First Bite Nation's Restaurant News

Starbucks reported a same-store sales decline for the second quarter of 2024, for the first time in almost three years since the peak of the pandemic, as shares of the Seattle-based coffee chain plummeted 16% over the past day.
According to CEO Laxman Narasimhan, the global same-store sales drop of 4% was driven by declining traffic in North America, issues in China and the Middle East, bad weather, and “a more cautious consumer overall.” Additionally, Starbucks revised its annual fiscal guidance to reflect a more reserved growth outlook as the company attempts to reverse this negative sales trend.
Besides reaching these occasional guests, Starbucks leadership emphasized that many of the issues over the past quarter came down to challenges with meeting demand, particularly during peak morning hours. 

During Yum Brands’ earnings call Wednesday morning, executives were somewhat upbeat, touting the resiliency of the company’s brands in a challenging operating environment and pointing to core operating profit gains and digital sales increases as reasons for their optimism. Additionally, executives cited sequential improvements from January’s weather impacts, as well as easing headwinds from tension in its Middle East markets.
Technology was the focal point of that optimism, with CEO David Gibbs noting that Q1 marked the first time the Yum system surpassed over 50% in digital sales, representing about $30 billion in annualized, digital sales. These sales were driven by the continued rollout of Click and Collect and kiosks.
One example is voice AI at the drive-thru, which Yum has been testing at five Taco Bell restaurants in California. The company is expanding the test into 30 restaurants in Q2 based on positive feedback. Yum is also piloting AI in its proprietary app, which makes it easier for general managers to access information to make decisions.

Domino’s Pizza is starting the fiscal year off strong with Q1 earnings highlights that include 5.6% same-store sales growth driven by transaction growth from the company’s new loyalty program.
In a Q1 earnings call, Domino’s CEO Russell Weiner discussed how the loyalty program is synergistic with other elements of the company’s previously announced “Hungry for More” strategy for 2024, including menu innovation. For example, the new New York Style pizza launching this week, made with thinner crust and a provolone cheese blend, is now available as a rewards deal.
All roads lead back to the loyalty program: Domino’s highly successful “Emergency Pizza” promotion, which gave away $1 million of free pizzas last fall, was effectively a rebranded “BOGO” coupon, that allowed customers to come back and cash in their free pizza at a later date. For Domino’s, it allowed the company to welcome new customers and lapsed customers back into the fold.

Chipotle reported first quarter results after market close Wednesday and the company once again bucked the industry’s declining traffic trends, turning in a plus-5% increase in transactions. Credit Chicken Al Pastor, barbacoa, and improved throughput to meet demand for both.
The company also generated 7% comp sales growth, while system sales grew 15% to reach $2.7 billion. CEO Brian Niccol said in-store sales were up by nearly 20% as throughput reached its highest level in four years. That throughput improvement has stemmed from the company’s Project Square One, first put into place during the summer of 2022 to prioritize a focus on operational fundamentals for a workforce that largely dissipated during the pandemic. The company improved its throughput by nearly two entrees during its peak 15-minute timeframe versus last year, with sequential improvements each month. Niccol said its operations initiative focuses on four areas, including expediting the bagging and payment process and ensuring the manager supplies both lines with food to avoid interruption.  

As food delivery becomes synonymous with the restaurant experience — data from McKinsey and Company shows that the value of the food delivery industry has more than tripled since 2017 — the need for guardrails around the still-budding segment of the restaurant industry has grown. 
The amount of both regional legislation and individual litigation attempting to regulate and mitigate issues with the food delivery industry has escalated recently. Over the past two months alone, Florida passed a bill requiring delivery apps to get permission from restaurants before arranging pickups, a New York City councilmember just proposed a bill that would require delivery apps to allow customers to tip before placing orders, and California put forth a bill that would require delivery app providers to provide an itemized breakdown of fees at checkout, including a disclosure of restaurant-facing fees.

While restaurant operators continue to struggle with both labor costs and employee retention, the foodservice industry may very well have deeper employee-side problems. According to a study of Glassdoor reviews just released from BBADegree.org (an organization that provides resources for prospective business professionals seeking higher education), workers in the restaurant and foodservice industry complain about burnout the most, as compared with other industries.
Chipotle Mexican Grill scored a 97.72 out of 100 on the organization’s burnout rating score, second only to Progressive Insurance as the workplace with the most complaints of burnout, with “stressful” being the most common word used to describe the workplace environment. According to the Glassdoor reviews that mentioned burnout, Starbucks was also in the top 10 companies out of the 550+ companies surveyed. As non-franchised organizations, the reviews of both Starbucks and Chipotle are overwhelmingly from corporate employees.