October 16th QSR Roundup: Financial Struggles and AI Innovations Redefine the Restaurant Industry

QSR news for Oct 16th, 2024. We reviewed 21 QSR publications, 6 subreddits, and over 72 articles to bring you the latest. Estimated reading time saved (at 200wpm): 240 minutes. It'll take you only 13 minutes to catch up.

Financial and Legal Challenges in the Restaurant Industry

Applebee's Franchisee Bankruptcy

Louisiana Apple, an Applebee's franchisee operating 14 locations across several states, has filed for Chapter 11 bankruptcy. This action follows a lawsuit from City National Bank of Florida, claiming $8.3 million in unpaid debt. The franchisee's troubles began with a $7.1 million loan in September 2020, with payments halted since July 2023.

In addition:

• Applebee's parent company initiated a lawsuit over unpaid royalty payments.
• Leases were transferred to another franchisee as part of a settlement.
• The bankruptcy filing aims to undo these transfers, allowing for reorganization or liquidation.

This case adds to a growing list of restaurant companies, including Red Lobster, facing bankruptcy due to rising debt and declining sales. Applebee's is working on strategies to drive growth, with third-quarter results expected on November 6.

Source: Nation's Restaurant News

Swipe Fee Battle in Illinois

A contentious debate is unfolding in Illinois over planned reductions in swipe fees for credit card processing. Set to begin July 1, the new rules allow restaurants and retailers to exclude taxes and tips from these fees.

Highlights:

• Banking Sector Opposition: Banks argue this change could disrupt payment systems and consumer protections.
• Potential Benefits: Proponents believe lowering these fees could reduce operational costs and menu prices for consumers.
• Legal Actions: National banking trade groups have initiated legal action to prevent the change.
• Broader Implications: Illinois’ move could inspire similar efforts in other states.

The National Restaurant Association is advocating for further reforms to increase competition among payment networks, focusing on legislation like the Credit Card Competition Act.

Source: Restaurant Business

Innovations and Partnerships

Chipotle Invests in Brassica

Chipotle has made a minority investment in Brassica, a fast-casual Mediterranean concept from Columbus, Ohio.

Key Points:

• Brassica's Offerings: Known for fresh falafel, harissa-rubbed brisket, chicken shawarma, and local vegetables.
• Cultivate Next Fund: This investment comes from Chipotle's $100 million fund aimed at supporting innovative concepts.
• Competitive Edge: Helps Chipotle compete with brands like Cava, which recently went public.
• Expansion Plans: Brassica will use the funding to open new units and expand into different markets.

This marks Chipotle's first investment in a restaurant brand since closing Pizzeria Locale last year.

Sources: Nation's Restaurant News, Restaurant Business

Uber Eats Introduces Restaurant Lists

Uber Eats is launching a new feature allowing food enthusiasts to create and share favorite restaurant lists.

Features:

• Locations: Initially available in New York City and Chicago.
• Content: Lists can include both restaurants and individual menu items.
• Social Media Integration: Users can make lists public, potentially featured on the app's home feed.
• Influencer Participation: Food influencers like Jeremy Jacobowitz are partnering to promote the feature.
• Benefits for Restaurants: Aids independent restaurants in gaining visibility against larger chains.

This development adds a social media touch to Uber Eats, enhancing user engagement and community building.

Source: Restaurant Business

Dog Haus Partners with Jake Paul

Dog Haus has partnered with YouTuber and boxer Jake Paul, who becomes a franchisee and board member.

Details:

• Franchise Agreement: Plans to open 25 locations, starting with four in Texas, expanding to Florida and Puerto Rico.
• Creative Vision: Paul will assist in shaping the brand's direction to appeal to Millennials and Gen Z.
• Promotion: Ahead of his fight with Mike Tyson on November 15, Dog Haus will host 'Fight Night Haus Parties' and introduce 'El Gallo Sauce' wings.
• Strategic Move: CEO Michael Montagano emphasizes this collaboration is driven by genuine engagement rather than celebrity status.

This partnership aims to infuse fresh ideas and attract a younger audience to the brand.

Source: Nation's Restaurant News

Restaurant Celebrations and Menu Updates

Tacodeli Celebrates 25 Years

Tacodeli is marking its 25th anniversary by bringing back its beloved daily specials menu.

Highlights:

• Daily Specials: Five daily tacos and a weekend ceviche return after a pandemic pause.
• Featured Tacos:
  • Monday: Carne Asado
  • Tuesday: Chicken Tinga
  • Wednesday: New Brisket Taco
  • Friday: Steak Chimichurri Taco
• Weekend Ceviche: Lime-cured shrimp or fish with bell peppers and guacamole.
• Expansion: Now with 14 locations, plans to open new ones, including Fort Worth in 2025.
• Retail Products: Popular salsas, like Salsa Doña, are available at Whole Foods and H-E-B stores nationwide.

Founder Roberto Espinosa emphasizes that these specials reflect the brand's journey and passion for tacos.

Source: Nation's Restaurant News

Subway Introduces Ghost Pepper Bread

Subway launches its spicy Ghost Pepper Bread, the first new bread in three years.

Key Features:

• Ingredients: Ghost pepper, habanero, paprika seasoning, Monterey cheddar, and jalapeños baked into the bread.
• New Sandwiches:
  • Spicy Nacho Steak
  • Fiery Meatball
• Customer Appeal: Catering to the growing popularity of spicy foods.
• Promotion: From Oct. 17 to 20, customers can share redemption stories for 2 footlong subs for $12.99.

Paul Fabre, SVP of Culinary and Innovation, aims to elevate sandwich experiences with this bold addition. Subway operates over 37,000 restaurants globally.

Source: Nation's Restaurant News

Papa Murphy's Jack-O Pizza Returns

Papa Murphy's brings back the seasonal Jack-O Pizza for Halloween.

Details:

• Features: Signature dough, red sauce, mozzarella, pepperoni arranged like a jack-o'-lantern face.
• Pricing: Starting at $10.
• Special Bundle: 'Scream of a Deal' offers the Jack-O Pizza with cookie dough for $14 ($18 in Alaska).
• Availability: Perfect for gatherings during the Halloween season.

Emphasizing freshness and affordability, Papa Murphy's offers a fun option for celebrations across over 1,000 locations.

Sources: Food & Beverage, Fast Casual

AI and Technology Advancements

AI Revolutionizing Drive-Thrus

Artificial Intelligence is making significant strides in drive-thru operations.

Key Insights:

• Adoption Rate: 16% of restaurant operators plan to invest in AI for drive-thru systems this year.
• Benefits:
  • Efficiency: Automates routine tasks, allowing staff to focus on quality and service.
  • Order Accuracy: AI can handle 90% of orders autonomously, reducing errors.
  • Personalization: Recognizes repeat customers to enhance engagement.
  • Data Analytics: Helps optimize menu items and promotions.
• Market Growth: AI in restaurants is projected to grow from $9.68 billion in 2024 to $49 billion in five years.

This showcases the rapid adoption of technology to enhance customer experience and streamline operations.

Source: QSR Magazine

AI Revolutionizes Kitchen Productivity

Restaurants are investing in technology to tackle back-of-house challenges, with 52% focusing on improving kitchen productivity.

Highlights:

• honeygrow's AI Prep Assistant:
  • Cuts prep time by 4-5 hours daily per location.
  • Uses accurate demand forecasts to reduce food waste.
• Enhanced Accountability: Instant task visibility boosts efficiency among staff.
• PreciTaste Solutions: Offers production planning and cooking assistance, pushing restaurants into the digital age.

Embracing technology is vital for restaurants to thrive financially while minimizing waste and elevating customer satisfaction.

Source: QSR Magazine

Serve Robotics Enhances Delivery

Serve Robotics has launched its third generation of sidewalk delivery robots in Los Angeles.

Notable Features:

• Speed and Capacity: Robots can carry four 16-inch pizzas, travel further and faster.
• Enhanced Safety: Equipped with fail-safe mechanical braking and autonomous collision avoidance.
• Tech Upgrades: Improved computing power with Nvidia modules for quicker decision-making.
• Scaling Plans: Aims to manufacture 2,000 robots by 2025, with an expansion of at least 250 robots in LA by Q1 2025.
• Revenue Boost: Partnership with Uber Eats expected to generate $60-$80 million annually.

These advancements significantly enhance delivery efficiency and represent a substantial technological leap in the food delivery sector.

Source: Restaurant Dive

Labor and Operational Strategies

Boosting Restaurant Revenue

Finding creative ways to increase revenue is essential.

Upselling Techniques:

• Train Staff: Engaging, personalized interaction increases upselling success.
• Highlight High-Margin Items: Utilize visual cues and descriptive language.
• Offer Thoughtful Pairings: Suggest complementary dishes or drinks.
• Create Urgency: Limited-time offers encourage quick decisions and repeat visits.
• Use Descriptive Language: Vivid descriptions make menu items more enticing.

Other strategies include strategic staffing, efficient inventory management, and utilizing restaurant management software for smoother operations.

Source: FSR Magazine

Kitchen Automation Benefits

Automation is key in controlling costs due to thin margins.

Benefits:

• Reduce Turnover Costs: Employee turnover can cost up to 200% of a worker's salary; automation improves satisfaction.
• Increase Profits: Trinity Corp. increased profits by 8% after adopting automated oil systems, saving about $300/month per location.
• Enhance Safety: Reduces dangerous tasks, improving workplace safety.

Managers gain real-time insights, leading to better training and predictable vendor pricing.

Source: Restaurant Dive

Food Trends and Seasonal Offerings

Squid Ink Black Matcha Launch

16 Handles introduces Squid Ink Black Matcha frozen yogurt for Halloween festivities.

Features:

• Unique Flavor: Sweet matcha with a daring black twist, turning tongues black.
• Launch Date: October 16.
• Social Media Contests:
  • Black Tongue Challenge (Oct. 16-31)
  • Dalgona Cookie Challenge (Oct. 25-29)
• Prizes: Chances to win $250 Visa Gift Cards.
• CEO's Vision: Neil Hershman aims to attract more guests with these challenges.

Known for innovative flavors, 16 Handles offers over 16 soft serve options and 50+ toppings.

Source: QSR Magazine

Cinnaholic's Halloween Treats

Cinnaholic launches a spooky Cemetery Box for Halloween.

Details:

• Contents: Four rolls topped with chocolate frosting, pretzels, “Oreos,” sprinkles, and tombstone decorations.
• Dietary Info: 100% free from dairy, lactose, eggs, and animal products.
• Availability: Until October 31st.

This offering ensures a sweet treat for all occasions, appealing to a wide audience with dietary considerations.

Source: QSR Magazine

Best Halloween Candy Revealed

Prepare for Halloween by knowing the best candies to hand out.

Popular Choices:

• Full-Sized Candy Bars: Twix, Hershey's, and king-size Crunch bars.
• Top Candies: Sour Patch Kids, lollipops, and Reese's cups.
• Least Desired: Raisins and toothbrushes, with kids avoiding sour candies like Warheads.

Enhance the Halloween experience with fun decor like spiderwebs, ghosts, and glow sticks to attract more trick-or-treaters.

Source: Eater

Food Delivery and Fraud Issues

Combatting Delivery Fraud

Food delivery apps face significant fraud challenges.

Main Issues:

• Promotion Abuse: Fraudsters exploit discounts using fake accounts.
• Collusion: Networks manipulate systems with fake orders, damaging restaurant reputations.
• Advanced Technology: GPS spoofing and account cloning enable large-scale fraud.
• Impact on Restaurants: Lower ratings, increased fees, and operational difficulties threaten sustainability.

Proactive Measures for Restaurants:

• Monitor for anomalies.
• Collaborate with support platforms.
• Strengthen account security.
• Educate staff.
• Keep transaction records updated.

By adopting these strategies, restaurants can protect themselves and maintain customer trust.

Source: Modern Restaurant Management

UberEATS Customer Scam Concerns

There's a drastic increase in false claims from UberEATS customers regarding missing orders.

Key Points:

• 400% Rise: Reports of customers falsely claiming expensive entrees are missing.
• Automatic Chargebacks: Restaurants face immediate financial losses.
• Community Feedback: Restaurant owners express frustration over automated dispute resolutions.

Some are considering dropping UberEATS due to the prevalence of scams and lack of adequate support.

Source: /r/restaurantowners

Restaurant Owner Discussions and Insights

Handling Negative Reviews

A restaurant owner received a one-star review from a DoorDash salesperson he declined to work with.

Advice from Peers:

• Respond Professionally: Address the review constructively.
• Report Misconduct: Notify DoorDash of the salesperson's unethical behavior.
• Focus on Quality: Maintain high standards to mitigate impact from unfair reviews.

There's a consensus on the importance of managing online reputations and handling negative feedback appropriately.

Source: /r/restaurantowners

Restaurant Renovation Tips

Essential considerations for renovations:

• Electrical Outlets: Ensure ample outlets throughout the space.
• Competitive Bidding: Solicit bids from at least three companies; avoid design fees.
• Quality Materials: Invest in durable flooring for high-traffic areas.
• Project Management: Hire a qualified manager to oversee contractors.
• Budgeting: Allocate an extra 30% for unexpected costs; anticipate timeline extensions.

Proper planning and professional oversight are crucial for successful renovations.

Source: /r/restaurantowners

Labor and Wages Discussions

Massachusetts Ballot Question No. 5

Debate surrounds a ballot question that would require restaurants to pay minimum wage and potentially implement tip pooling.

Perspectives:

• Front-of-House Staff: Prefer current tipping system for higher earnings.
• Back-of-House Staff: Support changes for a fair share of tips.
• Cost Concerns: Fears of increased prices and potential loss of customers.

Understanding existing laws and the impact of changes is vital for informed voting.

Source: /r/restaurant

October Restaurant Performance

Restaurant owners share varied experiences for October.

Insights:

• Mixed Results: Some report sales upticks, others face declines.
• Seasonal Effects: Coastal areas see post-fair season boosts.
• Financial Struggles: Instances of cash flow issues requiring personal funding.
• Optimism: Some note sales increases of 10% to 15.5% compared to last year.
• Election Impact: Uncertainty surrounds potential effects on customer behavior.

Overall, there's cautious optimism tempered by awareness of potential challenges ahead.

Source: /r/restaurantowners

Notable Leadership Changes

Alinea Group's New Leadership

Jason Weingarten becomes the first-ever CEO of the Alinea Group.

Highlights:

• Background: Tech entrepreneur and co-owner of restaurants Oliver's and Entree.
• Transition: Follows Nick Kokonas selling his stake; Kokonas remains an advisor.
• Chef Grant Achatz's Support: Praises Weingarten's fresh perspective.
• Growth Plans: Potential collaborations and innovative dining experiences.

Weingarten is committed to enhancing Alinea's renowned dining experience and exploring new opportunities.

Sources: Restaurant Business, Eater Chicago

Togo's New CEO Announcement

Matt Dowling is appointed as CEO of Togo's Sandwiches.

Key Points:

• Dual Role: Will continue as CFO while overseeing operations and growth.
• Experience: Over 40 years in the industry, including leadership at Boudin and Marin Bikes.
• Expansion Plans:
  • New stores opening in Burbank, CA and Vancouver, WA in Q4.
  • Featuring a refreshed design.
• Sales Performance: Nearly $90 million in sales for 2023, over 170 locations.

Dowling aims for innovation while retaining the brand's 50-year legacy.

Sources: Nation's Restaurant News, Restaurant Dive

Community and Food Culture

Mama Ninfa: Tex-Mex Pioneer

Celebrating Mama Ninfa, a pivotal figure in Houston's culinary scene.

Contributions:

• Popularized Fajitas: Turned a humble dish into a Tex-Mex staple in the 1970s.
• Cultural Impact: Her restaurant became a hub for community and inspiration.
• Legacy: Inspired many restaurateurs; fajitas are now a must-have across Tex-Mex eateries.

Her story reflects the blending of tradition, innovation, and community through food.

Source: Eater Houston

Eater Launches Restaurant Discovery App

Eater introduces a new app to enhance dining experiences.

Features:

• Curated Content: Over 10,000 editor-curated maps in 100+ cities.
• Easy Reservations: Integrates multiple platforms for booking.
• Personalization: Explore by city, cuisine, and save favorites.
• Exclusive Access: Capital One customers get special reservations.
• Partnerships: Collaboration with SevenRooms improves visibility for restaurants.

This app aims to connect food enthusiasts with top dining experiences worldwide.

Source: Vox Media

Miscellaneous Updates

Delta Air Lines Meal Service Halted

Delta temporarily suspends hot meal service on over 200 flights from Detroit due to a food safety issue.

Details:

• FDA Inspection: Routine check revealed concerns in the kitchen.
• Alternative Arrangements: Sourcing meals from other facilities.
• Compensation: Affected passengers received vouchers or miles.
• Past Incidents: Previous meal issues have led to flight diversions.

Delta emphasizes strict adherence to food safety protocols during this period.

Source: Salon

Wendy’s AI Drive-Thru Revolution

Wendy's integrates generative AI in drive-thrus with Wendy’s FreshAI.

Key Points:

• Languages: Processes orders in English and Spanish.
• Technology: Utilizes Google Cloud’s large language model.
• Efficiency Gains: Initial tests show service times improved by 22 seconds.
• Customer Experience: Focus on making AI voice friendly and approachable.
• Industry Trend: Part of a growing movement among fast-food chains to deploy AI.

This innovation aims to enhance productivity and customer satisfaction.

Source: Salon

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