The Restaurant Report

Even with rampant inflation and rapidly accelerating interest rates, household borrowing climbed to start 2022 and hit a new record, the Federal Reserve reported Tuesday.Consumer debt and credit rose 1.7% in the first quarter to $15.84 trillion. The rise in total household credit was propelled largely by a $250 billion increase in mortgage debt, which now stands at $11.18 trillion, an increase of 10% from the first quarter in 2021.Consumers are returning to their previous habits with the balance between goods and services (Restaurants and dining out) spending back to where it stood in May 2020, according to data adjusted for inflation from Flexport, a freight forwarder. A separate metric cited by Goldman Sachs shows goods consumption about 5 percent higher from before the pandemic.Follow the Amazon TrendsInvestment firms noted that macro indicators appear to be deteriorating at a faster pace in a significant development for Amazon (AMZN)."The resulting negative sentiment across both consumers and businesses is likely to result in more cautious spending patterns, with headwinds worsening as the economic slowdown deepens. For consumers, that means less discretionary spend on pricier physical goods and more price sensitivity to service items like dining out."Will China boost spending with a Digital Yuan airdrop?The airdrop is a joint effort between the city of Shenzhen and Meituan Dianping, China's leading food delivery app. As per instructions, users would need to first log in to the Meituan app, sign up for the incentive, and then potentially receive the e-CNY rewards as part of a lottery draw.If chosen, the e-CNY is then dispensed to users and can be spent at more than 15,000 in-app merchant terminals that accept the state-owned digital currency. Previously, the People's Bank of China had identified the e-CNY as a potential tool for advancing regional economies and improving the efficiency of select financial services. Meanwhile, sources at Meituan say that the e-CNY plays a vital role in boosting spending and revitalizing local businesses. Shenzhen is also currently one of three cities in China where residents can pay municipal taxes and charges with the e-CNY.

Shares of Chipotle Mexican Grill Inc. CMG, -5.23% shed 5.23% to $1,252.89 Wednesday. Chipotle Mexican Grill Inc. closed $705.66 short of its 52-week high ($1,958.55), which the company achieved on September 23rd.The stock underperformed when compared to some of its competitors Wednesday, as McDonald's Corp. MCD, -4.38% fell 4.38% to $231.05, Yum! Brands Inc. YUM, -2.68% fell 2.68% to $109.46, and Domino's Pizza Inc. DPZ, -2.51% fell 2.51% to $328.02. Trading volume (306,196) eclipsed its 50-day average volume of 267,893.Chipotle Hiring IssuesA recent report, titled “Unequal Opportunity: Uncovering Discrimination in Hiring at Chipotle Mexican Grill” reached disturbing conclusions, according to experts. Specifically, of the applications submitted in 37 states over a three-week period in February, white applicants heard back from recruiters about “significantly” more jobs than Black applicants, the report found.Pricing Starting to Affect SentimentFinance chief Jack Hartung said the chain has raised prices by about 10% for the 12 months through Q1 compared to 2% in a typical year all at the same time Chipotle continues to see falling consumer satisfaction. Foodable Labs reported the third quarter in a row with falling brand sentiment specifically related to order accuracy and the lack of food quality. Current Q2 has the brand's overall sentiment rating at 76.98 the lowest in the history of the brand.Overall SentimentFood Quality 75.91 (Down YOY)Food Value 73.71 (Down YOY)Food Accuracy 72.06 (Down YOY)Source - Foodable LabsHartung isn’t certain that the current leveling off signals a full reprieve. “I’d love it to be that inflation continues to pause and that our ingredient costs are stable here on out and I’d love to be able to say six months from now that we’ve not increased our prices,” Hartung said. “But we’ll see. It all just depends on the inflationary environment.”

Woworks acquired Barberitos Southwestern Grille and Cantina, a 54-unit fast casual chain, and Zoup Eatery, a 68-unit fast casual chain, in a press release this past Thursday. Zoup will continue to be run separately by Eric Ersher, founder and previous CEO of Zoup Systems. With these acquisitions, Woworks will own six brands and over 400 restaurant locations.Since its birth in 2020, Woworks, the parent company of Saladworks, has focused on adding healthy fast casual brands to its portfolio. The company acquired Garbanzo Mediterranean Fresh and Frutta Bowls in 2020 and The Simple Greek last year. Woworks has also targeted expansion, adding 60 restaurant units last year and signing 28 new franchise agreements, which represented 112 new units.The company may be buying these chains in consumer distress - with a consistent downtrend in consumer sentiment in all but one of the transactions. Garbanzo, Frutta and Simple Greek were in dire consumer downtrends at the date of the sale. Zoup however has been a solid performer on overall sentiment and Barberitos was also a falling knife of consumer dissatisfaction according to Foodable Labs sentiment data.Barberitos and Zoup could also grow using Woworks’ network of nontraditional locations, including ghost kitchens through partnerships with Ghost Kitchens and Combo Kitchens, as well as grocery stores, airports, colleges, and universities.

Today I breakdown Reef Kitchens as they seek an ownership stake in 800 Degrees Go, a joint venture between restaurant chain 800 Degrees and robotics company Piestro, 800 Degrees Go announced Thursday. Reef will also open 500 800 Degrees Go locations through 2027, and Kenneth Rourke, Reef’s EVP of kitchens and brands, has joined 800 Degrees Go’s board.800 Degrees Go currently operates out of 40 Reef locations in 13 markets and expect to open 100 more units this year, according to the press release. Reef initially announced a deal with 800 Degrees eight months ago to operate 500 mobile units by 2026. These plans and Reef’s current deal with 800 Degrees Go are one and the same, 800 Degrees CEO Tommy Lee wrote in an email to Restaurant Dive.This past Thursday the House of Representatives passed The Relief for Restaurants and Other Hard Hit Small Businesses Act of 2022 (H.R. 3807), which would add $42 billion into The Restaurant Revitalization Fund. The bill, which will soon face the Senate, would also allocate $13 billion for other businesses with less than 200 employees that were hurt by the pandemic environment.If H.R. 3807 passes the Senate, the 177,000 restaurants that were approved for RRF grants but did not receive funding before the portal closed are already in a queue to receive grants, legislators said on a media call hosted by the Independent Restaurant Coalition on Thursday afternoon. About 20% of the industry will be eligible and will be asked by the SBA to sign a form confirming their businesses are either open or will reopen in the next sixth months. No additional application requirements will be necessary.

Shares of the California-based chain crashed over 5% in the afternoon trading session, more than doubling the decline of the S&P 500 Restaurants index.The decline could certainly be correlated with the anticipated earnings release, which is leaning in to some uncertainty as inflation impacts on margins have promoted price increases across products. According to Keybanc, prices have increased by 5-6% in a survey of over 1,500 locations. The bank noted that prices are now 3.3% higher for Steak/Barbacoa, 3.1% higher for Carnitas, and 2.4% higher for Chicken/Sofritas/Veggie entrees. These price hikes add to a spike in avocado prices to the highest level seen in nearly 25 years.Wedbush still shows as a buy"While CMG is not immune to incremental food cost inflation, we believe it remains relatively well-positioned to offset the incremental inflation with price increases remains relatively well-positioned to offset the incremental inflation with price increases," said a Wedbush note to investors.In comparison to other chains our own Foodable Labs data has been tracking overall sentiment for the past eight years and Chipotle has taken a bit of a hit this past quarter.Chipotle Overall SentimentThis time last year - 82.3 vs 77.2 in March 2022 and a fall of 5.1 points the largest we have seen in a YOY over the past four years.Panera Overall SentimentThis time last year - 79.2 vs 78.4 in March 2022 (Down 1.2 Points)Mod Pizza Overall SentimentThis time last year - 73.2 vs 79.4 in March 2022 (Up 5.8 Points)SweetgreenThis time last year - 80.3 vs 74.1 in March 2022 (Down 6 points)

Supreet Raju and her husband & co-founder, Gaurav Gupta are huge food and travel enthusiasts, exploring the blockchain industry together since 2017. While working and researching projects in the market, they noticed a consistent failure in making blockchain products truly accessible to general audiences. Even simple products were made to sound complex, which attracted no one except developers and tech-geeks. With increasing global interest in crypto & blockchain, they felt the need to create something simple, educational & user-friendly to onboard the next wave of adoption - which culminated into OneRare.The future of technology and consumer adoption is leaning more and more into the evolution of blockchain and how NFT's, the Metaverse, and more will play a bigger role in the future of restaurants, food supply chain as well as consumer adoption, and pop culture. We dive deep into this podcast in a way that will explode your mind with our special interview.

Mobile payment app Strike has partnered with Shopify, alternative payment provider Blackhawk Network, and point-of-sale supplier NCR to create a new US payment system that allows merchants to quickly receive payments in dollars after people pay with crypto.My Latest Video on this announcement.The Lightning Network-based system will work with online purchases from merchants using Shopify, as well as point-of-sale transactions at many large chain stores. All of this made operational in conjunction with Cash App.What this means for companies like a Starbucks whose sales are $24.6 B and over 43% in card payments could save the chain as much as $800 Million a year in fees. Multiply that by the 4 Trillion restaurant industry globally and you end up with an addressable market of approximately $9 Billion in savings.Block, formerly known as Square, is integrating the Lightning Network into its popular Cash App, a move first promised in 2019. The company said the feature should be available to all U.S. Cash App users, except those in New York State, in the coming weeks.The integration of the network will allow Cash app customers in the U.S. to send bitcoin for free within seconds to anybody in the world.The Lightning integration is made possible by the Lightning Development Kit created by Spiral, which is funded by Block.Cash App customers will also be able to send bitcoin to any compatible wallet that accepts Lightning Network payments, without being charged fees.Almost three years ago, Block CEO Jack Dorsey, who’s also an investor in Lightning Labs, said there were plans underway to integrate the scaling technology with Square’s Cash App.

Foodservice added 250K jobs in the first 3 months of 2022Employment in the sector still lags behind February 2020 levels by about 820,000 jobs, but this is the smallest gap to date between pre-pandemic and current job levels.Restaurants and foodservice businesses added 61,000 jobs in March 2022, marking the 15th consecutive month of job growth in the sector, according to the Bureau of Labor Statistics. But sectoral employment lags about 819,000 jobs behind February 2020, the closest the sector has come to close the gap between pre-pandemic employment and current job levels.Drone Delivery BeginsBrinker International has expanded its partnership with drone delivery company Flytrex, which now offers its service in Granbury, Texas, outside of Dallas-Fort Worth via press release.Drones will offer five-minute delivery of Brinker's brands, including two virtual brands It's Just Wings and Maggianno's Italian Classics.The expansion into Texas follows Flytrex's domestic debut in North Carolina in September 2020. Since then, the drone company has expanded into two additional North Carolina markets, including a delivery station in Holly Springs Towne Center, where the company delivers from Brinker’s It’s Just Wings brand.Robot Invasion - Four Companies to watchStarship Technologies offers autonomous robots for stores, restaurants, and campuses. Starship robots can carry items within a 4-mile radius. Starship’s robots weigh no more than 100 pounds, move at pedestrian speed, and navigate around objects and people.Nuro produces custom autonomous delivery vehicles for neighborhoods. Its main vehicle, the R2, features 360° cameras, Lidar, short and long-range radar, and ultrasonic sensors. Nuro has formed several partnerships in Houston: Domino’s for pizza deliveries, CVS for prescription deliveries, and Walmart for grocery deliveries. Postmates is a food delivery app and service owned by Uber. Its Serve robot is designed for safe, autonomous navigation on urban sidewalks. Serve navigates using Lidar and communicates with customers through an interactive touchscreen.Amazon Scout is an electric delivery system designed to get packages to customers safely using autonomous delivery devices. Scout bots are the size of a small cooler and roll along sidewalks at a walking pace. Scout initially launched testing to a neighborhood in Snohomish County, Washington. The autonomous delivery system has since expanded to Atlanta, Georgia, and Franklin, Tennessee.

After more than a year of a bear market in innovation stocks that are not part of broad-based public equity benchmarks, we believe Instacart’s move marks the first major publicly announced valuation cut by a private startup. One of its public competitors, DoorDash, DASH on the NYSE, also has dropped roughly 40% since March 2021. Instacart still could be overvalued relative to DASH, however, as its revenue growth, last year was less than a third of DoorDash’s, 21% versus 69%, while its price-to-sales ratio is more than 50% higher at 13x compared to DASH’s 7.5x.Meanwhile, data from private secondary markets also suggest that startup valuations are responding to the drawdown in public markets. Secondary marketplace Forge reported that prices for companies that traded on its platform both in the fourth quarter and in February declined roughly 10%, and that the percent of indications of interest (IOI’s) on the sell side was 60%, the highest level since the depths of the coronavirus crisis during the first quarter of 2020 and a stark reversal from the 60% of buyer IOI’s in 2021. Fast Casual Drive-Thru?Sweetgreen will open its first drive-thru pickup window, or "Sweetlane," in Schaumburg, Illinois, within the next year, the chain announced Wednesday. The unit's opening date and hours of operation have yet to be determined.Sweetgreen has been eyeing drive-thrus for several years, but the pandemic helped accelerate its plans. The chain's urban locations largely struggled during the pandemic, pushing Sweetgreen to build out its presence in suburban markets, where drive-thrus are a natural fit. In 2021, the fast casual chain opened 31 units, with 18 in suburban and residential communities, Neman said. Sweetgreen ended 2021 with 150 locations. Will this move continue to help the stock price?Foodable Labs Sentiment: 78.64 Down 3.12 Points in the past 90 daysWage WarsNusr-et Miami — an upscale steakhouse in Miami owned by celebrity chef Nusret Gokce, also known as "Salt Bae" — did not violate the Fair Labor Standards Act by using an 18% "service charge" added to customers' bills to help meet its minimum and overtime wage obligations, the 11th Circuit Court of Appeals ruled March 18 in Compere v. Nusret Miami (No. 20-12422 (11th Cir. March 18, 2022)).Filed by a total of 24 tipped employees at Nusr-et, the class-action lawsuit alleged that from Nov. 1, 2017, through Jan. 18, 2019, the restaurant "paid them less than the required federal minimum and overtime wages and forced them to participate in an illegal tip pool with non-tipped employees." The plaintiffs' case argued that the 18% service charge should be treated as a tip.The 11th Circuit determined that the service charge was not a tip because it was mandatory; the payment was not a "gift" and the amount was not, as the legal definition of "tip" states, "determined solely by the customer."Make sure to check out all of our amazing podcasts here on Foodable Network!

Crypto Impact on RestaurantsRestaurant Revitalization Fund is dropped from omnibus spending bill as hope for relief dwindles. The second round of restaurant relief will not be included in the omnibus spending bill expected to be voted on by Friday. The rallying cry for a last-ditch effort to include another round of the Restaurant Revitalization Fund in President Biden’s spending package was led by Senate Small Business chair Sen. Benjamin Cardin (D-Maryland) and Sen. Roger Wicker (R-Miss.) in February. Torchy’s Tacos founder Mike Rypka is back as CEO, the company said Thursday.Fresh Mex Moves with Torchy'sRypka was serving as interim CEO for the Austin, Texas-based chain following the retirement of former CEO GJ Hart, which was announced in November. Before launching Torchy’s, Rypka was a corporate chef for several fortune 500 organizations MTV Studios, Disney Animation, and Dell. The chain took on a new group of new investors in 2020 that included private-equity firm General Atlantic, as well as D1 Capital Partners, T. Rowe Price, Lone Pine Capital and XN.Chippy ChipotleChipotle has recruited a mechanical employee to take the weight off the hard-working humans. The new recruit is called Chippy and has been given the all-important task of making the Mexican food chain’s tortilla chips. Chippy will be helping with staff shortages and combating inflation as we see more and more tech use with fast-casual concepts.Chippy’s first shift at Chiptole will take place in its test center in Irving, California. Chippy is a product of Miso Robotics, whose other business partners include the aforementioned Buffalo Wild Wings and the Dodgers baseball franchise. Chipotle, they gave their own reasonings behind their new hire: “We are always exploring opportunities to enhance our employee and guest experience. Our goal is to drive efficiencies through collaborative robotics that will enable Chipotle’s crew members to focus on other tasks in the restaurant.”McD Goes All-In On PodcastsPodcast growth has led to increased attention to and investment in podcast networks that can better connect advertisers with diverse creators to reach these audiences. SiriusXM this month signed an exclusive deal with reVolver Podcasts, a network that specializes in Spanish-language podcasts. Earlier this year, Pod Digital Media, a full-service agency for multicultural podcasters, signed a three-year, eight-figure ad deal with McDonald's as the QSR giant seeks to invest in diverse media partners.In 2022, 51% of the population has listened to a podcast and roughly 78% are familiar with the medium.Podcast listeners increased by 29.5% from 2018 to 2021.Over one-third (104 million) of Americans listen to podcasts regularly.According to Edison Research, 41% (116 million) listened to a podcast in the last month.28% (80 million) of Americans are weekly podcast listeners.