Restaurants in an Ozempic world

Restaurant Weekly - 8/18/23

Author

Andy Moore
February 02, 2024

Hello. 

Welcome to the second edition of this fine newsletter.

3 Numbers

62%

Cava’s year-over-year net sales increase. The newly public company reported a 🔥 second quarter — same-store-sales were up 18.2% and traffic rose 10.2%. Cava shares have more than doubled since its June IPO.

27

Number of Boston Market locations ordered to stop operations by the state of New Jersey on Tuesday. The company has been accused of several workers’ rights violations, including over $600,000 in unpaid wages.

10,000

Meals per day that Hawaii-based charity Chef Hui, World Central Kitchen, and other relief organizations are making for the people of Maui. You can help support their efforts here.

Could Ozempic affect the restaurant industry? (Seriously)

Image via Shutterstock

In a big NY Times piece yesterday, Baruch College historian of medicine and health-care policy Jonathan Engel summed up much of the medical community’s current feeling on Ozempic and other appetite-suppressing weight-loss drugs: “Game-changer.”

By now you probably know the story: Ozempic was first approved in 2017 as a drug for patients with Type-2 diabetes, but pretty soon everyone realized it was highly effective at helping users lose weight, and in 2021 the FDA approved semaglutide (brand name Wegovy) for just that purpose.

In late 2022, Ozempic essentially went viral. Celebrities began openly talking about their post-Ozempic results, the #ozempicchallenge began trending on TikTok, and both Ozempic and Wegovy got so popular the drugs faced shortages.

Now an oral version of the drug is going up for FDA approval later this year, which could lead to more widespread acceptance (currently the treatment requires injections). The drugs are still expensive, but costs are expected to come down as supply increases, and some analysts believe the market could reach $150 billion a year by the end of the decade.

So, you may be asking, all that’s great… but why is this being covered in a restaurant-focused newsletter? Because as William Gibson once wrote, “The future is already here – it's just not very evenly distributed.”

In LA and NYC, some restauranteurs are noticing a shift in ordering patterns and are already adjusting their menus to accommodate wealthy diners on Ozempic. Reports the NY Post, “The Ozempic craze is causing a stir at popular restaurants. Diners are suddenly failing miserably at finishing their meals. Restaurateurs say they’re being asked more and more about smaller portions and seeing an increase in orders for light bites such as sushi or caviar service.”

Go on the Ozempic subreddit and you’ll find story after story of users mentioning the same thing - they’re still going out to eat, but they’re splitting entrees, or trading down to a smaller portion, or ordering with the intention of going home with leftovers.

What does this mean for restaurants? Well, it could be nothing — just some scattered anecdotes. We could be in the middle of a hype cycle — there are of course many “wonder” drugs that never quite lived up to their promise.

But it’s worth pondering, I think, what the restaurant industry could look like if millions of its customers are also taking a weight-loss drug. Would there be a noticeable increase in to-go packaging expenses? A push for menus to include more options for smaller-sized portions? Or conversely - could weight-conscious consumers find that they enjoy their favorite restaurants even more, because they’re no longer worried about overeating?

Let’s have fun with Chick-fil-A’s average unit volumes

Chick-fil-A had another big week, garnering a ton of headlines for its newest LTO — the Honey Pepper Pimento Cheese Sandwich. It’s the first time since the company has released a new version of its chicken sandwich in nearly a decade, and of course it looks quite tasty.

But putting that aside … we’ve really gotta talk about where their average-unit-volume (AUV) numbers are now.

QSR recently released its annual list of fast-food chains ranked by AUV, and it’s becoming an annual tradition for restaurant operators to read Chick-fil-A’s numbers and begin breathing rapidly.

And finally - journey with me on this thought exercise…

  • If every one of CFA’s current locations was a free-standing drive-thru unit

  • And the company had as many locations as McDonald’s

  • And the stores didn’t cannibalize each other and performed at the same level they currently do….

CFA would have had $114 billion in total system sales in 2022. That would have put it 68th on the list of the largest companies in the world ranked by revenue, ahead of Target, Hyundai, and UPS.

And not to belabor the point, but all this is being done six days a week.

Name That Founder!

This week’s trivia time is about a guy who can lay claim to a truly fascinating life/Wikipedia page:

  • He drove a Mr. Softee truck in Harlem to earn the seed money to fund his first restaurant (which he opened with zero cooking experience)

  • Later, he broke the world record for longest hot-air balloon ride (5,208 miles) in a balloon that featured his chain’s logo

  • One of his sons works as a world-famous DJ

WHO IS THIS MYSTERY FOUNDER? (The answer lies at the bottom of the email.)

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