First Bite

Less than a week after abruptly closing nearly 50 California locations, Rubio’s has filed for Chapter 11 bankruptcy protection. The company said it is pursuing this action to facilitate the sale of the 41-year-old business, adding that its remaining 86 locations in California, Arizona, and Nevada will continue to operate as is.

The company has cited challenging economic conditions, diminishing in-store traffic driven by sustained work-from-home trends, rising food and utility costs, and “significant increases to the minimum wage in California.” On April 1, California’s minimum wage increased by 25% to $20 an hour.

Rubio’s is seeking court approval to continue operations during the sale process to ensure continued payment of employee wages and benefits. All gift cards and rewards will be honored at the remaining 86 locations.

Utah-based dirty soda chain Swig announced Monday the appointment of former Dutch Bros executive, Daniel Batty, as the fast-growing concept’s first chief development officer.

In jumping from one fast-growing beverage chain to another, Batty will help Swig to achieve its long-term goal of growing from 70 locations to 1,400 units over the next eight years.

Swig is best known for being at the forefront of the dirty soda beverage trend — which combines soda, dairy creamer, and flavored syrups and is popular in Utah — and was one of the fastest growing new concepts last year. According to Technomic Top 500 data, Swig had the second-fastest sales growth rate across the beverage and snack category at 39.1%. Swig also had the third-fastest unit growth rate in the category, behind only Crumbl and HTeaO.

With an ambitious long-term goal of building more than 1,300 stores in mind, the company will probably be about 900 franchised shops and 500 corporate stores, with corporate growth likely to move along quicker than franchise growth. Batty is currently in talks with the Swig leadership team to put a development plan in place.  

Cracker Barrel Old Country Store – the brand best known for rocking chairs out front, a gift shop of tchotchkes inside, and for being the restaurant of choice for road tripping families — has been struggling for a long time.

After several quarters of negative traffic and sales, new CEO Julie Felss-Masino announced last month that the family-dining chain would be undergoing a brand makeover to become more relevant, with five pillars of change, ranging from store remodels and tech investments to menu changes and pricing. While brand makeovers are not unusual (Domino’s and Papa Johns both announced new strategic overhauls at the start of the year), Cracker Barrel needs to walk a pretty narrow balance beam of modernizing the brand without drifting from the kitschy, homey vibe the chain is famous for.

During Cracker Barrel’s investor update call, which was hosted just two weeks before the company’s Q3 quarterly earnings, Massino broke down the ways in which the company is trying to dig itself out of the red and onto a positive path forward. While these company updates typically don’t pique the interest of the public outside of investor and restaurant news circles, mainstream media picked up the story, and Cracker Barrel was trending on X, the social media platform formerly known as Twitter.

While pricing continues to be a hot topic and challenging conundrum for restaurant operators in 2024, Domino’s Pizza is confident in its firm stance on the pizza delivery value equation. The Ann Arbor-based company purposefully did not raise prices last year and has not done so thus far this year, which has been beneficial for the bottom line, Domino’s CEO Russell Weiner said in a fireside chat during the annual Bernstein’s Strategic Decisions conference.

As most quick-service restaurant chains struggle to balance profitability with perception of value and affordability, particularly for lower income consumers, raising prices has been a common strategy. However, as NRN recently reported, 78% of Americans now believe that fast food is a luxury purchase, according to a new LendingTree study.

According to Russell Weiner, Domino’s saw the writing on the wall about consumer spending in this inflationary environment and pumped the brakes on pricing a bit earlier than most. 

BurgerFi announced that it would be rebranding to ChickenFi as it introduces new chicken sandwiches. There is no indication if this is a permanent rebrand or a temporary marketing move.

The Fort Lauderdale, Fla.-based fast-casual restaurant brand debuted a fried-chicken sandwich and a grilled-chicken sandwich on its permanent menu on May 21.

The chain’s chicken breast is prepared sous-vide. The new sandwiches come grilled or hand-breaded and fried, topped with fresh lettuce, tomato, pickles, and honey mustard.

The new sandwiches join the brand’s Jumbo Chicken Wings, Chicken Tenders, and Grilled Chicken Bowls.

Since the debut of Popeyes’ chicken sandwich in 2019, there’s been a surge in chicken-sandwich products across the industry, many brands trying to chase Chick-fil-A’s success in the category.

Technomic data shows that chicken sandwiches are continually increasing on menus despite their seeming ubiquity. In 2023, chicken sandwiches grew on menus by 0.4% and the five-year growth is expected to be 1.1%.

A recent CNN study of earnings calls and analyst notes finds that the word of the summer – on Wall Street, at least – is “bifurcation,” or the division of something into two parts. In this specific instance, bifurcation means that high-income consumers are plugging along just fine, while low-income consumers are really starting to struggle.

Indeed, 80% of American households have less cash available than they did in 2019, while credit card debt has reached a historic high. Meanwhile, a JP Morgan survey found that over 70% of low-income consumers are having a hard time making ends meet. Notably, middle-income households are also feeling pinched; 67% believe their income is falling behind the current cost of living.

The fast-casual category first became a thing in the 1990s (about the time Chipotle emerged) and came of age in the 2010s following the Great Recession, when consumers wanted more bang for their buck in the form of value, speed, and quality. The category came to be defined as a sort of elevated QSR but without the full-service component of casual dining.

Fast forward to this post-pandemic environment and fast casual has become a rare sweet spot of growth for the industry as price point lines continue to blur between segments. In the past several quarters, as inflation-weary consumers pull back on visits to most casual-dining concepts and some quick-service concepts, fast-casual players like Potbelly, Chipotle, Wingstop, CAVA, and Shake Shack have enjoyed traffic lifts — in some instances quite significant. The segment has also outperformed on sales. According to recently released Technomic data, fast-casual sales in 2023 grew by 11.2%, followed by quick-service sales at 7.9%. Family-dining restaurants grew by 5.7% and casual-dining chains grew by 4.7%.

No matter how it’s defined, growth in any capacity requires capital and capital remains expensive; the Fed raised interest rates 11 times between March 2022 and July 2023 to combat relentlessly high inflation. A cooldown has yet to happen, which has kept a lot of investors on the sidelines.

Of course, there’s an ironic twist at play here. Those rates remain high because demand remains high. Driving much of this environment is a sturdy set of consumers with more wages in their pockets and a continued pent-up demand from the pandemic. Those consumers, especially younger ones, have also proven that they really, really like to frequent restaurants. And so here we are, with a murky understanding of what exactly growth means at this post-pandemic juncture.   

The consensus is that most of the industry’s growth from this point will come from higher demand concepts focused on convenience. High rates haven’t derailed the quick-service or fast-casual segments, for instance, or many bigger players in general. According to Technomic data, the top 500 chains increased sales in 2023 by $31 billion, or nearly 8%. During the recent Restaurant Leadership Conference, Technomic Managing Principal Joe Pawlak called it a “very, very strong growth year” for those at the top.

The most popular technology tool on display at the 2024 National Restaurant Association Show in Chicago was mostly invisible. What do the robotic arms, POS systems, back of house analytics tools, and more booth gadgets have in common? Most of them are powered by and supported by data. Data — whether it’s collected by machine learning or AI — has proven to be the universal currency of restaurant technology in 2024 and beyond.

Operators are waking up to the significance of data collection and optimization in operational decision-making, from employee scheduling and inventory management, to marketing data about customers. This was especially evident at the Restaurant Show, where almost every booth at the tech pavilion went into detail about the data their software (and sometimes hardware) provides.

The restaurant industry has a labor shortage problem. That is certainly not breaking news. Employee engagement is at an 11-year low. That might surprise some folks.

Gusto founder/CEO Nate Hybl said this conversation about employees is long overdue.

The bigger companies are already focusing more on the employee proposition, but smaller brands need to make people development a part of their budget, Hybl added. He suggested taking 1-2% off the topline to invest in people.

Hybl said acknowledging and understanding the Gen Z mindset of work/life balance and diversity and inclusion are more important than they’ve ever been, in fact, he added that the pandemic changed the employee mindset and gave more leverage to hourly workers.