Happy Friday!

3 Numbers

7 to 9

Number of Infinite Kitchen automated stores that Sweetgreen plans to open next year. The company also plans to retrofit 2 to 4 preexisting stores with the system. The company says that Sweetgreen’s first automated store - in Naperville, IL - can make up to 500 bowls an hour, and in its first month boasted a restaurant-level margin of 26%.

2027

Year in which the famously far-sighted In-N-Out plans to open its first New Mexico store. For decades the chain was content with being California homebodies, but now, its pace of geographic expansion seems to be accelerating: In-N-Out opened up the Colorado market in 2020, and it plans to branch out into Idaho and Tennessee in 2024 and 2026, respectively.

31%

Q3 profit margins for company-operated Dutch Bros stores, a 540 basis point increase year-over-year. (The technical term for that kind of performance is “insanely good.”) In a masterclass in CFO understatement, Dutch Bros exec Charles Jemley said on the earnings call, “Where we’re sitting today is a general expectation of a good place to be.” Ya think?

Coming soon to your McD’s: Krispy Kreme (maybe)

• Krispy Kreme and McDonald’s to expand partnership… Over a year ago, McDonald’s began serving Krispy Kreme donuts in 160 Kentucky locations, in a test that essentially asked the question, “Will people find this weird?” Customers must have given a glazed-over thumbs up, as Krispy Kreme CEO Josh Charlesworth said this week that his company is in talks to expand the partnership to include more McDonalds’ stores. The announcement comes as McDonald’s is scrapping some of its bakery items (like its truly underappreciated cinnamon roll) and simultaneously leaning into coffee, which of course has a symbiotic relationship with the donut.

Here’s what else is happening in the restaurant world:

• One more McD’s note… McDonalds’ decision to rebrand its Crispy Chicken Sandwich as the McCrispy seems to be roughly as good a name change as the Twitter-to-X decision was bad. On McDonalds’ earning call last week, the company said it now values the McCrispy as a brand worth north of $1 billion.

• Son, look — it’s a traffic increase! In its Q3 earnings call this week, Cava showed a 7.8% traffic increase, along with a positive net income of $6.8 million (an increase of $18.7 million year-over-year). The newly-public company modestly chalked up some of the success to an “IPO halo,” but also said it has much room to grow, with the brand targeting 15% annual unit count growth.

• Wonder receives $100 million investment… A few weeks after acquiring meal-kit company Blue Apron for $103 million, food-delivery startup Wonder continued its game of Mad Libs with the food industry, announcing that it will be receiving a sizable investment from none other than Nestle. CNBC reports the investment to be $100 million, and it comes along with a strategic partnership between the two companies — Nestle will make pizza and pasta “tailored for Wonder’s kitchen equipment,” and later, Wonder plans to sell its equipment to Nestle’s food-service clients.

• About that industry return to pre-pandemic employment levels… Last month the restaurant industry celebrated a milestone: collectively speaking, restaurant jobs had finally exceeded their February 2020 tally. It turns out that wasn’t really the case. Last week, the Bureau of Labor Statistics announced revised August and September numbers, which said that its prior estimates were off by -21,000. With restaurant job numbers also dropping by 7,500 in October, the industry is now 14,000 jobs shorter than it was before the pandemic.

• Robots comin’… Bear Robotics, which makes the R2D2-esque Servi bot, will deploy its bots in healthcare facilities beginning next year, after signing a new deal with Sodexo. And Remy Robotics, which makes bots that fully cook entire meals, made its American debut yesterday with a virtual brand that will be delivered out of a CloudKitchens facility. Remy’s brand, called “Better Days,” was tested in European markets over the past two years.

• DoorDash tests out tip screen… DoorDash is testing a pop-up message in its  ordering process which warns customers that orders placed without a tip may take longer to be delivered. While online reaction to the message has been… divisive, DoorDash did say it had detected a “meaningful decrease” in no-tip orders since the start of the pilot.

• Toast announces earnings… In its earnings call this week, Toast struck a similar note as many casual diners in reporting a “modest slowdown” in same-store transaction volume, which the company also attributed to a return to normal industry seasonality. Otherwise, Toast’s results seem… pretty good. The company added 6,500 net new locations and grew its year-over-year revenue 37% to $1.03 billion.

• The not-fun news corner… Two large franchisees have filed for Chapter 11 bankruptcy: 172-unit Burger King franchisee Premier Kings declared bankruptcy in late October after the unexpected death of its owner led to operational disruption and uncertainty. And Denny’s franchisee Denn-Ohio LLC, which once operated 27 diners, filed its bankruptcy petition on Oct. 31, citing post-COVID increases in labor, food, and delivery costs.

Name That Chain!

You get three hints to guess this week’s mystery chain:

• Contrary to popular belief, this chain’s name is an acronym.

• Many of their menu items are pop-culture references — several of which are quite obscure.

• With 20 different fresh ingredients and seven different platforms on which to eat them, customers can choose from 17,030,314,057,236,500,000 potential meals.

WHAT IS THIS MYSTERY CHAIN? (The answer will be in next week’s email.)

Last week’s answer: Hungry Howie’s

#Content Recs

• Pretty much all of the recent Nate Bargatze episode of SNL was gold, but since this is a restaurant-themed newsletter I’ll link just to “Chef Show,” which made me spit out my coffee.

• Like many of you, I wait with bated breath for the coming “McDonald’s x Crocs Collaboration,” which will reportedly drop in the U.S. sometime this month. Our old pals Birdie, Grimace, and the Hamburglar are all getting their own shoe, and I’ve already called dibs on the Hamburglar, so no one else can get that one, okay?

• Eater released its 2023 list of the best new restaurants in America; Philadelphia appears to be having a bit of a culinary moment, as it was the only city to snag two spots.

Finally, there are a few pieces of content well worth reading on this topic:

Wingstop is releasing its own tech system next year called My Wingstop; reportedly three years in development (and costing $50 million), it will replace Olo, with which the company has been partnered for nine years. (It should go without saying that Olo’s stock is not having a good week, although CEO Noah Glass highlighted on the earnings call that Olo does not believe this loss will have a material impact on its business.)

This is, to put it mildly, a big bet that Wingstop is placing. Wingstop is currently crushing it (with a 15.3% same-store-sales increase in Q3), and the company is moving away from the provider that helped take it to 67% digital transactions.

The decision is leading to a fascinating (and consequential) “build vs. buy” discussion in the restaurant tech ecosystem. Glass says that the economics of Wingstop’s decision don’t make sense: Wingstop spent $50 million to build its system, while Olo spends $90 million each year on maintaining and improving the tech platform for 600 customers. If all 600 customers built their own system like Wingstop, they’d collectively spend $30 billion. (If you’re interested in this sort of thing, the entire earnings transcript is worth a read; just control-F “Wingstop.”)

Over at RB, Joe Guszkowski attempted to make sense of the decision, first explaining the many possible roadblocks Wingstop may face (and reminding us that the “road to tech nirvana is littered with brands that tried to do it themselves and gave up”), before giving a possible theory for why Wingstop made this move: that if Wingstop truly wants to get to 100% digital orders, it may feel it needs to fully own its tech infrastructure. And it may place a ton of value on the “hyperpersonalization” its own program will give.

Meanwhile on LinkedIn, 858 Partners co-founder (and former long-time Olo exec) Juan George pointed out that while the Wingstop deal was “transformational” for Olo, “some good things come to an end,” and (importantly), “most brands don’t have a $50MM budget in this environment.”

Which I think is the number that is really going to stick in restaurant operators’ heads. Obviously, it makes the decision to “build” a non-starter for the vast majority of restaurant brands, but even for those that could invest $50 million, well, maybe they’d rather do less-painful things with that cash than build out a tech platform. Operating restaurants is already pretty damn hard.

International Corner!

In an attempt to spur the imaginations of fast-food R&D departments across America — each week I’ll highlight an international item that should warrant at least some menu consideration in the States.

This week: PAPAS SUPREMAS.

Very into this offering by Mexico Burger King: an actual bucket of fries, which Google Translate tells me is “bathed” in cheese sauce and topped with “bacon flavored pieces” and crunchy onions.  

¡Supremamente deliciosas!