DMA is 'On-Stage' Representing Chain Distribution!
DMA members Justin Erickson (CEO, Harbor Foodservice) and John Reisigl (President, Cheney Brothers) joined DMA VP of Customer Solutions Jamie Thielman for IFMA’s "Futurescape of Distribution" panel at their virtual Marketing & Sales Conference Aug. 3. The panel discussed strategies for the future of distribution and distribution partnerships with a focus on best practices for national chains.
The primary topics of inflation and labor shortages were addressed – including solutions currently offered by Harbor Foodservice and Cheney Brothers. The increasing roles of technology and warehouse automation were covered along with the growing importance of "exclusive" brands. Learn more about DMA distributors’ innovative approaches to the future of supply chain by watching the recording (registration required).
Gordon Food Service’s own Brian Larsen will represent DMA at Kinetic 12’s final Collaborative Innovation session Sept. 13-14 in Chicago. The Team-to-Team Collaboration panel will showcase best practices for chain operators, distributors and suppliers to work together to deliver top quality service to their patrons. 2022’s event is full – but opportunities to attend or participate in 2023 are still available. Contact Bruce Reinstein for more information.
Restaurants Threatened as Industry Bifurcates
from the National Restaurant Association show restaurant spending is still
increasing, middle-tier restaurants would be wise to alter their business
models if they expect to survive amid raging inflation and a possible recession
later this year, experts told The Food Institute.
Restaurant Business reported (June 27) the restaurant
business is splitting into two – QSRs that concentrate on production and fast
delivery at affordable prices and pricier experiential dining, leaving little
room for the middle tier.
establishments have been busily rolling out apps and revamped drive-thrus to
speed customers through. Restaurant Business cites the changes made by Chick-fil-A
and Taco Bell as examples of these efficiencies while other chains are
incorporating more robot technology, both for cooking and order-taking.
experiential side, you have eateries like Punch Bowl and Sweetgreen
for a fresh take on salads and steak houses like STK presenting an
enhanced dining experience.
that leave restaurants like Denny's and Olive Garden and
restaurant and diner behavior expert at Vericast, said middle-tier
restaurants can be described as "fine-dining for the masses," and warned tough
economic times are likely to take their toll on them.
income customers stop celebrating birthdays, anniversaries, and other
events/milestones at these establishments," he said. "However, they still need
to eat. As a result, you see their dollars going to grocery and QSR.
featuring experiential dining appeal to consumers for whom their dining-out
dollars are a much lower percentage of their discretionary spending, so they
tend to be impacted less," he added.
reported that restaurant expenditures in May rose to $85 billion, up 0.7% from
April, the fourth consecutive monthly increase. From February through May,
sales were up 12.5% while menu prices during the same period rose 2%. That
followed sizable dips in December and January.
drinking places are the primary component of the U.S. restaurant and
foodservice industry, which prior to the coronavirus outbreak generated
approximately 75 percent of total restaurant and foodservice sales," the NRA
spend an average $1,200 on fast food annually, Barbecue Lab estimated,
averaging one to three meals a week. The USDA estimated Americans spend
between $4,100 and $12,200 annually on food, depending on income level, in
that after two years of missing milestone events like birthdays, weddings,
graduations and more, people are wanting to make up for lost time with
experiences," said Liv Vasquez, chef, event planner and restauranteur currently
working in experiential dining. "I think that also the threat of a pandemic
gave people bucket list items that they want to do in their lifetime and
enjoying a dining experience was on that list for a lot of people."
lingering threat of COVID, she said, makes people less likely to risk missing a
week's worth of work just to eat at Denny's or Olive Garden. Couple that with
such establishments' decision to set up ghost kitchens for take-out orders
contributing to an overworked staff, and you have a deteriorating experience
for the customer.
"So, it's a
bit of a perfect storm of not getting the experience that they used to get in
these places, not feeling like it's worth the risk during COVID, and guests not
wanting to deal with staff that is spread too thin," Vasquez said. Food Institute Focus
Grow More Concerned About Economy
positive indicators, an increasing number of restaurant operators are growing
more concerned about inflation and the prospects for the economy.
in the restaurant industry and overall economy continued to rise at a steady
pace in June, with eating and drinking places adding a net 40,800 jobs in June
on a seasonally-adjusted basis, according to the Bureau of Labor Statistics,
roughly on par with the previous three months.
Yet, the National
Restaurant Association says operators are not entirely convinced that the
positive economic trajectory will continue in the months ahead. In fact, in
each of the last four iterations of the National Restaurant Association's
monthly Tracking Survey, restaurant operators had a net negative outlook for
the economy six months out.
In the group's
June 2022 tracking survey, only 18% of restaurant operators said they expect
economic conditions to improve in six months – the lowest reading since March
2020 (15%). Forty-three percent of operators said they think conditions will
worsen in six months, while the other 39% expect conditions to be about the
same as they are now.
recent Alignable Research Center survey found that 72% of restaurateurs
say they will be out of business if inflation doesn't moderate. Roughly half
said inflationary pressures could force them to close their businesses within
the next several months, according to Talk Business (May 26)
a new survey by global intelligence company Morning Consult,
more than half of consumers say they have changed their eating and drinking
habits to manage the rising cost of living, with roughly eight in 10 people
saying they cut back on trips to restaurants and bars.
cutbacks have translated to traffic declines, especially at full-service
restaurants, which tend to have higher check averages than quick-service
places. According to Placer.AI, visits to FSRs fell 4% year over year in
June, while fast-food traffic was up 7.3%.
sit-down operations are trying to defend against those traffic declines by
courting price-conscious consumers with discounts and value meals, often for a
stand in contrast to fast-food brands, where some franchisees have been
resistant to discounts in the current inflationary environment, reported Restaurant Business (July 5).
bars and food service contractors across Colorado can keep what they'd normally
pay in sales taxes during the next three month, thanks to recent legislation.
passed last month, is expected to save establishments up to $40 million through
the end of September and allows them to deduct sales up to $70,000 in net
taxable sales for each month, according to Montrose Press (July 12). Food Institute Focus
About Discretionary Spending Jolt Coffee Chains
concerns about discretionary spending pushed Dunkin' Donuts and Starbucks
traffic lower in June, Placer.ai data indicated.
visits outpaced QSR visits every month between July 2020 and May 2022,
Placer.ai noted. In June, however, coffee visits dropped below QSR levels, as a
combination of inflation, high gas prices, and the rise in COVID cases kept
some consumers away.
At the same
time, drive-thru coffee chain Dutch Bros. visits continue to grow as the
brand expands with more locations. The company is currently offering half-off
cold drinks every Tuesday in July to Starbucks Rewards members.
other chains are keeping up with summer offers: Dunkin' discounted its
medium cold brew to $3 this month after debuting a new cold brew flavor. McDonald's
is offering free iced coffees with at least a $1 purchase on three days of its
July deals. The Coffee Bean & Tea Leaf's promoting a $2 croissant
with any beverage purchase and a 30% off Christmas in July online sale.
Coca-Cola is bringing the world's
second-largest coffee chain, Costa, to the U.S. this year with pilots
currently in select markets. The powerhouse plans to "disrupt" and "reimagine"
the category with sophisticated vending machines called Smart Cafes, fair prices
for premium coffee, and personalization for customers, Costa Coffee US GM Tim
Warner told Beverage Daily.
are turning to menu innovation. Eater and Bon Appetithave both reported on boba tea
influences seeping into coffee chains, like jelly at Peet's Coffee and
an iced brown sugar drink at Starbucks. And each chain has expanded
matcha offerings as the lower-caffeine tea gives the coffee category a run for
its money, according to The Street.
home — or the office as one consumer told CNBC — appears to be a quick fix for
inflation-weary consumers , and retailers are ready with surplus. Amazon
discounted more than two dozen coffee makers on its annual Prime Day, Target
and Walmart have Keurig's on sale, and Costco has
deals on Starbucks K-Cups and whole beans. Food Institute Focus
Grubhub's partnership with Amazon
will likely lead to new Prime subscribers, for a time. About three quarters of
Prime subscribers in the U.S. live outside of urban areas and Grubhub is known
for its strength in cities, reported The Wall Street Journal (July 16). Full Story
Malaysian operator of KFC and Pizza Hut restaurants in Southeast
Asia, has again delayed its domestic IPO of up to $500 million on worries that
poor macroeconomic conditions could hurt its valuation, reported Reuters
(July 19). Full Story
KFC began a limited test of chicken
nuggets in Charlotte, North Carolina. The white meat nuggets come in servings
of eight, 12, or 36 pieces, reported CNN Business (July 18). Full Story
Fazoli's signed seven area franchise
development agreements in the second quarter for 22 new locations. Full Story
pizza chain Milano Vice raised $6 million in funding. The Berlin-based
company operates a virtual pizza franchise concept that works with professional
kitchens to deliver pizzas to consumers, reported EU Startups (July 13).
$100 million in Series C funding from investors Kroger, Circle K
parent Couche-Tard, Restaurant Brands International, B. Riley
Venture Capital, shopping center behemoth Simon, Phillips Edison
& Co. and The HAVI Group, reported Supermarket News (July
25). Full Story
Starbucks will unveil its web3-based rewards
program in September. The web3 initiative will include coffee-themed NFTs that
the company says won't only be digital collectibles, but will also provide
access to exclusive content and perks, reported TechCrunch (Aug. 3). Full Story
Restaurant Brands International CEO Jose Cil says more customers are
redeeming coupons and loyalty rewards, but the company hasn't seen any significant
change in what diners are buying, reported CNBC (Aug. 4). Full
Wendy's announced plans to pare back its sizable ghost kitchen deal
with Reef Kitchens after U.S. units underperformed. The burger chain
announced last year that it planned to open 700 locations in Reef Kitchens;
it now plans to open as few as 100, reported Restaurant Business (Aug.
on the Move:
veteran G.J. Hart is coming out of retirement to become Red Robin's next
CEO and president, replacing Paul Murphy, who is set to retire at year's end,
reported Restaurant Business (July 14). Full Story
Grill & Bar named
George Felix chief marketing officer. Full Story
joined Tavistock Restaurant Collection as area director of New England
restaurants. Full Story
announced Christopher Harter as new chief operations officer. Full Story
Church's Texas Chicken and Texas Chicken named Joe Guith as CEO,
reported Meat & Poultry (Aug. 3). Full
Performance Food Group CFO Jim Hope will retire later this year and
COO of PFG's Vistar business Patrick Hatcher will take over, reported MarketWatch
(Aug. 10). Full
Del Taco CEO John Cappasola has stepped down and will be replaced
by COO Chad Gretzema, reported QSR Magazine (Aug. 5). Full
SUPPLY CHAIN NEWS
‘Heatflation' Is Pushing Up Food Prices
crop production enemies, drought and excessive heat, are putting unprecedented
pressure on the global food supply, sending grocery prices soaring in what's
being labeled "heatflation."
heatwave is the latest in a series of punches hitting retailers and food
manufacturers – from COVID shortages to the war in Ukraine. In the short-term,
retailers will scramble to replace missing supply, looking to alternative
sources of supply where possible," Randall Sargent, principal at Oliver
Wyman's Retail and Consumer Goods practice, told The Food Institute.
wave is yet more fodder for retailers and CPGs to rethink their supply chains
and look for more sustainable sources of supply," he added.
impact is likely to be felt first in the produce section while reduced supplies
of wheat will take longer to make their way through the supply chain.
Consumer Price Index showed food prices up 10.4% from last year, the largest
increase since 1981, with food at home prices up 12.2%, the largest increase
drought in 70 years in northern Italy is threatening olive oil, risotto rice
and processed tomatoes. Kyle Holland, an analyst for the market research group
Mintec, told The Guardian(July 13) Italian olive oil production could be down
as much as 30% from last year while Spanish production could be reduced by 15%.
already seeing some olive trees producing no fruit, which only happens when
soil moisture levels are critically low," Holland said. "According to industry
contacts, the lower production and, therefore, limited supply of olive oil is
likely to cause prices to increase in the coming months."
Molidor of the Center For Biological Diversity told KCBS, Los Angeles (July 19) that heatwaves, which are
fueling wild fires that destroy crops, are forcing farmers and ranchers to send
their cows to market early, meaning they're skinnier than usual.
Keszey, farm and land director at Earthkeep Farmcommon, told The Food
Institute that heatwaves and drought are likely to cause food disruptions,
but it might be possible to mitigate the impact by investing in local and
regional food economies, which, in turn, reduce transportation costs.
changing climate as the new normal, extreme weather like the recent heat waves
and drought conditions will continue to decrease yields," he said.
As a result
of rising prices, consumers are increasingly turning to discount grocers,
according to data from Klover, which tracks consumer spending. The data
indicate overall spending and transaction volume is down, with Aldi the only
discount grocer showing an uptick in transaction frequency.
prices are being felt at restaurants too, which are already being squeezed by
increase labor costs and shortages.
restaurants, margins are eroding due to limitations in the ability to pass on
all food and labor cost increases," Oliver Wyman partner Julien Boulenger said.
include declining consumer sentiment as well as contract limitations in the
case of B2B foodservices players." Food Institute Focus
Sales Increase as Traffic Slows in June
sales were up 1.6% on a dollar basis in June, but total restaurant traffic fell
4.8% during the month, according to Black Box Intelligence. The sales
growth was the lowest since February 2021 and was well below the 4.9% increase
reported in May. Full Story
Black Box found the fine dining and upscale casual segments saw steep declines
when compared to the prior months, with quick service representing the only
segment to experience positive sales growth month-over-month.
the impact of inflation and rising menu prices, U.S. consumers cut back on
their restaurant visits in the second calendar quarter of 2022, The NPD
Group said. Physical and online restaurant traffic declined by 2% in the
quarter versus a year ago, -6% below the pre-pandemic level in the same quarter
in 2019. Full Story
economic upheaval, more than a third of the nation's restaurants are putting
their recruitment efforts on hold to protect margins from soaring wage rates,
according to a new survey from the Alignable Research Center. The
inflationary pressure is so intense that 4% of establishments are even laying
off workers, reported Restaurant Business (July 22). Full Story
Pizza reported mixed
quarterly results as the pizza chain struggled with higher costs and an ongoing
shortage of delivery drivers. Net income in the three-month period ended June
19 was $102.5 million, or $2.82 per share, down from $116.6 million, or $3.06
per share, a year earlier. Net sales rose 3.2% to $1.07 billion, reported CNBC
(July 21). Full Story
better-than-expected quarterly earnings as price hikes helped offset higher
costs and restaurant closures in Ukraine and Russia. Net sales fell 3% to $5.72
billion, hurt in part by the closure of McDonald's Russian and Ukrainian
restaurants, reported CNBC (July 26). Full Story
Mexican Grill beat
Wall Street estimates for quarterly profits as multiple rounds of price hikes
helped the burrito chain cushion the blow from soaring costs. Net sales climbed
17% to $2.21 billion, reported Reuters (July 26). Full Story
mixed quarterly results but said Taco Bell had stronger sales. The company had
second-quarter net income of $224 million, or 77 cents per share, down from
$391 million, or $1.29 per share, a year earlier. Net sales rose 2% to $1.64
billion, reported CNBC (Aug. 3). Full Story
Starbucks reported better-than-expected
quarterly results, fueled by demand in the U.S. for its cold coffee drinks. Net
sales rose 9% to $8.15 billion, reported CNBC (Aug. 2). Full Story
Restaurant Brands International posted a 9% same-store sales growth
rate in second quarter 2022, with increases posted across Tim Horton's
(+12.2%), Burger King (10%), and Popeyes Louisiana Kitchen (1.4%).
Its system restaurant count reached 29,747 during the quarter, with 1,233
of those restaurants Firehouse Subs locations it added as part of its
acquisition of the company. Full
Salad chain Sweetgreen lowered its full-year outlook and said it would
lay off 5% of its workforce and downgrade its office space. For the quarter
ended June 26, the company met earnings expectations, reporting 36 cents per
share, but fell short on revenue, reporting $124.9 million versus $130.2 million
expected, reported CNBC (Aug. 9). Full
The Wendy's Co. missed Wall Street estimates for quarterly U.S. same-store
sales growth as Americans reined in their spending on burgers and fries in
the face of decades-high inflation. Revenue rose 9% to $537.8 million, but
missed Wall Street expectations of nearly $540 million, reported Yahoo!
Finance (Aug. 10). Full
Jollibee Foods, the largest Philippine restaurant operator, saw its
profit jump by nearly 200% in the second quarter as diners returned with the
easing of Covid restrictions. The company reported a net income of 2.8 billion
pesos ($50.5 million) in the three months to June, nearly triple its 976 million-peso
profit a year ago, reported Bloomberg (Aug. 11). Full
Tillamook – the fastest growing premium ice cream brand in the USA - has inked an exclusive partnership with Dot Foods making Tillamook Ice Cream now available to foodservice operators and distributors in all 50 states!
Tillamook has been making its premium ice cream since 1947, using rBST-free milk, cage-free eggs, and no artificial flavors or preservatives. Packaged in plastic three-gallon tubs, there are eight taste-tempting flavors currently stocked at Dot including Vanilla Bean, Chocolate, Mint Chocolate Chip, Oregon Strawberry, Chocolate Chip Cookie Dough, Cookies & Cream, Rocky Road, and Butter Pecan, with another 20 flavors available for special order. Tillamook products have tremendous loyalty, with nearly one in four households currently buying the brand. This new distribution is poised to appeal to that fan base while they are away from home, once delicious scoop at a time. Reach out to your distributor today to arrange a sample.
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.