October 22, 2020
Sustaining Superior Operator Partnerships
“Superior operator partnerships” can be read many ways. DMA believes in delivering superior partnerships to all our stakeholders – but certainly with a focus on operators. This year, those values came together at MUFSO, where DMA was the sole distributor sponsor supporting multi-unit operators. “This was a great opportunity for us to show we’re doing our part in the industry’s recovery at a time that’s so critical for restaurants’ and distributors’ futures,” said Pat Mulhern, DMA CEO. DMA helped share great content from keynote speaker Jim Creel of Taco Johns as well. View Here

Be sure to follow DMA on LinkedIn to stay up to date on new virtual events and chain-specific content.
Investments in Cold Storage Grow During Pandemic
Cohen & Steers invested approximately $100 million in Lineage Logistics, a temperature-controlled logistics solutions company. Full Story

The firm made the investment on behalf of several mutual funds with the belief that the market is in the early stages of a long-term transformation of the food supply chain, which will increase the need for innovative cold storage.

“The need for next-generation, efficient and technology-driven cold storage will create opportunities for companies with superior technological and operational capabilities,” said Thomas Bohjalian, head of U.S. real estate and senior portfolio manager at Cohen & Steers. “Our investment is based on our view that these trends and attributes offer superior long-term growth potential and presents an attractive investment for our investors.”

Back in May, Lineage acquired Maines Paper & Food Service assets, reported Verdict Foodservice.

The acquisition of Maines’ foodservice distribution assets is expected to strengthen Lineage’s end-to-end supply chain capabilities in the quick-serve restaurant and casual dining hospitality markets.

Later in the same month, it also acquired Henningsen Cold Storage Co.—bolstering its presence in the Pacific Northwest with the addition of 14 facilities across Oregon, Washington, Idaho, Pennsylvania, North Dakota, and Oklahoma.
The company has also significantly expanded its cold storage warehouse capacity in the UK.

Lineage recently broke ground on a 92,000-pallet-position, fully automated expansion at its Peterborough location in the UK to form a strategically positioned South Eastern Superhub, which will serve both retail and foodservice customers with unique supply chain requirements. Full Story

The new capacity will complement 26,000 existing conventional pallet positions at the property, which combined with the expansion’s automated design, will enable maximum flexibility and highly customized solutions for customers. The investment brings Lineage’s total automated warehouse count in the UK to six, with a total of 330,000 automated pallet positions.

Lineage’s phased expansion approach in Peterborough is in response to growing customer demand from both online and conventional grocery sales – a trend which was accelerated due to the COVID-19 pandemic.

In the UK, online sales now account for 13% of all grocery sales, up from 7.4% in March 2020, and new online customers are predicted to continue shopping online, according to Kantar. Frozen items have also increased in popularity, and the sector is up 22% year over year.

In the U.S., even before the pandemic, it was reported that the need for cold storage was growing due to the online grocery delivery market increasing.

In January, nearly half of U.S. consumers were already shopping for packaged food products online—which was expected to rise to 70% by 2022, translating into an estimated $100 billion spent per year on online groceries, as stated by the Food Marketing Institute and Nielsen.

CBRE had estimated cold storage space demand of between 70 million- and 100 million-sq. ft. over the next five years. The firm also predicted an increase in projects without a tenant in place—meaning there will be more entrants into this space, with specialized developers and contractors leading the way. Food Institute Focus
National Chains Thrive, While Independent Restaurants Struggle
National chains are growing while locally owned restaurants suffer in the pandemic, reported The Wall Street Journal (Oct. 12). Full Story

Large chains have more flexibility both when it comes to moving money and locations around and in transitioning to delivery and curbside pickup. This ease of ordering means customers tend to think of them first.

The divide between large and small restaurants seemed to surface in the summer. Chipotle more than tripled its online business sales in the second quarter, while Domino’s, Papa John’s, and Wingstop all reported double digit same-store sales increases in the third quarter compared with the year-earlier period.

McDonald’s said U.S. same store sales rose 4.6% in the third quarter, which included a rise in the low double digits during September—its best monthly performance in nearly a decade.

“The silver lining in this pandemic is we are going to emerge stronger,” said Bernard Acoca, CEO of El Pollo Loco. They opened three restaurants in 2020 and aim to add more in the years ahead, Acoca noted.

Meanwhile, prospects for independent restaurants are dimming. Three-quarters of the nearly 22,000 restaurants that closed across the U.S. between March 1 and Sept. 10 were businesses with fewer than five locations, according to Yelp.com.

The National Restaurant Association predicts 100,000 restaurants will close this year. The sudden loss of many independent restaurants could permanently change the landscape of American cities.
Independent coffee shops are also giving way to chain competitors, reported The Seattle Times (Oct. 12). Full Story

The number of coffee shops in the U.S. is shrinking for the first time in nine years as sales decrease. This is aiding coffee-serving chains such as Starbucks, Dunkin’, and McDonald’s gain ground in the market.
“Closures have happened already and we believe the winter could bring another wave, especially for coffee shops depending on outdoor seating or even walk-up foot traffic,” said Rabobank’s senior beverage analyst James Watson.

Euromonitor International reported the U.S. will have 25,307 outlets specializing in coffee or tea by the end of 2020, down 7.3% from 2019 and representing the first decline since 2011. With annual sales plunging 12% to $24.7 billion, chain operators are finding ways to gain ground as independent outlets fight to keep their doors open. Food Institute Focus

Chicken Wars with a Plant-Based Twist
Although plant-based beef is usually in the spotlight, meatless chicken is now taking center stage.
Jack in the Box unveiled the Unchicken Sandwich, its first plant-based offering, reported Forbes (Oct. 15). Full Story

It will be tested in the Reno, NV, and Monterey, CA, markets from Oct. 15 until Dec. 12—or while supplies last.

Available in classic or spicy, the sandwich includes a split-top bun, mayo, lettuce, and tomato in addition to the plant-based chicken. Unchicken Sandwich Combos will be priced at $6.99 each, which is in line with the pricing of other sandwiches on the menu.

The substitute chicken filet is sourced from Raised & Rooted, an alternative protein product line launched by Tyson Foods in 2019. It is made from pea protein isolate and Jack’s traditional crispy breading.

The launch marks the second time a major U.S. fast-food chain has experimented with a chicken alternative. In 2019, KFC partnered with Beyond Meat—the first foray into the category. Results from the initial Beyond Fried Chicken test in August were strong enough to expand the product into new markets just months after.

“Since there has been a recent explosion of popularity in the chicken category, we wanted to introduce a plant-based option in this space rather than the predictable meatless burger patty,” said Jen Kennedy, SVP, chief product and innovation officer, at Jack in the Box. “Chicken is definitely having its moment.”
In the UK, chicken chain Nando’s revealed it was launching their first ever plant-based meat alternative, reported Daily Mail (Oct. 12). Full Story

The Great Imitator, also made from pea protein, launched in restaurants across the UK and is designed to taste like the restaurant’s popular PERi-PERi chicken breast fillet. It will be served as four strips that are grilled to order and sit on the menu as part of the burgers, pittas, and wraps category. As they would with their usual Nando’s order, customers will be able to choose their desired level of spice on the PERi-ometer.

Although the recipe is completely plant-based, the dish is aimed at flexitarians rather than vegans or vegetarians as it is cooked on the same grill as chicken dishes—meaning it’s not strictly vegan.
“Nando’s can’t guarantee zero risk of cross-contamination, so it’s not calling it vegan, but as all the ingredients in the burger and pitta versions are completely animal-free—right down to the mayo—we say these are an excellent choice for vegans, vegetarians, meat-reducers, and chickens,” said Dawn Carr, Director of Vegan Corporate Projects, PETA.

Meanwhile, plant-based chicken is also having a moment in the for-retail category. Heura, a vegan-friendly alternative to chicken that’s been cooked up by a Barcelona-based startup, has launched its first products in the UK, reported TechCrunch (Oct. 5). Full Story

The company is working with local distributors The Vegan Kind and Planet Organic to sell three of its most popular products in the market: 100% vegetable original chicken bites, Mediterranean chicken bites and strips.

The 100% plant-based chicken is made from European soy, olive oil, salt, and spices.

Additionally, The first Latin American foodtech company to develop and produce plant-based meat that “has the same taste, texture and juiciness of animal based meat,” is Fazena Futuro, who’s launching its new plant-based chicken: Future Chicken, reported Vegconomist (Oct. 14). Full Story

Future Chicken was developed using True Texture Technology, which recreates the same fibrous texture similar to that of an actual chicken, along with natural extracts to make sure it has a neutral flavor. The product will also be sold in a 100% sustainable, plant-based packaging. Food Institute Focus

Burger Rivals Turn to Promotions, Natural Ingredients
McDonald’s Corp. and Burger King have long competed in the QSR space, and the coronavirus pandemic is forcing them to adopt new strategies and introduce new items to win over consumers.

McDonald’s turned to a strategy not employed since Michael Jordan reigned supreme over the Windy City by partnering with rapper Travis Scott for a namesake combo meal. The $6 meal, which included a Quarter Pounder burger with cheese, bacon, and shredded lettuce, a Sprite, and fries dipped in BBQ sauce, proved popular.

So popular, in fact, the company reported shortages of some ingredients tied to the meal just eight days after launch. The company said some restaurants had temporarily sold out of some ingredients and was controlling supply of Quarter Pounder beef, bacon, slivered onions, and shredded lettuce, reported CNBC (Sept. 16) Full Story

To follow up on the Travis Scott Meal, McDonald's launched the J Balvin Meal. The meal named after the reggaeton artist will run through Nov. 1 and includes a Big Mac, medium fries, and an Oreo McFlurry, reported MassLive.com (Oct. 5). Full Story

Additionally, McDonald's will expand its breakfast menu Oct. 28 with the McCafe Bakery Line. The company will launch an apple fritter, blueberry muffin, and cinnamon roll as part of the menu, with participating restaurants offering the items all day long. Full Story
Not to be undone, Burger King is reportedly testing a hand-breaded chicken sandwich in some locations. Food blogger Chewboom found the product in a location near Phoenix, AZ, but Burger King did not confirm the product’s availability, reported Delish (Oct. 2). Full Story

While the product may be in a testing phase, the product idea is sound, and would give the company an entry in the Chicken Sandwich Wars, allowing it to compete against the likes of Popeye’s, Chick-fil-A, KFC, and more.

Additionally, Burger King is changing Whopper packaging to include ingredients on the front to show the lack of artificial flavors, colors, and preservatives. Burger King foods are now 85% free of artificial additives, the company said. The new wrapper will be in use for a limited time, reported the New York Post (Sept. 17). Full Story

Executives on the Move:
  • Culver Franchising System is recruiting a CEO due to the retirement of Joe Koss. Full Story
  • KeHE Distributors, LLC hired Lisa MacNeil as president of Tree of Life. Full Story
  • Taco John’s hired Greg Miller as COO. Full Story
  • Potbelly appointed Adam Noyes COO. Full Story
  • McDonald's Corp. named ex-Hilton executive Katie Beirne Fallon to the newly-create role of chief global impact officer, reported Forbes (Oct. 1). Full Story
  • Sysco named Tim Ørting EVP and president of foodservice operations, international. Full Story
  • Papa John's International Inc. named Ann Gugino CFO. Full Story
  • RAVE Restaurant Group Inc. named Darren Webb director of development and Dion Firooznia franchise business consultant for Pizza Inn. Full Story
  • Kitchen United named Michael Montagano CEO and Joy Lai COO. Full Story
  • Church’s Chicken and Texas Chicken named Eric Stein international R&D chef. Full Story
  • Sysco Corp. named Judith Sansone to the newly-created position of EVP and COO, effective Oct. 26. Additionally, EVP and chief information and technology officer Michael Foster will step down effective Dec. 31. Full Story
  • US Foods named Bill Hancock EVP and chief supply officer. Full Story

Store News:
  • Four Corners Property Trust acquired a Chick-fil-A property in Indiana for $2.1 million; a Texas Roadhouse property in Illinois for $3.8 million; and a Popeye’s property in South Carolina for $1.6 million.
  • Teriyaki Madness will open five locations in the Milwaukee area by end of 2020, reported Milwaukee Journal Sentinel (Sept. 17). Full Story
  • Chipotle Mexican Grill opened Chipotlane locations in Washington Township and Somers Point, NJ, and will open four more locations in the state, reported NJ.com (Sept. 21). Full Story
  • Noodles & Company is offering paid time off for voting. One hour of leave is provided to employees, including those who vote by mail. Full Story
  • Jack in the Box achieved its goal of having the majority of its eggs cage-free by 2020, reporting that over 77% now come from cage-free chickens. The company is still working toward its commitment to use 100% cage-free eggs by 2025. Full Story
  • Fajita Pete’s will open 15 locations in Texas. Full Story
  • PJ's Coffee of New Orleans will open its first shop in Alabama in Spanish Fort, the first of as many as 45 it plans to open in the state over the next few years. The company is targeting Mobile, Birmingham, Huntsville, and Montgomery, with the next three planned for the Mobile area, reported AL.com (Oct. 2). Full Story
  • Famous Dave’s will open 25 locations across the U.S., including ghost kitchens and dual restaurant concepts. Full Story
Restaurant Sales Improve in September, but Remain Negative
Although still in negative territory, September marked the first month since February when same-store sales were better than -10%, according to Black Box Intelligence, which reported a comparable sales decline of -8.09%. Comparable traffic fell -14.62% during the month. Full Story

Selected Economic Results
  • Papa John's International Inc. reported an 18.4% increase in North American same-store sales in September, representing the sixth consecutive month of double-digit growth. Domestic company-owned restaurants showcased 14.3% growth, while international restaurants were up 23.3%, reported MarketWatch (Sept. 29) Full Story
  • Wingstop's same-store sales at company-owned locations jumped 15.2% in the third quarter, according to a preliminary earnings report. Domestic same-store sales were up 25.4%, and Wingstop opened 43 net new restaurants during the quarter, reported MarketWatch (Oct. 6). Full Story
  • Domino's Pizza Inc. posted a U.S. same-store sales increase of 17.5% in third quarter 2020, while international same-store sales climbed 6.2%. The company added 44 net new U.S. stores during the quarter, along with 39 net new international stores. The company closed 126 stores in third quarter, mostly concentrated in India, reported MarketWatch (Oct. 8). Full Story
  • McDonald's Corp. reported same-store sales fell 2.2% in the third quarter, but beat FactSet estimates of a 5% decline. In the U.S., same-store sales were up 4.6%, reported MarketWatch (Oct. 8) Full Story
CRC Offers Insights for the Foodservice Industry
Cleveland Research Company (CRC) offers forward-looking, actionable insights across Foodservice channels including Distribution, Non-Commercial, Chain Restaurants, and Convenience Stores. CRC’s annual Foodservice Council membership includes full access to their analyst team, events, webinars, surveys, and 100+ reports per year. CRC has built a great reputation as an independent research provider serving manufacturers across categories, aiming to help members win with key customers and channels, understand how their peers are reacting to the marketplace, and identify where to invest resources. Learn More
Stay Up to Date with Technomic’s Ignite Company Distributor Program
Sales growth for the power 50 broadline distributors was up 6.2% in 2019. However, due to the prolonged and severe impact of the COVID-19 pandemic on the foodservice industry, 2020 is projected to be the most challenging year on record for broadline distributors of all sizes. Marketplace consolidation is expected to increase at a rapid rate in 2020 as struggling distributors shutter their operations and as opportunistic buyers take risks on buying out competitors. Ensure that your business stays up to date on the distribution channel with Technomic’s Ignite Company Distributor program, including searchable profiles for more than 500 broadline and specialty distributors, continuous deliverables and access to our channel experts. Learn More
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