Technomic’s Joe Pawlak joined John Inwright, John Tracy and our own Pat Mulhern last Thursday to share insights on the current state of the foodservice industry.
The good news – business is past recovery and in the SURGE phase. The bad news – the dramatic increase in demand is being impacted by everything from labor shortages, to driver & freight challenges and even to manufacturing backlogs.
John Tracy from Dot Foods may have summed it up best by stating, “No supply chain is ready for a once-in-a-hundred year event.” When asked how long this could last, John was pragmatic, “Inbound service levels are not getting better anytime soon. Labor is a huge component, being able to get people back, hiring people when you need them, social distancing in a plant where you couldn’t do it…we’ve never seen labor problems like this. Everyone is fighting for people and this could go on throughout 2021.”
Which Brands are Getting Health and Safety Right as Consumers Return to In-Room Dining?
As the pandemic spread in 2020, IPSOS asked “What are the key health & safety measures restaurants can take to stay open and stay profitable?”
To answer that question, they launched the Consumer Health and Safety Index. Global brands such as McDonalds and Panda Express used results to
identify the health and safety expectations that mattered to their consumers,
pin-point the strengths and weaknesses in their response plan at the store level, and
build consumer confidence in their brand.
Now, as vaccinations progress and the "new normal" feels closer than ever, we ask, “What role will health and safety play as restaurants open their doors to in-room dining again?" Wave 3 of our Index answers this key question and determines which brands are getting it right in the eyes of their consumers.
Join IPSOSto hear how top QSR brands ranked in Wave 3 of Ipsos' Consumer Health and Safety Index.
Dining Off-Premises Looks Like It’s Here to Stay
Consumers are increasing their off-premises dinner
purchases, according to the latest weekly survey from the National
Restaurant Association. In the early spring 2021 period, Gen Xers and Baby
Boomers have increased their weekly off-premises dinner purchases by 8% and 7%,
Here’s a closer look at the recent restaurant survey stats,
and what they might mean for the industry’s recovery from the COVID-19
Off-Premises Dining Took Share from Sit-Down Eating
Pre-pandemic, an average of 59% of adults each week went out
for dinner at a sit-down restaurant or fast-food establishment, reported MarketScreener
(March 19). Full
Gen Z adults (72%) and Millennials (65%) were the most
likely to go out for dinner in the weeks leading up to the pandemic. However,
on-premises dinner patronage fell sharply during the lockdown period, with
average weekly usage plunging by more than 40 percentage points.
Prior to the pandemic, around 58% of adults purchased
takeout or delivery for dinner, with Millennials and Gen Z being most likely to
do so. During lockdown, an increasing proportion of consumers started using
takeout and delivery for dinner. Overall, the largest gains in weekly
off-premises dinner usage were seen among Gen X and Baby Boomers.
As for the lunch daypart, the survey displayed similar
results, in which consumer activity remained below pre-pandemic levels for
on-premises and showed growth for off-premises. On-premises breakfast remains
below-pre-pandemic, while consumer usage is similar to pre-pandemic for
off-premises for that daypart.
Meanwhile, Jack in The Box reported its best quarter
in nearly 30 years in February, which can largely be attributed to off-premises
dining and digital sales that doubled in the first quarter on a year-over-year
basis to account for nearly 7% of all sales, the chain’s CEO said, according to
Yahoo Finance (March 22). Full
Indoor Dining Restrictions Ease, Sit-Down Eating
As the weather improved mid-2020, more people started going
out for dinner with an average of 35% of adults each week going out for dinner
during the summer/fall period. After a slight dip during the winter
restrictions period, on-premises dinner activity trended higher as spring
In addition to the weather, indoor dining restrictions have
eased in several states. Diner growth has shown improvement in recent weeks, according
to data from OpenTable. OpenTable restaurant diner growth year-over-year data
in the U.S. was -29.66% as of Mar 17, 2021. For comparison, it was at -54.81 on
Feb. 17, 2021.
Foodservice May Need a Hybrid Model Going Forward
Though on-premises dining is coming back into favor,
off-premises is still growing, which means that restaurants will likely need to
adopt a hybrid model moving forward.
Restaurant industry experts believe that drive-thru ordering
will stay above pre-pandemic levels for the foreseeable future, reported CNBC
(March 12). Full
One market analyst says consumers have changed their
ordering habits for good over the past year and now demand convenience and
A Look at Pizza Chains’ Post-Pandemic Plans
Pizza has been in high demand throughout the COVID-19
pandemic. But as indoor dining resumes and competition between food pick-up and
delivery services heats up, how will major pizza chains maintain sales
Major chains like Domino’s, Papa John’s, and Pizza
Hut are making menu tweaks of late, which Yahoo Finance recently
suggested may be igniting a “pizza war.”
Here’s a closer look at how major pizza chains plan to
The Pandemic Pie
In 2020, pizza restaurants in the U.S. generated approximately
$46.24 billion in sales, according to a recent Statista report. The top
performing chain was Domino’s, followed by Pizza Hut, Little Caesars and
At the outset of the pandemic, pizza sales spiked and top
chains recruited thousands of new employees. In the months that followed,
demand remained high. But what sales strategies are big pizza chains banking on
as consumer dining options diversify in the foreseeable future, as more and
more consumers get vaccinated against COVID-19?
Catering to Trends, Customer Demand
One sales-boosting strategy is the development and promotion
of new menu items that play off popular trends.
In November 2020, for example, Pizza Hut launched a line of
plant-based, alternative-protein pizzas as part of a broader,
sustainability-driven collaboration with Beyond Meat. The company also
released a Detroit-Style pizza in January, following a year of development and
testing iterations in the Midwest.
In February, Little Caesars reintroduced its Pretzel Crust
Pizza in the U.S. The pie was introduced six years ago and reinstated due to
outspoken customers — some of whom inspired a Change.org petition — calling for
the pizza’s return.
Papa John’s added stuffed-crust pizza to its menu in
December 2020. Buying patterns revealed that customers who purchase
stuffed-crust tend to order more frequently and have higher average ticket
sales, reported Yahoo Finance (Mar. 10). Full
The company plans to continue investing in stuffed-crust
advertisements to raise awareness in the year ahead.
Pizza chains are increasing their use of internal data to
develop new products and direct overall growth strategies.
Domino’s in particular has capitalized on this approach,
mining its database of 85 million users for consumer insights, reported PMQ
(Jan. 2020). Full Story
This led the company to focus on carryout service, which
represented 45% of its U.S. sales in 2019. The same year, 65% of Domino’s
transactions were digital.
Expanding data insights and increasing digital activity
helped Domino’s pivot quickly in response to the pandemic. In the months ahead,
pizza restaurants could expand their focus on internal data analysis to meet
the evolving needs — and predict future demands — of specific customer groups. Food
Restaurant Recovery: How Chains are Innovating
During the pandemic, restaurants have had to find new ways
of winning over consumers. Those who are innovating seem to be recovering well
from pandemic-related losses.
“300 million people wake up hungry each day, and they want
to go eat somewhere. They’re gonna eat somewhere,” said Dan Rowe, CEO of Fransmart
in an interview with The Food Institute. “So, the restaurants that have
fresh legs right now are thriving.” Rowe also noted that it is important for
restaurants to make customers feel safe.
Below are a few examples of chains switching things up to
Taco Bell’s digital sales approached 20% of total
sales in 2020, generating about $1 billion. The company says it has a clear
pathway to deploy 1,000 new stores, with a heavy reliance on franchise
operations, reported Forbes (March 23). Full
“The last six months have really shown us the power of our
franchisees and their entrepreneurial spirit in this business,” said Taco Bell
President and Global COO Mike Grams. “We’re on an explosive growth trajectory
fueled by our franchisees playing a much bigger role.”
The company has also invested in its digital capabilities.
Its new Go Mobile model is designed specifically for digitally-focused
consumers, including a dedicated digital-order-ahead drive-thru lane and smart
Leaning into off-premises dining, the chain’s next 1,000
restaurants will be modernized with features such as order-taking bellhops at
the drive-thru and kiosk-only ordering, reported Business Insider (March
Additionally, Taco Bell has been luring in consumers during
the pandemic with new menu items like the Quesalupa.
Popeyes has continued to profit off its chicken
sandwich during the pandemic. Edison Trends, which analyzed the online
transactions of major chains from Jan. 2019 to Dec. 2020, found that Popeyes
was Chick-fil-A’s closest competitor in terms of chicken sandwich sales.
The chain has also focused on other areas to drive sales.
The company recently revealed new quality and sustainability commitments as
part of the Restaurant Brands for Good sustainability plan. The commitments are
part of the brand’s work to serve responsibly sourced, high quality food while
continuously working to reduce its environmental footprint, which is a big
selling point with environmentally-conscious consumers.
Popeyes is also expanding internationally. It is opening
hundreds of locations in Mexico as part of a deal with investors and business
developers at JK Capital. Currently, the company is only active in
Guadalajara, with locations in Mexico City slated to open in 2021. The chain
will also open restaurants across India, Bangladesh, Nepal and Bhutan in the
Like Taco Bell, Starbucks is placing new emphasis on
the drive-thru. The chain is making plans to upgrade its drive-thru efficiency
by implementing multiple process changes, including having employees walk
drive-thru lines with handheld point-of-sale devices to take orders, reported FOX
Business (Jan. 28). Full
Drive-thru sales at Starbucks have increased by more than
10% since the pandemic began, according to the company.
Another way the company has grown over the last few months
is by adding more plant-based options to the menu. At the beginning of March,
Starbucks cafes nationwide began carrying Oatly’s nondairy substitute.
The oat milk was incorporated into Starbucks’ spring menu through the new Iced
Brown Sugar Oatmilk Shaken Espresso. Going even further, the chain later added
the Chickpea Bites & Avocado Protein Box as the latest permanent addition
to its vegetarian menu. Food
Executives on the Move:
Wendy’s promoted Liliana Esposito to chief
corporate affairs and sustainability officer. Full Story
Church’s Chicken and Church’s Texas Chicken named
Gregg Gallaher VP, Americas and Cinthia Nehring-Salm director, international
McDonald’s named Desiree
Ralls-Morrison as general counsel and corporate secretary. Full Story
named Darla Morse EVP and chief information officer. Full Story
will search for a new CEO to replace Tara Comonte who is leaving to pursue an
opportunity outside of the restaurant industry. Full Story
Restaurant Brands International’s Chief Marketing
Officer Fernando Machado has resigned and is leaving for an undisclosed role
elsewhere, reported Business Insider (April 2). Full Story
Jack in the Box will "separate" from
CIO Andrew Martin effective May 7, reported MarketWatch (April
Buffalo Wild Wings will launch three new menu items this spring:
including a Smashed Hatch Burger, Truffalo sauce, and Buffalo Chicken
Tots, reported Eat This, Not That (March 14).Full Story
launching a fleet of food trucks across 30 cities in Indiana and Kentucky,
reported eatthis.com (March 17). Full Story
Torchy’s Tacos, a
Texas-based chain, is currently pursuing an IPOthat could raise nearly
$300 million, reported My San Antonio (March 17). Full Story
Naf Naf Grill, the fast-casual Middle Eastern
restaurant concept, and an investor group have acquired the entire minority
ownership in the company previously held by affiliates of Roark Capital.
Texas Roadhouse founder Kent Taylor died by suicide
battling symptoms following a case of COVID-19. Taylor founded the restaurant
chain in 1993 and most recently was its CEO and chairman. During the pandemic,
he donated his entire compensation to support the company’s front-line workers,
reported Seattle Times (March 22).Full
Burger King announced
a cross-Canada rollout of the Impossible Whopper on April 12. Full Story
Taco Bell's digital sales mix approached 20% of total
sales in 2020, generating about $1 billion. The company says it has a clear
pathway to deploy 1,000 new stores, with a heavy reliance on franchise
operations, reported Forbes (March 23). Full
Starbucks will take a closer look at how its coffee is
grown as part of the company’s carbon reduction efforts. The coffee giant
is testing programs with smallholder farmers who use an app to glean details
about the health of soil to better target fertilizer use, reported Fast
Company (March 22). Full
Yum Brands is
buying Israel-based startup Tictuk Technologies Ltd., whose software helps
customers order food to go via text and social-media apps – a strategy
executives hope will fuel sales as people shift away from fast food
and return to full-service restaurants, reported The Wall Street
Journal (March 24).Full Story
Chipotle Mexican Grill will continue its expansion into
Canada with a new restaurant in Surrey, British Columbia, representing its
first new Canadian location since October 2018. Additionally, the company has
plans for seven new stores in the country, including the first Chipotlane
restaurant in the country. Full
Meanwhile, Chipotle Mexican Grill invested in
Nuro, a leader in autonomous delivery, as part of their Series C funding
round. This is the company’s first significant investment in a third-party
technology company since CEO Brian Niccol arrived in 2018. Full
Brinker International's first virtual brand, It's Just
Wings, partnered with Google on a new pickup option. Customers can
now order pickup directly on Google Search and Google Maps by searching
"It's Just Wings near me.” Full
Delight Restaurant Group will acquire 54 Wendy’s restaurantsin the Raleigh metropolitan area. As part of the transaction, Delight plans
to build several new restaurants in the area and remodel certain acquired
restaurants in Wendy’s new Image Activation format. Full
Pokeworks named Michael Walters COO, Steve Heeley
chief marketing officer, and Larry Sidoti chief development officer. Full
Flynn Restaurant Group will acquire 937 Pizza Hut
and 194 Wendy's restaurantsfrom NPC International.
In total, Flynn will now operate about 2,355 restaurants, with other banners
including Applebee's, Panera Bread, Taco Bell, and Arby's,
reported AL.com (March 25). Full
Saladworks signed a deal with Ghost Kitchen Brands
to double its footprint across the U.S. and Canada. Many of
these new kitchens will live inside Walmart stores offering some
seating, and all locations included in the deal will offer carry-out and
third-party delivery. Full
launching The Hut Lane, a digital-first carryout option. The service can
be accessed through the Pizza Hut app and pizzahut.com and is also available
for those placing orders over the phone. Upon arrival, customers can simply
pull up to the dedicated window, grab their order and go. Full
booking and relationship-management company Tock is being acquired by Squarespace
in a cash-and-stock deal worth more than $400 million. Full Story
Blaze Pizza accelerated its franchise development
efforts in the first quarter of 2021, signing agreements to develop 16 new
restaurants in Texas, Florida and Tennessee.Full Story
McDonald's plans to close hundreds of locations
positioned within Walmart stores. At the peak of the 30-year
relationship between the companies, roughly 1,000 McDonald's restaurants were
opened within Walmart stores, but only 150 will remain following the next wave
of closures. Some Subway franchisees report closures, as well,
reported The Wall Street Journal (April 9). Full
pizza chain Lou Malnati's is exploring a sale which could reach as
much as $700 million. The company operates nearly 70 locations in four states,
as well as a mail-order business, reported MarketWatch (April 9). Full
TGI Fridays is implementing new air purifying systems
for safer indoor dining nationwide. The company says the treatment system
neutralizes 99.9% of COVID-19 particles. Full
Burger King has made
the Impossible Whopper available at all of its Canadian locations.Full
SUPPLY CHAIN NEWS
California Logjam Finally Easing
A persistent kink in the global supply chain is getting
straightened out – slowly, but relatively surely.
The backlog at southern California ports appears to finally
be easing, even as imports continue to flood into the U.S. What had been a
lingering issue in recent months may now be approaching its end.
As recently as late March, West Coast ports like those in
Los Angeles and Long Beach, California, had caused major supply chain
disruptions. The two California ports – among the busiest in the world — were
clogged at length from an inventory restocking drive that began late last year.
The California ports handled 97.1% more container imports in March compared to
the year-ago period, and 65.1% more than March 2019, reported The Wall
Street Journal (April 14). Full
Signs of Hope
“We are making progress,” Port of Los Angeles executive
director Gene Seroka told The Wall Street Journal. “Today we have half
the number of anchorage ships that we reported at the peak in February.”
The shipping traffic jam, of course, has been part of a
larger gridlock in supply chains around the globe caused by disruptions from
the COVID-19 pandemic.
The ports of Los Angeles and Long Beach dealt with their
busiest March on record, handling 898,287 container imports. The port of Los
Angeles is on pace to have the best fiscal year in history for any port in the
Western Hemisphere, reported presstelegram.com (April 14). Full
Businesses have been restocking inventories that were
depleted earlier in the pandemic. Trade data group Panjiva said Tuesday
that U.S. seaborne imports of containerized freight surpassed 3 million TEUs
(or 20-foot equivalent units) last month.
The global ripple effects are many, and the supply chain
pain has been far-reaching. In February, for example, Hershey CEO Michelle
Buck noted that her company has seen freight inflation become an increasing
issue. And, more recently, trucking companies have been boosting pay in order
to hire drivers as consumer demand rises. Knight-Swift Transportation
Holdings Inc., the largest trucking company in North America, recently
increased pay for certified drivers by 40%, reported The Wall Street Journal
(April 14). Full
Issues at Play
The heavy flow that began in July, Seroka told reporters, is
due in large part to a pandemic-related online retail spending surge, as
consumers consistently purchased items they could enjoy at home (golf
equipment, for example, according to Seroka).
And, as a result, the waiting time to load containers on
trains out of Los Angeles reached 11 days this week, up from a normal yearly
average of around two days, port officials said. Seroka said that the rapid
succession of vessel calls, poor weather across the country, plus a one-way
trade spike make it tough to get railcars back to Los Angeles quickly.
The port expects box volumes to rise 28% from last year in
April and 45% in May. Liner operators say there simply isn’t enough capacity in
the water to handle the demand. The backlogs have caused many retailers to wait
for weeks for goods stuck on ships at sea.
However, Rolf Habben Jansen, the chief executive of
container line Hapag Lloyd AG, told The Wall Street Journal that he
expects the bottlenecks to ease in the third quarter. Food
Restaurant industry comparable sales increased 1.8% in March
2021 when compared to March 2019 as the industry passed
over the first month of the pandemic in 2020, according to Black
Box Intelligence. Same-store sales skyrocketed 62.3% over March 2020, when
closures and stay-at-home orders became more common. Full
Meanwhile, restaurant industry experts believe that
drive-thru ordering will stay above pre-pandemic levels for the foreseeable
future. One market analyst says consumers have changed their ordering habits
for good over the past year and now demand convenience, cleanliness, and
safety, reported CNBC (March 12). Full Story
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