February 10th QSR Roundup: Restaurant Industry Growth, New Bakery Ownership, and Value Promotions Decline

QSR news for Feb 10th, 2025. We reviewed 21 QSR publications, 6 subreddits, and over 47 articles to bring you the latest. Estimated reading time saved (at 200wpm): 150 minutes. It'll take you only 10 minutes to catch up.

Restaurant Industry's Massive Growth Amidst Challenges

The restaurant industry is on track to achieve an incredible $1.5 trillion in sales and add 200,000 jobs in 2025. Despite facing hurdles like a 61% decline in customer traffic due to economic pressures, operators remain cautiously optimistic.

• 95% of operators observe that guests are more value-conscious.
• To attract customers, 53% have introduced discounts.
• 81% of consumers would dine out more if they could afford it.
• Inflation is easing, expected to grow at 2.4% in 2025.
• The labor market shows signs of stability:
  • 77% report hiring challenges.
  • Job growth is projected to reach 17.4 million jobs by 2035.
• 60% plan to boost tech investments, focusing on:
  • Digital marketing.
  • AI integration to enhance productivity and customer experiences.

Source: QSR Magazine

Waffle House Adds Egg Surcharge Amidst Soaring Prices

Egg prices have skyrocketed by 40% since late 2023, severely impacting restaurant margins, especially for breakfast spots.

• Waffle House introduced a 50¢ surcharge per egg, serving 272 million eggs annually.
• Demand remains strong, with increased consumption linked to dietary trends and medications like GLP-1.
• A bird flu outbreak has led to 8% fewer egg-laying hens, tightening supply.
• Large Grade A eggs have increased by over 187% since January 2024.
• Consumers are stockpiling, and while some consider plant-based alternatives, eggs remain in high demand.

Source: Food Business News

McDonald's Bold Chicken Strategy to Regain Market Share

McDonald's is gearing up to strengthen its presence in the chicken market with new menu offerings:

• Introducing chicken strips and snack wraps to attract customers.
• Recovering from a 1.4% decline in U.S. sales in Q4 due to an E. coli outbreak.
• Menu innovations aim to boost traffic:
  • Chicken strips expected in late April.
  • Snack wraps anticipated in June or July.
  • Adding the Chicken Big Mac to the lineup.
• A focus on value promotions, with past successes like the $5 Meal Deal.

Source: Restaurant Dive

PepsiCo Invests $68.6 Million in New Quaker Oat Facility in China

PepsiCo is partnering with Jiangsu Rilong Food to build a state-of-the-art Quaker oat production facility in Huai’an City, China.

• Investment of nearly 500 million yuan ($68.6 million).
• Facility will span 100,000 square meters (1.08 million square feet).
• Operations set to begin by 2025.
• Expected to produce up to 160,000 tonnes of oat cereals, including 10 different types in various packaging.
• Leverages Jiangsu Rilong's 20 years of oatmeal processing experience.
• Part of PepsiCo's strategic growth in China, with:
  • 11 food plants and 60 beverage plants.
  • A new food plant opened annually for the past six years.

Source: Food Business News

California Pizza Kitchen's Ambitious U.S. Expansion Plans

Celebrating its 40th anniversary, California Pizza Kitchen (CPK) is poised for significant growth.

• Launching a U.S. franchise program:
  • Initial deal to open six stores in Nevada and Utah over five years.
• Currently operates approximately 120 U.S. locations.
• Plans to re-franchise underperforming areas and focus on strong markets like Hawaii.
• Innovative initiatives include:
  • Launching vending machines offering pizza, with plans to add pasta and salads.
• After restructuring post-2020 bankruptcy, CPK is focusing on:
  • Brand equity.
  • A balanced leadership team.
  • Strategic growth pillars: Recognition, Reputation, and Whitespace.

Source: FSR Magazine

Innovations and Collaborations in Food and Beverage

HTeaO Partners with poppi for Craft Sodas

• Launching innovative sodas blending signature iced teas with poppi’s prebiotic soda.
• New flavors include:
  • Trop poppi: Strawberry Lemon poppi + Blueberry Green Tea.
  • Peachy poppi: Strawberry Lemon poppi + Sweet Georgia Peach Tea.
  • Dirty Cherry poppi: Cherry Cola poppi + coconut and lime.
• Available from February 14 in 24oz ($5.49) and 32oz ($6.89).
• Celebrates Texas collaboration and beverage creativity.

Source: QSR Magazine

Restaurant Value Promotions See a Decline

• Only 47% of operators plan to introduce discounts or promotions this year, down from 53% last year.
• Yet, 95% note diners are more value-conscious.
• Successful value strategies incorporate:
  • Not just pricing, but also food quality and service.
• 75% of adults consider specials or discounts when choosing quick-service restaurants.
• Limited-service restaurants outperform full-service in value offerings.
• McDonald's and Chili's have leveraged value deals to drive sales, though external factors like health outbreaks can impact momentum.

Source: Restaurant Dive

Technological Advancements Streamlining Food Industry

Turing Labs Introduces AI for Food Reformulation

• Launches an AI platform to help CPG companies reformulate products swiftly.
• Addresses challenges like the FDA’s upcoming ban on Red Dye No. 3.
• Combines AI with in-depth ingredient knowledge.
• Aims to reduce time and resources in product reformulation.
• Successfully raised $16.5 million in Series A funding.

Source: Food Business News

Fast Casual Nation Podcast Revolutionizes Industry Insights

• Fast Casual Nation introduces its Podcasting 3.0 approach.
• Co-hosted by Cherryh Cansler and Paul Barron.
• First episode launched on Feb. 28.
• Coverage includes:
  • Consumer science.
  • Industry trends.
  • Interviews with key industry leaders.
• Accessible on platforms like YouTube, Apple Podcasts, and Spotify.
• Aims to set a new standard for podcast production and industry engagement.

Source: Fast Casual

Significant Growth in the Global Sandwich Market

The sandwich market is experiencing substantial expansion:

• Expected to grow by $46.5 billion from 2025 to 2029.
• Projected 5% CAGR.
• Trends driving growth:
  • Rise in breakfast sandwiches featuring egg protein and organic ingredients.
  • Millennials pushing for healthier, eco-friendly options.
  • Increased popularity of organic meats, vegetables, and breads.
• Pre-packaged sandwiches gaining traction for convenience in:
  • Households.
  • Quick-service restaurants.
  • E-commerce platforms.

Sources: Networld Media Group, Food Business News

Egg Price Surge Impacting Restaurants

• Egg prices have risen by 40%, pressuring restaurant profit margins.
• Restaurants are employing creative strategies:
  • Reducing portion sizes.
  • Raising prices.
  • Promoting egg alternatives.
• Waffle House added a 50¢ surcharge per egg.
• Factors contributing to the surge:
  • Bird flu outbreak leading to 8% fewer egg-laying hens.
  • Increased egg consumption linked to dietary trends.
• Some consumers turn to plant-based egg substitutes, but demand for real eggs remains high.

Source: Food Business News

Crave Hot Dogs & BBQ Continues Expansion

• Opening a new location in a Walmart Supercenter in Burleson, Texas.
• Part of a national expansion strategy.
• Adds to existing locations in Florida.
• CEO Samantha Rincione expressed excitement about the growth.

Sources: Fast Casual, Networld Media Group

Optimizing Marketing Spend for Restaurant Franchises

Restaurant franchises are focusing on data-driven marketing strategies to enhance ROI:

• Aiming to identify effective advertising spend.
• Common issues include:
  • Overspending on incompatible tech tools.
  • Lack of consolidated platforms leading to inefficiency.
• Solutions involve:
  • Tech consolidation to improve cost efficiency.
  • Leveraging customer data for targeted marketing.
  • Prioritizing loyalty programs to lower acquisition costs.
• Strategies discussed at the Restaurant Franchising and Innovation Summit.

Source: Networld Media Group

KFC Collaborates with Mike's Hot Honey

KFC introduces new meal options featuring Mike's Hot Honey:

• $7 box meal deals include:
  • Three Original Recipe Tenders or two pieces of fried chicken.
  • Drizzled with Mike's Hot Honey.
  • Served with a side and biscuit.
• $25 Fan Favorite's Box includes:
  • Four pieces of bone-in chicken.
  • Twelve white-meat nuggets.
  • Fries and biscuits.
  • Choice of four sauces, including Mike's Hot Honey.
• Emphasizes a fusion of flavors: crispy, juicy, salty, spicy, and sweet.
• Mike's Hot Honey founder celebrates the partnership blending nostalgic flavors.

Source: Fast Casual

Food Manufacturing Revolutionized by Technology

In a recent webinar, experts highlighted the transformative impact of technology on food and beverage manufacturing:

• ERP Systems:
  • Improve batch efficiency.
  • Enhance inventory management.
  • Boost compliance and traceability.
• MES (Manufacturing Execution Systems):
  • Provide real-time production monitoring.
  • Enable immediate bottleneck identification.
  • Reduce setup costs.
• APS (Advanced Planning and Scheduling):
  • Offer flexible, visual planning.
  • Adapt to production floor changes.
  • Allow long-term planning.
• Integration of these technologies leads to:
  • Increased visibility.
  • Better decision-making.
  • Reduced waste and higher productivity.

Source: Food Industry Executive

Chipotle Implements Sous Vide Cooking for Consistency

Chipotle now uses sous vide cooking for its beef to enhance safety and consistency.

• Sous vide allows precise cooking, reducing overcooking risks.
• Mixed reactions from customers:
  • Some appreciate the consistency and safety.
  • Others feel the flavor has changed negatively.
• Emphasizes the balance between innovation and maintaining taste.

Source: /r/fastfood Reddit Forum

Navigating Rising Costs in Restaurants

Cost of Employee Meals

• Restaurant owners discuss whether eating a pizza from their establishment incurs retail price or just ingredient costs.
• Key considerations:
  • Generally, only the cost of ingredients is counted.
  • Opportunity cost of potential sales if the pizza was sold.
  • Importance of accounting for labor and operational costs.
  • Suggestions to budget for staff meals to avoid impacting profitability.

Source: /r/restaurant Reddit Forum

Dining Out: Sharing Bills and Food Intolerances

Splitting the Bill Strategies

• Techniques range from even splits to itemized checks.
• Factors influencing the approach:
  • Fairness and simplicity.
  • Differences in orders (e.g., drinks vs. no drinks).
  • Use of apps like Venmo or Zelle for easy transfers.
• Emphasis on maintaining camaraderie while ensuring everyone pays their fair share.

Navigating Food Intolerances

• Individuals with dietary intolerances feel left out when friends share food.
• Recommendations include:
  • Communicating dietary needs upfront.
  • Ordering extra dishes to accommodate sharing.
  • Friends being considerate of allergies.

Sources: /r/restaurant Reddit Forum

Bar Industry Trends and Discussions

Homogeneity in New Bars

• Frustration over new bars lacking originality, following similar themes and aesthetics.
• Discussion on the appeal of 'Instagram-friendly' bars versus traditional dive bars.
• Challenges new establishments face in a saturated market.

Espresso Martini On Tap

• Bar owners explore serving espresso martinis on tap.
• Mixed opinions:
  • Freshly made cocktails vs. convenience of draft options.
  • Nitro drafts praised for popularity and ease.
• Practical considerations:
  • Use of cold brew instead of espresso.
  • Managing equipment for optimal results.

Sources: /r/BarOwners Reddit Forum

Applegate Introduces New Breakfast Sandwiches

Applegate, a subsidiary of Hormel Foods, launches Applegate Naturals breakfast sandwiches:

• Two varieties:
  • Chicken and Maple Sausage.
  • Turkey Sausage.
• Provide 12-14 grams of protein.
• Made with high-quality, antibiotic-free meat.
• Aimed to be a convenient and delicious option for families.
• Retail price: $8.99 for a box of two.

Source: Food Business News

Bunge's Earnings Impacted by Global Challenges

• Full-year net income for fiscal 2024 dropped nearly 50% to $1.14 billion.
• Weak oilseed processing margins affected quarterly earnings.
• Projected adjusted earnings per share for 2025 at $7.75, down from $8.71.
• Shares hit a 52-week low, dropping 7% in one day.
• Sales fell 11%, from $59.54 billion to $53.11 billion.
• Despite challenges, volume growth in several units indicates future potential.
• Upcoming business combination with Viterra and acquisitions signal commitment to strategic growth.

Source: Food Business News

Flowers Foods Focuses on Premium Product Growth

• Net income doubled in 2024 to $248.1 million.
• Success attributed to:
  • Growth in branded items: organics, keto, and gluten-free products.
  • Cost-saving initiatives and efficiency improvements.
• Traditional loaf bread sales declined, but premium options showed promise.
• Introduced Wonder snack cakes and innovative products.
• Recent acquisition of Canyon Bakehouse aids in diversifying towards better-for-you snacks.
• Expected adjusted EPS between $1.11 and $1.24 in fiscal 2025.

Source: Food Business News

Significant Investments in Food and Beverage Industry Expansion

• 62 new projects identified, totaling over $700 million in planned investments.
• Includes 37 processing facilities and 26 distribution warehouses.
• Largest project: Agristo's $450 million processing facility in Grand Forks, ND.
• Top states for new projects:
  • Wisconsin (10 projects).
  • New York and Texas (5 projects each).
• Investments reflect growth and expansion in the sector.

Source: Food Industry Executive

Yum! Brands Reports Growth Driven by Taco Bell and KFC

• Net income of $1.49 billion for 2024, with revenues rising to $7.55 billion.
• Taco Bell achieved 5% same-store sales growth in Q4.
• Digital sales increased by 15%, making up over 50% of total sales.
• Taco Bell opened 347 new restaurants globally in 2024.
• Introduced Byte by Yum!, an AI-powered digital platform.
• Pizza Hut focuses on innovative value offerings despite challenges.
• Terminated franchise agreements in Turkey due to unmet standards.

Source: Food Business News

FDA's Ban on Red No. 3 Dye Raises Consumer Awareness

• 83% of consumers are aware of the FDA's upcoming ban on Red No. 3 in foods and beverages.
• Ban set to take effect in 2027.
• Information spreading rapidly, especially via social media.
• 47% likely to avoid products containing the dye.
• The ban results from studies linking Red No. 3 to cancer in lab tests.

Source: Food Business News

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