Editor's Note
Welcome back to Savory Bites. Fresh intel for restaurant and hospitality operators who want to stay ahead of the tech reshaping our industry.
This newsletter has spent most of its run arguing independents have real advantages over chains. This week somebody else's data makes the case, and the customers driving it are the ones everybody assumed were already lost.
Let's get into it.
— James, Founder of Savory Bites
This Week In The Industry
Everything Outside the Big Chains Grew Four Times Faster.
Sysco CEO Kevin Hourican said something this month that most operators would call wishful thinking.
"Oftentimes people just assume the opposite. They assume the national chain with the loyalty app, they're going to put the mom-and-pop out of business. We see the opposite in our data."
Bank of America's card data now says the same thing.
Restaurant spending rose 3.3% in July, up from 1.8% a year earlier. Transactions rose 1.1%, against 0.8% last year and a decline the year before.
The split underneath: quick service, casual dining and fast casual each grew 1% or less. Pizza declined. Everything outside the national chains grew around 4%. That figure covers independents and regional brands together, so it isn't purely a mom-and-pop number, but the gap is still four to one.
The growth is coming from lower-income consumers and younger Gen Z. Those are the two groups the entire value-menu buildout was designed to hold.
The pizza numbers show how far it has moved. Lower-income spending fell in pizza, harder than any other income group, while it rose everywhere else. Those customers didn't stop eating out. They left value pizza chains and spent the money somewhere. Bank of America doesn't say where it landed. It does say the national chains didn't catch it.
One thing I'd like to point out. In Issue #17 of Savory Bites a Harris Poll found 68% of Gen Z say going out is not worth the cost, but BofA says Gen Z spending grew faster than any other age group. When the two disagree, the card statement is the one you can bank on. Gen Z isn't absent. They're selective.
Bank of America credits price. Restaurant inflation ran ahead of grocery inflation from 2019 on, which is how "just eat at home" became everyone's default advice. That gap is closing. Restaurant prices eased this year while eggs and chicken wings climbed faster.
Three things to do with this.
Stop pricing against the chain value menu down the street. In this data, the customer you think you're losing to a $5 combo already walked away from it.
Reconsider whether you have a Gen Z problem. If your under-30 traffic is soft while their category spending grows, that's a you problem, and it's cheaper to find out which before you redesign anything.
Check what eggs and wings cost at the store this week against your invoices from a year ago. If your plate price moved less than the grocery shelf did, that's a marketing line nobody in your market is using.
Read more → https://www.nrn.com/consumer-trends/consumers-are-spending-more-at-restaurants-but-not-at-chains
News Bites
🧾 What's Actually New About the Overtime Rules Pay stubs have itemized overtime for decades. That part isn't new. The deduction is.
For your staff: the premium half of time-and-a-half is now tax-deductible, up to $12,500 a year filing single and $25,000 married. It phases out at high incomes, which won't touch most hourly workers.
For owners: to let them claim it, you have to report qualified overtime separately on the W-2 instead of folding it into total wages. The grace period is over and penalties run $60 to $660 per form. Ask your payroll provider to confirm they're handling it. Source: NRN
💰 PG&E and SoCalGas Just Funded $1.41M in Grants to California Independents The California Restaurant Foundation gave 282 independent restaurants and catering businesses $5,000 each through its Restaurants Care Resilience Fund, backed since 2021 by The PG&E Corporation Foundation and SoCalGas. To qualify you need fewer than five units and under $3 million in revenue. Recipients averaged 10 years in business and 85% run a single location. They plan to spend it on kitchen equipment (69%), technology (15%) and training (8%). California operators: RestaurantsCare.org, watch for round seven. Source: RestaurantNews.com
Tech Spotlight
Chipotle Just Invested in Six More Food Tech Companies
Chipotle's Cultivate Next venture fund announced six new investments this week: Benchmark Labs, IMIO, Clean Crop Technologies, Athian, SIMPLi, and PopID. The bets span agriculture, sustainability, supply chain transparency, and payment tech. The Cultivate Next portfolio now covers most of the emerging restaurant technology landscape. Independent operators can't run a venture fund, but you can watch what Chipotle bets on. The tools they invest in today become the tools available to independents in three to five years. Following Cultivate Next is a free preview of the tech stack you'll be evaluating for your own restaurant in the next decade. Source: QSR Magazine
Ellie's Corner
Every week this space is dedicated to something we're building at Ellie Carte. An AI phone ordering and restaurant management platform built for independent restaurants and hospitality operators.
Spending outside the national chains grew four times faster than inside them. Some of that demand reaches you by phone, from people with a question before they'll commit to an order. A chain's app cannot answer a question. That's the advantage sitting in the numbers above, and it only counts if somebody picks up. There's nobody free at 6pm, which is exactly when they call. Ellie answers every call, takes the order, and keeps the customer attached to their history.
👉 Learn more at elliecarte.com
The chef's special drops every Wednesday.
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Till next week — stay sharp, stay fed. 🍽️
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