Expensive food delivery over? Higher prices at fast food companies in California

TOP STORY

Food delivery services facing pushback

The cost of food delivery has risen significantly due to new fees introduced by delivery apps like UberEats, DoorDash, and Grubhub in response to minimum pay laws in cities like New York and Seattle.

• Impact on Order Volume: The additional fees have resulted in a significant decrease in orders, with Uber reporting a 30% drop.

• Legislative Intervention: Senators have criticized these practices, demanding transparency and the cessation of excessive hidden fees that dramatically inflate order costs.

• Worker Impact: Despite laws aimed at increasing delivery workers' pay, challenges persist, such as fewer work hours and a continued dependence on tips for income.

• Company Resistance: Delivery apps argue that stringent regulations lead to unsustainable operational costs, which in turn increase prices for consumers and decrease earnings for workers.

• Economic and Community Impact: Delivery companies claim that changes imposed by regulations threaten their business models and could negatively affect the entire ecosystem, including restaurants, consumers, and workers themselves. Critics argue that the companies prioritize profits over fair compensation and reasonable charges.

Florida’s New Food Delivery Law

Florida's new law, Senate Bill 676, imposes regulations on food delivery platforms like DoorDash, Grubhub, and Uber Eats to enhance transparency and protect local restaurants.

1. Consent for Listings: Food delivery apps must have explicit consent from restaurants before listing them or arranging deliveries.

2. Pricing Consistency: The law prohibits apps from altering a restaurant’s menu prices unless agreed upon beforehand.

3. Communication Channels: It mandates that delivery services provide ways for restaurants to communicate directly with customers during and after the order process.

4. Disclosure of Fees: Apps must clearly disclose all fees and commissions charged to restaurants.

5. Removal of Listings: Restaurants can request the removal of their listings from apps, which must be honored within ten days.

Additionally, the law centralizes the regulatory authority over these platforms at the state level, preventing local governments from imposing their own rules. Non-compliance can lead to significant penalties, including cease and desist orders and fines up to $1,000 per offense.

This legislation aims to rectify issues related to unauthorized listings and pricing discrepancies, and it is supported by both major food delivery companies and local business associations. The changes will come into effect by July 1, 2025, offering potentially better experiences for both consumers and restaurants.

RESTAURANT NEWS

Fast Food prices going up

Since the implementation of California's $20 per hour minimum wage law on April 1, several fast food chains have raised their menu prices.

• Wendy’s: Prices increased by approximately 8%.

• Chipotle: Prices increased by 7.5% overall, with specific increases such as the Chicken Burrito by 8.3% and the Steak Burrito by 7%.

• Starbucks: Prices in California went up by about 7%.

• Taco Bell: Menu prices increased by 3%.

• Burger King: Prices rose by 2%, with the Whopper Meal seeing a modest increase of 1.4%.

This research compared prices at 25 locations for each chain and analyzed specific menu items before and after the wage increase. The wage law, passed as Assembly Bill 1228, was intended to support the significant number of adults working in the fast food industry, not just teenagers. Restaurants with fewer than 60 locations nationwide and those that bake and sell bread as a standalone menu item are exempt from this law. Additionally, there have been job cuts in the industry, with two large Pizza Hut operators in California laying off around 1,200 in-house delivery drivers.

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FOODIE SOPTLIGHT

In-N-Out’s Presidents leadership and plans

Lynsi Snyder, the president of In-N-Out Burger, oversees the iconic fast-food chain's strategic expansion while maintaining its simple, affordable approach. Under her leadership since 2010, the company has grown from 230 stores in four states to 402 stores in eight states, with plans to open in Washington, New Mexico, and Tennessee. Despite this growth, In-N-Out remains a private, family-owned business that avoids franchising to control quality and pricing, offering competitive wages to its employees well above the minimum requirements.

Snyder emphasizes a cautious approach to expansion, focusing on preserving the chain's core values and customer satisfaction rather than rapid growth. She has opted out of modern trends like mobile ordering to maintain a high-quality customer service experience and uses long-standing suppliers to ensure consistent quality and pricing. In-N-Out has a unique position in the fast-food industry by maintaining lower prices and better wages without compromising its family-run business ethos, with plans to continue expanding cautiously while keeping its roots on the West Coast.

FOOD DOLLAR

Key Performance Indicator

Retail and Food Services monthly sale for March 2024

• Total Sales: U.S. retail and food services sales in March 2024 amounted to $709.6 billion.

• Monthly Increase: Sales rose 0.7% from February 2024, after seasonal adjustments.

• Yearly Growth: Sales increased 4.0% compared to March 2023.

• Quarterly Growth: From January to March 2024, sales were up 2.1% compared to the same period in the previous year.

• Retail Trade Growth: Retail trade sales increased by 0.8% from the previous month and 3.6% from the previous year.

• Strong Sectors: Nonstore retailers experienced a substantial 11.3% year-over-year increase, while food services and drinking places rose by 6.5% compared to March 2023.

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FOOD SAFETY

Food Scientists are finding ways to preserve food quality and safety

Food scientists are working on methods to ensure food safety without compromising quality, particularly for low-moisture foods like powdered milk. The study led by Arshpreet Khattra developed a framework using microbiology, engineering, and statistics to refine food processing methods. This approach utilizes a statistical technique called "bootstrapping" to help food processors determine safer processing standards while preserving nutrients and flavor. The framework allows for choosing a safety standard between very conservative and more liberal approaches based on risk tolerance, which can then be submitted for FDA approval.

The study highlights the need for balance in food processing, aiming to eliminate pathogens like salmonella while maintaining the nutritional and sensory qualities of food. This is particularly significant in the context of previous food safety outbreaks linked to low-moisture foods, which prompted the industry to adopt more stringent, but often quality-compromising, safety measures. The new methodology could lead to more optimal processing standards that ensure safety without unnecessary degradation of food quality.

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AGRICULTURE, SCIENCE, AND TECH

Food Waste Tech in the US

In 2023, investment in U.S. food waste technology dropped by 33% from the previous year, mirroring broader declines across the agrifoodtech sector due to challenging market conditions. Despite the downturn, investment levels are still above those in 2019 and 2020, indicating sustained interest and potential for resilience.

• Ongoing Momentum: Although investment fell, it remains higher than in earlier years, suggesting continued interest in food waste technologies.

• Increased Motivation: Rising food prices are driving businesses to adopt technologies that reduce food waste, seen as crucial during economic strains.

• Consumer Behavior: High food prices are also changing consumer habits, although measuring household food waste remains difficult.

• Recycling Investments: The Recycling category received significant funding, with $681 million invested across 44 deals in 2023, despite the overall decrease in funding.

• Sector Maturation: The food waste sector is showing signs of maturation with later-stage deals and corporate investments, indicating readiness for larger-scale operations.

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