October 22th QSR Roundup: From Potbelly’s Investor Push to Chick-fil-A’s Family App and Chipotle’s AI Revolution

QSR news for Oct 22th, 2024. We reviewed 21 QSR publications, 6 subreddits, and over 75 articles to bring you the latest. Estimated reading time saved (at 200wpm): 235 minutes. It'll take you only 18 minutes to catch up.

Fast Food Giants Under Pressure and Innovating

Potbelly Faces Activist Investor Pressure

Potbelly is under scrutiny from activist investors seeking to maximize shareholder value. Immersion Investments LLC is urging the board to consider a sale and conduct a strategic review, expressing concerns over slow share repurchases and rising operational costs. CEO Bob Wright aims to expand from 429 to 2,000 locations by franchising, leveraging higher-margin revenue. With 234 franchise commitments and potential revenues of nearly $17 million, investors believe the current stock valuation doesn't reflect Potbelly’s growth potential. Recent sales showed only a minor increase, prompting questions about financial strategy and investor confidence.

Chick-fil-A Launches Family-Focused Play App

Chick-fil-A is set to launch the Chick-fil-A Play app on November 18, aiming to create a shared entertainment space for kids and parents. The app will feature original animated content like 'Legends of Evergreen Hills' and adventures of the Chick-fil-A Cows, along with podcasts, games, recipes, and interactive stories. This initiative follows a trend where brands like Chuck E. Cheese and Starbucks are venturing into entertainment-focused platforms to engage families and enhance customer experience.

McDonald's Involved in Political Discussions

McDonald's finds itself at the center of political conversations due to an event involving former President Trump at a Pennsylvania location. The stunt, designed to portray him as relatable, involved Trump pretending to serve fries in a closed setting, leading to public criticism. This has raised questions about the brand's political associations and how they affect customer perceptions.

Sources:

• Nation's Restaurant News
• Restaurant Business
• Eater

Chipotle's Bold Moves and KFC's Unique Campaigns

Chipotle's Strategic Investments and AI Hiring

Chipotle is making significant strides with its $100 million Cultivate Next fund, investing in an AI supply chain firm and the fast-casual Mediterranean concept Brassica. There's optimism about Brassica despite Chipotle's mixed success with new concepts in the past. Additionally, Chipotle introduces a cutting-edge AI hiring platform, Ava Cado, projected to reduce hiring time by 75%, enabling managers to focus more on hospitality. This platform will be implemented across 3,500 locations in North America and Europe, aiming to reduce job advertising costs and enhance the candidate experience. These moves reflect Chipotle's commitment to innovation and growth.

KFC's Sleep-Inducing Sounds and Menu Innovations

KFC has launched a unique collaboration with sleep wellness company Hatch, creating the "Kentucky Fried Chicken Rain" audio channel designed to help users sleep better. This initiative taps into the trending realization that the sound of frying chicken resembles rain or white noise. The audio is available on platforms like Hatch devices, YouTube, and Spotify. To capture the authentic frying sound, Hatch representatives visited KFC’s headquarters.

Moreover, KFC unveiled Original Recipe Tenders to enhance competition against chicken rivals like Raising Cane’s. Discussions highlight the challenges KFC faces in a crowded market, but these innovative approaches aim to strengthen their position.

Sources:

• Nation's Restaurant News
• QSR Magazine

Emerging Concepts and Eatertainment Venues

Electric Pickle: The New Eatertainment Hub

Electric Pickle is set to open its first location in Tempe, Arizona, featuring 4.5 acres of pickleball courts and a two-story restaurant. Owned by Eureka! Restaurant Group and backed by Knighthead Capital Management, this concept is tapping into the surge in demand for activity-driven dining experiences post-COVID.

• Expansion Plans: Future locations are planned for Las Vegas, Roseville, Katy, Rancho Cucamonga, and Reno.
• Unique Offerings: Electric Pickle aims for an elevated experience with diverse entertainment like DJs, live bands, and a food menu ranging from sushi to tacos.
• AI Technology: Enhanced gameplay experiences are promised with state-of-the-art AI tech at some pickleball courts.
• Aesthetic Appeal: The venue emphasizes a lush, outdoorsy atmosphere complete with waterfalls and firepits, creating a vacation vibe.
• Growth Strategy: By targeting underserved markets, they plan to open additional locations within 11 months per site, ensuring minimal competition.

Mo' Bettahs Hawaiian Style Food Acquired

Mo' Bettahs has secured a majority investment from Blue Marlin Partners and Trive Capital. Previously owned by Savory Fund, the chain grew from 6 to 56 locations since 2017. Founders Kimo and Kalani Mack, originally bus drivers from Hawaii, retained minority ownership and express gratitude towards their partners. With revenue increased by 178% over the last three years and a loyalty base of nearly 500,000 members, Mo' Bettahs is poised for further growth under new ownership.

Sources:

• Nation's Restaurant News
• Restaurant Business

Technological Innovations in the Food Industry

Sustainable Digital Signage with Praevar's ePoster

Praevar Corporation has launched the ePoster, a sustainable digital signage solution featuring a 32-inch E Ink Spectra 6 display.

• Innovative Design: Tailored for indoor advertising, it reduces carbon footprint with low energy consumption.
• Technology Integration: E Ink's technology enhances visual appeal while maintaining sustainability, drawing power only during content updates.
• Key Features: 65,000 colors, high-resolution (2560x1440), battery-powered for up to a year, lightweight at 9 lbs (4 kg), and easy to install.
• Future Developments: The upcoming eLuminex series in Q1 2025 will target outdoor use, promising up to 50% reduced energy costs.
• Market Need: These innovations address the growing demand for eco-friendly solutions in the retail and advertising sectors, aligning with environmental responsibilities.

Chipotle's AI Hiring Revolution

As mentioned earlier, Chipotle's introduction of the AI hiring platform Ava Cado is a significant technological advancement in recruitment. By streamlining the hiring process, it allows for more efficient growth and better allocation of managerial focus on customer service.

Sources:

• QSR Magazine
• FSR Magazine

Menu Innovations and Seasonal Offerings

New Dipping Delights and Fall Flavors

Restaurants are enticing diners with new dipping options and exciting seasonal menu items:

• Burger King's Big Dip Cup: An 8-ounce ranch dressing cup now available at select locations, perfect for fry enthusiasts.
• Qdoba's Loaded Tortilla Soup: Back with a flavorful vegetable broth and customizable add-ins, it's a hearty option for cooler weather.
• Shaquille O’Neal's Big Chicken Dunks: New bite-sized pieces ideal for dipping with various sauce options, adding fun to the menu.
• La Madeleine's New Dishes: Crepes and a Caprese Sandwich join the menu, featuring fresh ingredients for a taste of autumn.
• Biscuitville's French Toast Test: New sweet and savory options are being trialed, expanding their breakfast offerings.

VIVA Chicken's Fall BBQ Menu

VIVA Chicken introduces its first-ever BBQ menu, blending Peruvian flavors with sweet and savory elements, available from October 22 to the end of November. Dishes feature house-made BBQ sauce incorporating ginger and soy, celebrating Peru's culinary heritage. New offerings include:

• Peruvian BBQ Chicken Sandwich: Priced at $11.95, offering a flavorful twist on a classic.
• Burrito: At $14.15, it includes avocado and canary beans, a hearty option for burrito lovers.
• Fall Harvest Salad: For $14.95, featuring roasted squash, apples, and feta, it's a fresh take on fall ingredients.

Yogurtland's Fan Appreciation Day

Yogurtland celebrates Fan Appreciation Day on Monday, Oct. 28 with two exclusive deals:

• Buy One Cup, Get One Free: Encouraging customers to share the love of frozen yogurt.
• Earn 2x the Points on Purchases: Enhancing their loyalty program benefits.

Customers can enjoy delicious flavors like Cranberry Orange Tart and Plant-Based Brown Sugar Vanilla, along with tasty toppings like Cookies & Cream Yummy Chow.

Sources:

• Restaurant Business
• QSR Magazine

Activism and Corporate Restructuring in the Restaurant Industry

Activist Investor Pushes Cheesecake Factory

An activist investor, JCP Investment Management, is urging The Cheesecake Factory to spin off its smaller brands—North Italia, Flower Child, and Culinary Dropout—into a separate public company for better focus and growth. JCP, owning 2% of Cheesecake’s shares, is prepared to invest in the new entity. Since acquiring these brands in 2019, they've seen significant expansion:

• North Italia: Expanded to 39 locations.
• Flower Child: Grown to 34 locations.
• Culinary Dropout: Operating 11 locations.

Cheesecake Factory plans to open up to 22 new restaurants in the coming year. With a successful quarter and a stock rise of nearly 5%, reflecting a 23% increase year-to-date, the activist interest underscores challenges and opportunities in the market.

Roti Fast Casual Chain Auction

Bankrupt fast-casual chain Roti is up for auction, with all 19 locations available for a minimum bid of $3.5 million. The company filed for bankruptcy in August due to COVID impacts and rising costs. It reported $25.7 million in revenue for 2023 with an 8% increase in same-store sales, expecting growth in 2024. Established in 2006, Roti previously peaked at 42 locations generating over $50 million in revenue in 2019.

Sources:

• Restaurant Business
• QSR Magazine

Navigating Workplace Politics and Legal Considerations

Election Tension and Workplace Policies

With election season approaching, restaurants face challenges in managing political expressions in the workplace:

• Employee Rights: While employees claim First Amendment rights, private employers can limit speech to maintain a professional environment.
• Concerted Activity Rights: Under the NLRA, employees can discuss politics impacting workplace conditions.
• Dress Codes: Policies should be consistent; if one political candidate's gear is banned, all must be.
• Campaigning: Employers can prohibit campaigning but must apply non-solicitation rules evenly.
• Voting Leave Laws: Vary by state; some require notice about employee rights, and employers should facilitate rather than inhibit voting.

Setting clear expectations for professionalism can help mitigate conflicts and prevent discrimination claims. Employers are advised to consult legal counsel to ensure compliance and foster a respectful workplace.

Massachusetts Tip Credit Controversy

Massachusetts Governor Maura Healey opposes a ballot initiative, Question 5, aiming to eliminate the state’s tip credit for employers. She argues that removing the tip credit could lead to restaurant closures and job losses. Currently, the tip credit allows employers to pay tipped workers less than the minimum wage as long as their tips make up the difference. Question 5 proposes to progressively raise the cash wage paid by employers until matched with non-tipped wages by 2029. This stance highlights the complexities within the tipped wage debate and its impact on the restaurant industry.

Sources:

• QSR Magazine
• Restaurant Business

Global Expansion and Brand Resilience

Jollibee Launches Loyalty Program for Expansion

Jollibee has introduced its first loyalty program, Jollibee Rewards, allowing members to earn 10 points for every dollar spent. Rewards start at 200 points for $2 off, promoting engagement and customer retention. New members receive $5 off their first order of $35 if they sign up by Nov. 15, and referrals earn 200 points. This initiative aligns with Jollibee's strategy to enhance customer experiences and support its aggressive expansion in the U.S. and Canada, where the chain currently operates 100 stores and plans to open 14 more this year.

Waffle House's Brand Resilience

Celebrating 70 years, Waffle House has demonstrated brand resilience in crises:

• 24/7 Service: Staying open during disasters, often providing a modified menu through generators, showcases commitment to customer needs.
• Waffle House Index: A color-coded operational status map, created by FEMA, signals safety and operational readiness to the public.
• Emotional Connection: Engagement in trending news enhances brand relevance, making Waffle House a symbol of resilience.
• Established Values: Core values of "good and fast" focus on community support, increasing loyalty and trust.

Waffle House's approach highlights the importance of steadfast service and community connection in building a lasting brand.

Sources:

• Restaurant Dive
• FSR Magazine

Emerging Trends and Industry Insights

Instant Coffee Revolution

Instant coffee is experiencing a renaissance as craft roasters produce high-quality options with unique flavors. Swift Cup Coffee leads the charge, working with 150 roasters to create exceptional instant coffees from various origins.

• Innovative Process: Uses proprietary methods to preserve flavor, involving high-extract concentrates and freezing techniques.
• Variety Available: Offers 11 types, including single origins from East Africa and South America.
• Advantages of Instant: Ideal for travel or camping; easily dissolves in hot or cold water for quick, convenient coffee.
• Quality Upgrade: Far surpasses traditional jarred options of the past, despite a higher price point of around $2.50 per cup.

This evolution caters to evolving tastes, providing both quality and convenience for coffee enthusiasts.

Pizza Brands to Watch 2025

Nominations are open for the upcoming "Pizza Brands to Watch 2025" report, showcasing promising pizza brands that excel in customer service, innovation, and sales. The report will spotlight both new concepts and established brands making significant impacts in the pizza industry. Submissions are open until October 31 for all types of pizza establishments.

Sources:

• Eater
• Pizza Marketplace

Employee Management and Industry Challenges

Navigating New Hires and Workplace Dynamics

Restaurant managers are sharing experiences with challenging new hires and seeking advice on handling difficult situations:

• Employee Concerns: A new BOH employee exhibiting erratic behavior and clashing with the team highlights the importance of timely intervention.
• Team Impact: Unmotivated or problematic staff can negatively affect team morale and productivity.
• Management Decisions: Sending the employee home or letting them go may be necessary to maintain a positive work environment.

Keto Diet and Recovery Challenges

Restaurant professionals discuss the difficulties of managing stress, sobriety, and dietary restrictions:

• Dietary Struggles: Low-carb diets like keto can cause frustration and cravings, impacting mood and job performance.
• Supportive Advice: Focusing on recovery first and finding manageable dietary plans is recommended.
• Work-Life Balance: Balancing personal health with demanding restaurant work requires careful attention and self-care.

Sources:

• Reddit (/r/Restaurant_Managers)
• Reddit (/r/restaurateur)

Industry News and Controversies

McDonald's Global Menu Innovations and PR Challenges

• Global Menu Innovations: McDonald's international menu allows operators to cater to local tastes, enhancing appeal with items like McWings and McShaker Fries with seaweed seasoning.
• PR Challenges: McDonald's issued a PR statement responding to criticism over a political event involving Trump, aiming to navigate the situation while maintaining brand image.

Health Violations After Political Event

A McDonald's location that hosted Trump was cited for health violations, sparking debate:

• Commonality of Violations: Some argue that health violations are common in the industry.
• Political Overtones: The timing of the citation raises questions about political motivations.

Popeyes $6 Big Box Return

Popeyes has brought back its $6 Big Box for a limited time, generating excitement among customers. Regional price variations exist, but overall, it's seen as a valuable offering in today's market.

Sources:

• Reddit (/r/fastfood)
• Eater
• Restaurant Business

Corporate Social Responsibility and Community Engagement

Pizza Nova Supports Cancer Research

On Halloween, Pizza Nova will donate $1 from each order to The Princess Margaret Cancer Foundation, aligning with Breast Cancer Awareness Month. This initiative, in partnership with CHIN Radio/TV International, emphasizes the importance of supporting cancer research.

• Community Impact: Pizza Nova's president, Domenic Primucci, emphasizes the role of community in supporting vital health causes.
• Research Advancements: Dr. Miyo Yamashita of The Princess Margaret Cancer Foundation lauds the partnership for accelerating research and innovation.

First Watch's Crayon Donation

First Watch partners with The Crayon Initiative to donate 3 million upcycled crayons to over 260 children’s hospitals. This effort aims to bring happiness and creative play to young patients during their hospital stays.

• Community Support: Chief Brand Officer Matt Eisenacher emphasizes the restaurant’s commitment to making a positive impact on children facing critical illnesses.
• Significant Contribution: Since its inception, The Crayon Initiative has collected 425,288 pounds of crayons and distributed over 913,200 packs nationwide.

Sources:

• Pizza Nova
• FSR Magazine

Technological Partnerships and Delivery Enhancements

Delivery.com Partners with Cartwheel

• Enhanced Delivery Capabilities: Cartwheel has been selected as the preferred delivery technology partner for delivery.com, introducing a Hybrid Delivery model.
• Improved Operations: The integration maintains delivery.com's fleet while connecting with major national fleets like Uber Direct for peak times.
• Customer Experience: Features like real-time tracking and in-app chats improve communication between dispatchers and drivers, enhancing the customer experience.
• Industry Impact: Cartwheel has powered deliveries for notable brands, setting a new standard in the delivery industry.

Rotisserie Chicken Addition at Erbert & Gerbert's

Erbert & Gerbert's introduces a new lineup of Rotisserie Chicken Sandwiches, elevating their menu with fresh flavors and quality ingredients. The sandwiches include:

• Apollo: Rotisserie chicken, BBQ sauce, crispy bacon, avocado, tomato, lettuce, and mayo.
• Nebula: Rotisserie chicken, ranch, bacon, provolone, tomato, lettuce, and mayo.
• Quatro: Rotisserie chicken, cranberry sauce, bacon, cheddar, cucumber, lettuce, and mayo.
• Spartan: Rotisserie chicken, honey mustard, bacon, cheddar, tomato, lettuce, and mayo.

CEO Eric Wolfe emphasized enhancing classic chicken sandwiches while maintaining beloved flavors.

Sources:

• Restaurant Dive
• Erbert & Gerbert's Sandwiches

Challenges in the Food Supply Chain and Distribution

Water Challenges Threaten Global Crops

A new report reveals that one-quarter of the world's crops are at risk due to high water stress and unreliability:

• Irrigated Crops: 60% originate from stressed regions, with 72% grown in just 10 countries like India and the USA.
• Rain-Fed Crops: 8% are affected by unreliable water supply, projected to rise by 40% by 2050.
• Agricultural Impact: The sector consumes 70% of freshwater, contributing significantly to water stress.
• Suggested Solutions: Improving soil health, shifting diets towards less water-intensive foods, and implementing nature-based management strategies.

Food Distribution Dynamics in the US

The food distribution sector in the US is thriving, driven by consumer spending and innovative technologies:

• Market Leaders: Big players like Sysco and US Foods dominate, but smaller suppliers play a critical role.
• Specialization: Most distributors focus on specific categories like produce or meat, while broadliners offer extensive ranges.
• Efficiency: With over 27,400 food distribution companies, efficiency in operations directly influences profitability and growth.

Sources:

• Grist
• BlueCart

Culinary Highlights and Chef Journeys

Manny Barella's Culinary Journey

• Background: Manny Barella, "Top Chef" finalist, transitioned from law school to culinary director of Camp Pickle and Jaguar Bolera.
• Passion for Food: Inspired by family meals, he shifted focus to cooking, gaining experience in prestigious kitchens, including Michelin-starred venues.
• Achievements: Recognized as a James Beard semifinalist in 2022, Barella's focus on Mexican cuisine propelled his career.
• "Top Chef" Experience: Winning his first challenge boosted his confidence, and he built strong relationships with fellow contestants.
• Current Roles: At Jaguar Bolera, he creatively navigates menu development, champions authentic Mexican cuisine, and supports emerging talent.
• Expansion Plans: New locations for Jaguar Bolera and Camp Pickle are planned across the U.S. in coming years.

Curd Rice: A Comforting Delight

Curd rice, known as thayir sadam in Tamil, is a simple yet deeply satisfying dish made from leftover rice and chilled curd or yogurt, often enhanced with spices.

• Origin: Dates back to 16th-9th century B.C., initially a delicacy for aristocrats.
• Nutritional Benefits: Contains probiotics, aids digestion, and provides cooling, essential during Indian summers.
• Cultural Significance: Enjoyed across class divides, remembered fondly as comfort food, and adaptable with various mix-ins and spices.

Sources:

• FSR Magazine
• Eater

Restaurant Industry's Political Side and Economic Insights

Restaurant Industry and Politics

Despite employing 12.4 million workers and generating $1 trillion in sales, restaurants receive minimal attention in major political party platforms:

• Republican Party: Mentions restaurants regarding eliminating tip taxes.
• Democratic Party: Focuses on COVID recovery funds.
• Key Issues:
  • Tip Taxation Proposals: Vice President Kamala Harris supports eliminating tax on tips; the NRA prefers a different approach.
  • Immigration Reform: Vital for staffing; Democrats show more support.
  • Swipe Fees: Third-highest cost for restaurateurs, but neither party addresses them adequately.

Amex Restaurant Spending Insights

American Express reported a 7% growth in restaurant spending by cardholders for Q3, a slight decrease from earlier quarters:

• CEO's Perspective: Steve Squeri is unconcerned, noting substantial growth over five years.
• Fastest-Growing Segment: Restaurants remain the fastest-growing within travel and entertainment.
• Strategic Focus: Amex targets Millennials and Gen Z with dining perks and acquisitions like Tock and Rooam to enhance their restaurant presence.

Sources:

• Restaurant Dive
• Salon

Final Thoughts on the Evolving Dining Landscape

The restaurant industry is witnessing a dynamic shift with technological innovations, menu creativity, strategic investments, and a deeper engagement with social and political issues. From fast-food giants embracing AI and launching unique campaigns to emerging concepts like Electric Pickle redefining entertainment dining, the landscape is rich with opportunities and challenges.

Activist investors are influencing corporate strategies, pushing for restructures to unlock growth potential. Technological advancements, such as sustainable digital signage and AI-driven hiring processes, are streamlining operations and enhancing customer experiences.

Menu innovations cater to evolving customer preferences, with seasonal offerings and creative dishes that blend tradition with modern tastes. Loyalty programs and community engagement efforts strengthen the bond between brands and customers, fostering loyalty in a competitive market.

Navigating workplace politics and legal considerations remains crucial, as employers strive to balance employee rights with professional environments. Global expansion efforts showcase brands' ambitions to reach new markets while maintaining core values and brand resilience.

Overall, the dining experience continues to evolve, shaped by innovation, consumer trends, and an ever-changing social landscape.

Sources:

• Multiple (as cited in individual sections)

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