Wednesday, December 28, 2005

Dr. Ruth, Dr. Phil, Mr. Jared

I’m a bit worried that Jared Fogel is stalking me. He used to be that nice-seeming fella who lost a ton of weight—some 245 lbs., or more than one of me—by eating at Subway every day. For that reason alone, you had to love the guy. It was like finding someone who proved Jack Daniels and tira misu cured cancer and promoted world peace. Losing weight, by eating fast food? And who got the Nobel that year? Put him on a mountain, and we’d be there offering hit CDs and small crafts as gifts (sacrificing a goat is so wrong; consider the clean-up).

But the folks at Subway are an onion slice short of being creepy with their new promotion. Sign up on a special website and Jared will call you with a pre-recorded pep-talk about keeping your New Year’s weight-loss resolution. And, according to the Associated Press’ press-release-beating coverage of the new program, this is merely a test for possible further interactions with the guy.

Which, of course, gives rise to all sorts of possibilities:

“Hello, you’ve reached Subway’s corporate headquarters. Press one if you’re waivering in a moral dilemma. Press two if you’re in danger of cheating on your spouse. Press three if you’re thinking of taking the mortgage money and heading to Tijuana…”

I can see it now: Standing in some captain-of-industry’s office, awaiting the start of a hugely important, nerve-jangling interview, and my cellphone rings: “Hey, buddy, it’s Jared. Just be yourself. And try a six-inch turkey sub, hold the mayo. Only six grams of fat!”

The possibilities are endless: Jared’s Oscar picks. Jared on tax preparation. Jared on what exit to take off the expressway.

What happened to selling subs?

In fairness, we have to point out the brilliance of what Subway is doing. TV commercials are as yesterday as Nehru jackets (explanation for younger readers: Amazingly dorky coats that were in vogue for about 15 minutes during the ‘60s). The objective today is interactive marketing, where consumers are prompted to take an action, thereby fostering a bond with a brand. Subway has that part nailed, more admirably in my estimation than such ground-breaking prior efforts as Burger King’s iPod download program (fans were given cameras to make videos somehow involving Burger King, which were then posted online for downloading. One effort consisted of a customer going through a McDonald’s drive-thru while wearing a mask of Burger King’s royal mascot. It didn’t make the cut at either Cannes or Sundance.) Four stars to Subway for that effort.

But we were never fans of the logo’d shrimp de-veiner mindset, where you extend a marketing come-on or concept to every possible aspect of daily life to keep a brand top-of-mind and relevant. You risk a sort of pitch fatigue; the marketer making the incessant appeal becomes an annoyance that’s resented, not a relished brand choice. Overexposure is much more of a danger today because it can happen so much more readily.

There should be limits to how far Jared should be used to sell fast-food sandwiches. Is this new compaign over that line? Probably not. But what’s next?

I’d love to answer, but the phone is ringing. It might be Jared, with a heads-up about his Hollywood Squares appearance.

Friday, December 23, 2005

Consumers go head-over-heels for Wendy's deal

A restaurant promotion that merits its own message thread on (“Your Dumpster Diving and Curb Crawling Resource”) might sound like a bad thing. But Wendy’s has stated that it’s delighted with the fun consumers are having with the traffic builder it launched on Nov. 1 in collaboration with Airtran, the budget airline, and Coca-Cola. Indeed, the campaign has some people going head over heels. And we mean that literally.

The promotion encourages Wendy’s customers to buy a soft drink with the enticement of free air travel. On each drink cup is a coupon worth one-sixty-fourth of a roundtrip excursion on Airtran, a payback easily worth several hundred dollars. Some patrons have computed that they can buy 64 drinks for less than $80. According to news reports implicitly confirmed by Wendy’s, customers are walking up to the counter and ordering 64 medium drinks, without ice. Or soda.

The rules limit purchases to five drinks at a time, and presumably require that the cups actually be filled with fluid. But the chain has acknowledged to papers like The Atlanta Journal and Constitution that not all units are abiding by the restrictions.

Even cagier consumers are foregoing the purchases altogether. They discovered that some patrons could care less about amassing points for a free flight, and toss their couponed cups in the trash along with burger wrappers and uneaten French fries. That’s why, if you cruise by the Dumpsters outside Wendy’s units until Dec. 31, you may spot pairs of legs jutting into the air. Dumpster divers are not only reaping the refuse to enjoy a post-holiday getaway, but are sharing information via and other sites about what receptacles have been picked clean and which ones have proven particularly fruitful.

Those who don’t want to plunge into trash can keep their hands clean by working what may be the most robust promo aftermarket the trade has seen since McDonald’s offered mini Beanie Babies as Happy Meal premiums a few years ago. Sites like the uber-popular are reportedly packed with offers to buy the coupons for a quarter or 50 cents each. Meanwhile, eBay is bristling with offers from entrepreneurs willing to part with their cups, with bids on the auction site usually falling around that per-cup price range.

Wendy’s has yet to say what kind of impact the promotion has had on sales. Ditto on its garbage-carting costs.

Thursday, December 22, 2005

Canadians want more of Timmy's back

Wendy’s ownership of the Tim Horton’s donut chain has been a point of controversy among its shareholders for months. Now a pending partial divestiture is festering into an international incident.

Would-be stake-buyers from Horton’s native Canada are outraged because relatively few shares in the chain are expected to be offered north of the border, where “Timmy’s,” as it’s called, is as much of an institution as AM radio is here in the States.

“Those danged Americans have done us in again,” Keith Woolhouse wrote in today’s edition of the The Ottawa Citizen .

Wendy’s has said it would sell 15% to 18% of Horton’s in an initial public offering next year. According to Woolhouse’s story, only about a third of that stake will be available to investors in Canada, or less than 6% of the beloved brand.

The riled northerners point out that there are only 300 Horton’s outlets in the Lower 48, and they’re collectively not doing well, breaking even despite years of Wendy’s tutelage and retooling. The chain boasts more than 2,500 units in Canada, where people use it as they would the coffee station at work, stopping by several times a day for a refresher.

Relations between the U.S. and Canada are rocky enough already, given the nations’ widely disparate view of the war in Iraq. It be a shame to worsen relations over a Boston Creme.

New Yorkers make do

Overheard on the Long Island Rail Road, a commuter line still running amid New York City’s bus and subway strike:

“…And I couldn’t even have sushi for lunch. My favorite restaurant couldn’t get its fish,” said a businessman, hunkering down in his seat in apparent exhaustion.

“These are extraordinary times,” replied his companion, sounding like a battle-weary sargeant.

Wednesday, December 21, 2005

Politics is local. And lucrative.

With all due respect, the National Restaurant Association has it wrong. The association breaks down its 2006 sales forecast by state, region and industry segment. It really should do it by politician.

A few weeks ago, in The Marketplace thread of our blog, we reported how former U.S. Rep. Duke Cunningham had allowed favor-seekers to pick up $10,000 in restaurant and lodging charges before he was caught taking bribes. Now he’s heading to jail, depriving the industry of a prime customer.

But the California Republican looks like a value-menu maniac compared with Party god Tom Delay. Documents reviewed by the Associate Press show that the former House Majority Leader ate in restaurants at lobbyists’ expense some 500 times during the last six years, with an average ticket often topping $200, according to the wire service. That’s one freebie at least every five days, on average.

For the record, there was apparently nothing illegal about the free-loading; it’s as common in politics as kissing babies or cutting ribbons. Indeed, the AP cited similar indulgences by plenty of Delay’s competitors from the other side of the aisle, including Minority Leader Nancy Pelosi of California, and Senate Minority Leader Henry Reid of Las Vegas. Second only to Delay in his enthusiasm for resort and restaurant-meal giveaways, according to today’s widely carried AP story, was Speaker of the House Dennis Hastert.

The story noted Delay’s particular fondness for the Morton’s of Chicago steakhouse chain, and the famed “21” Club in New York.

The NRA has long encouraged restaurateurs to invite their elected officials into their dining rooms as a way of exposing lawmakers to the realities of the business. Turns out they may not have to bother.

Tuesday, December 20, 2005

Surviving the NYC strike

The New York City transit strike, some 22 hours old as I write this, is forecast to cost the Big Apple $400 million in lost business per day. The local restaurant industry has yet to estimate its portion of the loss, but the wallop was evident during the long-distance trek into work today. A Pret A Manger grab-and-go outlet across from Nation’s Restaurant News’ Manhattan headquarters was closed during what would normally be the morning rush, presumably because employees had no way of getting to work from the outer boroughs. Similarly, the local Hale & Hearty lunch chain had to forego salad sales this midday because it had only enough employees to man the concept’s signature soup station. A Dunkin’ Donuts outlet visited by a co-worker during her 90-minute hike to the office from Queens was being run, quite frantically, by a single employee.

In Penn Station, where traffic was unusually heavy because its trains were still running, a deli had to make due with the meager foodstuffs left by a distributor’s pre-strike delivery (commercial vehicles are prohibited from serving downtown customers except during strictly limited hours). Bus and subway commuters switched in droves to Penn’s Long Island Rail Road trains, but concessions were unable to exploit the situation. Some lacked supplies, while others were located along corridors whose access was limited by the police, for reasons that were never given.

Similarly, a unit of Chopped, the hot young made-to-order salad chain, had to close some of its salad stations. It was unclear if the outlet lacked employees, or the greens to keep them busy.

Then again, the places might have been staffed appropriately. In the middle of Manhattan, during the height of the holiday tourism season, when normally you have to fight your way across a street, the sidewalks were as sparsely trafficked as the fringe areas of Peoria. The drop-off is clearly going to hurt.

For those of you who aren’t in the city: A key issue of contention is the transit workers’ demand for three consecutive annual raises of 6%, which was a retreat from their original demand of 8%. And they don’t want to contribute anything to their healthcare coverage.

Friday, December 16, 2005

Gus Boulis is back in the news

The worsening scandal connected to lobbyist-turned-restaurateur Jack Abramoff has touched another notorious character from the industry, though he was murdered in 2001. Gus Boulis, the founder and longtime owner of Miami Subs, was shot gangland-style in his car after he'd sold a controlling interesting in his fleet of Florida-based casino boats for some $148 million. One of the buyers was Adam Kidan, who yesterday pleaded guilty to conspiracy and fraud charges related to the purchase. The other buyer: Jack Abramoff.

Kidan was accused of faking the wire transfer of some $23 million to meet a lender's requirement for what was in effect a down payment on the boating firm. He has said he knew two of the three individuals who were recently arrested in connection with Boulis' murder. News reports have speculated that Kidan's plea deal may include cooperating with authorities who are still trying to determine why Boulis was killed.

Boulis had a reputation as a brilliant entrepreneur, but someone who seemed comfortable with conducting business in the shadows. He retained a stake in the SunCruz line, but had reportedly feuded with partners Kidan and Abramoff.

Abramoff is under investigation for charges similar to those brought against Kidan. Meanwhile, investigators are also probing his high-level lobbying activities. The latter endeavors revealed that Abramoff owned a restaurant in Washington, D.C., Signatures, where he often entertained clients and lawmakers.

Thursday, December 15, 2005

'On your left: Total devastation...'

In an idea hatchery like the restaurant business, opposing an entrepreneurial endeavor is akin to disparaging Walter Cronkite. But a new venture arising from the wreckage of New Orleans is testing the boundaries of acceptability. Judgment may be particularly difficult for restaurants, given what they have at stake.

On first exposure, it’s easy to retch at the notion of busing tourists past totaled restaurants and homes too mold-infested to be inhabitable, at $35 a head ($28 for children, if the family wants to making an outing of it). The new hurricane-devastation tours include drive-by’s of the now-infamous Superdome and Convention Center. According to the Associated Press article that brought the new business to light, $3 of each ticket sale will be passed along to the charities serving Hurricane Katrina victims.

Better yet is the $32 of every adult ticket that will be injected into the local economy, which virtually lost its tourism underpinning when Katrina’s floodwaters burst through the levies. It may not be as high falutin as browsing through an art museum or restoring your soul with some jazz. But it’s tourism that leaves no one hurt, and plenty benefiting, from the hotels that house overnight tour guests, to the restaurants that feed them.

Besides, is it really that bad? Or any worse that touring the areas graveyards to take in the elaborate chambers that are built to keep bodies above the water table?

It may not be akin to the traveling King Tut exhibit, or a trek to the Louvres. But businesswise, it’s a masterpiece in its own right.

Wednesday, December 14, 2005

Boldface buyers

I’ll never sip a Dunkin’ Coolatta again without feeling a little star-struck. Not that long ago, the guy behind the purveying chain was supposedly the poor schlub who had to get up before daybreak to make the donuts. Now, with Dunkin’ Donuts about to be purchased in one of the largest foodservice deals ever, that flour-dusted character may soon be hobnobbing with powerbrokers and big-name politicos.

The $2.43 billion, all-cash deal involves more names than a phone book: Dunkin’ Donuts, Baskin-Robbins and Togo’s, sold by Pernod Ricard to The Carlyle Group, Thomas H. Lee Partners and Bain Capital, who collectively outbid Kohlberg, Kravis Roberts and Trimaran, among others. But the powers behind the players are the ones you’re likely to find in boldface within elitist newsletters like The Washington Post and The New York Times.

Consider the name plaques on the executive floor of The Carlyle Group. The chief executive: Lou Gerstner, former chairman and CEO of IBM Corp. and the guy brought in to tame RJR Nabisco after that Frankenstein of a conglomerate was formed. Assisting him are people like Thomas “Mack” McLarty, the business partner of Henry Kissinger and former chief of staff to President Bill Clinton. Then again, the White House seems to be a farm team for Carlyle. A past chairman was Frank Carlucci, former U.S. Secretary of Defense under President Ronald Reagan.

More political connections come from Bain Capital, a current co-owner of Burger King and one-time principal of Domino’s. The Boston-based firm was started in part by Mitt Romney, currently the Republican governor of Massachusetts and possibly a future President of the U.S.

And then there’s Thomas H. Lee Partners, a former big stakeholder in Morton’s and Smith & Wollensky, not to mention a little consumer-products company called Snapple. The company fosters fantasies of being at a family gathering and hearing old Aunt Martha blurt out something about that distant cousin Tom Lee who’s somehow involved in finance.

It’s no wonder that Dunkin’ Brands CEO Jon Luther described the trio of buyers as a near dream team. Of course, he was thinking of their business savvy, not their media-recognition quotient. Either way, the chain has come a long way from the days when founder Bill Rosenberg started peddling donuts from a lunch truck.

Monday, December 12, 2005

Open-air dining becomes less open

Patios, long a haven for restaurant libertarians, are sprouting strictures like café umbrellas. It’s happening in a relatively few markets right now. But red tape tends to spread like kudzu.

Already, the whole state of Washington has banished smoking within outdoor dining areas, unless they’re somehow set up as parking-lot islands (a law that went into effect Thursday prohibits smoking within 25 feet of doors, windows or air vents). Once the DMZ in the smoking fracas, patios could now be up for grabs. A major loophole in the bans could be drawn shut for restaurants.

Similarly, al fresco areas were once the place where restaurants could allow patrons to sip a latte with Fido without angering health authorities. But, in a skyrocketing number of places, that’s no longer kosher. Inspectors have been challenging the tradition of permitting dogs to sit with their masters in out-of-doors dining sections. They’re enforcing health codes more narrowly. A possibly example-setting attempt to change the rules was turned back in Orlando, FL, as was reported in this space a few weeks back.

Now comes news that Arizona’s Pima County might forbid restaurants to use misters, those oversized atomizer units, as a means of cooling guests while they dine al fresco. The measure is being eyed as a way to realize the water-conservation goals that were set in place for the county by a 2001 plan.

Smoking refuse-niks have boasted about flouting the law in sympathetic sneak-easies, which will allow them to light up as long as no one raises a ruckus. We foresee a rash of misters being toted to Arizona’s outdoor dining areas come summer. And may rainbows not give away any restaurant offenders.

Sunday, December 11, 2005

What's the real danger?

A difference in opinion seems to be widening within the ranks of Nation’s Restaurant News, just as it is in the industry at large. Not in our news and feature stories, where objectivity is the rule. But the writers behind the paper’s op-ed pages clearly don’t agree on the risks posed by avian flu and what the industry should be doing to protect itself.

My voice may admittedly be the shrillest, because, as I’ve asserted in my column, I fear the industry is pooh-poohing a potential catastrophe. I’m not sure the typical restaurant operator has even sized up the wildest threat, the chance that a pandemic could erupt, resulting in quarantined sections of the country, widespread infection and fatalities, food shortages, and generally a massive up-ending of life as usual. (Before you jump on me for offering that scenario, keep in mind that those are the possibilities put forth by the Bush Administration, not me personally.) The prevailing mindset seems to be, “Oh, yeah. It could really affect my chicken sales. I may have to switch to other proteins for awhile.”

While they’re living by that assessment, BusinessWeek is reporting that the impact “could be comparable to The Great Depression.” Last week, U.S. Senate majority leader Bill Frist disclosed that a soon-to-be released Congressional study will show the flu could cut national economic activity by 5%, or $675 billion. That’s a lot more than dampened chicken sales. According to Frist, who’s also a respected medical doctor, 90 million Americans could be affected, and 2 million of them will die. A pandemic won’t be a poultry sales problem. It’ll be a social and economic dislocation.

That’s why I believe more firmly than ever that the industry should at least be mindful of the worst-case possibilities, instead of shrugging them off as scaremongering.

But a lot of smart people have a different assessment, and they wield some persuasive reasons. One non-industry columnist quoted a federal official’s chilling warning that the country was in danger of being paralyzed by a nightmarish pandemic. Then the writer revealed he’d resurrected the dire quotes from news stories that ran in 1995, when the country was facing a similar flu threat. The most the nation actually suffered was a spike in sick days.

Many of the optimists maintain the biggest fear is fear itself—that the public will react negatively to what-if’s, making the dire forecasts a self-fulfilling prophecy. Focusing on the extreme possibilities does nothing more than stoke public hysteria, they argue. They emphasize the need for industry and government to allay fears.

A few weeks ago, Nation’s Restaurant News ran an editorial headlined, “Panic over flu threat for the birds, but operators should prepare safeguards” (retrievable, for a slight fee, from our archives at Citing a dearth of evidence that avian flu can be passed to humans via poultry consumption, the opinion piece recommended that “such information should be shared with all restaurant employees to improve the odds that nervous, uninformed guests might be set straight.” It also advised restaurateurs to take such additional steps as fortifying health programs for employees, and reviewing sick-worker policies. But all in all, it sounded a three-bell alarm, whereas I was at DefCom 5.

But both assessments looked like unbridled hysteria compared with the perception voiced by the Center for Consumer Freedom , the Washington, DC-based lobbying group headed by NRN columnist Rick Berman. In a press release, Berman’s group asserted, “A massive U.S. media focus on avian influenza, coupled with needless hysteria from animal rights activists who see bird flu as an opportunity to promote vegetarianism, has generated widespread fear that has no basis in reality.” As evidence, it noted that a poll it sponsored found 47% of consumers “mistakenly” believe they can contract bird flu by eating chicken, a “false statement.” It called on government to ally public fears on the matter.

I’m not going to blast either assessment that differs from mine. Indeed, I hope I’m wrong. But I do have to take issue on one major point. Both parties have suggested you couldn’t contract avian flu by eating contaminated poultry. In fact, live viruses have been found in various meats, even after they were frozen, according to experts who briefed the National Restaurant Association on the matter. And government officials have cited a need to cook the birds to at least 180 degrees, or above the 145 degrees specified by many food codes. Both of those authorities have said the flu could be a food-safety issue, and requires extra vigilance in food handling.

Will bird flu be a mega-business issue? We’ll have to see. Hopefully, it’ll be 1995 all over again.

Friday, December 09, 2005

Patrons lose their indoor voices

The struggle to set a boundary for acceptable customer behavior has been shifting decidedly in restaurateurs’ favor as of late. Maybe the industry is still hopped up from its awesome showing in the Cell Phone Controversy, when operators were rewarded for their intolerance of the portable yak boxes with appreciation from guests who preferred conversations be conducted with people actually in the restaurant. Whatever the reason, the trade has lately been a veritable caped crusader in dealing with patrons who allow their children to disturb other customers.

The media have been filled with stories about restaurants that set reasonable ground rules for the sort of pint-sized patrons whom many places would do nearly anything to draw a few years back. The most-reported measure seems to be the sign that Dan McCauley posted in his Chicago bakery-café after seeing untended kids bounce off his display cases like outfielders hitting the wall at Wrigley: “Children of all ages have to behave and use their indoor voices at Taste of Heaven.”

His subtle suggestion that children behave for the good of all patrons touched off a firestorm. Parents took umbrage, while guests fed up with having their visits disrupted by unruly rug rats found the courage to hail McCauley as a brave knight. He received over 600 letters, according to an Associated Press story carried in a number of newspapers, some of which subsequently published a few letters of their own. Here’s one from The Chicago Tribune: “With all this clamor for smoke-free restaurants, child-free restaurants and cell phone-free restaurants, why not just go all the way and have only customer-free restaurants?”

But the proponents of shriek-free dining didn’t waiver, perhaps pushed onward by support from no less a power than Dear Abby. On Monday, her syndicated advice column carried a letter (from a party called Wish I’d Had Ear Plugs) asking for the Dear's opinion on unruly children in restaurants. Abby opined that there’s no need for tolerance in such a situation. She recounted being in a restaurant that evicted a family because the little ones were being annoying, and noted that the patrons who remained gave the manager a round of applause for the heave-ho.

It’ll be interesting to see how far the behave-or-else movement goes before it loses momentum or is walloped by the back swing of the pendulum. It’s just a shame my grammar-school nuns weren’t still alive. They'd have been the neutron bomb in the push for decorum.

Wednesday, December 07, 2005

Now you're causing car wrecks

Even if Brad and Tiffany Consumer cook every meal at home, that restaurant down the street could be a hazard to their health. Or so suggests a study released today by the party animals at Quality Planning Corp., a concern that helps insurance companies determine who’s going to live a long and healthy life and who’s an episode of “Six Feet Under” waiting to air.

The unsung heros who work behind the scenes in the Hollywood-like world of insurance, QPC’s researchers surveyed some 2 million claims to correlate injury with place of residence. They found that an average consumer is 30% more likely to crash the Camry if he or she lives within a mile radius of a restaurant. The next most dangerous situations: Living near a supermarket or a school, with 26% greater chances of having a wreck.

The safest place to live is in the shadow of a church, whose neighbors are 11% less likely to crunch a fender.

Researchers noted that the findings support what you’d think intuitively: The more traffic an area sees, the more likely the cars are to hit one another.

Tuesday, December 06, 2005

French bred

Our auto industry is tanking, and U.S. furniture makers are struggling to beat back a do-or-die challenge from Asia. But in the foodservice balance of trade, we’re Superman on steroids. For decades we’ve exported burger and fried-chicken concepts to the Continent without seeing much flowing back in return save a Jean-Georges Vongerichten here, a Daniel Boulud there. It must irk the French in particular that you can find a McDonald’s on the Champs Elysee, but not even Vie de France is truly Gallic anymore (it’s now Japanese-owned). We give them Jerry Lewis, they send us Champagne and foie gras. Sweet.

But wouldn’t you know our brethren from across the pond have been quietly infiltrating one of the U.S. trade’s most promising markets, bakery-cafes? While Panera was opening stores like Starbucks on Red Bull, three European entrants were quietly laying their berets in the ring.

The newest arrival is Brioche Doree, whose first U.S. unit, a franchise managed by HMS Host, opened during October in the Los Angeles International Airport. Apparently more HMS franchises will follow, given the statements of both parties. Brioche, which offers foccaccia and ciabatta sandwiches as well as arrays of salads and baked delectables, has 325 units in operation in Europe,

Paul Bakery and Cafe, the 115-year-old, 270-unit French chain, opened its first U.S. store this spring in North Miami. The place offers both tableservice, at about $10 a head, and takeaway. Miami-based Apety Group has secured development rights to another 100 stores in the U.S.

Very similar in approach is Le Pain Quotidien, a 60-unit chain with outlets in Los Angeles, New York and Europe. It hails from Belgium, but founder Alain Coumont amassed his burns and knife scars studying under French chefs. His specialties include café au lait served French-style, in bowls, as well as jams and other condiments available for retail sale.

Of course, European-born bakery cafes aren’t exactly new to the U.S. The Il Forniao chain was patterned after an Italian outlet. Cosi took its name and approach from a French place, and Le Madelaine has been around since pre-Freedom Fries days. Interestingly, with American ill will toward France running high because of differences over the Iraq invasion, the chain has tried to position itself as an American-owned operation with a French theme.

Wednesday, November 30, 2005

Ready for Katrina II?

This serves as official notice of our diversification into the umbrella and galoshes trade. The brainstorm came yesterday afternoon, after catching the news from the National Oceanic & Atmospheric Administration , the federal version of your local weather forecaster. Given how the announcement might affect you, we may want to include sedatives in our product line.

The news wasn’t wholly bad. Indeed, Part I was reason to crack open the Cold Duck: The hurricane season is officially over. After a record-setting five instances of cowering in front of a TV, wondering if the storm will affect your restaurants, the industry can expect six months of relatively normal weather.

But after that? Start guzzling.

Expect another season like the one that brought us Katrina and Rita, the NOAA warned. “I’d like to foretell that next year will be calmer, but I can’t,” said Conrad C. Lautenbacher, the Ph.D.-holding vice admiral who heads up the agency. “Historical trends say the atmosphere patterns and water temperatures are likely to force another active season upon us.”

An official, detailed forecast won’t be issued by the NOAA until May. But its leadership was confident enough of its misgivings to warn that areas start preparing now.

And what size umbrella would you prefer?

Monday, November 28, 2005

IL county to recommend restaurants?

Restaurant-inspection programs have undergone profound changes in recent years, largely as a result of efforts to trumpet the results. In some areas, patrons are greeted with a prominently posted grade—literally an A, B, or D—while in others, a mouse has undergone a social climb unseen since Mickey lifted Walt Disney out of the rat race. The computer version is now the messenger that allows patrons to get a complete lowdown on the eateries in their area, or at least the problems that concerned an inspector. Meanwhile, local radio and TV stations routinely ensure good ratings during sweeps weeks by scheduling “exposes” on popular restaurants that were rated less than perfect. It’s as sure-fire as promising naked news anchors.

As much of a shin kick as those new emphases might have been for restaurants, they’re just a tsk-tsk compared with the concerns likely to be raised by an initiative under consideration in Kane County, IL. Health officials there want to go beyond warning consumers about sub-standard restaurants, to guiding them to places adjudged by the regulators as being healthful. The area plans to publish a directory to its 1,500 eateries, rating them on sanitation-inspection scores; how smoke-free they are; and how many healthy choices they offer on the menu. The findings will be presented both as a printed guide and as an online resource.

As reported in The Chicago Tribune <>, the Kane Public Health Department has already contacted more than 200 restaurants to alert them to the guide. To be considered, the places have to submit a menu, which will be evaluated by a dietician.

The initiative is still in the what-if stage, but it will be formally proposed as a new undertaking for the county at a meeting on Dec. 27.

The folks at Zagat have yet to file their comments.

Friday, November 25, 2005

'Cheese this, hoser'

Here in the States, restaurant operators have been griping about rising food costs all year. Their cousins up in Canada have decided to stop merely carping and start fighting back.

A number of pizza chains operating north of the border have joined forces to counter what they see as unjustifiably high cheese prices. Starting next week, their carryout and delivery boxes will be affixed with stickers inciting consumers to sound off about the higher costs being passed along to them. “Cheesed off about high dairy prices?”, read the tags. It encourages them to visit a website set up by the Canadian Restaurant and Foodservices Association,

The site looks like something from the Center for Consumer Freedom, the Doberman-like industry lobbying group here in the U.S. But it’s actually from the Canadian counterpart of our National Restaurant Association. The site uses an interactive graph to illustrate how regulators have hiked dairy prices by 49% since 1994 despite a 4.5% drop in the cost of producing milk. The click-to-run graphic’s headline reads, “Spot the Moostake.”

Another area of the site allows visitors to pass along their opinions to the Canadian Dairy Commission, the national body that sets dairy prices. The Commission is widely expected to raise the scale next month, after hiking prices by 7.8% earlier in 2005.

Restaurant operators can also use the site to get free downloadable protest posters for their stores. Of particular annoyance to the industry is the difference in the price of cheese sold to food processors for frozen pizzas and what pizzerias are charged. explains that the sky-high price of mozzarella prompted the Dairy Commission to extend a 30% discount to companies that manufacture frozen pizzas for sale in grocery stores, apparently to ease the impact on consumers.

Without a similar adjustment, the CRFA has said, Canadian pizzerias typically keep only 43 cents of every $13 pie they peddle.

The protest reportedly involves such U.S.-based corporate giants as Pizza Hut and Domino’s. But the effort is classic grass-roots rebellion.

Tuesday, November 22, 2005

Ronald's new hit

A full-page ad in a recent Rolling Stone shows a four-member rock band wailing away in a grainy black-and-white snapshot offset by a funky brown-and-black background. It could be the cover shot for a punk band’s boxed set, or maybe an art-house DVD. Indeed, it follows ads for new compilations from Franz Ferdinand, Ali G, and Spongebob Squarepants. Then you see the tagline—“I’m lovin’ it”—and catch the copy, about the joys of working for McDonald’s.

The recruitment ad complements today’s announcement from the fast-food Schwarzenegger: A reputable collegiate organization has recommended that employees completing the chain’s unit-manager and middle-management training program be eligible for up to 46 college credits.

Welcome to the State of Recruitment, circa 2006.

The business pages have been filled with stories about McDonald’s efforts to make itself more relevant by overhauling the menu. Just yesterday, for instance, the wire services quoted a McD exec in Australia as suggesting burgers and fries were not the chain’s future.

But the general media may not appreciate what a quantum leap the chain is making in its efforts to out-recruit the competition. Here again, it’s striving for relevancy. The Rolling Stone ad stresses that McDonald’s allows persons with aspirations to act, not wait. “Sound familiar? Maybe that’s because I’m someone just like you,” reads the copy.

The bigger breakthrough is the college-credit enticement. Think of it: You’re a young person looking to pack away some money for college. McDonald’s not only offers the pay, but less time in the college classroom, too. While other chains are still relying on bows and arrows, the segment leader has invented the heat-seeking missile.

Of course, the edge is likely to be dulled by all the other chains following suit. But that’s okay. Suddenly, foodservice would look like a passage, not a dead-end. And that’s good for everyone.

Monday, November 21, 2005

Turnaround is fair play. Delicious, too.

If it was a sit-com plot, you’d dismiss it as too perfect. But the Galley restaurant in Morro Bay, CA, has pulled a virtuoso turn-about that’s as real as it is brilliant. The place had been sued in 2004 by professional litigant Jack Molski, who was seeking damages for the emotional distress and mental anguish he claims to have suffered as a result of allegedly hurting himself at the restaurant. Molski is a paraplegic, and he insists that he was injured because the Galley wasn’t in compliance with accessibility rules. The 35-year-old wants $1.6 million in compensation, according to local press reports.

I don’t mean to be callous, but Molski should really look into home-delivery. He’s been similarly damaged some 400 previous times, or so he’s alleged in an equal number of lawsuits. He’s been in more courtrooms than a gavel. So many hear-ye’s have been sounded in his name that he’s been ruled a “vexatious litigant” and barred from filing any other accessibility suits in state courts. So now he’s working county courts.

Facing that kind of claimant across the aisle, the Galley’s co-owners decided Molski wasn’t the only one who’s suffered some mental anguish since he paid their place a visit. So they decided to sue him. They filed a lawsuit last week seeking compensation from him.

The proprietors have only asked for $3,000. But here’s the brilliant part: Their lawsuit in effect pivots on Molski’s motivation for seeking $1.6 million, according to local observers of the proceedings. Suddenly, he’s the one who has to justify himself.

Sometimes it seems as if the trophy business owes its livelihood to the restaurant trade. Name a discipline, and chances are there’s an award for it, from top up-and-comers to the latest inductees into the old guard. You can bag a loving cup for being the best stock-picker, the concept most loathed by dietary nags, the best place to work, or the most considerate neighbor.

But there isn’t a prize yet forged that adequately honors the Galley’s proprietors for their legal ju-jitsu. If the situation is what it seems, they deserve an industrywide standing ovation.

Sunday, November 20, 2005

Another side of running a restaurant

What kind of weekend did restaurants have? Judging from news reports, a sporadically violent one. A Google search reveals that eateries were the scene of one rape, seven shootings, one murder, an armed robbery, a full-tilt drug raid, a slashing, a stabbing, a break-in, two car crashes, four fires, and a prolonged, heated dispute over a dog’s name (Pink, the rules-disdaining rock star, kept calling her obscenely named pooch while visiting a Beverly Hills place, much to the outrage of patrons dining with children). And there’s no reason to think that the most recent Thursday-through-Sunday stretch is any different than most.

Granted, the affected places represent an infinitesimal portion of the more than 800,000 food outlets that were in operation during the last four days. But those are only the crimes that made the news. It’s rare, but it does happen. It’s an aspect of the business that isn’t worked into restaurant-based sitcoms or reality shows.

That’s a good thing, given how difficult it is to recruit workers without that added drag. But it’s a shame the hazard wasn’t appreciated by more outsiders, especially the folks who view the restaurant business as a lark, the sort of trade that anyone could take up. Make a mean omelet? Get raves every Thanksgiving for your hors d’ouevres? Like interacting with people? Dine out all the time? Hey, why not open a restaurant? It’ll be a blast. So much better than a real job.

They have no idea how difficult the trade actually is—the hours, the attention and diligence that’s required, the headaches of having a largely young workforce serving a clientele with sky-high demands. And then there are the real undersides to the business, like crime, or dealing with drunks, or the job’s disproportionately high divorce and alcoholism rates.

Maybe if the public knew more of the downside, it’d think twice about casually burdening restaurants with new fees, regulations and social responsibilities. It might moderate it’s stance of give, give, give, and consider what a restaurant sometimes has to take.

Thursday, November 17, 2005

Definitely a rubber-glove situation

It looks as if the restaurants of Pennsylvania have been caught in a political crossfire.

At 11:15 this morning, Auditor General Jack Wagner issued the results of a “special audit” of the state’s restaurant-inspection system. The report all but accused the Pennsylvania Department of Agriculture, the program’s administrator, of farming rats and cockroaches in the places it was supposed to keep clean and sanitary. Instead, said Wagner’s office, the “Department of Agriculture was putting public health at risk.”

The Department of the Auditor General noted that restaurants in the state have to renew their licenses annually. To re-up, they first have to be inspected. Yet 4,000 of the state’s 17,597 establishments holding valid permits had not been inspected in at least two years, Wagner’s office said. It cited one restaurant that hadn’t been inspected for six years—literally since the last century.

And even if a place was inspected, the report asserted, it could serve bacteria culture in petrie dishes without fear of being sanctioned. Fines were seldom levied, according to the Auditor General, and other penalties were both “rare” and “insignificant.” It noted that establishments written up for health-code violations like the presence of rodents or “deficient sewage” were allowed to remain in operation; not one license was pulled during the two-year period that was the focus of the audit (Jan. 1, 2002 through Dec. 31, 2004; curiously, no reason was given for the 11-month lag in releasing the findings, despite the Auditor’s repeated warnings that they underscore a dire health threat).

In most instances, the report suggested, not even a warning letter was sent out. “Consequently, public eating and drinking places had little incentive to make changes,” Wagner was quoted as saying in a press release.

His office offered 20 recommendations to remedy the situation, including such radical measures as inspecting each restaurant once a year.

At 12:33 that afternoon, the Department of Agriculture responded. It announced that it would start to fix its admittedly “antiquated” inspection system by spending $600,000--$600,000!—on a website where restaurants’ inspection scores could be posted. I spend almost as much on gas for my car.

It’s a shot of Bactine for a sucking chest wound.

You just know where this is heading. One government agency slams another for its laxity. Either the criticized agency loses its mandate—and you get the sense that the Department of the Auditor General wouldn’t mind such an occurrence—or it becomes Wyatt Earp, proving it’s the baddest law enforcer ever to wield the ability to fine. If a restaurant is the scene of so much as a gnat fly-over, it’ll be called to task.

Certainly it seems like a situation that has to be fixed. But the solution will hopefully address the risk, such as it is, instead of being forged by political considerations. And yet we know that politicians just can't help themselves. In this case, maybe they won't be helping restaurants, either.

Wednesday, November 16, 2005

Going to the dogs

More than 300 legislative proposals have already been slotted for consideration during Florida’s 2006 legislative session, which doesn’t begin until March, the Florida Restaurant Association notes. Hopefully 299 are more important than the restaurant-related initiative that was effectively killed on Monday. It’s proof that restaurants aren’t going to the dogs. But, most definitely, the canines are coming to them.

Indeed, anecdotal evidence shows conclusively that more and more patrons want to yank their dogs along when they grab a latte or wolf down a brunch omelet at an open-air café. And why not? It’s not like the kitchen is out there, or that a banquette’s edge might be mistaken for a tree.

Or at least that must have been what Florida lawmakers reasoned when they concocted a plan to seat dogs as well as humans in the outdoor dining areas of Orlando restaurants. A state representative from the theme-park capital wanted to push a bill that would exempt local restaurants from the state health department’s prohibition of dogs from every section of an eating place. After three years, legislators could decide if they wanted to extend the measure statewide, or re-instate the coast-to-coast ban.

Other Orlando legislators, no doubt controlled by the cat lobby, said they couldn’t use the statehouse to pass what was in effect a local bill. Without their support, the measure is doomed. Hungry pomeranians have no doubt been whining since they got the word. Their owners might howl if they defied the health regulations and were caught bringing the pooch along for some al fresco dining. The fine is $5,000.

It may sound like a silly matter. But when does reason come into play when you’re talking about dog owners (this writer included)? In Austin, TX, a restaurant decided to evade similar health regulations by exploiting a loophole. The code notes that patrol dogs accompanying police or security officers can stay with their masters in an open-air dining area. So Freddie’s Place paid leash-toting patrons a penny to wear a badge that reads, “Freddie’s Official Security Officer.” Clearly the officers' llahsa apsos and shitzuhs are guard dogs, and hence exempt from the law.

Monday, November 14, 2005

Judge Alito on restaurants

It was bound to happen. Partisans are CAT-scanning everything Judge Samuel Alito has ever written, said or done, hoping to sluice some indication of his thinking on the flashpoint issues likely to be put before a Supreme Court that includes him. With that sort of scrutiny, it was only a matter of time until his past handling of restaurants and their employees was brought to light. And, no, we don’t mean his preference for the ethnic places of his native New Jersey.

One of the cases cited by critics wary of Alito’s civil-rights orientation is a 1996 discrimination case involving the dining-room captain of a restaurant in the landmark Hotel DuPont, in Wilmington, DE. After Barbara Sheridan was fired from the post in 1991, she alleged in a lawsuit that she had been sexually harassed by a superior, and denied a promotion because of it. When she complained, the 12-year Hotel DuPont veteran asserted in the filing, she was fired.

A jury disagreed with Sheridan’s contention that she had been harassed and denied a promotion out of spite, but still awarded her $30,000 in lost wages because it sympathized with her assertions that she had been unjustly fired. The presiding judge overturned the jury’s award, however, prompting Sheridan to appeal.

Alito sat on the appeals court that was given the case. It decided that Sheridan was entitled to the money because a jury was the appropriate body to determine whether a payment should be made, not the judge. The majority decision stated that Sheridan appeared to have evidence that she was the victim of discrimination, and that her employer failed to offer an adequate alternative explanation.

Alito dissented, arguing that an employee in such a case has to prove the employer discriminated against him or her, and not merely air a possibility that the employer fails to disprove.

Perhaps not coincidentally, the AFL-CIO has urged the Senate to reject Alito’s candidacy. In issuing its thumbs-down decision, the eroded labor union noted that the Supreme Court will likely hear a case next year involving a small New Orleans restaurant that fired a female employee in 2001. The woman then sued, alleging discrimination under the Civil Rights Act. But that Act only applies to establishments with 15 or more employees. The restaurant, Y&H, said it did not meet that threshold because the proprietors, their wives, and drivers did not figure into the count.

A jury sided with the discharged employee, Jennifer Arbaugh. But that decision has been repealed. The AFL-CIO cited it as one of “several anti-worker rulings” in which Alito has been involved.

Alito also heard a case in which Marriott Hotels was being sued by a housekeeping manager who alleged she was denied a promotion because of her race. The court found in favor of the woman, but Alito dissented, arguing that the plaintiff had failed to refute all of the reasons Marriott had provided for elevating someone else.

Sunday, November 13, 2005

What's sufficient punishment?

Which plan would turn more illegal immigrants into legitimate workers, judging from your experience in employing non-natives?

Plan A would require foreign-born workers here illegally to pay a fine for their transgression. The payment would also entitle them to a three-year employment visa, renewable at the end of that time for another three-year permit. If they fail to naturalize by the end of the six years, they have to head back to their country of origin.

Plan B would require the illegal immigrants to head home first, as punishment for being here in violation of the law. Only then could they apply for a three-year employment permit, which could be renewed for another three-year stint.

Plan A is being pushed by the Republicans. Guess what party has put forth Option B?

Try the Republicans.

Last week, according to a story carried exclusively in The New York Times <>, Sen. Arlen Specter of Pennsylvania is circulating a copy of Plan B as a rigid-right alternative to Plan A, which has been aired by the White House. An initiative similar to the Bush Administration’s has also been put forward by—steel yourself—Sen. Ted Kennedy of Massachusetts.

Specter, a usually moderate GOPer who first represented the Keystone State during the White House tenure of Ted’s brother, reportedly sent a letter to colleagues, assuring them he was only stimulating discussion, according to the Times. He out-and-out said he doesn’t support every component of his own plan. Huh.

Sounds more like an olive branch to Party hardliners who can’t abide the notion of giving legal temporary-worker status to immigrants who are here illegally. Would they be paying a fine to get a work permit, or posting a processing fee? Isn’t it just amnesty, with a nominal charge tagged on to make the process more palatable to persons who actually heed the law?

You may have a much better gauge on that than the lawmakers in D.C. Do you think immigrant employees would regard a fee of several thousands dollars as a nothing, a low hurdle that would allow them to become legal with virtually no pain?

And how many of them do you think would seek legal status by heading home first, then applying for a temporary-worker’s permit, then coming back? Does anyone truly believe that illegals will take that route, instead of merely staying here illegally?

The industry may be standing side by side with some unusual allies on the matter. But it’s really clear what position it should maintain.

Thursday, November 10, 2005

Mandated healthcare becomes a real possibility

Did we sell Massachusetts back to the British? Or give it as a welcome present to Prince Charles and Consort Camella? Maybe it was spun off into its own nation, so the Red Sox could finally dominate a league.

There has to be some Ripley’s reason for the silence that prevails as restaurateurs there contend with the industry equivalent of having a guy in a hockey mask ring your doorbell with the blade of a meat cleaver. Between now and next Tuesday, the state legislature will likely enact some major measure to expand healthcare coverage. Actually, two bills have already been passed by either the House or Senate, including one that would levy a 5% to 7% payroll tax on all employers who don’t provide health insurance to employees. The other will require that a new $105 million healthcare outlay be split in a different way. The immediate query might be which one will prevail. But the real question is, Are we seeing the start of mandated healthcare?

First, the basic facts: Yesterday. Massachusetts’ Senate unanimously approved a bill that would extend the state’s Medicaid program to about half the 500,000 Bay Staters who currently don’t have insurance. The measure was much milder than the industry might have feared. A leading alternative called for billing companies for healthcare expenses incurred by the employees they hadn’t provided with coverage. As a colleague noted, the charge just for Wal-Mart employees, and just in California, is reportedly $30 million annually.

The passage of the Senate bill follows last week’s lopsided approval in the House of the payroll-tax initiative, which would affect any business with more than 10 employees. Now the two measures have to be reconciled. That sometimes fractious process may be particularly pressured this time around because Gov. Mitt Romney has let it be known that he wants a reform bill on his desk before the legislature recesses. Romney is widely expected to be a candidate for the U.S. presidency in 2008, and a healthcare repair measure could snag him national attention.

The governor himself leans toward something more sweeping than what the Senate has OK’d.

The Massachusetts Restaurant Association is of course fighting the payroll tax idea. It had not released any formal comment on the Senate measure as of this writing.

Wednesday, November 09, 2005

Chain haters try a new slam

Chain haters have a new epithet for McDonald’s, Red Lobster and the like: “formula restaurants.”

Among the more interesting initiatives put before voters yesterday was a proposal to ban formula restaurants in the coastal town of Ogunquit, ME. The measure passed by more than a 2:1 ratio (506 to 207).

Lest you wonder what constitutes a formula restaurant, the ordinance spells it out. Such an accursed establishment has "standardized features which cause the restaurant to be substantially identical to another restaurant regardless of ownership or location," it reads.

According to an Associated Press story posted on, Ogunquit joins at least a dozen other towns in banning formula businesses. Other news reports indicated that the Ogunquit initiative was drafted and promoted by a local bakery operator who heard that a Dunkin’ Donuts might open in the town.

Monday, November 07, 2005

Is Len Roberts coming back?

Whether you loved or loathed him, chances are you remember Len Roberts, one of the industry’s standouts during the late 1980s and early ‘90s. Now come indications, as reported in today’s Nation’s Restaurant News, that you could see him back in the business, albeit in a tangential role.

Not surprisingly, the possibility carries some complications, not the least of them being Roberts’ day job as executive chairman of Radio Shack. Controversy dogged Roberts during his relatively brief foodservice career, though he always sported a white hat. At the height of his prominence, as the franchisee-adored CEO of the Arby’s roast-beef chain, he was fired by then-owner Victor Posner for recommending consideration of a $200 million purchase offer. Although historical documentation is sketchy, Posner might have been Saddam Hussein’s role mode for governing Iraqi. The financier, a convicted felon, was so brutal and tyrannical that shareholders and franchisees both tried to force him out. Roberts got the boot first.

He turned up at the helm of Shoney’s not long after the family chain had been hit with a landmark racial-discrimination lawsuit. Similar suits against other restaurant chains would follow, but at that point the industry had never seen anything like it. The action could have irreparably damaged the southern chain’s reputation, while miring it in a lengthy court case that would have likely ended in devastating damages being levied on Shoney’s. Roberts instead negotiated a settlement for $105 million and took bold action to change Shoney’s culture.

Not long afterward, he was packaged out. A page-one Wall Street Journal article suggested that Roberts had annoyed Shoney’s old guard by agreeing to the settlement and pushing too hard for anti-discrimination measures. Insiders told a different story, about Roberts alienating long-time executives with his New Age-sounding theories and programs. They also questioned the need to keep a high-paid franchising specialist in the corner office when the company was discontinuing its licensing efforts.

Roberts was subsequently hired to head Radio Shack, the string of electronic-gizmo stores. He moved up the rank to become CEO of its parent company, a job he relinquished this past May. He has remained executive chairman.

The possibility of a return to the business surfaced a few weeks ago when a newsletter speculated that Roberts was leading a buyout of Radio Shack. He refuted those reports, though he acknowledged that he had been asked by several equity firms to join them with the express purpose of identifying restaurant and retail acquisition candidates.

In an e-mail to the Fort Worth Star-Telegram, Radio Shack’s hometown paper, Roberts reportedly said he would not leave Radio Shack to join an equity firm. Nor would he risk a conflict of interest by participating in such a deal.

But, he reportedly said, he would be willing to help with the due diligence, and might even serve on the board of an acquired company.

Friday, November 04, 2005

Channel-surfing to the future

Columbia University offered a preview this week of the media that will likely carry your marketing messages to the public after conventional advertising loses its sway. Which should be around next Tuesday, if the session participants had an accurate read.

The seminar, offered through Columbia’s vaunted Graduate School of Journalism, was intended to ease communicators with a print or broadcast bent into a scrambled world where consumers' info pipeline of choice could be a pair of iPod ear buds. Several presenters indicated that the traditional ways of shaping commercial impressions--like television commercials--are already being rivaled.

One of the scarier new methods was suggested by Craig Newmark, the founder of If you don’t know what that is, you a) are likely over 27; b) probably haven’t been in the market for an apartment since fajitas were the new big thing; and c) may not realize that break dancing is passe. It’s probably as interwoven into youngsters’ lives as the nightly news was in older generations’. Strictly speaking, it’s a classified-ad site, primarily for persons looking to rent or sublet apartments. But around that function have sprouted message boards and other means for visitors to communicate with one another, resulting in a tight-knit community that shares information on everything from love to lava lamps. Food is definitely one of the major nodes of discussion.

The potential danger, Newmark suggested, is the opportunity for scalliwags to disseminate opinions and feedback that are purposely skewed to serve an unstated agenda. Like political sympathies, or perhaps even payment from a viral-marketing company. Posts lauding a chain's new sandwich would likely convince some List-heads to give it a try, the way their parents or older siblings might have been prompted by the luscious food shots in a 60-second commercial. But messages could also slam a particular product, without 'fessing up that the poster may not be your average visitor. Comparative advertising is part of the marketing mix today, but at least the viewer knows that a vested interest is involved.

On the web, “dis-information is a huge issue,” Newmark acknowledged, explaining that he personally often combs his sites to yank the bogus material.

Other speakers cited new media like vlogs—video web logs, or diaries, already being used by such old-guard media giants as The New York Times—and live local online chats that turn high-school sports stars into local celebs. Why not product spokespersons, too?

It might have all sounded a little Star Trek-ish if the news about Burger King’s latest off-beat-marketing effort hadn’t broken today. Various online media carried a story about the chain’s sponsorship of several on-demand files that visitors to a site called can download to video iPods, once those new devices become readily available. In the meantime, the spots—amateur clips made by regulars—can be viewed at the site,

And what sort of commercial messages are delivered by these new-age marketing efforts? None, actually. The clips show a guy in king's robes and a mask of the Burger King mascot, going through the drive-thru of McDonald’s as he doubles over in laughter at times. That's it. No lingering product shots, no put-downs of what the BK-garbed consumer is getting from McDonald's, no sense of dismay that he didn't hit a BK instead.

Must be a youth thing, because I just didn't get it. I can only hope for another Columbia seminar, Understanding Tomorrow's Marketing Messages.

Tuesday, November 01, 2005

Feds issue kitchen guidelines for halting avian flu

It almost went unnoticed, but the federal government issued guidelines today for protecting your employees from exposure to the avian flu, the viral infection that health experts characterize as one of the direst potential health threats the U.S. has ever faced.

In a comprehensive but undetailed plan released yesterday by President Bush, foodhandlers were one of only five types of workers for whom security measures were suggested. That dubious distinction put restaurant kitchen staffers in the same high-risk category as lab workers, farm and ranch hands, emergency-room personnel, and flight attendants.

The guidelines were posed specifically for “foodhandlers,” not kitchen workers. The label could just as easily apply to people working in food-processing plants.

But the guidelines underscore the potential vulnerability of back-of-the-house staffers. In the broadest of terms, the recommendations called for careful handling of raw poultry, eggs, and egg products, all of which could contain the virus. The advisory also noted that the virus is destroyed in poultry cooked at a temperature of at least 180 degrees.

As we noted here three weeks ago, the U.S. and the rest of the world is bracing for the possibility that avian flu, a bird-based disease that has thus far jumped to only a few hundred humans, could morph into an illness transferable from person to person. If that happens, a pandemic surpassing the flu outbreak of the early 20th Century could erupt. As President Bush noted in releasing his defensive strategy, some 500,000 Americans died during that plague. Death projections for an avian pandemic have run as high as 1.9 million in the U.S. alone.

“At this moment, there is no pandemic influenza in the United States or the world,” President Bush said this morning at the National Naval Medical Center in Bethesda, MD. “But if history is our guide, there is reason to be concerned.”

A wealth of information about the disease and the defenses against it is posted on a site created by the White House,

Monday, October 31, 2005

A tree-hugging Ronald

Two years ago, a judge accused McDonald’s of selling “a McFrankenstein creation” only loosely resembling food. Who’d have believed the same company would become arguably the industry’s strongest proponent of organics?

You still won’t find much that’s all-natural on the menu of the corporation’s mother brand, or at least not for a few hours. But McDonald’s upstart ventures are another matter. Its Chipotle burrito chain has hands-down been the biggest chain making the boldest commitment to selling additive-free, naturally cultivated meats. The proteins may not meet the legal definition of organics, but they’re certainly less processed and manipulated than the meats coming in the back doors of most chains.

Virtually all the foods sold at Pret A Manger are additive-free, but the milk provided for patrons’ coffee is the real attention-getter for food finnicks. The serve-yourself pitchers are clearly marked as containing organic milks, of several varieties. Given the supply problems that keep more organic products off chain menus, or at least beyond the brands’ economic capabilities, this is a major commitment for a small chain moving that much coffee.

And now McDonald’s itself is giving organics a try. Tomorrow, 650 units in seven New England states will start selling Newman’s Own Organics Blend java. The price wasn’t revealed, but presumably the new brew will command a premium.

In any case, it certainly can’t be called joe. Not when that’s what BK is calling its revamped brew. The King’s new jolt is a premium perk, according to news stories that quote persons at the chain. But organic? Nope. That’s the sort of thing an on-the-edge brand like McDonald’s might try.

Friday, October 28, 2005

Labeling it right

It’s been three days since McDonald’s surrendered to the Dark Side, and we’re still looking for cracks in the earth. It’s a development the industry has tried to prevent for years, with dire predictions of money being torched, operations getting horribly snarled, and customers tossing down their purchases in disgust. And all for the sake of some over-zealous do-gooders who think, quite foolishly, that it will have a profound social impact.

In short, the legion of opponents said, there’s no way nutritional information could be included on restaurant-food containers. It’s just not feasible, affordable or functional.

And yet McDonald’s said on Tuesday that it plans to do exactly that next year.

An executive of the chain once observed that she could create a worldwide sesame-seed shortage merely by modifying the specs for McDonald’s buns. More recently, the fast-food giant in effect handed the orchard business a winning Power Ball lottery ticket by agreeing to sell apple slices as a side. It’d like to start selling edamame, but there may not be enough soybeans the world over to do it. The scale of the operation is almost unfathomable.

But it’s confident that it can start listing information—similar to the nutritional data printed on grocery-food boxes—on the wraps and containers for Big Macs, Chicken Selects, and almost every other food sold by the chain. It took two years of development and tests, but the home office is certain it can do it without going broke.

We’ve been waiting for a mob of competitors to grab a noose and start looking for a branch stout enough to support the mighty McDonald’s. Resentment must be running as high as it did in the 1980s, when a burgermeister of the chain made a flip remark about the minimum wage having little effect on the business—just as the trade was combating a proposed pay-floor hike by stressing the damage it’d wreak industrywide.

Here, too, the industry took a stand: Labeling, it said, just couldn't be done. Yet McDonald's piped up on Tuesday with assurances that it can.

The industry has been remarkably quiet then, which suggests there’s more resignation than anger out there. Maybe the other chains realize the time has come to throw in the napkin and just do it, especially now that they’ll look socially insensitive otherwise. McDonald’s CEO Jim Skinner has publicly urged them to make the same move, even if it blunts a distinction that might be favorably regarded by fast-food shoppers. The benefit of shielding the whole sector from social reproach (and perhaps legal challenge) seems more important to Skinner. It’s a brave new attitude.

But the industry’s opponents in the health debate also have to accept some new realities. For one thing, McDonald’s and the fast-food chains planning to follow suit are dropping their resistance voluntarily, not because of a poke from lawmakers. So legislative proposals mandating labeling should be shelved. If the issue is the release of information, and the industry is meeting that demand on its own, why slap the trade with heavy-handed requirements and sanctions? At the very least, restaurateurs would have to prove their compliance in some fashion, and that means another complication in a business that’s already dauntingly complex.

Second, this doesn’t change the industry’s objection that labeling won’t work for full-service restaurants, and independents in particular. There’s just too much customization, even within the multi-unit systems. True standardization has been gone since Tom Cruise seemed normal.

It would also be in the interest of everyone to hold off sniping for a bit. But Michael Jacobson, head of the Center for Science in the Public Interest, was quoted the very next day as saying McDonald’s plan isn't ambitious enough. He wants the information posted on menu boards, where customers can see the data before they order. With the planned set up, they won’t know a Double Quarter Pounder with Cheese packs 730 calories until they buy one.

The likelihood that patrons will remember that distinction the next time they order is something Jacobson seems to have overlooked.

He also told The New York Times that he’d like fast-food chains to warn patrons of super-caloric meals, like a bundled deal that topped the 1,000-calorie mark.

The CSPI and the other nutrition nags should realize that the industry moves in steps, not radical leaps. They fail to understand that commercial entitites need to figure out how they can make a change without losing money. Otherwise, the suggestion will be met with pitched resistance, as labeling long had been.

Few could have predicted a few years ago that McDonald’s would even consider what it’ll start doing in a few months. And now it's happening. Give the trade a chance.

Thursday, October 27, 2005

Ho-ho-oy this gift-card season?

First, the bad news for mall-based restaurants: Consumers are planning to spend less on holiday shopping this November and December than they did in 2004, according to a new survey. That could mean less time spent in retail centers, since ionospheric gas prices were cited as a main reason for the cutback.

And now the good news, for restaurants of almost every stripe: The same canvass found that one of the presents consumers are most likely to buy this year is the gift card or certificate, the little somethings that have added up to a huge boon for restaurants in each of the last two Christmas-Hannukah seasons.

About 70% of respondents in the survey by Unity Marketing said they planned to spread cheer this December by giving either cash or credit for a purchase. Restaurant gift cards are among the most popular types of the latter. Chains have found that the offer of the cards not only pulls in shoppers before the holidays, but delivers a boon in the otherwise dead months of January and February, when the gift recipients come in to use their present. Card-bearers also tend to spend more than what’s on the card, or what they’d usually lay out if they were using their own cash.

But there is a huge asterisk to a finding that should otherwise be as warming as a mug of cocoa. It’s already prompted the catalog-shopping industry to up-end its marketing strategy this year. As The New York Times <> reported last week, the major mail-order houses have already shipped their catalogs to prospective customers, weeks ahead of the usual posting dates. The move is a cagey defense against the budget-gobbling effects of higher fuel costs—not gas prices, which theoretically should help catalog retailers, but fuel-oil charges. The shop-by-mail specialists are hoping to get consumers to place their holiday gift orders before the first heating bill arrives. Otherwise, a dramatic gulp could be followed by a dip into the Christmas kitty.

We figured that restaurant companies would follow suit, given how important gift cards have become to their wintertime sales. Yet in poking around, we’ve not found any accelerated activity. It may be that the industry is still relatively new to holiday retailing, and doesn’t comprehend yet the dynamics which affect that small but growing aspect of their business. But certainly the big players must have hired retailing talent to put them in that arena. Shouldn’t those experts jumpstart marketing efforts right away, before the fuel trucks start pulling up to card-buyers’ homes?

Sorry to be a Grinch. But the industry may have slipped into hibernation on this issue.

Wednesday, October 26, 2005

Viral marketing makes one pundit nauseous

You know advertising’s old sensibilities are turning to dust when the Rolling Stones appear in an ad for a Mercedes-Benz mini-van, as the band did in a New York Times full-pager today. But that’s nothing compared with the latest frat-boy marketing ploy from Burger King, which prompted advertising columnist Seth Stevenson to blast the chain’s zany agency as a passel of tricksters and liars who no doubt forget their mother’s birthday, if anyone would even admit to being their parents. And if his suspicions are correct, Stevenson is being easy on them.

As he reported in Monday’s Ad Report Card column < Masked - Is Burger King trying to put one over on me? By Seth Stevenson>, Stevenson started receiving e-mail queries at the end of September from “readers” who wanted to dress this Halloween as the wooden-faced king that appears in Burger King’s current television ads. Any idea about where they could buy a mask of the Whopper-loving monarch?

Before long, Stevenson had fielded six or seven of the requests, including one that that included misspellings like “comercial.” And that “smelled pungently fishy,” he asserted, adding that he's a big fan of BK’s new campaign.

“Why were these readers so eager to dress as a corporate mascot?” he wrote. “Why did they get the idea at the exact same time? Why was no one asking about, say, Geico caveman costumes? And wouldn't it be infinitely funnier to dress as the Dove Ladies?,” the full-figured real women who now star in the soap’s ads.

Smelling a rat along with the fish, Stevenson called BK’s agency, Crispin Porter + Bogusky, and mentioned the queries to the shop’s highly regarded team. In an astounding coincidence, they told him, Burger King had just started selling a king’s mask on its website for $9. And the minimal costume went on sale at almost exactly the time Stevenson had started receiving the queries.

Somewhere, Rod Serling was likely savoring a Whopper at that very moment.

Stevenson said he out-and-out asked the agency if had sent the e-mails as one of its viral-marketing ploys. After all, this was the same shop that once dressed someone in a chicken suit and put him on an unadvertised website where visitors could command him to do things like dance or hit the deck for a dozen push-ups. It was Crispin’s way of selling chicken sandwiches.

“The PR guy answered, ’Not that I know of,’” wrote Stevenson. “His mealy-mouthed tone convinced me that my suspicions were justified.”

Indeed, “not that I know of” is one of those smoke-screen responses, like “I can’t be quoted as saying that,” or “that’s not my recollection.” It’s a slick way of saying, “Could be, but I’ll be damned if I say so.”

Stevenson admits “there’s a chance that I’m wrong, and that these e-mailers—of their own volition—suddenly, earnestly, and simultaneously wondered if they might buy Halloween masks from a fast-food conglomerate.” But his suspicions were strengthened by word from Crispin that the masks had sold out, as if BK is so popular that anything it offers is a sales hit. Right. How about those chicken baguette sandwiches?

The irony, as Stevenson admits, is that the ploy has worked despite his condemnation. “For now, Crispin gets precisely what it wanted: I'm writing about their fricking Halloween masks,” he noted.

But the viral-marketing ploy—if that indeed is what it was—is only fostering a groundswell of concern about the fundamentally deceptive form of branding known as buzz marketing. Lawmakers are already calling for outlawing or regulating the practice.

That’s a high price to pay for what could better be called shenanigan promotions.

Tuesday, October 25, 2005

Reforming immigration reform

Behind me on this morning’s train, an immigrant couple practices English.

“How you doing?,” the man enunciates with the seriousness of a judge.

“No, no, no,” says the woman. “How are you doing?”

“How are you doing?” parrots the twentysomething man.

“No! Listen: How are you doing?” she says, shedding the emphasis.

“How are you doing?” he says. He’s delighted with himself for getting it right, and decides to push it. “Hey, how are you doing?” he warbles in a lounge lizard’s voice. He and his companion collapse into giggles, then revert to an unfamiliar foreign language.

Their stab at assimilation comes to mind as politicians in Washington, DC, try to determine where they should stand on immigration reform. In the posturing to show constituents they’re conservative beyond reproach, or truly pro-working class, or absolutely, positively law-and-order, lawmakers seem to have forgotten that lives are at stake as much as votes. People will be fundamentally and profoundly affected by how our purported guardians act on the Hill—the immigrants, of course, but also you. Not to mention your partners, shareholders, native-born employees, and guests. Without that labor supply, the locomotive could run out of coal.

The situation seems simple enough for a turnip to comprehend: Immigrants come here because they need jobs; the restaurant industry has to fill jobs to sustain its key social and economic roles. Insert Group A in Slot B, cue the band to play “Celebration,” and let the conga line commence.

To its credit, the Bush Administration has tried to facilitate that straightforward solution by suggesting the I-9 based system for regulating immigrant employment, a clunker unmatched since the Yugo, be scrapped for something more realistic. The President wants to eliminate illegal immigration by making legal residency easy enough for a straight-Ds turnip to obtain. For a considerable fee, non-citizens could obtain a three-year worker’s permit, renewable for a second three-year term. If they fail to naturalize after six years, they have to head back to their native country for a year before giving it another go here.

Sounds very reasonable. But the very idea has the traditionalists of both parties scrambling for air-sickness bags. Old-line protectionist Democrats decry the loss of American jobs to American workers who no doubt have an Old Glory flapping in the yard. Republicans, meanwhile, almost bust a button on their three-piece suits when they consider that foreigners here illegally could be forgiven their transgression. Why not just give criminals a gold star?

It’s bad enough that the posturing perpetuates the current strain of hiring people who want to take the foodservice jobs that few native-borns seem to want. Now you’re being turned into bargaining wampum. In his weekly radio address last Saturday, President Bush once again urged the nation to embrace his worker’s visa idea. To make it more palatable to the law-and-order set within his own party, the President stressed that work-place enforcement of immigration laws has to be stepped up. Great. The current set-up is a curse to restaurateurs because of how much effort is required to prove they’re not breaking the law and hiring illegals. Under the so-called reform program, they’ll have to meet tougher enforcement standards?

And where exactly is the reform?

Monday, October 24, 2005

Fish trends through the ages

If oyster history is your thing, Wednesday could be the closest you’ll ever come to a Ken Burns-style retrospective. Marine biologists—known to the irreverent as fish heads—will be gathering that day in the Danish town of Kolding to review what restaurant menus from the last 150 years can tell us about the price and availability of shell and fin-fish during the last century and a half.

Glenn Johns, a paleo-oceonographer (i.e., an archeological fish head) affiliated with Texas A&M, has been reviewing more than 200,000 menus unearthed from as far back as the days Millard Fillmore was making a name for himself. The bills of fare were found in libraries, historical-society collections, and the archives of culinary institutes, according to Johns. The professor and his research associates noted the prices of various species on the bills of fare, as well as when certain seafoods began appearing as restaurant choices. For instance, Johns reportedly found few mentions of lobster prior to 1880, when the image of the crustacean changed from trash fish to delicacy. Not coincidentally, he noted, the price also rose at that time.

But it’s a matter of what came first, the lobster or the cachet. Did the price rise because of a pop in demand, or did more people want to try it because it was marketed as an indulgence, with a price to match?

It’s the contention of Jones and his colleagues that a higher price connotes something exclusive and ritzy, and hence carries a powerful allure for people who can stretch to afford it.

Although the results of Jones’ work have not yet been disclosed, he has released a few teasers for the benefit of the media and the attendees of the gathering in Denmark. “I report here on the first attempt at using restaurant menus to reconstruct changes in the retail costs and regional/temporal usage of seafood throughout the coastal United States from the 1850s to the present day,” Jones writes in a preview of his presentation. He notes that he’ll be hitting it all—“invertebrate, demersal and pelagic species.”

That's Danish, right?

Thursday, October 20, 2005

BK, franchisee group reportedly sever ties

A dispute between Burger King and an organization representing most of its franchisees could prove a boon to McDonald’s and the other major competitors, a restaurant analyst alerted clients after the stock market closed today. Buckingham Research Group’s Mark Kalinowski did not reveal the nature of the conflict. Nor was he specific about the extent of the possible impact.

But reported this afternoon that BK headquarters had apparently severed ties with the National Franchise Association, the group that briefly snared attention when it filed and then dropped a lawsuit against McDonald’s earlier this year. The suit had alleged that the No. 1 burger chain should be held accountable for BK’s loss of customers during a Monopoly-themed promotion that McDonald’s marketing affiliates were caught rigging several years ago. BK’s management team had not supported the NFA’s action, which sought $500 million in damages from the chain’s arch-rival.

Dow Jones reported today that BK had sent a letter to NFA at the end of September, alerting the group that contact would be minimal moving forward because the organization was unwilling to support the franchisor’s marketing programs. Some reports have indicated that NFA represents as much as 90% of BK's domestic system.

The Dow Jones story, as posted on, said the NFA had sent a 12-page response to BK president John Chidsey last week. The article quoted NFA president Daniel Fitzpatrick, the CEO of franchisee Quality Dining, as saying in the letter that BK's home office had misconstrued some healthy discussion about the chain’s direction. Quality Dining itself operates several chains, including Grady’s American Grill, Spageddies, and Papa Vino’s. It’s also a Chili’s franchisee.

Kalinowski’s heads-up to customers was e-mailed after regular business hours for Burger King's Miami headquarters.

Wednesday, October 19, 2005

Carvel, Cinnabon parent has another in its sights

Look for FOCUS Brands, the parent of Carvel and Cinnabon, to make another acquisition within the next six months. A spokeswoman did not disclose what brands are being courted, but she commented that the private concern would like to add a "center-of-the-plate concept," a descriptor that would apply to a chicken, sandwich, burrito or pizza chain.

The spokeswoman indicated that the purchase would be part of the company's FOCUS 5 program, a drive to amass five foodservice companies with a total of 5,000 franchisees during the next five years.

FOCUS, a holding of the private equity firm Roark Capital, sees its universe of acquistion candidates as franchised brands that require a per-unit investment of $300,000 to $500,000. Roark bought Cinnabon from AFC Enterprises last November, combining it with Carvel, a frozen-treat chain it acquired in 2001 from Investcorp, to form FOCUS.

A few months ago, Roark bought a controlling interest in Mississippi-based McAlister's Deli, which is being operated separately from Atlanta-based FOCUS.

Tuesday, October 18, 2005

Trans fats, eh?

Trans fat has surpassed carbohydrates as the foodstuff restaurant customers most want to avoid, according to a survey released at an obesity-focused conference yesterday by contract feeder Aramark.

But even more intriguing is what the study says about international differences in health concerns.

According to a report issued in Canada by the Reuters news service, 21% of respondents in an Aramark poll said they were “strongly attempting” to avoid trans fats when they dine out, while only 18% cited the same aversion to carbohydrates.

The drop in concern about carbs is hardly a surprise. The a-ha is the lack of coverage that the study snagged here in the U.S. Sure, it was released at the Vancouver convention of the North American Association for the Study of Obesity (we shudder to think of what they might serve at breaks). But that doesn’t seem to explain why the release was covered north of the border, but not here in the States.

The answer might be found in a second study, released two weeks ago in Montreal and covered by the Canadian Press news wire. The report indicated that 62% of Canadians had changed their diets to avoid trans fats, and 53% avowed that they’d stop eating their favorite treat if it contained the artery-clogging fatty acid. Not coincidentally, 80% of the 1,500 respondents in the Leger Marketing survey said they were aware of trans fats and their dangers.

In the safest wager since we plunked down a bundle against the Cubs this year, we’d wager that the percentage might be a tad lower in the U.S. At least until packaged-goods manufacturers start labeling the trans-fat content of their foods after Dec. 31.

Tuesday, October 11, 2005

FCC adds to its stable

Add another concept to the menu of restaurant brands partially owned by Franchise Capital Corp. The Scottsdale, AZ-based finance company has been buying into small regional chains that seem at the point in their development where they're ready for more ambitious expansiion. Yesterday FCC announced that it planned to buy a 20% stake in Lucky Lou's, a gambling-themed concept generating more than $1 million at its sole present location, in Mesa, AZ. Two more are under development. The value of the stake was not disclosed. Nor did FCC disclose if it foresaw franchising for Lucky Lou's, which specializes in steak.

FCC already holds a piece of Creative Eateries Corp., the franchisor of eight small chains, including Kokopelli's Mexican Grill. Creative is led by Frank Holdraker, a veteran of the Ponderosa franchised family steakhouse chain and Jamie Coulter's Pizza Hut franchise.

Monday, October 10, 2005

Unfortunately, it's not science fiction

With all the big stories that broke last week—the earthquake in Pakistan, the targeting of New York subways by terrorists, the disclosure that 9/11-style airliner hijackings were thwarted in 2002 and ’03—you might have missed one that was even more alarming. It deals with a possibility that would be unlike anything the nation has ever seen, and would likely devastate much of the industry.

As The New York Times <> reported on Saturday, the federal government is preparing for the possibility that Asia’s avian flu will morph into an illness that could readily be passed from human to human. If that happens, a human disease that has thus far afflicted only about 100 persons could spread to tens of millions. A study generated for the Bush Administration and leaked to the Times reportedly says that casualties in the U.S. could soar as high as 1.9 million. Officials have already warned that it would be the worst disaster ever to affect the U.S.

With a projection that dire, even a remote threat of an outbreak could prompt federal or state authorities to halt travel from Asia or other infected areas of the world. Suspicions of infection could scare tourists and business travelers away from some U.S. destinations. Just ask Toronto, where hotels sat virtually empty, their occupancy rates in single digits, after the world learned that some residents were hospitalized with SARS.

In disclosing details from the report, the Times reported that food might be in short supply, and that sectors of the population could be subjected to a quarantine enforced by the military. The present-day foodservice industry is woven into the very fabric of present-day life, a key reason for its phenomenal success. But if that social fabric is shredded, the trade suffers accordingly.

This is not meant to trivialize the impact of a trans-global pandemic. Tens of millions of people die, and the restaurant industry should worry about the impact on sales? A bit myopic, wouldn’t you say? Besides, the government’s concerns are based on a possibility that may never come to pass, not a certainty.

But that’s not the intent of this at all. The foodservice business is so consuming that its members often lack the time to raise their heads and look around at what’s happening in the world at large. As big as this story is, it might’ve slipped by you. You’ll likely be hearing far more about what government and science authorities will be doing to minimize the risk, or temper the damage. Hopefully this will help you understand what’s at stake.

Wednesday, October 05, 2005

Could Katrina and Rita zap Wendy's again?

Watch financial analysts give Wendy’s a drubbing for attributing its less-than-stellar quarterly results in large part to Hurricanes Katrina and Rita.

The quick-service company reported this morning that same-store sales at its namesake brand fell by 5% at company units and by at least 5.5% at franchised stores during the quarter ended Oct. 2. In explaining why sales had slipped, management stressed that the chain had lost more than 2,676 store days (number of stores times the number of days they were shut), and that 47 affected units had yet to re-open.

What’s more, headquarters said in releasing preliminary results, corporate revenues were lowered by the loss of royalties from the franchised stores. Yet rents and payroll expenses didn’t abate, and the concern contributed to relief efforts in the Gulf area. All told, said management, the hurricanes has likely trimmed earnings by two cents a share.

If that discouraging news had been released in a vacuum, investors might have been more accepting. But almost simultaneously investors were learning that same-store sales had increased domestically by 2% at Taco Bell, Pizza Hut, KFC and the other brands of franchising giant Yum! Brands during the quarter ended Sept. 3. And P.F. Chang’s disclosed that comp sales were up 2.8% in the third quarter at its Pei Wei Asian Diner concept, which, like Wendy’s Baja Fresh, competes in the fast-casual market. Baja’s same-store sales declined 4.1%.

To make matters worse, skepticism about the effects of Katrina had been stoked in the days and weeks beforehand by earnings alerts from companies competing outside of foodservice. Avon and Estee Lauder, for instance, warned investors that Katrina had adversely affected cosmetic sales. In an inspired piece of analysis, Associated Press business columnist Rachel Beck noted that a similar explanation than lower-than-expected earnings had been posited by mattress maker Tempur-Pedic International and ATM manufacturer Diebold. She dubbed the phenomenon the blame-it-on-the-rain excuse.

In Wendy’s instance, stores were really closed, if not destroyed. And, as it noted, gas prices have risen to a level that pilots typically announce on commercial flights as “our cruising altitude.” Most dismaying of all, it will likely be faulted rather than appreciated by investors for continuing to pay staffers who lost work because of Katrina and Rita, and for contributing to the relief efforts. That kind of good will pays dividends of a far different sort, and not merely on a quarterly basis.

Monday, October 03, 2005

Will Caribou's Islamic parentage raise eyebrows?

Caribou Coffee doesn’t sound Muslim, as indeed it’s not. But a controlling interest in the company is held by Arcapita Bank, which had switched to that name from the potentially inflammatory First Islamic Investment Bank. Regardless of what it’s called, the institution operates in accordance with shariah, or Islamic law. And that, as Motley Fool contributor Stephen D. Simpson noted in a posting this afternoon, could be an issue with U.S. shareholders of the newly public coffee chain.

Simpson speculates that there could be two areas of concern. The first is how shariah could hamper operations. The ethical code sets rules for borrowing money, which “might impair the company's access to quick sources of capital,” Simpson wrote. Similarly, he noted, the chain could be denied the go-ahead for new products that are not permitted under Islamic law.

That, Simpson observed, will probably not be a problem for a limited-menu coffee chain. But Arcapita also reportedly holds a sizeable stake in the Church’s fried-chicken chain. Items like bacon or other pork cuts may not be so far a field for a concept like that. They could not be offered under shariah.

The other risk to Caribou, said Simpson, is “flat-out” ignorance. “Islam is not exactly well understood in this country, and there are a lot of people who go into knee-jerk reactions when they hear the word,” he wrote.

But the connection between Caribou and Arcapita nee First Islamic has been a topic of discussion on the internet for years. The relationship was even reported on, the popular site that collects urban legends, with an indication of whether each is true or not. The 2002 installment confirmed that First Islamic held a controlling stake in Caribou. “Starbucks, here I come!” remarked the site’s content controller.

A Caribou spokesman did not respond to a request for comments.

Friday, September 30, 2005

Gas pains

About a third of consumers are dining out less often because of the space shot in gas prices, according to a survey from a company that sets up carpooling for companies.

The canvass of NuRide’s 7,000 members, who reside predominantly in the East, found that a staggering 98% have adjusted their household’s spending because of the climb in gas prices, which soared past $3 a gallon in early September. Some pundits think the cost will top $5 a gallon because of the damage and disrupted production caused by Hurricanes Katrina and Rita, as well as turmoil in the Middle East.

In a single seven-day stretch during August, pump prices climbed 18.2 cents per gallon. The following week, sales at casual-dining restaurants fell dramatically, according to Knapp-Track, a service that monitors the weekly intake of chain outlets. In analyzing the data for all of August, the service noted that drivers were paying 74.4 cents more per gallon of gas by the end of the month than they were spending on Aug. 31, 2004.

The week after Katrina devastated the Gulf Coast area, per-gallon prices shot up by more than 45 cents.

Dining dollars were the most likely form of fun money to be reallocated to tanking up the car, according to the NuRide data. Fifteen percent of consumers spent less on entertainment because of gas hikes, and the same percentage throttled back on leisure travel, which typically translates into restaurant business.

Tuesday, September 27, 2005

Outback acknowledges plans for another concept

Outback has quietly confirmed that it plans to launch a new seafood concept called Blue Coral Seafood & Wine Bar, a venture expected to be a seafood version of the company’s upscale Fleming's steakhouse brand.

Like Fleming’s and Outback’s new Paul Lee’s Chinese Kitchen concepts, Blue Coral was conceived by Phoenix restaurateur and philanthropist Paul Fleming, who is also the P.F. in P.F. Chang’s. Outback already operates a seafood chain, Bonefish Grill, which executives have described as a seafood version of the company’s namesake steakhouse concept. Blue Coral is expected to be pricier than Bonefish, with a far stronger emphasis on wine.

Seafood also constitutes much of the menu of Roy’s, Outback’s Hawaiian concept.

A newspaper near Outback’s headquarters city of Tampa, Fla., The St. Petersburg Times, reported in July that the company had secured a lease in Newport Beach, Calif., for a restaurant called Blue Corral Seafood & Wine Bar. But the company would not confirm at the time that it planned to try a new venture.

Last week, Outback disclosed that chief branding officer Nancy Schneid was leaving that post to launch a consultancy. The company noted that Schneid’s new concern would offer guidance on a number of its upstart brands. Blue Coral was one of the brands cited as likely to get Schneid’s attention.

But Outback isn’t revealing any details about Blue Coral. A spokesperson wouldn’t respond to requests for information.

Monday, September 26, 2005

Updating your decoder

If you want to understand that exotic being known as the present-day customer, add two new acronyms to your consumer-speak translation guide: GF, and No WBRO. Both deal with what some chains are calling the new challenge in meeting the dining public’s increasingly varied special needs: Menu items fit for celiac sprue sufferers.

If that’s Greek to you, don’t be embarrassed, but don’t tarry in learning what it means, either. Until recently it was regarded as a relatively rare ailment, afflicting just 2 million people in total throughout the U.S. That works out to about one sufferer in 133 people. But the recent surge in interest and concern suggests the condition may be under-diagnosed. Indeed, you may have already dealt with a customer who had it, but referred to it as a gluten allergy.

In truth, persons with celiac sprue can’t process gluten, a wheat flour. The almost universally used ingredient throws their digestive system out of whack, and they have trouble absorbing nutrients. When a person suffers from the ailment, his or her children have a dramatically stronger chance of also being afflicted. That may or may not be a factor in the pronounced activism of the group, which is using the internet to share information about what restaurants offer a gluten-free menu, or GF in the shorthand of that community. GF bills of fare are already being offered by a number of the national chains, including Outback and P.F. Chang’s, as well as progressive regional operations like Legal Sea Foods and Cameron Mitchell’s Fish Market restaurants.

At Nation’s Restaurant News’ Culinary R&D Conference last week in Orlando, during informal discussions of allergies’ impact on recipe development, several chain menu-makers cited gluten intolerance as something they’ll all have to address if they want to avert a different type of veto vote. As one put it, “If we don’t give them what they want, they’ll find someplace that will.”

Part of the challenge is the ready communication between sufferers. The web abounds in sites and organizations. The community even has its own Zagat guide of sorts, the Clan Thompson Celiac Pocket Guide to Food. One group, the Celiac Sprue Association—“Celiacs helping celiacs,” according to its website—is trying to burn a new buzz-phrase into the minds of its constituents and the institutions that serve them: No WBRO Is The Way To Go. That means no wheat, barley, rye or oats.

The translation: Unless you reformulate, they can't buy your bread, pizza dough, pasta, cereals, and breaded fried foods, to name just a few restaurant staples.

As far as we could determine, many of the sufferers’ groups have yet to identify likely replacements for the ingredients that trigger their illness.