November 14th QSR Roundup: Cava's Rapid Growth, Grubhub's New Chapter, and Culinary Innovations Shaping 2024

QSR news for Nov 14th, 2024. We reviewed 21 QSR publications, 6 subreddits, and over 104 articles to bring you the latest. Estimated reading time saved (at 200wpm): 300 minutes. It'll take you only 8 minutes to catch up.

CAVA's Meteoric Rise in the Fast-Casual Scene

CAVA is making waves in the fast-casual dining industry with impressive growth:

• Same-store sales soared by 18.1% in Q3, and traffic increased by 12.9%, setting CAVA apart among public restaurant brands.
• Revenue climbed 39% year-over-year, reaching $241.5 million, with average unit volumes escalating to $2.8 million.
• The introduction of Garlic Ranch Pita Chips created a social media buzz, yielding over 12 million impressions.
• CAVA plans 17% unit growth in 2025, expanding into South Florida and strengthening its position in the Midwest.

CAVA focuses on blending technology with hospitality to enhance the dining experience while maintaining warm personal interactions.

Sources:

• QSR Magazine
• Restaurant Business

Grubhub's New Chapter: Sold to Wonder at a 90% Loss

Just Eat Takeaway.com has sold Grubhub to Wonder for $650 million, marking a staggering 90% loss from its original acquisition price of $7.3 billion.

• The deal includes $150 million in cash and $500 million in assumed debt.
• Wonder, a food hall company founded by former Walmart CEO Marc Lore, plans to integrate Grubhub's services to enhance meal delivery options.
• Grubhub operates with 375,000 merchants and 200,000 delivery partners in the U.S.
• The acquisition is expected to finalize in Q1 2025.

This move aims to enhance Just Eat's financial position and allows Wonder to create a "super app for meal ordering," reimagining food delivery.

Sources:

• QSR Magazine
• Restaurant Business
• Fast Casual

Subway's Fresh Forward 2.0: Revitalizing the Brand

Subway has unveiled its updated store prototype, Fresh Forward 2.0, designed to enhance customer convenience and franchisee profitability.

• The new design includes vibrant décor, self-service kiosks, and significant digital improvements.
• Early adopters are already embracing the new design, with positive feedback indicating a greater likelihood of guest return.
• Subway achieved a 6.4% rise in global same-store sales in 2023, marking a turnaround after years of decline.
• Roark Capital acquired Subway for about $9.6 billion, underscoring ambitious growth plans.

The rollout begins in several countries amidst an expanding international presence.

Sources:

• QSR Magazine
• Restaurant Dive

Culinary Innovations and Trends Shaping 2024

Restaurants are gearing up for 2024 with exciting trends and innovations.

Bullets:

• Sustainability and Local Sourcing top the list of upcoming trends, reflecting growing consumer demand for responsible dining.
• Asian flavors are on the rise, with Korean and Vietnamese cuisines gaining popularity among adventurous eaters.
• Mushrooms are shining in the ingredient spotlight for their versatility and health benefits, including cognitive support and mood enhancement.
• Wellness Drinks and Creative Spritzes are becoming essential menu items as consumers seek healthier options.
• Value Deals remain important as diners navigate inflation, indicating a willingness to pay for exciting flavors.

Longer Summary:

Operators are innovating to balance efficiency with exciting flavors, embracing both novelty and nostalgia. Seasonal comfort foods like soups and indulgent desserts are making a comeback as temperatures drop. The beverage scene is buzzing with trends like cold brew, hyper-local beers, and innovative low-alcohol options.

Sources:

• Restaurant Business
• Food Business News
• FSR Magazine

Optimism and Challenges in the Restaurant Industry

The industry shows signs of recovery but remains cautious.

Longer Summary:

After a challenging period, the restaurant industry is experiencing early signs of recovery, highlighted by improving sales and a more favorable lending environment. Fast-food traffic rose by 2.8% in October, and chains like McDonald's and Wendy's reported meaningful sales increases. Lending conditions are easing, with more lenders participating in industry conferences and interest rates lowering.

However, the economic recovery is uneven. Wealthier consumers are benefiting, while lower-income groups struggle with inflation. Market disparities suggest that while there's optimism, the industry remains vulnerable to economic fluctuations, indicating that the recovery may still be fragile and inconsistent.

Bullets:

• Sales are improving, with fast-food traffic up by 2.8%.
• Lending conditions are easing, signaling a healthier lending landscape.
• Interest rates are lowering, fueling confidence in borrowing.
• Private equity interest may rise as conditions improve.

Sources:

• Restaurant Business
• FSR Magazine

Franchise Developments and Leadership Changes

Significant movements in franchising and leadership positions.

Bullets:

• Salata Salad Kitchen aims to triple its store count to 300 within five years, focusing on existing markets and innovative locations like college stadiums.
• Jack in the Box welcomes Lance Tucker back as CFO to navigate financial strategies amid sales challenges.
• Moe's Southwest Grill promotes Mike Smith to Chief Brand Officer, enhancing operational strategies.
• Greg Flynn of the Flynn Group remains optimistic about casual dining, despite sector challenges, emphasizing the value of selective partnerships.

Longer Summary:

Franchisees emphasize the importance of structured support and open communication for success. Salata is prioritizing customer-centric approaches, implementing a mystery shopper program, and focusing on value propositions to set itself apart from competitors. Jack in the Box is facing sales declines but is pushing forward with expansion plans.

Sources:

• QSR Magazine
• Restaurant Dive
• Restaurant Business

Legal Battles and Regulatory Updates

Key legal and regulatory developments affecting the industry.

Longer Summary:

• KFC is suing Church’s Texas Chicken over trademark infringement related to the phrase 'original recipe', arguing that it will confuse customers and dilute its trademark power. KFC seeks to stop Church's campaign and claim damages amounting to three times the profits made from the infringement.
• The National Labor Relations Board (NLRB) has declared captive audience meetings unlawful, asserting they violate employees' rights under the National Labor Relations Act. This ruling tightens restrictions on employer communications around unionizing.
• TGI Fridays faces a class-action lawsuit for failing to provide proper notice during abrupt restaurant closings while in Chapter 11 bankruptcy. The lawsuit claims violation of the WARN Act, seeking back pay and attorney fees.

These developments highlight the importance of compliance and awareness of legal obligations within the industry.

Sources:

• Restaurant Business
• Restaurant Dive
• QSR Web

Sustainability Efforts and Food Waste Reduction

Restaurants are focusing on sustainability and reducing food waste.

Bullets:

• Food waste contributes significantly to climate change, with wasted food making up 24% of landfill waste.
• Only one restaurant chain, Chick-fil-A, has committed to a national Food Waste Pact.
• Chef Michael Cimarusti's Providence restaurant implements innovative practices to minimize waste, like repurposing beef fat and utilizing chocolate husks.
• Policymakers aim to halve food waste by 2030, yet levels remain high.

Longer Summary:

Despite ongoing initiatives, the restaurant industry faces challenges in tackling food waste amidst other pressures. The broader food system needs to collaborate to address waste effectively, ensuring environmental sustainability and operational efficiency.

Sources:

• Restaurant Business
• Civil Eats

Technological Advancements Transforming the Industry

Tech innovations are reshaping restaurant operations.

Longer Summary:

• SkyTab offers a transformative POS solution for restaurants, eliminating processing fees and improving revenue. Key features include zero processing fees, a $5,000 incentive, advanced technology, and seamless switching with free installation.
• AI phone agents are revolutionizing customer communication by handling reservations and inquiries 24/7, improving operational efficiency and ensuring consistent customer interactions.
• Pita Pit USA unveils a tech-savvy drive-thru prototype with features like modular design, automated queue gates, kiosk ordering, and dynamic LED lighting, promoting fast, contactless service.

These technological advancements enhance customer experience and operational efficiency, setting new industry standards.

Sources:

• Total Food Service
• Modern Restaurant Management
• QSR Web

New Product Launches and Menu Updates

Exciting new offerings from various brands.

Bullets:

• Krispy Kreme introduces a new cinnamon butter popcorn flavor and reports a 15% growth in their delivered-fresh-daily business.
• Outback Steakhouse launches festive holiday menu ‘Steakmas’ with new items like the Bloomin' French Onion Sirloin and Bourbon Onion Ribeye.
• Little Bites Snacks releases Hot Cocoa with Marshmallow Muffins, a seasonal offering from Bimbo Bakeries USA.
• Big Mozz revolutionizes mozzarella sticks with new flavors: super ranch and flamin’ mozz, adding excitement to the snacking category.

These updates aim to attract customers with innovative flavors, seasonal specials, and unique dining experiences.

Sources:

• Food Business News
• Nation's Restaurant News

Financial Trends and Food Price Updates

Insights into food prices and economic trends.

Longer Summary:

• Food prices increased moderately in October, with the Consumer Price Index (CPI) showing a 0.2% rise, half that of September's increase. Bakery products led the surge with a 1.9% increase in bread prices.
• Hershey's CEO noted a mild impact from GLP-1 weight-loss drugs on candy sales, acknowledging changing consumer behaviors influenced by these medications.
• The market for GLP-1 drugs is booming, with projections of becoming a $150 billion market by 2030.
• Despite challenges, companies are adapting to changing consumer behaviors and economic conditions, focusing on innovation and customer engagement.

Sources:

• Food Industry Executive
• Food Business News

Discussions from Restaurant Owners and Industry Professionals

Insights from industry professionals and Reddit discussions.

Bullets:

• Funding a Restaurant: Aspiring restaurateurs are advised to plan realistically for startup costs, with estimates ranging from $150,000 to over $500,000, and to consider options like personal loans, investors, or starting with smaller ventures.
• Ghost Kitchen Partnerships: Challenges include liability issues, insurance implications, and finding willing partners due to potential risks associated with sharing kitchen space.
• Kitchen Equipment Placement: Advice against placing Kitchen Display Systems (KDS) behind cooking equipment due to maintenance concerns, grease accumulation, and device longevity.

Longer Summary:

These discussions highlight the practical challenges and considerations in restaurant operations, emphasizing the importance of thorough planning, understanding industry dynamics, and prioritizing safety and efficiency in operations.

Sources:

• /r/restaurantowners
• /r/restaurateur
• /r/Restaurant_Managers

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