.

The strained supply of rice is a result of the war in Ukraine as well as weather issues in economies like China. Globally, rice production is falling and driving up prices. CNBC reported the price of rice averaged $17.30 per cwt year-to-date and appears likely to ease to $14.50 per cwt next year. Fitch Solutions' commodities analyst Charles Hart told CNBC the following:

"Given that rice is the staple food commodity across multiple markets in Asia, prices are a major determinant of food price inflation and food security, particularly for the poorest households."

Fitch Solutions predicts the global shortfall of rice for 2022-23 is 8.7 million tonnes.

Weather & Russia Weak Havoc

Last year, farmland in large portions of China was hit by heavy rains and, eventually, flooding. USDA also noted that Pakistan saw annual rice production drop 31% year over year due to severe flooding. In 2023, China – the largest rice producer in the world – is experiencing its worst drought in roughly two decades. Drought has also hit rice-growing countries in the U.K., France, and Germany.

Rice tends to be a vulnerable crop. In addition to tighter supply challenges, rice became an increasingly attractive alternative following the spike in price of other grains amid Russia's conflict with Ukraine in early 2022.

The subsequent rice substitution has driven up demand. India also banned exports of broken rice in September, which Hart claims has been a key driver of prices.

"The Russian/Ukraine conflict continues to shift world food demand away from wheat and corn and toward rice," Luginsland said. "The shortage is severe and will likely last until 2024-25, when higher prices drive supply and demand back into balance.”

Hope on the Horizon?

Fitch Solutions, meanwhile, estimates that the global rice market should return near normal in 2023-24. That could lead to rice futures falling in year-on-year terms to below their 2022 level but remain elevated at more than one-third above their pre-pandemic mean value, in part as inventories are replenished after a period of extensive drawdown, CNBC reported.

Fitch Solutions projects that the prices of rice could drop almost 10% to $15.50 per hundredweight, in 2024.

Wells Fargo and its team of national industry advisors in its Agri-Food Institute say the impact of the global rice shortage won't be as severe in the U.S. as overseas. Coincidentally, recent heavy snow and rain in California should be a boon for rice production – and acreage will surge higher this year as a result.

"So, the U.S. food industry may see slightly elevated prices for rice, but it will certainly be available," Luginsland said. "Domestically, we will likely see prices decrease from these high levels [in] late 2023 in the U.S., if we have a normal growing season this summer." Food Institute Focus


Is Foodservice Headed for a $1 Trillion Milestone?

The foodservice industry is expected to top the $1 trillion milestone in 2023 for the first time ever. That was one of the key topics addressed at the recent Restaurant Leadership Conference in Phoenix, reported Restaurant Business (April 20). Full Story

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