Global bottleneck in supply chain and costs cup restaurant results attention

Investors hope to gauge the impact of the global supply chain bottleneck on restaurant expansion plans when McDonald’s Corp, Starbucks Corp and Yum Brands Inc report their capital expenditures on earnings this week.

Rising prices for kitchen equipment – as well as labor, food and other goods – are leading some restaurant chains in the United States to cut back on their opening plans despite strong and steady revenue growth.

Some chains and their franchises may put off remodeling or add in-car pick-ups in the face of rising costs, the restaurant consultant said. Aaron Allen.

Median capital expenditures as a percentage of revenue at publicly traded U.S. restaurant companies fell to 3% in early May 2021 and remained at that level in October compared to a ratio of 5% in 2017. to 2019, he pointed out Allen.

Chipotle Mexican Grill Inc opened 41 new restaurants in the third quarter. Your CEO, Brian Niccol, said it aligns with plans to build 200 new stores in 2021, mostly in the United States, but without delays and higher construction costs, labor and equipment could have opened. “many more”.

The CEO of Domino’s Pizza Inc, Richard Allison, said in an earnings call on Oct. 14 that problems obtaining kitchen equipment was a key factor in delaying the opening of stores in the third quarter.

Globally, all sectors are expected to increase capital expenditures by 8.1% in 2021, according to a report by the global economist of Morgan Stanley. Restaurants are paying at least 10% more for some new equipment and are waiting months for them to arrive.

Surcharges and long waits

The Italian equipment manufacturer Ali Group raised prices 10-20% on some metal shelves and refrigerators in the past 18 months, he said Rob August, senior vice president of the manufacturer Ali Group North America.

When the next price increases of Atosa USA Going into effect on November 1, one of its two-door refrigerators will be priced at US $ 3,249, 37% more than in January, according to a distributor. Atosa it is a division of china Yindu Kitchen Equipment Co Ltd.

Ice makers from Ali Group are now hard to find, the dealer said, and waiting for certain Pitco fryers from Middleby Corp. it’s been up to seven months, depending on the franchises.

“We are experiencing unprecedented increases in material, freight and labor costs”Commented a Middleby spokesperson, noting that while wait times are longer than usual, seven months is not the standard.

A franchise of McDonald’s stated that some pairs had to wait 23 weeks to get a new one Frymaster Fryer, manufactured by Welbilt Inc. Atosa and Welbilt They did not respond to requests for comment.