Nation’s Restaurant News On the Go Newsletter #9

Sprinting through the week

Hey readers,

Alicia Kelso here, can you believe it’s only mid-January? What a sprint so far. The restaurant industry has wasted no time coming out of the 2023 gate, and this past week has proven as much with a dizzying array of big news. It kicked off with the ICR Conference in Orlando — a perennial event that provides an early glimpse on how private and public companies feel about the macroenvironment as the new year kicks off.?

Largely, and perhaps surprisingly, most of the executives who participated in the event are optimistic. Growth was a major theme among companies?Nation’s Restaurant News?covered, as was continued and aggressive digital innovation. It has become abundantly clear that investments in things like digital menuboards, kiosks and loyalty programs used to be a “nice to have,” and are now becoming “must haves.” In other words, as forecasts for a recession continue to permeate, it doesn’t seem to be dampening spirits too much.?

Of course, ICR doesn’t provide a strong pulse on the mom-and-pop establishments, which are significantly less optimistic according to new data from the National Restaurant Association. Fifty percent of those operators expect to make less profits this year, in fact, as high food, labor and energy costs linger relentlessly. That said, if there is an economic downturn, the bifurcation of the industry is likely to continue where the big (well capitalized) get bigger and the small struggle or fold all together. If there is reason for hope, it’s that restaurant operators have been to hell in the past three years and have learned plenty of lessons on how to find their way back.?

Beyond ICR, the c-suite carousel continued to spin, with announcements about a new CEO of Sugar Bowl Bakery, a new EVP of people and culture at Sheetz, new CMOs at Burger King and Denny’s and a new president at Texas Roadhouse. We also know that former Applebee’s president John Cywinski has landed at Modern Restaurant Concepts — parent company of Qdoba, Lemonade and Modern Market Eatery — as its new CEO.??

The biggest news this week wasn’t technically news at all, but more speculation as reports swirled that Subway is exploring a potential sale. Such a move would be massive, as Subway has the largest global footprint by unit count in the industry and the brand equity to match. That said, it won’t be easy with a $10 billion evaluation in a remarkably uncertain economic environment. Then again, nothing should surprise us anymore.?

Subway faces bumpy road on way to potential sale

With Subway reportedly retaining advisers for a potential sale of the sandwich brand, an estimated value of more than $10 billion and a tightening interest rate market made conditions less than ideal for shopping around a major restaurant concept.

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Red Robin has put its Donatos expansion plan on hold for now

Red Robin added Donatos’ pizza to its menus at a few dozen restaurants in 2018, generating incremental sales while also ensuring the brand operated autonomously on third-party marketplaces. Donatos essentially functioned as a virtual restaurant out of Red Robin locations well before the pandemic put such concepts on the map. Red Robin CEO G.J. Hart said the Donatos partnership has been successful, but the company will focus on Red Robin’s comeback this year.

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Denny’s focuses on staffing, return to all-day hours and value

Denny’s Corp. has put near-term focus on three areas — staffing, a return to full-day 24-7 opening hours and its value platform — as it continues to recover from pandemic restrictions, CEO, Kelli Valade, told the ICR Conference on Tuesday.

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Portillo’s newer markets are outpacing its core Midwest restaurants

Portillo’s has been a Chicagoland staple since its founding 60 years ago in Villa Park, Illinois. That’s not to say the company hasn’t found favor in other markets, however. In fact, CEO Michael Osanloo said recent openings outside of its core Midwest market have been performing even better. Portillo’s, which went public in 2021 and now includes just over 70 locations, has about 10 restaurant openings planned this year, 70% of which are slated to open in the Sunbelt – Texas, Central Florida and Arizona.

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Inflation continues to cool, but food prices remain stubborn

The U.S. Bureau of Labor Statistics’ Consumer Price Index for December slowed to 6.5%, which is in line with expectations. Inflation remains significantly higher than pre-pandemic levels – around 2.5% in early 2020 – however, December’s index marked the smallest 12-month increase since October 2021, as well as a continued cooldown from its plus-8.5% peak in mid-2022.

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NRN Breakfast Showdown - Finalists Announced

Three finalists have been announced in the NRN Breakfast Showdown. Help us determine the winner – Eggs Up Grill, First Watch, or Another Broken Egg. VOTE NOW and let us know which breakfast or brunch concept you think is best!

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