DMA's Chain Update

The chain restaurant business is one of the most significant segments in foodservice. Technomic's Top 1,500 chains, for example, will deliver nearly $400B of the total $569B in restaurant and bar sales projected in 2022.*

DMA delivers customized distribution solutions to top chains on behalf of the nation's leading, privately-held, foodservice-focused distributors. This unique position in the industry offers a behind the scenes view of what's happening in this highly complex supply chain.

  • In spite of inflation, consumers continue to dine out and the country's supply chain continues to be stretched. Technomic projects Fast Casual restaurants to grow sales 2.2% and Fine Dining establishments to jump 6.9% in 2022!**
  • Manufacturers are recovering from historically low fill rates into distribution – but are still not 100%. Many have converted available production capacity to grocery items from foodservice SKUs as well, prolonging supply challenges in this channel.

This leads to one of the biggest issues confronting chains today: distribution capacity. Physical warehouse space has filled with extra inventory to assure operators' supply, while drivers and equipment continue to be challenging to source. The implications to chains are:

  • Increased cost to serve from distributor partners
  • Less flexibility to offer unique, proprietary menu items
  • Challenges executing limited time offers

So what's a chain to do? Successful chains (and independents as well) are adapting by increasing focus on (and visibility to) their Supply Chain partners:

  • Plan new items and LTOs as far in advance as possible.
  • Convene all parties – from ingredient supplier through manufacturer to the distributor.
  • Deliver analytics – visibility to timely data has never been more important.
  • Communicate constantly – collaboration to solve challenges, rather than assigning blame to failures will drive successful execution.

2023 is projected to be a strong year for all commercial foodservice segments. What are you doing to prepare your supply chain to deliver the best solutions?

*Technomic Top 1500 Chains Report, August 2022
**Technomic 2022-23 Wallchart, August 2022


Study: Gen Z Flocking to Fast-Casual Restaurants

These days, members of Gen Z are flocking to quick-service restaurants.

In the 12 months ending July 2022, Gen Z consumers made 5 billion total restaurant visits, and 4.3 billion of those visits were to QSRs, according to a new study from The NPD Group. While overall quick-service traffic was flat compared to a year ago, Gen Zers' fast-casual visits were up 4% year-over-year.

NPD said its findings indicate that Gen Z skews toward QSRs, particularly fast-casual establishments, that balance value with a strong brand persona and focused menus. Although price matters to this group of young American adults (aged 18-24), the group tends to favor businesses that provide the items they want, with messaging that reflects their interests.

"Customization extends to their food choices, as well. It's no secret that the reason many QSRs, ... allow you to build your own meal has been heavily influenced by the Gen Z generation," Barbara Casey, the CEO at Mobile High 5, told The Food Institute.

Today's young adults also expect the restaurant chains they choose to reflect their interests, like organics and sustainability, according to NPD's study. Many Gen Zers are also seeking more from their restaurant foods and beverages, including local, low-calorie, organic, sustainable, and plant-based options.

Traditional QSR menu items like burgers and chicken options that are unique, craveable, and can't be replicated at home, also appeal to Gen Z. Chicken sandwiches are especially valued by this group, particularly those with value price points or a spicy profile, noted NPD, which recently merged with Information Resources Inc. (IRI).

Meanwhile, snack-oriented foods, bottled water, and non-carbonated soft drinks are also gaining favor with young adults, according to NPD's findings.

"Restaurant operators can differentiate their brand with Gen Z by focusing on creative spins on classic foods, engaging relevant messaging, and generating value beyond price," said David Portalatin, NPD food industry advisor, in a statement.

Additionally, "Gen Z consumers grew up with choices, and they're open to trying new restaurants," Peter Boivin, VP, Head of Industry, Restaurant at Vericast, told The Food Institute. "According to a Technomic Segmentation Study, 44% of Gen Z consumers are motivated to try a restaurant they have never visited if they have an incentive.

"Therefore," Boivin added, "brands have a significant opportunity to increase market penetration with this desirable market segment by using incentives." Food Institute Focus

4 Tips for Foodservice Operators Post-Pandemic

Foodservice operators have faced numerous obstacles during the COVID-19 pandemic, not the least of which is an unrelenting labor shortage.

"I went to a local restaurant recently," Patrick O'Reilly, principal at Marcum LLP said. "There was a sign on the front door that said ‘Be nice to our employees; they showed up for work today.'

"It's really, really hard to retain these employees," he added.

O'Reilly joined R.J. Hottovy, head of analytical research at, on a recent Food Institute webinar, noting trends among restaurants that have thrived throughout 2022.

According to the industry experts, successful foodservice operators are taking the following steps to emerge from the pandemic on solid ground:

Embracing Menu Innovation

Taco Bell is using menu innovation to bring customers back. The last few years have featured a dearth of product innovation, Hottovy noted, as many quick-service restaurants opted to keep inventory lean, with streamlined menus, for operational purposes.

In May, however, Taco Bell bucked that trend with the limited time, re-release of the Mexican Pizza, which promptly resulted in a spike in traffic. The chain recently announced the Mexican Pizza will return to its menu for good starting September 15.

"I think we're really starting to see some hard evidence of the idea that innovation can drive visitation trends," said Hottovy, who also noted that KFC recently received a boost in visits with the release of new chicken nuggets.

Adjusting Menu Prices

Hottovy noted that multiple fast-casual chains have had success this summer with an entrée price point of $12 to $15, catering to price-sensitive customers during a period of increasing inflation.

"We've seen a pare back the last couple months as we've gotten to this place where consumers have been more cautious," the executive said. "There are still some stores that are doing very well, particularly the ones that have adjusted the price point to really accommodate for what consumers are looking for."

Focusing on Community

This year, Starbucks has displayed an increased focus on what it deems its "community stores," which are designed to allow employees the ability to connect with local communities through specific initiatives or causes. The coffee chain currently has 150 community store locations, reported Restaurant Business.

The strategy is working, Hottovy said.

"If we map out the performance of community stores compared to the rest of the nearby Starbucks locations," he said, "we're seeing an outperformance there, really underscoring this idea of a community being very important. I think that's been an emerging trend through COVID."

Seeking Efficiency

Restaurants are increasingly utilizing relatively new technology to overcome issues like the labor shortage. Columbus, Ohio-based Charleys Philly Steaks chain, for example, is using self-ordering kiosks that help the chain dedicate employees to less menial tasks.

"Embracing technology has been huge for these QSRs," O'Reilly said. "It has to be convenient or you're not going to draw customers.

"Convenience is absolutely the king right now," he added. Food Institute Focus

The Next Big Fast-Food Fight: The French Toast Stick Wars

On the foodservice battleground, the chicken sandwich wars are now giving way to ... the French Toast Stick Wars.

Wendy's, Burger King, Jack in the Box, and Sonic are all offering French toast sticks now, indicating that, in 2022, breakfast is truly the most important meal of the day for these chains.

As society emerges from the waning COVID-19 pandemic, restaurants clearly view breakfast as a prime time to engage customers.

Inflation, of course, has also been tough on all forms of restaurants, and the rising costs they're forced to pass along to customers has made it tough for many Americans to be able to afford dining out like they once did. Overall restaurant traffic declined 2% in the second quarter from a year ago, as noted by CNBC (Aug. 27), but dining out for breakfast and morning snacks remained unchanged.

So, while many chains are getting by with cutting menu items, hours and staff, others are seeing an untapped opportunity to expand breakfast offerings.

"We're actually seeing this big recovery in full-service breakfast," noted R.J. Hottovy, head of analytical research at, during a recent Food Institute webinar. "Some breakfast-first concepts, like First Watch and Waffle House, if you look at second quarter traffic, were making a big comeback."

And, Hottovy added, "the top five chains that we saw in terms of visitation trends and (in the) full-service space, three of them are breakfast-focused chains. So, (we're seeing) some real demand."

The Forgotten Meal

Possibly due to it being early in the morning, breakfast traditionally lags lunch and dinner in popularity for most consumers.

Breakfast accounts for 20% of restaurant transactions and 13% of total fast-food sales, CNBC noted. That was especially the case earlier in the pandemic; With no need to get up and moving early to get to work, less and less consumers grabbed breakfast and instead opted to eat at home, as sales for breakfast items at the grocery store rose.

Emerging Breakfast Trends

In 2019, breakfast was becoming more popular with patrons. Fast-food chains were either adding or expanding breakfast menus. Then, the pandemic hit and breakfast saw the sharpest decline in sales of any meal.

Now, with people headed back to office work environments, savvy restaurateurs are taking advantage by marketing expanded breakfast offerings, which is showcased in the brewing French toast stick battle.

"[Fast-food chains] especially are really innovating around new menu items to try and capture those incremental sales as consumers start to return to the breakfast daypart within restaurants," Technomic principal David Henkes told CNBC.

Total spending was up 32% for the year ended June 12 compared to 2019 levels for quick-serve eateries, which includes fast food and coffee shops.

"Now that we're getting back to more normalized behaviors, we're really just returning to the oldest trend where breakfast was generally outpacing the growth of other dayparts," David Portalatin, NPD's food and beverage analyst, told CNBC.

Key Factor at Play

With the rising cost of food and people cutting back on dining out, why exactly is breakfast thriving?

For starters, breakfast tends to be cheaper than going out for lunch or dinner. Grabbing a cup of coffee and a scone on the way to work is typically a rather cheap endeavor. It's a more affordable indulgence that allows consumers to nevertheless treat themselves.

So, now for the real question... where will you be getting your French toast? Food Institute Focus

Store News:

  • Taco Bell is testing its own plant-based meat substitute ahead of its Beyond Meat launch later this year. The new menu item, made from soy and pea protein, is separate from the chain's partnership with Beyond Meat, although Taco Bell still plans to offer a Beyond product by the end of the year, reported CNBC (Aug. 18). Full Story
  • McDonald's is adding a Chicken Big Mac in the U.S. The chicken version of the chain's premium burger was a hit in the U.K., prompting plans to test the sandwich at select locations in Miami this month, reported Restaurant Business (Aug. 22). Full Story
  • Meanwhile, McDonald's isn't bringing back all-day breakfast in October, despite a viral tweet saying otherwise. The fast-food giant ended its all-day breakfast during the early days of pandemic lockdowns as part of a broader plan to simplify service, reported CNBC (Sept. 2). Full Story
  • Burger King unveiled a $400 million plan to revive U.S. sales with investments in renovations and advertising. The company also said it's built a multiyear blueprint for menu improvements, including developing new Whopper flavors, betting on its Royal Chicken Crispy sandwich, and investing in more employee training, reported CNBC (Sept. 9). Full Story
  • Meanwhile, Burger King is testing a plant-based chicken sandwich, called the Original Chick'n Sandwich, for a limited time in Cincinnati, Ohio, reported Restaurant Dive (Aug. 22). Full Story
  • Wendy's has unveiled a restaurant redesign that will debut in spring 2023, featuring a dedicated pick-up window for delivery orders, new grills, and a galley-style kitchen intended to maximize efficiency, reported CNN (Aug. 18). Full Story
  • DoorDash was hit by a data breach that exposed customers' personal information. The food delivery company says hackers stole credentials from employees of a third-party vendor and then used that information to gain access to some of DoorDash's internal tools, reported TechCrunch (Aug. 25). Full Story
  • Chipotle Mexican Grill is testing a new chicken al pastor menu item in 94 restaurants across the Denver and Indianapolis regions, reported CNBC (Aug. 31). Full Story
  • Meanwhile, a Chipotle Mexican Grill restaurant in Lansing, Michigan, became the chain's first location to vote to unionize. Workers at the store voted 11 to three in favor of unionizing under the International Brotherhood of Teamsters, according to the tally conducted on Thursday, reported CNBC (Aug. 25). Full Story
  • Actor-comedian Kevin Hart opened his first plant-based, fast-food restaurant called Hart House on Thursday in the Westchester neighborhood of Los Angeles near the city's airport, reported The Associated Press (Aug. 26). Full Story
  • Tim Hortons is introducing flatbread pizzas at 20 locations in the greater Toronto area, reported Meat & Poultry (Aug. 26). Full Story
  • Popeyes Louisiana Kitchen announced that it will be moving into the Chinese market, agreeing to an exclusive development agreement with Cartesian Capital Group LLC, reported Meat & Poultry (Aug. 29). Full Story
  • The secret sauce at Hot Chicken Takeover: its unique workforce. The fast-growing restaurant chain's equal employment policy has proved people often passed over because of incarceration, drug addiction, or homelessness can build a devoted workforce, reported Bloomberg (Aug. 30). Full Story
  • Starbucks outlined a wide-ranging revamp of the chain, announcing plans to spend hundreds of millions to update its stores. It expects to spend nearly $3 billion annually through its 2025 fiscal year to build new types of stores, deploy updated equipment, and offer expanded employee benefits, reported The Wall Street Journal (Sept. 13). Full Story
  • Meanwhile, Starbucks plans to increase its China store count by 50% over the next three years. The company plans to operate 6,000 stores in the country by 2023 and 9,000 by 2025, but could face headwinds via COVID-19 lockdowns in the country and competition from China's Luckin Coffee, reported The Wall Street Journal (Sept. 14) Full Story
  • Restaurant group Brinker International has paused its robotics server test with Bear Robotics at 61 Chili's restaurants. Brinker will instead accelerate deployment of its Kitchen of the Future 3 equipment, reported Restaurant Dive (Aug. 25). Full Story
  • Panda Express, in partnership with Beyond Meat, brought back its plant-based Beyond the Original Orange Chicken for a limited time. Full Story

Executives on the Move:

  • JBS SA named Michael Koenig its new chief ethics and compliance, reported The Wall Street Journal (Aug. 16). Full Story
  • Kitchen United has announced former Papa John's and Wendy's marketing veteran Katie Wollrich as its new CMO, reported Restaurant News (Aug. 16). Full Story
  • Starbucks named Laxman Narasimhan as CEO effective October 1, reported CBS News (Sept. 1). Full Story
  • Meanwhile, Starbucks COO John Culver will exit the company and his role will be eliminated, shifting many of the responsibilities to the head of strategy and transformation, reported CNBC (Aug. 18). Full Story
  • McDonald's named Tony Capuano, Jennifer Taubert, and Amy Weaver to its board, and said current board member Sheila Penrose will retire, reported CBS News (Aug. 18). Full Story
  • SPB Hospitality announced the appointment of Josh Kern as interim CEO. Full Story
  • Chip Wade will replace Danny Meyer as CEO of Union Square Hospitality Group, reported The New York Times (Aug. 30). Full Story
  • Bar Louie has named Brian Wright CEO. Wright joins the grill-and-bar chain after serving as CEO of Tijuana Flats, reported Restaurant Business (Sept. 7). Full Story
  • Inspire Brands has promoted three executives. John Kelly was named chief company restaurant officer, Tanisha Beacham will serve as COO for Sonic, and Lou Beccarelli chief operating officer for Arby's, reported Restaurant Brands (Sept. 8). Full Story


Will AI Ordering Go Mainstream at Restaurants?

In response to labor shortages, some restaurants are turning to AI-powered bots that answer phones and communicate with customers, allowing human staffers to focus on other duties.

How it Works

AI bots learn the restaurant's menu and use natural language processing (NLP) to process and analyze large quantities of human speech, enabling them to take orders over the phone and collect customer data at the same time.

"One of the biggest pros of AI ordering is that it automates a routine task, allowing understaffed restaurants to make the most of the staff that they have," Bhavin Asher, CTO at GRUBBRR, a restaurant automation company, told The Food Institute.

Another big benefit is that an AI bot always sticks to the sales script, an area where stressed or overworked employees may easily falter. An AI bot will always read back the order, suggest additional menu items, and text customers their receipt. Plus, a bot can take multiple orders at once.

Use Cases

Naturally, an AI phone operator is better suited for some restaurants than others. "Quick-service restaurants, fast casuals, and restaurants that focus on takeout such as pizza shops can benefit most from AI ordering," Asher said.

One such pizza chain testing out AI ordering is Jet's Pizza, currently piloting an automated voice bot at 130 of its 400 restaurants. However, Jet's customers still have the option to skip the bot and be put through to a human at the restaurant, which the vast majority of people do. Only around 35% of the customers that call in choose to place their order with the bot.

Customer Response

That's the big problem with AI ordering—many customers don't like it.

"Adoption from consumers is still low, and many may be annoyed to talk to a robot," Asher explained. "Additionally, AI ordering removes that ‘human touch,' eliminating small talk which could have potentially dangerous consequences for people with food allergies who cannot clearly communicate with the robot that their food is safe from allergens."

Accuracy is important to customers and restaurant owners alike, and AI voice technology may still have a way to go before it can fully meet expectations.

When McDonald's tested voice-recognition software in the drive-thru at 24 Illinois restaurants earlier this year, the technology got customer orders right between 80-85% of the time. These results fell short of the 95% or higher accuracy rate that the fast-food giant was looking for and CEO Chris Kempczinski has said that a wider national rollout is still years away, Restaurant Dive reported.

An Automated Future

Voice-activated AI is still in the early stages of development, but the technology is rapidly evolving and it won't be long before it becomes a viable solution for restaurants. As the tech becomes more sophisticated, some experts believe that consumers will quickly adjust to the new normal, especially because many customers are already more comfortable ordering online than in-person.

Asher, for one, believes AI ordering could become part of our daily lives sooner than we think.

"Consumer perceptions will shift within the next seven years to accommodate AI ordering," he said. "By 2030, many restaurants will be automated." Food Institute Focus


Comparable Sales Up in August as Traffic Slows

Comparable sales at foodservice operations increased 5.3% in August despite a 1.9% decline in comparable traffic during the period, according to Black Box Intelligence.

Black Box noted same-store traffic rebounded by 3.2 percentage points when compared to July, but that it was the sixth consecutive month of year-over-year declines in customer count.

New England was the best performing region during the month, with upscale casual and Italian/steak representing the best performing segment and cuisine types, respectively.

California was the worst performing region, with quick-service and hamburgers representing the worst performing segment and cuisine. Full Story


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