See You in May at the Restaurant Show!

We look forward to seeing so many of you Friday, May 17th at DMA's Party at the Post Office to kick off the 2024 Restaurant Show in Chicago! More than 500 people have RSVP'd for this outdoor event already and we'll likely hit capacity soon. You don't want to miss this...Chain Operators can still sign up today!

Thank you to our supplier Partners and event Sponsors for making this such a great experience as well! Your support not only enhances this event, but also makes the monthly newsletter more engaging. We are so grateful to collaborate with each of you! Explore their product videos and promotions on DMA's website highlighting many of the items you'll see (and taste) at this year's event.


Fast-Food Chains' ‘Wrap Battle' Has Commenced

A wrap battle is booming in the QSR arena. By remixing preexisting ingredients with build-your-own appeal, major players are producing flavor-drenched "hunger hacks" and fresh affordable snacks that span dayparts.

Wendy's, Burger King, KFC, and Sonic are among the wave of restaurant chains innovating their wrap offers with a blend of classic and bold flavors, reported Restaurant Business.

Value is a key attribute driving this momentum, as the affordability of wraps extends to food service operators and consumers.

In most cases, adding this item to the menus requires the addition of only one SKU—a flour tortilla. Operators can then combine proteins (chicken is the most popular) with sauces, veggies, and other ingredients that are already a part of their inventory.

According to MenuData, Burger King introduced chicken wraps in varieties like Classic, Spicy, and Honey Mustard last August, while KFC ventured into unique combinations with its Spicy Slaw and Mac & Cheese Wraps.

Other notable additions include Carl's Jr.'s BBQ Hand Breaded Chicken Tender Wrap, Dunkin's Chicken & Roasted Pepper Wrap, and Saladworks' Jalapeño Ranch Crispy Chicken Wrap.

"These menu expansions reflect a shift towards offering a larger number of wrap[s], which include diverse and innovative options, catering to a wide range of customer tastes," MenuData CEO Sunny Khamkar told The Food Institute.

Tapping Snack Appeal to Span Dayparts

The wrap battle is echoing across other foodservice venues as QSRs pull more lunch daypart share from grocery and convenience channels.

According to a February 2024 report by Circana, FMI, and Oliver Wynman, younger generations, especially Gen Z, are increasingly driving growth at foodservice establishments and shifting midday spend to QSRs.

Similar movement can be seen in the snack category, where customizable mix-and-match wrap deals that bridge dayparts are faring well in both fast food and QSRs environments.

As the report suggests, leveraging snackability could be a valuable target for ongoing innovation across multiple dayparts.

"Snack foods play different roles throughout the day and should be promoted to consumers based on their shifting needs," noted the authors. "Between main eating occasions, consumers look for ways to tide themselves to the next one or to satisfy cravings."

As the report also observes, QSRs excluding fast casuals held a 54% share of traffic across foodservice snack channels as of September 2023, marking a 5% increase year-over-year.

C-stores hold the next highest share (28%), followed by all other Retail Foodservice (8%), but YOY traffic at both channels was down 3%, and 2%, respectively.

"To win the wrap battle, it'll be on QSRs to deliver on not just taste, but value and innovation as well," Vijay Sukumar, chief food innovation Officer at KFC, told Restaurant Business.

Channeling MTO Appeal

As more QSRs drop fresh wraps and c-stores push back with their own creations, order customization could be a growth advantage.

According to a June 2023 consumer study from FoodserviceResults, 66% of respondents said convenience stores should offer made-to-order (MTO) food. Furthermore, 72% of those respondents were members of Gen Z, reported C Store Decisions.

In March 2024, East coast c-store chain Wawa launched a build-to-order wrap campaign to elevate the offer by placing customization in the hands of the consumer. Food Institute Focus

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New Study Exposes the Power (and Pitfalls) of AI-Generated Food Images

Generative AI continues to pervade the food industry, and image creation is no exception.

On a company level, the path to incorporating these tools has been, in many cases, experimental. In recent months, some early adopters have been cast into the public eye for sharing inaccurate or unappetizing AI-generated food images.

In January, Instacart scrubbed a swath of recipes with AI-generated food images from its website after "unsettling" details like strangely blended textures and physically impossible compositions began raising eyebrows, reported Business Insider.

Despite such pitfalls, food producers that master the nascent technology could reap significant rewards in the long term.

According to new findings by the University of Oxford, consumers think AI-generated food images look tastier than authentic photos of food.

In the study, the researchers asked 297 participants to rate a range of real and AI-generated images — including natural, processed, and ultra-processed foods — on a scale from "Not at all appetizing" to "Extremely appetizing."

Results suggest that AI-generated visuals can enhance food's overall appeal by leveraging key features such as symmetry, shape, lighting, color — even subtle tweaks in positioning like not pointing products directly at the viewer.

Key Considerations and Concerns for AI-generated Food Images

The study also revealed that an awareness of the image creation process impacts overall reception.

When participants knew how each image was sourced, they tended to rate real and AI-generated versions equally appealing. When participants were unaware, however, the AI-generated version was consistently rated as significantly more appetizing than the real food image.

This point could be noteworthy for food producers as formal regulations surrounding the technology have yet to be established. In the case of Instacart, the company has been publicly disclosing when photos are generated by AI, emphasizing that user discretion is advised.

Furthermore, the study raises concerns about how AI imagery could potentially foster unrealistic expectations about how natural foods should look and potentially harm sustainability efforts such as the promotion of "ugly" fruits and vegetables.

Consistent exposure to picture-perfect dishes could also influence unhealthy eating behaviors at a time when American diets are already under heavy scrutiny.

"While AI-generated visuals may offer cost-saving opportunities for marketers and the industry by reducing the cost of commissioning food photoshoots, these findings highlight potential risks associated with exacerbating ‘visual hunger' among consumers – the phenomenon where viewing images of food triggers appetite and cravings," said study supervisor and co-author Professor Charles Spence, a Professor of Experimental Psychology at University of Oxford. Food Institute Focus

Chef Robert Irvine Provides Guide for Restaurants to Survive Wage Hikes

The restaurant industry has reached a crossroads regarding labor costs. Chef Robert Irvine has kept a close eye on the issue, especially as California recently raised its minimum wage for the state's fast-food workers to $20.

"Times have changed," Irvine, a celebrity chef and longtime restaurateur, told The Food Institute. "With this new law in California that passed, we were already seeing problems; the inflation and food costs went through the roof. ... We thought the interest rates were going to drop; they didn't.

"As these changes affect the rest of the country – and they will – you'll start to see a decline in smaller restaurants. We've already seen restaurants close."

"I'm not a prophet of doom and gloom," he added. "I'm just telling you what's happening in the industry."

Irvine, a veteran of nearly four decades in foodservice, isn't against workers making a living wage. After all, he's been there, as a former immigrant from England who began working in the U.S. as a dishwasher. Irvine does, however, believe that restaurant operators need to carefully consider their labor expenses these days.

"We don't have that capacity to fill those jobs anymore," Irvine said.

The celebrity chef, who appeared on Food Network's Restaurant: Impossible show between 2011 and 2023, fears that as many as one-fifth of all American "mom-and-pop" restaurants could be forced to close by year's end due to rising labor costs.

"I've had some of my own Restaurant: Impossibles [consider] closing down this week, because they can't afford to pay" up to $20 per hour, Irvine noted. "And I said ‘Don't close yet; let me show you something. ... Look at technology to help you out.' There's so much technology out there."

In that spirit, Irvine partnered with self-service tech company GRUBBRR to launch a project called Restaurant Revamp. The national campaign will start in California and grant a winning business a full suite of restaurant technology designed to address labor challenges.

"I want to prove that, if you use technology in the restaurant business, it will actually make you money," Irvine said. "I'm all for the wage increases; I agree with the living wage and increasing wages, because for years our restaurant workers have suffered. ... The unintended consequences of that is this: We've seen restaurants put up their prices, and then the consumer says ‘Well, I can (just) cook at home.'"

Meanwhile, Irvine has observed major restaurant chains like McDonald's and Taco Bell deftly incorporate technology like kiosks to ease their labor expenses.

"Not many people are using [technology correctly], except the big boys, like McDonald's and Yum Brands. And, because of technology, if you look at their earnings year over year, they're through the roof," Irvine noted. "And I want small operators to be able to do that.

"I want to prove, especially in California, that yes, smaller restaurateurs can make it, even with all these things stacked against you."

Humans will continue to play a key role on restaurant staff for the foreseeable future; Irvine realizes that. Yet he's also noticed that many Gen Z and millennial consumers don't seem to care if they receive human interaction from restaurant workers. Irvine chef is also enamored with technology like inventory control systems, automatic ordering, and FlippyMiso Robotics' French fry-cooking robot.

"I started in the restaurant business 36 or 37 years ago and we were still counting on abacuses – that's how old I am," Irvine joked. "And here we are now. ... Over the last 30 years, technology has changed dramatically.

"There's always going to be people (working) in restaurants," he added. "Do I want a computer or a robot bringing me food? No, not at all. But I want the speed of service, and accuracy. (And) technology allows for pinpoint accuracy." Food Institute Focus

Store News:

McDonald's CosMc's restaurant concept has made its debut in Texas. CosMc's new Dallas location is one of nine planned for Texas this year for the burger chain to "learn from." The new location also features two new drink items, reported WFAA-TV (March 20). Full Story

Meanwhile, McDonald's will sell Krispy Kreme doughnuts nationwide by the end of 2026. It began testing doughnut sales in 2022 and now the popular doughnut company will more than double its distribution to reach McDonald's restaurants nationwide, reported CNBC (March 26). Full Story

Chick-Fil-A backtracked from its "no antibiotics ever" pledge, blaming a projected supply shortage. Instead, the company will embrace a standard known as "no antibiotics important to human medicine," often abbreviated as NAIHM, which entails the avoidance of medications commonly used to treat people and limits the use of antibiotics to cases of actual illness, reported The Seattle Times (March 24). Full Story

Panera's new menu highlights core items like soups, sandwiches, and salads instead of searching for a new breakthrough item or menu category. The new menu is shorter and hailed as the most sweeping makeover in the chain's 37-year history. Executives are already working on revamping the breakfast and morning beverage lineups; alcoholic beverages will not be served, reported Restaurant Business (March 28). Full Story

White Castle is offering discounts on gift cards and special deals for Tax Day, Mother's Day, and Memorial Day Weekend. And on April 20, Craver Nation members can roll up to White Castle for a BOGO offer on the Impossible Slider, made from plants for meat lovers. Full Story

The new CFO of Yum! Brands said Taco Bell and Pizza Hut are going "AI-First," citing data shared by its restaurants as the "secret sauce" for enabling AI and digital sales. About 45% ($30 billion) of Yum's sales are digital, and managers are testing a mobile app to track and manage operations with a generative AI boost, "like a coach in your pocket," reported The Wall Street Journal (April 1). Full Story

Meanwhile, Taco Bell is charging customers 20 cents for each of its new avocado verde salsa packets—a new permanent addition to the menu. The new condiment comes in a packet twice the size of the brand's standard hot sauces, which are still free, reported Fortune (March 27). Full Story

Additionally, Taco Bell is testing three new Agua Refrescas drinks in a continuing effort to become a "beverage destination." Each drink is based on energy-boosting green tea and infused with real fruit, reported Restaurant Business (April 11). Full Story

KFC has debuted Saucy Nuggets, offering three new sauce options along with two returning favorites: Honey Srircha, Korean BBQ, Sticky Chicky Sweet ‘n' Sour, Nashville Hot, and Georgia Gold. Full Story

BurgerFi has partnered with Heinz, making it the first brand to ever have an in-restaurant, customizable sauce dispenser. The Heinz REMIX Machine is an IoT-enabled digital sauce dispenser that allows consumers to personalize their sauces with over 200 potential sauce combinations. Full Story

Burger King unveiled a new limited-time "frozen cotton candy" drink. The new drink was made available at Burger King restaurants nationwide starting April 11, reported Food & Wine (April 4). Full Story

Jersey Mike's Subs is considering a sale that could value the company at $8 billion, according to sources familiar with the matter. The company has been in on-and-off discussions with Blackstone, reported The Wall Street Journal (April 5). Full Story

MOD Pizza closed 26 underperforming restaurants during the first quarter. The fast-casual chain confirmed Tuesday that it had shuttered locations in 10 states and the District of Columbia, reported Restaurant Business (April 9). Full Story

Dave & Busters is launching a new dine-in menu featuring more than 20 new premium food and drink items. In celebration, the brand is offering a first-of-its-kind offer for new and existing D&B Rewards members, who are eligible to receive 50% off all food at Dave & Buster's April 15 through April 28. Full Story

Papa John's has signed a 50-unit development deal with the Bajco Group. The Group will open restaurants in the Midwest, Arizona, Pennsylvania, and Florida as the pizza chain increases its domestic development. The Group already owns 200 Papa John's locations and is one of its largest operators, reported Restaurant Business (April 10). Full Story

Executives on the Move:
Smashburger has named former Starbucks executive Denise Nelson as senior vice president of U.S. operations. Full Story

Taco John's named Heather Neary as CEO; Neary spent 15 years with Auntie Anne's and brand president at KBP Brands. Full Story

Shake Shack this morning appointed Rob Lynch to the role of CEO, effective May 20, succeeding Randy Garutti. Lynch previously served as President and CEO of Papa. Full Story

Bloomin' Brands has promoted Michael Healy to CFO. Full Story

Carl's Jr. named Blake Devillier its new brand president as its parent company restructures. CKE Restaurants, which also owns Hardee's, has separated its two QSR brands. Full Story


H5N1 Avian Flu Hits Dairy Herds

The recent spread of a highly pathogenic avian influenza (HPAI) strain (H5N1) to dairy cows in the United States has raised concerns about the potential impact on the dairy and beef industries. While the U.S. Department of Agriculture (USDA) has stated that there is little safety risk, the outbreak has unsettled the industry, with cattle and milk prices taking a hit.

Risks to Consumer Demand

There are concerns that some consumers may be hesitant to drink milk or eat beef due to the outbreak, potentially hurting demand. Analysts have noted that "risks to consumer demand for dairy are prevalent in conversations," although the actual impact on buyer behavior remains unclear.

Supply-side Concerns

The infection of dairy cows by the same virus strain that has caused unprecedented deaths in wild birds and poultry globally is also raising concerns on the supply side. Infected Texas dairy cattle are experiencing decreased lactation and low appetite, with older cows more likely to be severely impacted.

Some herds infected with H5N1 have reported pneumonia and clinical mastitis, an inflammatory disease. While most animals seem to recover in as many as two weeks with supported care, some cows may never see their milk production recover to pre-infection levels, potentially leading to culling. The overall impact on the milk supply is expected to be mild, however, as the number of affected farms and cows remains relatively small.

Human Infection and Safety Measures

In early April, a person in Texas was infected with the virus after exposure to infected dairy cows, although the risk to the general population remains low according to the Centers for Disease Control and Prevention. The CDC has advised against consuming uncooked or undercooked food from potentially infected animals.

Milk from impacted animals is being diverted or destroyed to prevent it from entering the human food supply. The USDA and the Food and Drug Administration have stated that there is no concern about the safety of the commercial milk supply, as pasteurization inactivates viruses like influenza.

Impact on Major Producers

Cal-Maine Foods Inc., the largest egg producer in the U.S., has culled 3.6% of its flock after birds at a Texas facility tested positive for avian flu, adding to concerns over the widening outbreak. This is the biggest bird flu casualty in the U.S. since December 2022 when 2.6 million birds were killed at an Ohio egg farm. While the virus has not been found in beef cattle herds so far, cattle futures fell 2.7% following the confirmation of the human case in Texas before trimming some losses the following day.

Overall, the situation requires close monitoring and coordination between agencies to ensure the spread is contained. Based on the current information, however, the risks appear manageable, with no major disruptions expected to the dairy and beef supply chains. Food Institute Focus


Restaurant Sales Decline in February

Comparable restaurant sales contracted 0.6% in February as comparable traffic ticked down 2.3%, according to Black Box Intelligence. "Excluding January of this year, which was negatively impacted by the weather, February 2024 was the worst-performing month based on restaurant sales growth since February 2021. This means that we have reached a low point in the post-Covid recovery when it comes to year-over-year sales growth." Full Story

Selected Results:

Darden Restaurants – whose portfolio includes Olive Garden, LongHorn Steakhouse, and Capital Grille – posted its first same-store sales decline since the pandemic. While quarterly earnings met Wall Street expectations, revenue fell short of estimates. Olive Garden same-store sales fell 1.8%, though net sales of Darden businesses rose 6.8%, fueled by the acquisition of Ruth's Chris Steak House and 53 other new restaurant locations, reported CNBC (March 21). Full Story

Chick-fil-A enjoyed another huge year in 2023, as the chain's unit volumes at stand-alone restaurants hit $9 million. The chain generated nearly $22 billion in U.S. system sales last year, while both mall and non-mall locations thrived, reported Restaurant Business (April 4). Full Story

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