Kitchen United represents a fast-growing, behind-the-scenes company that may be on a fast track toward growth. Backed by a recent round of funding that generated $10 million, the virtual restaurant provider will open its first location outside of California in Chicago. The operation expects to begin in January.
Kitchen United serves two groups. Its first target is 10 to 20 local, regional and/or national chains that want to have a kitchen for takeout, delivery and/or catering services. This is based on the idea that some operators find takeout and catering business to be disruptive to their normal in-house operations.
Kitchen United also believes its concept offers startups and popups a low-risk way to enter the market. Operators can use the facilities on an hourly or monthly rental basis.
In addition to the Chicago market, Kitchen United plans on adding locations in Atlanta, Columbus, Denver, Los Angeles, New York, Phoenix and Seattle.
Economic News This Week
- Home builders’ confidence tumbled in November. The National Association of Home Builders/Wells Fargo Housing Market Index fell 8 points to a final reading of 60. While any reading greater than 50 indicates growth, builders continue to show concern about home affordability due to rising home prices and higher interest rates.
- Privately owned housing starts increased 1.5 percent in October from September on a seasonally adjusted annual basis. However, from October last year housing starts fell 2.9 percent. Single family housing starts were down 1.8 percent from September.
- October privately owned housing permits declined 0.6 percent compared to September on a seasonally adjusted annual basis. The number of housing building permits issued were also down 6.0 percent from October 2017.
- Sales of existing homes increased 1.4 percent in October compared to September to a seasonally adjusted annual rate of 5.22 million. Sales were down in the previous 6 months. In the first 10 months of this year, existing home sales declined 5.1 percent from 2017. A spokesman for the National Association of Realtors attributed the October rise in sales to an increase in the number of homes on the market.
- Initial-jobless claims totaled 224,000, an increase of 3,000 for the week ending Nov. 17. The 4-week moving average was 218,500, up 2,000. Jobless claims remain at a very low level.
- New orders for manufactured durable goods fell 4.4 percent in October from September, according to the U.S. Census Bureau’s advance report. Without orders for transportation equipment, October durable goods orders dipped just 0.1 percent. October durable goods shipments in October declined 0.6 percent.
- The Conference Board’s Leading Economic Index for the U.S. increased 0.1 percent in October after rising 0.6 percent in September and 0.5 percent in August. The small rise in October is the first slowdown since May and could indicate the U.S. economic growth rate is slowing. The Conference Board believes near-term economic growth should remain robust but sees longer term growth moderating by mid to late 2019.
- The University of Michigan’s Consumer Sentiment Index final November reading was largely unchanged. A university spokesperson noted the index is about at the center of the 11-month range. The index has been at very favorable levels this year. The Index now stands at 97.5, down from 98.5 in October. The Current Economic Conditions Index is 112.3, down from 113.1 in October. The Index of Consumer Expectations is at 88.1, down from 89.3 in October.
- Christmas retail sales are a mixed bag, thus far. Online sales increased a whopping 23.6 percent on Black Friday over last year. RetailNext, a retail analytics company, estimates retail sales in stores were down 4 percent to 7 percent with foot traffic down 5 percent to 7 percent on Thanksgiving and Black Friday, though. The impact of all this on restaurant sales is unknown at this point.
Foodservice News This Week
- Food distributors’ labor problems are having a major impact on operators. A serious shortage of truck drivers is causing problems with numerous U.S. businesses, including foodservice distributors. A recent report notes warehouse workers remain in short supply as well. These supply chain-related challenges, in turn, force foodservice operators to make changes in how they do business. For instance, Texas Roadhouse is making larger but less frequent orders to avoid running out of product. The Firehouse Restaurant Group is expanding storage capacity in the company’s new restaurants by 15 percent. This would seem to make a stronger market for refrigeration, freezers and shelving.
- Robots deliver meals to workers in Chinese office buildings. A delivery person hands the food to a 3-foot tall robot that then uses an elevator to find its way to the correct floor. The robot can communicate by voice command with the elevator. When reaching the correct floor, the robot then calls the customer’s cell phone. The customer enters the last 4 digits of the cell phone to get their delivery. The robots are also being tried in hospitals and hotels.
- Aaron Allen Foodservice Consulting takes a look at the U.S. pizza business. The U.S. pizza market is the most competitive — read: saturated — in the world. Sixteen pizza companies make it into the top 200 U.S. chains. Slicing the revenue among those 16, Domino’s and Pizza Hut account for 50 percent of the pizza sales dollars. Add in Little Caesar’s and Papa John’s and the largest four chains are doing an amazing 79 percent of the 16 largest pizza chain’s dollar volume.
- Three old foodservice chains hit the comeback trail. Once they were successful, but for various reasons they shrunk. Now the Wall Street Journal says that Shakey’s Pizza, The Ground Round and Frisch’s Big Boy, which all have new owners in the past few years, are planning on growing again.
- Growth Chains: Jollibee Fried Chicken plans to grow to 150 U.S. locations from 37 in the next 5 years. Famous Toastery opened 12 restaurants this year and plans to open at least the same number in 2019.
- Comparable Store Sales Reports: Jack in the Box (System up 0.5 percent, Company owned up 0.8 percent and Franchised up 0.4 percent) and Ruth’s Chris Steak House up 3.7 percent.
For details and same-store sales of other chains, please click here for the Green Sheet.