Breaking News

Subway’s U.S. Locations Fall Below 20,000 for First Time in Decades

• Subway, once the largest restaurant chain in the U.S. by unit count, has now fallen below 20,000 domestic stores for the first time in decades.
• This dramatic contraction reflects a larger trend of franchise fatigue, rising lease costs, and stiff competition from faster, more tech-integrated players.
• Independent owners should view this as both a cautionary tale and an opportunity—localized, high-service concepts are increasingly appealing as legacy chains falter. | SOURCE | NYPOST

Chili’s sales surge for a second straight quarter

• Chili’s reported a 31.6% increase in same-store sales for the second consecutive quarter, attributing the growth to the popularity of its value meals, Triple Dipper platters, and operational improvements.
• The casual-dining chain’s performance indicates a successful strategy in attracting cost-conscious consumers. However, sustaining this momentum poses a challenge as the company seeks innovative ways to maintain customer interest and manage rising operational costs.
• The industry watches closely to see how Chili’s will navigate the competitive landscape moving forward. SOURCE | RESTAURANT BUSINESS

Insurance Rates Continue Climbing

• Rising insurance premiums are becoming a hidden but critical challenge for restaurant owners.
• Coverage for liquor liability, general property, and workers’ compensation has surged, particularly in densely populated cities and regions with high claim volumes. For many operators, the increases are outpacing revenue growth, leading to tighter margins and renewed scrutiny of risk management practices.
• Smaller restaurants and independents are disproportionately affected, often having fewer resources to absorb the added financial burden. SOURCE | MYNEWMARKETS

New Tariff on Mexican Tomatoes Sparks Industry Concerns

• The U.S. government has announced a 17.09% tariff on imported tomatoes from Mexico, starting mid-July 2025.
• For restaurant owners, this could mean significant cost hikes on a menu staple—especially for pizza, Mexican, and farm-to-table operations. With domestic supply unable to fully cover the gap, prices may spike quickly. SOURCE | WASHINGTON POST

 

Industry Projections

Wendy’s Revises 2025 Sales Forecast Amid Economic Pressures

• Wendy’s has revised its 2025 sales outlook downward, citing economic pressures that disproportionately affect lower-income consumers—many of whom are fast-food regulars. The company reported a 2.8% drop in same-store U.S. sales during Q1. Executives attribute this to ongoing inflation, decreased customer traffic, and reduced discretionary spending. SOURCE | INVESTOPEDIA

Insurance Market Bottlenecks Threaten New Openings

• High insurance premiums and limited policy availability are slowing down or outright stopping restaurant development in coastal and high-risk regions. Restaurateurs report being denied coverage or quoted unaffordable rates due to location-based exclusions—particularly in areas prone to flooding, hurricanes, or wildfires. This market constraint is creating disparities in growth potential, skewing new openings toward safer, inland regions. Some operators are lobbying for insurance reform or forming group purchasing collectives to gain leverage with carriers. SOURCE | SC DAILY GAZETTE

Technomic lowers its 2025 sales forecast

• Technomic revised its 2025 foodservice sales growth projection to a range of 2.8% to 4.2%, down from an earlier estimate of 5.1%. The adjustment reflects early-year sales challenges attributed to weather disruptions and economic uncertainties, including potential tariff implementations. Consumer sentiment declined in February and March, despite signs of easing inflation, raising concerns about discretionary spending. Industry executives express cautious optimism, emphasizing the need for strategic adaptability in the face of fluctuating market conditions. SOURCE | RESTAURANT BUSINESS

Labor

Stricter Immigration Rules Worsen Labor Gap

• Amid tightening U.S. immigration policies in 2025, the restaurant industry is facing an increasingly strained labor market—especially for back-of-house positions traditionally filled by immigrant workers. Operators are being forced to offer higher wages, which is compounding the effects of recent minimum wage hikes. Additionally, these constraints are intensifying employee turnover, increasing training costs, and delaying service. Many restaurants are now exploring kitchen automation and menu simplification as stopgap solutions to labor shortfalls. SOURCE | FOOD INSTITUTE

Technology

Starbucks Shifts Strategy: Increases Staffing, Slows Automation

• Starbucks is shifting gears by slowing down its store automation plans and instead investing in frontline labor. After testing high-tech equipment meant to cut labor costs, the coffee giant realized it wasn’t delivering the expected improvements to speed or customer satisfaction. This pivot toward human staffing, especially in high-volume stores, signals a broader lesson: technology can supplement service, but not replace it entirely in hospitality-driven experiences. SOURCE | REUTERS

First-Party Ordering Systems Gain Strategic Priority

• With margins squeezed by third-party delivery fees, restaurants are doubling down on first-party ordering solutions to reclaim profitability and own customer relationships. These systems allow operators to bypass costly commissions, offer direct promotions, and gather valuable user data. A 2025 industry report shows that over 40% of multi-unit brands now see direct digital channels as their primary growth vehicle. Integration with POS systems, loyalty programs, and CRM tools is accelerating this shift as brands aim to strengthen engagement and reduce churn. SOURCE | RESTAURANT NEWS

McDonald’s Expands AI Across 43,000 Locations

• McDonald’s is deploying AI-driven tech upgrades globally, including smart kitchen tools, predictive maintenance, and voice-enabled drive-thrus. The company says these changes will enhance accuracy, speed, and reduce employee workloads. This AI investment aligns with broader trends toward automation in foodservice, especially as labor challenges persist. Restaurants using connected equipment can expect faster recovery from equipment breakdowns and better data visibility. This innovation wave will likely influence tech adoption across the industry. SOURCE | NEW YORK POST