Goodbye (and Goodnight) from the 2023 Restaurant Show
Thank you to everyone who attended DMA’s 2nd Annual Party at the Post Office!
What a great way to kick off this year’s National Restaurant Show week! Thanks to the nearly 70 operator brands represented at the event…and, of course, DMA’s Member distributors who support those Superior Operator Partners every day.
If you’d like to see the photo gallery from the party, please follow DMA on LinkedIn for more details. We hope to see you on the rooftop next year!
Gen Z Embracing Restaurants' New Tech, Experiential Offerings
are picking up the pace regarding innovation for their offerings.
After an era
of low-contact transactions due to coronavirus fears, an increasing number of
consumers prefer the tech-based service restaurants are now offering. The
National Restaurant Association's latest state of the industry report found
that many restaurant owners are embracing changes to their services to
incorporate more digital interactions.
consumers clearly embrace such innovation.
Of Gen Z and
Millennials, approximately 70% say they prefer today's mobile pick-up orders
and food deliveries. Meanwhile, only 44% of Baby Boomers say they're more
likely to order delivery from a restaurant today than they were prior to 2020,
according to the National Restaurant Association.
Demos Welcome Array of Restaurant Offerings
just new technology young consumers are more open-minded about, results showed
that they're also more interested in purchasing things like chef's
table-experiences, restaurant meal-kits and retail products, and restaurant
kinds of changes are here to stay with more restaurants embracing digital
systems for taking orders and handling transactions. While companies invest in
these newer systems, it's important to ensure the transition process happens
smoothly for the sake of the employees and the customers.
systems may require ‘training' of consumers, needing signage or perhaps an
employee to explain how these systems work, but ultimately, the experience will
remain largely the same," Maria Hossain, employment lawyer and
restaurant industry expert, told The Food Institute.
franchise Ynot Italian Restaurants has
introduced a digital ordering system with iPads placed at every table. Founder
and president Tony DiSilvestro says that the iPads
not only allow for real-time pricing adjustments to help with operational
costs, but also for flexible font sizes on the menu which can be helpful to
The Ynot chain has also seen success adopting Apple Pay as an
technology has allowed us to market our brand and products in unique ways, such
as showcasing videos of our suppliers and the production process of our food
and wine," DiSilvestro said. Food
Can Cope with Post-Pandemic Pressures
owners are scrambling to improve their bottom lines amid pandemic hangover,
inflation, and labor challenges, with half predicting 2023 will be less
profitable than prior years. This is especially true of the quick service
Restaurant Association calculated in August restaurants were operating on a
roughly pre-tax profit margin of 5%, with food and labor costs accounting for a
third of expenses; utilities, maintenance, and other costs ate up 29% more.
Eighty-five percent of restaurant operators said their eaters were less
profitable than in 2019.
numbers are likely to change significantly this year as inflation hammers
ingredient and utility prices, people look for more lucrative employment, and
consumers find they have fewer discretionary dollars to spend on restaurant
secret that the pandemic forced consumers to rethink how and when they ate out
at a quick-service restaurant," Michael Jaszczyk,
CEO of GK Americas, told The Food Institute. "[A] recent survey
from the National Restaurant Association [indicated] 50% of restaurant
operators believe their business will be less profitable in 2023 than in years
prior. This statistic is alarming, and it emphasizes the importance of
innovation within QSRs to bolster steady relationships with consumers."
survey found 93% of QSR operations called food costs a significant challenge.
Almost 90% said they already have increased menu prices and 59% said they had
changed their offerings. When it comes to labor costs, 87% said it's a problem,
and 48% noted it had forced them to reduce their hours of operation. Almost 40%
said they had shelved expansion plans.
of both full-service operators (63%) and limited-service operators (61%) say
their restaurant does not have enough employees to meet customer demand," NRA
increasingly turning to innovations like dynamic pricing and greater use of
rely on customer data to determine pain points in the customer experience and
find new ways to improve ordering, fulfillment and checkout," Jaszczyk said. "This can enhance the value the consumer
sees in visiting the restaurant, which can improve long-term relationships,
regardless of economic conditions."
dynamic pricing can be used in restaurants in the same way it is used in
[artificial intelligence]-based strategy can be used to offset inflation and
rising costs of key ingredients like eggs, which are now 70% more expensive
than this time last year. With dynamic pricing, foods with shorter shelf lives
nearing their expiry date can automatically become cheaper, strengthening
profits, and helping consumers get more for their money," he said. Food
lingering like an in-law overstaying their welcome. As a result, consumers are
demanding deals as they make vacation plans for summer 2023.
recent research, consumers plan to hit the road in droves this summer and
cookouts could be less frequent and elaborate as in the past. Consider the
following recent findings:
survey revealed that, among the 37% of American adults unlikely to take a
vacation this year, most of that group – 58% — indicated they simply can't
afford to. That's 10 percentage points more than in 2022 (Gen Xers were the
most likely demographic to say they couldn't afford a summer vacation this
year, at 69%).
survey showed that 26% of respondents who are taking at least one vacation this
year are planning to drive rather than fly to cut costs.
cumulative toll to both inflation and the higher interest rates that are meant
to combat it," Bankrate analyst Ted Rossman said in a statement, adding:
rising much faster last year at this time, but fewer travelers were adjusting their
gauged sentiment among more than 1,000 shoppers as Memorial Day – the
unofficial start to summer – nears. The findings revealed 74% of shoppers plan
to search for sales in the days ahead.
persists this summer, businesses can nevertheless win customers by taking a few
advisory council said a few rather simple measures can help businesses like
restaurants capitalize on summer crowds. Their tips are applicable to various
industry segments, too.
reminded business operators to appeal to day-time crowds with seasonal and
social media friendly offerings (like colorful menu items, for example). The
experienced business leaders also noted that it's imperative to add new
offerings with the changing season, such as the latest in healthier-for-you
JB Balingit, owner of The Hideout Kitchen, said businesses must
carefully consider their pricing strategy in the current climate.
too greedy with your pricing strategy – we can't price ourselves out of repeat
business," Balingit warned.
Trips on the Rise
uptick in road trips on the horizon this summer – as indicated by Bankrate –
businesses like convenience stores must take a few specific measures to meet
Michael Jaszczyk, CEO of GK Americas, said C-stores can improve the
customer experience through innovative technologies by enabling mobile
payments, investing in loyalty programs, and combining fuel and in-store
making a pit stop for fuel will also be looking for refreshments and foods that
don't require any extra preparation," Jaszczyk noted.
"Retailers must have a unified POS." Food
Coffee is adding 300
locations. Part of Panera Breads' wider portfolio, the Minnesota-based
coffee chain has over 700 locations worldwide. Full
The Wendy's Co. is automating its drive-through service with an AI-powered chatbot. The
chatbot, powered by natural-language software powered by Google, will be rolled
out in June at a company-owned restaurant in Columbus, Ohio, reported The
Wall Street Journal (May 9). Full
announced a partnership with Conagra Brands to bring its beloved chili
into kitchens across the country. Starting this summer, local retailers,
grocers, and select online retailers will roll out cans of Wendy's Chili with
Beans for $4.99, reported Good Morning America (April 27). Full
Pizza Hut is adding sirloin Cheesesteak as a
menu option for its pizza and handheld Melts for a limited time. Full
Taco Bell wants more sustainable beef. The
taco chain is partnering with the National Fish and Wildlife Foundation
and Cargill to support ranchers' regenerative farming initiatives,
reported Restaurant Business (May 2). Full
Shack's new Veggie
Shack burger uses mushrooms, sweet potato, carrots, and grains. It's not 100%
vegan but it does appeal to consumers who desire less-processed meat
The owner of
Olive Garden, Darden Restaurants, will buy Ruth's Chris Steak
House for over $700 million. The all-cash transaction represents a 34%
premium and should be completed in June, reported The Wall Street Journal (May
Chipotle CEO Brian Niccol said California's
business environment is slowing the company's ambitions for growth in the
state. While California is a hub for technology innovation and industry, some
business leaders have expressed frustration with its regulatory burdens and
high taxes, reported Bloomberg (May 4). Full
Papa Johns wants to help its franchisees open more locations with construction
services as its unit economics warrants faster development. The company has
increased its average unit volumes by a third to nearly $1.2 million and added
40 restaurants in the past three years (May 4), reported Restaurant Business.
Popeyes hopes to improve its operations by
renovating its kitchens. The chicken chain is looking to international
operators for inspiration after its chicken sandwich sales spurred the
strongest quarter for any publicly traded restaurant chain in history in 2019,
with 38% same-store growth, reported Restaurant Business (May 4). Full
Sweetgreen's robotic Infinite Kitchen is open.
The fully automated makeline is faster, more accurate, and could cut labor
costs in half. Restaurant Business reported the
Kitchen debuted on Wednesday in Illinois and is an adaptation of the Spyce technology the company acquired in 2021 to design a
"frictionless experience" for more exact portions, reported Restaurant
Business (May 10). Full
SUPPLY CHAIN NEWS
Waste: Investment in Upcycled Food Gaining Steam
of upcycling food – finding new, higher-value uses for items that would
otherwise go to waste – appears to boast untapped potential for businesses
a huge growth in consumer awareness [of upcycling] and we're seeing a lot of
traction in the natural grocery channel in particular," said Angie Crone,
CEO of the Upcycled Food Association (UFA). "We're seeing 21%
year-over-year growth for products with the upcycled certification – I think
we'll continue to see the retailer adoption really drive and create more
markets for this."
That was a
common sentiment during an April 27 upcycling-related webinar hosted by The
Food Institute. The event's panel – which included investment experts Paul
Mariani and Eric Markin of Mesirow
Investment Banking, in addition to Crone – noted that the upcycled food
industry is projected to surpass $80 billion within a decade. In addition to
helping address the world's sizable food waste issue, UFA sees ample
opportunity for the trend to create economic value for companies.
the UFA, which offers third-party certification for upcycled foods, has
observed a significant increase in private investment in the upcycled category
in recent years, with much of that investment going into early-stage companies,
mostly CPG brands, and ingredient producers.
Mesirow Investment Banking managing director, said he's "very bullish" on the
upcycled food sector. "What excites us most about upcycling, frankly, is how it
transcends the entire value chain," he said. It's "a high-growth trend that has
gained tons of momentum."
are increasingly producing upcycled products from cocoa (70% of a cocoa pod typically goes to waste), bananas, brewers' spent grain,
and nutrient-packed avocado seeds. Additionally, shelf-stable jams and jellies
are two historically popular upcycled product categories.
Brands like Misfits
Market and Imperfect Foods that offer upcycled items appeal to
today's often environmentally conscious consumer. According to a 2021 Hartman
Group study, 70% of consumers are more likely to buy products once they're
aware that the items are upcycle certified.
Mariani noted, selling upcycled food offers an
economically viable way for companies to "rather neatly" achieve their ESG initiatives.
"I think the
reality is corporate ESG initiatives will continue to gain prominence ... which,
in our view, extends the runway for recycling," said Mariani.
In America –
where roughly 10% of the population is food insecure – roughly $150 billion
worth of meals is wasted annually. Staggering statistics like that have helped
the upcycling movement gain both support and momentum.
It can be a
home run investment for food companies, even though, as Markin
noted, "we're still in the early innings of upcycling in a formal sense."
"Upcycling, it resembles what we saw a decade ago with the
natural organic and clean-label products (which) eventually became huge
mainstream markets," said Markin, Mesirow Investment
Banking director. "When we look at upcycling we think
it could evolve similarly." Food
Sales Weakest in March Since Last Summer
3.2% lift in same-store sales, restaurants experienced their weakest month of
growth in March since last summer, according to GuestFM
by Black Box Intelligence. Comparable traffic was down 2.6% during the
noted the best performing region was the Mid-Atlantic while Texas took a hit as
the worst performing. Italian cuisine was seen as a highlight as bar &
grill concepts struggled. Family dining had a strong month while fine dining
took a backseat. Full
Pizza Inc. warned of
a slowdown in its delivery business as consumers opt to cook at home instead of
ordering out. The company reported same-store sales rose 3.6% in the first
quarter, reported Reuters (April 27). Full
Brands International beat
Wall Street earnings estimates, fueled by Tim Hortons' and Burger
King's strong sales. Both brands reported double-digit same-store sales;
Burger King's same-store sales rose 8.7%, reported CNBC (May 2). Full Story
Brands missed its
earnings estimate despite KFC and Pizza Hut's recovery and growth
in China. Same-store sales increased 8% in the first quarter as KFC, Taco
Bell, and Pizza Hut outperformed expectations, though shares of the company
dropped more than 2% in premarket trading, reported CNBC (May 3). Full
Corp. reported a 12%
same-store sales increase for its North American stores as global same-store
sales increased 7%. The company reported same-store sales rose 3% in China
after the country relaxed its COVID-19 policies, reported Reuters (May
reported losses in
the first quarter of this year but not as much as expected. The salad chain
hopes to be profitable by 2024 as traffic increased 2% and same-store sales
rose 5%, reported CNBC (May 4). Full
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.