Happy Friday!

3 Numbers

5.6%

Fourth-quarter traffic growth reported by Kura Sushi, making the chain a strong outlier among public restaurant companies that have announced declining traffic numbers in recent weeks. Kura can also lay claim to an impressive year-over-year increase in average unit volumes, jumping from $3.8 million in fiscal year 2022 to $4.3 million in 2023.

550,000

Number of pizzas shipped each year by Chicago deep-dish purveyor Lou Malnati’s. At $28 a pie, that equates to a $15 million-a-year frozen-pizza business. (Mamma mia!)

$7.6 billion

Bloomberg’s estimated net worth for Raising Canes’ founder Todd Graves, making him one of the 500 wealthiest people in the world. Graves has (impressively) retained 90% ownership of the chicken finger chain, which continues to crush it — Cane’s reported $3.3 billion in sales for the 12 months ending in June (along with adjusted earnings of $647 million).

A first look at CosMc’s — McDonald’s new concept

McDonald’s: so back right now:

• Its same-store-sales rose 8.1% in the third quarter, and the company made a tremendous amount of money ($2.3 billion in net income).

• It’s growing in the U.S. for the first time in years, with a reported 250 new units in the pipeline.

• It’s tackling its dry burger issue, telling the Wall Street Journal that it’s made upwards of 50 tweaks to its signature burger line, including a clamshell grill calibration that presses burgers on the grill “down to the millimeter.”

• And its marketers have figured out the internet, tapping into a deep well of characters and cultural touchpoints and earning a tremendous amount of free media attention in the process (looks in mirror). Grimace, of all … things, was responsible for one of the biggest limited-time-offers in fast food history. And scoff all you want, but unique events like a Crocs collaboration and an upcoming partnership with artist Kerwin Frost (featuring the McNugget Buddies, no less) both hit the Gen X/Millennial nostalgia buttons and keep the chain relevant with the kids.

Now, the company may be taking a run at Starbucks and Dutch Bros — at least if some recent leaks of its new concept CosMc’s are to be believed.

CosMc’s — named after an alien mascot from the ‘80s and one of the stranger characters in the McDonald’s canon — was first announced in the Q2 earnings call, with CEO Chris Kempczinski stating that the prototype would be “a small format concept with all the DNA of McDonald’s, but is own unique personality.”

The first location will open in Bolingbrook, IL. Photos show a CosMc’s sign with a retro feel and four drive-thru lanes (ala Taco Bell’s Defy model).

This week, X user Iman Jalali did some real sleuthing, posting photos of the site’s menu board.

If the photos are representative of the final product list, CosMc’s is going to be quite different from a tried-and-true McDonald’s. Along with several all-day breakfast items are many new caffeinated drinks, including a Sour Cherry Energy Boost, Berry Hibiscus Sour-Ade, and the intriguingly named “Island Pick-Me-Up Punch.”

Also on tap: slushies and frappes (including a Churro Frappe) and an expanded coffee line.

The emphasis on drinks makes sense — the Bolingbrook CosMc’s is located right beside an already-open McDonald’s, and the company will presumably want to launch with a differentiated menu so it doesn’t take market share from itself.

@McFranchisee, who writes candidly about the good and bad of being a McDonald’s franchisee, posted about the leak: “We have been asking for a custom drink lineup for years. This is one of the biggest developments in $McD in almost 2 decades, if not more.”

A beverage-heavy menu would also mean that McDonald’s is launching a direct competitor with Starbucks, Dunkin, and Dutch Bros (not to mention rising players like Swig and 7Brew). And if the company wants to scale CosMc’s, it’ll be well-positioned to do so quickly — especially if it offers the concept to its current franchisees as a growth vehicle.

Scaling CosMc’s would also raise a big question: how would this affect McDonalds’ new competitors?

Despite Dutch Bros’ monster growth and Starbucks’ pivot to more suburban drive-thru locations, drink-focused brands still represent a relatively small percentage of the overall drive-thru market. It’s possible that CosMc’s would be additive — on the whole, people really like caffeine, and there seems to be more room in the space.

On the other hand, this is McDonald’s, which has a large war chest and plenty of well-capitalized franchisees. It’ll be fascinating to see if McD’s ends up taking market share from “Big Beverage” … or if it grows the category.Name That Chain!

Popeyes gets into the wings game

It’s been four years since Popeyes introduced its chicken sandwich, and the whole launch saga feels like a fever dream — breathless media coverage, hour-long drive-thru lines, Twitter battles.

The sandwich changed the company: Popeyes began adding restaurants again, and its average unit volumes grew significantly. This year, it passed KFC as the country’s second-largest chicken brand.

One could argue it also represented a shift in the broader quick-service industry, launching the forever Chicken Sandwich wars. (There’s a whole Wikipedia page about it.)

While it may be too much for Popeyes to ask for something on the scale of its chicken sandwich launch, the company is hoping to recapture at least some of the spark with its newest menu offerings: wings.

Popeyes added five chicken wing offerings to its permanent menu this week. Flavors include Roasted Garlic Parmesan, Signature Hot, Ghost Pepper, Honey BBQ, and Sweet ‘N Spicy.

The company says the wing recipes have been three years in the works, and in-store testing earlier this year went well — the ghost pepper wings were “an overnight success,” according to president Sami Siddiqui.

Wingstop will be a formidable competitor — its growth over the past few years has been phenomenal — but Popeyes will be unique in that there really aren’t many drive-thru options for wings.

The company is also taking an aggressive marketing tactic that hearkens back to its opening salvos in the Chicken Sandwich Wars — it’s bought billboard space near competitor restaurants, “prompting consumers to reconsider their wing choices.” Spicy!

Who’s afraid of Big Sandwich?

Roark Capital’s Subway acquisition hit a roadblock last week when the FTC announced that it will be investing the purchase. From Politico:

“The Federal Trade Commission is investigating if the $10 billion purchase of Subway creates a sandwich shop monopoly with Jimmy John’s and Arby’s. The latter two, in addition to McAlister’s Deli and Schlotzky’s, are owned by private equity firm Roark Capital, which inked a deal to buy Subway in August. The government is focused in part on whether the addition of Subway gives Roark too much control of a lucrative segment of the fast food industry, the people said.

“The investigation is in the early stages, and any resolution is likely months away. Merger reviews by antitrust regulators can often take a year or more. The FTC can either sue to block the merger, reach an agreement with the companies that alleviates its concerns, or take no action at all.”

Among the people applauding the investigation is Senator Elizabeth Warren, who wrote on X this week:

Roark’s purchase would indeed give them a lot of sandwich shops.

But this argument has also received more than a little skepticism — as many have pointed out, a Subway-Jimmy John’s-McAlister’s combination would still give consumers plenty of choices for where to get a sandwich. There would still be national brands like Jersey Mike’s and Firehouse Subs, not to mention grocery stores and local delis. Most people, in the comfort of their own homes, are also capable of putting deli meat in between two slices of bread.

But regardless of whether the investigation blocks the acquisition, there’s little doubt that it’ll thoroughly disrupt the timeline hoped for by both Roark and Subway. Subway’s long sale saga continues.

(On a positive note, the company’s new footlong cookies are being warmly received.)

Quick Hits

• Ghost kitchen provider Kitchen United unexpectedly closed its seven Kroger food halls, 18 months after raising $100 million in growth capital. The company plans to pivot back to its software business, called “MIX.”

• Healthy concept Modern Market Eatery opened its first drive-thru restaurant this month, becoming the latest fast casual to tread a toe into the world of quick-service (and further frustrating anyone who has to categorize restaurants professionally).

• Crumbl — which has nearly 1,000 locations now — announced a brand refresh this week. “Bakerhead” has been given severance, and “Cookies” has been removed from the logo. (Make of that what you will.)

• The private equity firm Carlyle Group sold its stake in McDonalds’ China operation to McDonald’s Corp for $1.8 billion, netting a tidy 7 times return on its 6-year investment.

• At an investor conference this week, Shake Shack CEO Randy Garutti said that all U.S. locations now have kiosks, and they’re already accounting for more than half of the company’s sales.

• Chick-fil-A — the Max Verstappen of customer-service award winners — finished tops among restaurant brands in a Forbes ranking of consumer companies by service levels, bested in the overall rankings by only the UPS Store. Other restaurant chains ranked in the top 20 include Mission BBQ (8th), Dutch Bros (10th), Texas de Brazil (20th).

Name Those Chains!

Doing things a little differently this week… Here is your question:

There are three restaurant chains which have naming rights to sports arenas housing a Big Four (NBA, NFL, NHL, MLB) team. What are the three chains?

Stay tuned… the answer will be in next week’s email.

Last issue’s answer: Jollibee

#Content Recs

• A sentence I truly never thought I’d write: “Even LongHorn Steakhouse Is Getting In On The ASMR Trend Now.”

• Clickbait ads featuring a photo of Dave Thomas and the headline “Classic Restaurants That Are Gone for Good” have gone viral on Facebook and Instagram. Snopes reports that Wendy’s — which is most assuredly not closing all its locations — is the subject of a tactic called “advertiser arbitrage,” in which an advertiser attempts to make more money on ads placed in a lengthy article than it spends on an (often misleading) social media ad.

• The Dish uses a plate of dry-aged steak at a Chicago restaurant to investigate every component of the dish’s supply-chain — from the farm to the delivery network to the restaurant itself. Looks to be a fascinating deep dive.

• The Sphere in Las Vegas has been responsible for some truly arresting images — a giant, blinking eye, a jack-o-lantern, whatever this is. Last week, Pizza Hut helped answer the question, “What does a 160,000 square foot pepperoni pizza look like?”

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: HUNGRY JACK’S BREKKY ROLLS

An important milestone in any American's study-abroad journey to Australia is going to a place called “Hungry Jack’s” and learning that it’s actually Burger King.

(The quick story as to why: When franchisee Jack Cowin bought the rights to develop Burger Kings in Australia in the ‘70s, he found that the King’s trademark had already been taken by an enterprising American immigrant; Cowin and Burger King Corporate decided to rebrand the concept’s name, but keep a similar menu and design as the American Burger King.)

Hungry Jack’s serves Brekky Rolls until 11 a.m. — these delightfully-named sandwiches include either bacon or sausage, eggs, cheese and BBQ sauce on a toasted roll.

For research purposes this week, I added BBQ sauce to a bacon, egg and cheese and folks… it works. Game-changing culinary innovation.