Global Supply Chain Logjams, Costs in Focus as Restaurant Chains Report Earnings

8 months ago 116

NEW YORK—Investors anticipation to gauge the interaction of the global supply-chain logjam connected edifice enlargement plans erstwhile McDonald’s Corp., Starbucks Corp., and Yum Brands Inc. study superior expenditures successful their earnings this week.

Skyrocketing prices for room equipment—as good arsenic for labor, food, and different goods—are prompting immoderate U.S. edifice chains to curtail opening plans contempt consistently beardown gross growth. Some chains and their franchisees whitethorn enactment disconnected remodeling oregon adding drive-thrus successful the look of rising costs, edifice advisor Aaron Allen told Reuters.

Median superior expenditures arsenic a percent of gross astatine publically traded U.S. edifice companies dropped to 3 percent successful aboriginal May 2021 and remained astatine that level arsenic of October compared with a ratio of 5 percent from 2017 to 2019, Allen said.

Chipotle Mexican Grill Inc. opened 41 caller restaurants successful the 3rd quarter. CEO Brian Niccol told Reuters that aligns with plans to physique 200 caller locations successful 2021, mostly successful the United States, but without delays and higher costs for construction, labor, and equipment, it mightiness person been capable to unfastened “well beyond” that.

Domino’s Pizza Inc. CEO Richard Allison said successful an net telephone connected Oct. 14 that problems getting room instrumentality were a cardinal origin successful a fig of store openings delayed successful the 3rd quarter.

Epoch Times Photo A Domino’s Pizza edifice successful the Lower East Side of Manhattan connected July 11, 2017. (Samira Baouaou/The Epoch Times)

Globally, each sectors are expected to boost superior expenditures by 8.1 percent successful 2021, according to a study from Morgan Stanley’s planetary economist. Restaurants are paying astatine slightest 10 percent much for immoderate caller instrumentality and waiting months for it to arrive.

Surcharges and Long Waits

Italy-based instrumentality shaper Ali Group raised prices by 10 percent to 20 percent connected immoderate metallic shelving and refrigerators implicit the past 18 months, said Rob August, elder vice president of shaper Ali Group North America.

When Atosa USA’s adjacent terms increases instrumentality effect connected Nov. 1, 1 of its two-door refrigerators volition beryllium priced astatine $3,249—37 percent much than successful January, according to a dealer. Atosa is simply a part of China’s Yindu Kitchen Equipment Co. Ltd.

Ice makers from Ali Group are present hard to find, the trader said, and the hold for definite Pitco fryers from Middleby Corp. has been arsenic agelong arsenic 7 months, franchisees said.

“We are experiencing unprecedented outgo increases successful material, freight, and labor,” a Middleby spokesperson said, noting that portion hold times are longer than usual, 7 months is not standard.

One McDonald’s franchisee told Reuters that immoderate franchisees person waited 23 weeks to get a caller Frymaster Fryer, made by Welbilt Inc.

Atosa and Welbilt did not reply to requests for comment.

At sandwich concatenation Portillo’s Restaurant Group Inc., which went nationalist connected Thursday, “we’re budgeting astir 10 to 15 percent much for caller edifice builds than we were virtually six months ago,” said CEO Michael Osanloo.

John Stack, president of A City Discount instrumentality trader extracurricular Atlanta, said astir of the caller and remodeled restaurants his institution has designed person delayed openings due to the fact that they cannot get instrumentality connected time.

By Hilary Russ