BK to beat McD in eliminating trans fats?

Think President Bush knows pressure? Consider whoever is charged with securing a trans-fat-free fryer oil that McDonald’s could roll into its domestic operations. The quick-service giant pledged three years ago to swap its partially hydrogenated oil for a medium that would eliminate a widely recognized health risk to customers. Yet, as CEO Jim Skinner has said, it still doesn’t know when the changeover will come.

Meanwhile, the public has watched a flurry of competitors raise their hands to pledge, “I’ll do it right now.” Wendy’s said in August that it was switching. KFC chimed in on Monday. And now Burger King is giving franchisees the heads-up that it’ll move toward a changeover within the next 90 days, starting with tests in selected units, according to a report in The Wall St. Journal this morning. The publication apparently interceded an e-mail that was sent to U.S. franchisees, disclosing steps to beat McD’s in switching.

And McDonald’s? Well, it did change the oil of all 740 of the chain’s outlets in Australia.

Of course it’s a bit tough for a chain of McDonald’s size to find sufficient supplies of trans-fat-free oil. It has in the neighborhood of 14,000 restaurants in the U.S., or more than Wendy’s and KFC combined, or about double the store count of BK.

Yet all of them are securing the oil. What’s the advantage of being the 500-pound gorilla when you can’t lock up supplies of scarce, valuable resources, at a cost that smaller jungle-mates can’t negotiate?

So that poor soul who’s leading the procurement effort must be looking a lot like an especially nervous Don Knotts these days. You can only hope that he or she has invested in some soybean farms along the way, because McD’s alone could make that a boom business.

More bang for bucking trans fats?

Does anyone truly think it was coincidental that KFC announced its switch to a trans-fat-free cooking oil in New York City, moments before the board of health opened hearings on a proposal to ban trans fats from restaurants? For that rare individual who probably believes pro-wrestling is real, consider that the chicken chain had shuttles on hand to haul reporters from its press announcement directly to the hearings.

That would also explain why it scheduled a press event for 9 a.m. on a Monday, traditionally a Dead Zone for the working press.

KC is swapping its partially hydrogenated oil for a trans-fat-free frying medium in all 5,500 of its units within the United States. The NYC ban would affect few of those stores, but other areas are quickly following the Big Apple’s lead in seeking to curtail consumption of trans fats, which are portrayed as a virtual toxin by coronary-health experts.

Although the New York announcement was carefully choreographed to coincide with the ban-proposal hearings, no connection was drawn to another relevant event, this one elsewhere within the KFC system. The chain’s Canadian operation disclosed at 3:01 a.m. on Monday that all 786 of its units would switch to trans-fat-free oil by early 2007. It did not specify precisely how early, but presumably KFC Canada will complete the overhaul before its U.S. counterpart, which pledged to make the changeover by April.

Why 3:01 a.m.? Maybe the operation realized that more journalists would be awake then than there would be at 9 a.m. on a Monday.

Former-sibling rivalry

Tim Hortons has been out of the fold for merely a few weeks, but Wendy’s is already seeing some side effects of spinning off the monster Canadian brand. The burger chain has cited the rollout of hot breakfast sandwiches and other morning options as a key part of its comeback effort, with projections that the a.m. menu could add $225,000 in sales per Wendy’s unit.

And what’s fueling Hortons’ sales growth these days? In part a hot breakfast sandwich, rolled out in the United States at the end of September. “We expect that the breakfast sandwich will contribute to continued sales growth,” Hortons CEO Paul House said in lauding the new item’s impact on sales. He also noted that the chain is finding new success in the States, which it largely struggled to do under Wendy’s tutelage.

The breakfast overlap isn’t the only indication that the chains’ test kitchens might’ve been aware of what the other was doing while they were part of the same company. Among the items that Wendy’s said it has in test: A chunky chicken salad sandwich, made on its new Frescatta fresh-baked bread.

In explaining why its units enjoyed a 9.2 percent increase in same-store sales (or 5.9 percent in Canada), Hortons cited the success of such promotional items as a chunky chicken salad wrap. Different by light-years, of course, from a chunky chicken salad sandwich.

Wendy’s said it’s also testing oversized Big Dipper chicken nuggets. No word yet on a comparable product from Hortons.

Succession planning of a different sort

Among the more intriguing informational tidbits served up at last week’s MUFSO conference was a revelation from Domino’s CEO David Brandon. He and other chain chiefs were asked what they view as their greatest industry challenge. Brandon noted that Domino’s, at age 46, is at a point in its lifecycle when a lot of franchisees would like to retire or otherwise kick back. How is the franchisor going to manage the transition to a new generation of operators?

It’s a question with profound implications for the brand. McDonald’s, with five more candles on its birthday cake, went through an adjustment of sorts in the 1980s and ‘90s when some of its long-time, smaller franchisees decided to focus on grandchildren instead of Big Macs. In many instances, the units were passed along to kids who’d grown up in the business, working in their folks’ franchises. But in others, the units were bought up by franchisees looking to expand their territory, leading to operations like Rick McCoy’s in Boston, with more than 100 stores.

Other systems have greeted that consolidation with concern, if not a counterattack. Pizza Hut didn’t like to see its franchisees become public companies. And most of the giant quick-service brands still don’t have publicly owned franchisees, with the notable exceptions of Burger King and Wendy’s.

Domino’s, founded in 1960, is entering a phase of maturation that other brands will hit sooner or later. Many have already made that changeover from early entrepreneurs to successive stages of franchisee ownership. For others, it’s a test yet to be undertaken.

Yet not a lot of eyes will likely be on the pizza giant, since that succession process is not a public display. Unfortunately, since it’s the franchisor is now a public company, many of those peepers will likely be investors’.

The MUFSO conference (for Multi-Unit Foodservice Operators, of course) is presented by Nation's Restaurant News. Look for full coverage in our Oct. 30 issue.

Near upset in Europe?

A $916 million bid for the European quick-service chain Quick has muted rumblings that the powerhouse brand would be acquired by Burger King.

The move would’ve been a brilliant flanking operation by the Home of the Whopper, giving it a dominant concept in the heart of the European Union. Belgium-based Quick reputedly outperforms McDonald’s in the French, Belgian and North African markets served by its 400 burger outlets.

Instead, Quick Restaurants SA said it fielded a friendly takeover bid from the French private-equity giant CDC Capital Investissements. Quick said it would exclusively deal with CDC to finalize a deal.

CDC’s per-share bid of $47.48 (or €37.8) outstripped the $43.98 (€35) offer that analysts had expected from Burger King Holdings, according to the Associated Press.

A green-hot trend

I appreciate your attention here, but keep an eye diverted for safety reasons. After the industry insisted for decades that it couldn’t afford to address social concerns, the pendulum is suddenly swinging the other way, and you don’t want to get bonked by that baby. Not at the speed it’s moving.

Consider how it’s been pushed in the other direction by events of the last few days. Walt Disney Co. would’ve generated headlines merely by adopting healthier menus in its theme parks, as it’s indeed doing. But it took the considerable extra step of vowing not to do business with restaurant chains that refuse to meet its health-oriented menu standards. A tie-in with the likes of Burger King, Taco Bell or McDonald’s can presumably mean millions in additional box-office revenues for a Disney flick. Yet the company has publicly vowed to walk away from such a collaboration if healthful dining options aren’t on its partner’s menus.

An aspect of the announcement that went unnoticed by the public: Disney convened an event the day afterward at MUFSO, our conference for restaurant-chain executives, to provide further details of its initiative. Was it a way of getting out the word to the big chains that future marketing partnerships would have to be much different?

The initiative is such a bodacious step that even the Center for Science in the Public Interest couldn’t muster it’s usual “good, but” response. It veritably gushed about the move Ditto for critics like Marion Nestle. It is indeed a quantum leap.

Yet the magnitude of that development might’ve diverted attention from other strokes of green. Normally, the launch of a new lodging chain by Barry Sternlicht, the Steve Jobs of the hotel industry, would have delivered the buzz of a honey farm. Add an exclusive affiliation with BR Guest, the New York indie-restaurant group headed by Steve Hanson, and the Richter Scale needle would’ve moved into the red. Overlay the news that the venture will be totally eco-friendly, right down to its restaurant, banquet and room service operations, and more than a few observers would be bouncing like Tom Cruise during an “Oprah” appearance. But coming just a few days after Disney’s announcement, it might’ve seemed, um, a little mickey mouse.

Ditto for Wendy’s disclosure that it had developed a website where parents could get information from dieticians about children’s nutrition, or the pledge from McDonald’s, a frequent partner of Disney, that it would develop more healthful kids’ entrees. McD also promised to spend 20 percent of its GDP-scale children’s marketing budget on spots that promote exercise.

Added together, the news suggests the industry is convinced, after decades of being hounded, that there’s considerable green to be made from being green.

The next big thing?

Add a new word to the crib sheet for staying current on restaurant trends, and put this one down in ink: izakayas, or the neighborhood restaurant-bars of Japan. Recent developments suggests they’re about to become the concept of the moment on the U.S. dining scene, with two very distinct followings.

The Japanese term was largely Greek to American foodies until a few weeks ago. But izakayas have been quietly infiltrating the U.S. market for several years, serving a subculture of Japanese students and young transplants within the States known as NEETs, or Needing Education, Employment, or Training. A major recent feature in The New York Times equated that portion of Japan’s youth to our slacker generation. It noted that these disaffected youngsters are coming to the U.S. in waves, for anywhere from a few months to several years, in hopes of finding themselves (read about it yourself at http://travel2.nytimes.com/2006/10/15/fashion/15miho.html).

The story noted that so many izakayas have opened in the city’s East Village, an anything-goes area known for avant-garde boutiques and body-piercing emporiums, that a section of neighborhood has been re-dubbed Little Tokyo. The places are presumably authentic izakayas, Japan’s equivalent of the United Kingdom’s gastro-pubs. Both serve a clientele of professionals and hipsters who want to have a few drinks after work or school, accompanied by something better than each country’s equivalent of nachos, chicken fingers or other standard bar foods. Izakayas catering to NEETs and other Japanese immigrants typically offer small plates of highly flavored Asian specialties, often grilled.

If the anticipated izakaya craze went no further than serving those ethnic strongholds, the concept would likely garner no more attention from the dining mainstream than Korean barbecues or Peruvian eateries. But recent signs say the format may be moving into the American mainstream.

The Las Vegas-scale neon alert was the opening a few weeks ago of an izakaya-style place by P.F. Chang’s, the company that all but minted gold by introducing many areas of the country to Chinese food they could trust, in a setting that bedazzled instead of conjuring fears of ptomaine poisoning. Its namesake brand has been one of the most successful restaurant ventures of recent years, and a lower-cost version call Pei Wei Asian Diner has similarly enjoyed the touch of Midas, though both concepts have wheezed a bit in recent months.

And now comes Taneko, in Scottsdale, Ariz., a test of what the company hopes will be its newest Asian over-achiever. The company has set it up as a izakaya for the American mainstream, or at least the more adventurous of its dining-out aficionados. Like the pub-restaurants of Japan, it puts a considerable emphasis on beer, spirits and cocktails. The kitchen offers plates of what Gourmet or Food Channel fans might recognize, like Kurobuta pork chops or kobe beef, along with sashimi, tempura and noodle dishes. The company has indicated that patrons will typically spend $30 a head.

Meanwhile, another chain is poking its sandaled toe into the market. Wann, an izakaya brand from Japan, plans to open a U.S. outpost in downtown Seattle, that city’s Post-Intelligencer reported this summer. The newspaper’s restaurant writer, Rebekah Denn, cited the arrival as evidence of izakayas emergence as a next big thing, or what she calls the “it kids” of the local dining scene. Two izakayas are already in operation there, she noted.

Back on the Right Coast, The New York Times reported just last Wednesday that a place called Izakaya Ten had opened in the city’s Chelsea neighborhood, a frequent arbiter of dining fashion.

The paper has tacitly (and uncharacteristically) acknowledged that its hometown may be lagging behind Los Angeles in the evolution of the trend. Note the observation of a July Times story that carried a Los Angeles dateline: “The Japanese izakaya — a pub featuring savory snacks downed with sake or cold beer — is starting to shove the sushi bar off its pedestal,” wrote Jennifer Steinhauer.

And the ultimate gauge of a trend’s arrival: A Google search of “izakayas” served up 16,900 hits. That’s almost in Paris Hilton territory.

Seasons in the sun

Among the industry’s most-watched new restaurant ventures has been Seasons 52, Darden Restaurants’ attempt to mold an all-fresh restaurant and wine bar into something that could profitably serve the mass market, and aging Baby Boomers in particular. The company has been careful to characterize it as an experiment that might never grow into a sizeable chain. Or at least that’s what it had been saying before today.

The Red Lobster and Olive Garden parent tossed aside that usual caution when Blaine Sweatt, the concept’s Obi-Wan Kenobi, was asked during the MUFSO conference about Seasons 52’s chances of ever become a $1-billion-a-year business. Darden has said it wouldn’t undertake the development of a new chain unless it could reach that threshold. Would this ever be a concept feasible for widescale expansion?

“Are we ready to set the switch [to] ‘on’? Yeah, we’re getting pretty close,” said Sweatt. “Will it be a billion dollar business? Yes. It’s going to be bigger than a billion-dollar business.”

He explained that Darden’s success with the venture would likely prompt other casual-dining companies to develop knock-offs, which would add top-spin to the whole pack’s expansion. Darden would prosper, as would everyone else. But it’s invested the time and effort into nailing the right venture.

Sweatt noted that Darden has opened seven outlets of Seasons 52 in markedly different outlets, to gauge its popularity nationwide. Although he didn’t share details about the brand’s acceptance, the mere mention of that tactic suggests that Darden has liked what it’s learned.

Similarly, Darden is one of the industry’s most cautious players. It doesn’t boast or lightly project success. For Sweatt to speak the way he did,, the company has to be very confident about its chances of succeeding. It’s Darden’s boldest endeavor to date, but undoubtedly the one with which it’s moved most cautiously.

Behind the Baja deal

One of the big topics of conversation at MUFSO, Nation’s Restaurant News’ annual conference for multi-unit restaurant operators, has been Wendy’s sale of Baja Fresh for a mere $31 million. To put it in perspective: Wendy's bought the chain in 2002 for more than $275 million.

Attendees in a position to know said the brand had been widely shopped around before Wendy’s agreed to sell it to David Kim, a West Coast entrepreneur described as MUFSO participants as operator of more than 100 Cinnabon franchised stores. They also noted that he’s been a franchisee of Pickup Stix, T.G.I. Friday’s Asian little sister, and franchises a flower-delivery service called Kabloom.

Persons close to the situation say other bidders were put off by the poor financial health of company stores; they speculated that would-be bidders figured they’d have to close dozens of corporate units, which would represent a considerable write-off. But, they said, Kim has vowed to keep the units open, apparently by pursuing a turnaround plan he’s yet to reveal.

Many noted that a number of franchisees are thriving despite the brand’s travails. And word surfaced of an alternative prototype, already in operation in Pennsylvania, that offers the key benefits of speedier service and a less-expensive design.

Down from Olympus

Among the high points of this year’s MUFSO was having Norman Brinker attend. It was like going to a wedding reception and seeing the Rolling Stones take the stage. The man is nothing less than a founding father of the business—every bit as much of god as Ray Kroc, Dave Thomas, or Colonel Sanders. And there he was, sitting in the audience as if he headed a six-unit chain with national aspirations. This was a man who veritably invented casual dining, the visionary who thought up Steak and Ale, Bennigan’s and Chili’s when concepts of that sort were Gemini space craft in a horse-and-carriage world . Oh, yeah—along the way he managed to become one of the richest men in America. Yet you could readily reach him on the phone if you felt like chatting.

There, in the flesh, at MUFSO.

Yet a most extraordinary thing happened: Our industry’s equivalent of Frank Sinatra was in the house, and the house stayed as calm as a yoga instructors’ convention. A few of we old-timers said hello, but nary a Beatles-esque scream was raised, and the crowd kept its distance.

If most attendees merely wanted to respect the seventysomething’s privacy, that’s a wonderful thing indeed. But you can’t help wondering if many of those in the room didn’t grasp who this person was, and how much of a stamp he’d left on the industry, and society as a whole. They’re squandering the chance to meet a legend. And that’s sad indeed.

Bling for the King?

Can Burger King get its funk groove on, even with Diddy in the house?

The quick-service chain has contracted the one-time Puff Daddy as a “change agent” who can get the chain some street creds with the iTunes generation. The first step is the association of BK with the rap star on a page of YouTube.com, as if the King and Diddy hang together all the time. A video clip on the new Google holding shows the entertainer ordering a Whopper (written all in lowercase for added coolness) and explaining why he chose BK as a new collaborator. He’ll also star in an ad spot on that old-media staple, TV.

What either partner has yet to explain is the “consulting on relevant entertainment and marketing talent” piece of the deal. BK stresses that provision, and notes the deal is “multi-year,” but provides little detail. Is the burger chain looking to sign other stars for promotional gigs? Is it scrapping the hold-the-pickle-hold-the-lettuce schtick to become the sort of place where teens might skateboard in for the newest downloads and DVD? Will it sell the music and movies, as it’s already doing with its XBOX games, or just give it away to push more Whoppers—sorry, that’s whoppers, dog.

But while the King and Diddy are out clubbing, McDonald’s is already seeing more Big Macs slide across the counter because of its new entertainment initiative. Seventeen percent more, according to the franchisee of the test site. The m-Venue service, currently available just in that lone Schaumburg, Ill., unit, allows patrons to play songs, music videos or movie previews—all from Sony’s entertainment holdings—on any of 10 flat-screen TVs within the restaurant. They send their request via the ether, via either a text-message, a wireless laptop, or a web-enabled phone.

Right now, the entertainment is free. But the company supplying some of the equipment says a digital store is already part of the plan. At that stage, customers can buy the music or videos and download them to their wireless toys. There was no indication of how much the McDonald’s unit might collect from a sale.

That company, Akoo International, says McDonald’s units throughout the greater Chicago area will be retrofitted with m-Venue by year’s end, but the chain itself has not issued an announcement or other statement.

Coming clean on washing

Restaurateurs say getting employees to wash their hands is more difficult than packing the house. New research on American’s use of soap and water may provide some insight as to why.

Dining out may be ingrained in our culture, but hand washing is still surprisingly iffy, according to a new study from the Soap and Detergent Association, whose Washington, D.C., headquarters must be spotless. In a survey of more than 1,000 U.S. adults, more than a third (36 percent) admitted they seldom or never wash their hands after coughing or sneezing. Almost as many (30 percent) said they don’t routinely give the paws a scrub before lunch.

Worst of all, about 8 percent confessed they don’t always wash their hands after using the bathroom. And the SDA surmises that the true figure may be far higher. “There’s a gap between what people say and what they do,” the group observes in its analysis of the data. It cites an earlier study, conducted in collaboration with the party animals over at the American Society for Microbiology, that found 17 percent of Americans don’t hit the soap after using a public bathroom.

And if adults don’t stop at the sink as a matter of course, what habit are their children going to develop?

Fish tales

Recent events confirm that Maine is very serious about fish. And don’t even get it started on crustaceans.

As we reported yesterday, one of the state’s U.S. senators has asked the federal government to prohibit restaurants from marketing pelagic crab meat as lobster, even if the designation incorporates the more familiar name of “langostino.” Olympia Snowe, a Republican, says her state’s lobster industry has lost $44 million in sales because chains like Red Lobster and Long John Silver’s can buy the less-expensive langostino and peddle it as langostino lobster, accent on the second word. In her view, the feds have to protect the majestic Maine lobster from being confused with the sea mutts she dismisses as “large shrimp.”

But while Snowe was trying to foment a storm, another fish story was unreeling far more quietly within the state. The conclusion will come within 30 days, when a special panel of the state’s Department of Inland Fisheries and Wildlife decides the fate of 10 koi that were seized from a restaurant’s dining-room aquarium.

The oversized, ornamental goldfish, routinely kept as pets in Asia, were taken from a Freeport restaurant called China Rose, where they’d lived for 15 years. Then a game warden spotted the fish and alerted authorities. In Maine, you need a license to raise koi, and China Rose proprietor Coung Ly clearly didn’t have one. Indeed, only one person in the state does.

The state is afraid that koi could escape from captivity, thrive like rabbits in the wild, and starve the endemic species that have turned Maine’s sports-fishing business into a whopper. So they took Ly’s fish—and gave them to a pet store.

Presumably, people can’t buy the specimens. But they can ogle the fruits of Ly’s crime and feel the pull of the dark side. If you know the right people, buying koi in New York or New Hampshire is a cinch.

Ly has begged to have his fish returned, pledging never to let them go or allow them to escape—which, presumably, is a pretty tough feat for a fish.

The odds of an escape will be weighed by the three-person panel appointed by Fisheries and Wildlife. They’ll decide if the fish will be returned to Ly. But regardless of their ruling, he’ll still face courtroom time and the possibility of a $1,000 fine under misdemeanor charges filed against him several weeks ago, for koi smuggling.

Hopefully he’s already erased any mention of langostino lobster from his menu.

This week in history?

After the events of last week, who knows what the next seven days will bring? It’s unlikely to be noted in history books, but the recent past served up some important milestones, some as obvious as Grant’s Tomb, and others as little-noticed as the Menudo reunion album.

Topping the list would have to be New York City’s call for virtual elimination of trans fat from restaurant preparations. A corner was turned, a tipping point was reached, the last straw was slipped into the camel’s pack. Whatever cliché you want to use, this is when it’s all likely to change, with regulators pushing on restaurants, the eateries pressuring their vendors, and the suppliers giving their R&D folks a firm kick. The end result is going to be the phasing out of trans fats, if for no other reason than the publicity that was raised by the New York health department’s call for eliminating the artery clogger from commercial kitchens. The infallible new gauge of buzz, the Google search, shows 106,000 website mentions of the issue.

And that’s going to be the first domino that falls. Chicago has already said that it’s eying what happens in New York as a model for what it does. And, whether you love New York or hate it, it’s hard to argue that it’s not a bellweather for much of the nation. Where it goeth, often so goes the nation.

Strangely, despite all the attention that New York’s proposed ban has garnered, several aspects of the proposal have been overlooked, or certainly under-appreciated. Why, for instance, is there not more of a sympathetic outcry for banishing trans fat from retail shelves? Or the home kitchen? Why is the public—and the restaurant industry—so willing to accept that double standard?

The answer may be the second part of the health department’s proposal, which, as we’ve noted in our New York office, was largely overlooked even by the city’s celebrated hometown media. Health Commissioner Thomas Frieden also wants to mandate the posting of nutritional information on the menu boards of chain restuarants if the host concept already offers it as a handout or in some other form. It could be the stick that prods a sector of the trade to mute its protest to the ban proposal, which some insiders characterize as a done deal. If restaurants argue that they shouldn’t be subjected to the double standard of having to eliminate all but trace amounts of trans fats, when packaged-goods companies merely have to label the trans-fat content of their foods, then regulators might say, “Fine. Have it your way. Just provide the information, right on your menus. Along with info on cholesterol, calories and salt.”

Eliminating trans fat is a task that can be pushed back on suppliers. Menu labeling is a matter for restaurant accountants, and likely not one to make them happy.

The trans fat proposal may have accounted for plenty of headline ink, but it was hardly the lone newsworthy event of last week. Consider, for instance, the little-noticed tidbit about McDonald’s funding research into what makes children obese. About a year ago, I wrote a page-one story for Nation’s Restaurant News about the glut of research now being conducted on obesity, a cause du jour for academics, scientists and health officials. There’ll be no shortage of data on the topic. Yet McDonald’s is ponying up $2 million for more—no doubt in part to demonstrate concern, but perhaps also to make sure that all voices are heard in that authoritative discussion of obesity’s causes and possible remedies. As far as I can tell, it’s the first time that a restaurant chain has done such a thing, and certainly the only time that a quick-service operator has plunged into the world of health research to that degree.

The last week or so also brought the filing of three lawsuits against restaurants by the U.S. Equal Employment Opportunity Commission. As was noted here last Saturday, Starbucks is being sued by the federal agency for allegedly violating the rights of a psychologically troubled employee, as provided by the Americans with Disabilities Act. A McDonald’s franchisee in Denver was hit with a suit for purportedly allowing two teenaged female employees to be sexually harassed by male managers and employers. And then came the announcement of a suit against the Parker Palm Springs hotel in Palm Springs, Calif., for allegedly hiring only males at one of its restaurants.

Given the volume of suits that the EEOC files, three doesn’t exactly signal a trend. But to have three actions against restaurants disclosed in the same week seems unusual. Is the EEOC stepping up its use of lawsuits as an enforcement tool? Are restaurants’ rules slipping a little in this tougher economic environment? Or are employees willing to resort to legal action more readily because jobs are harder to come by?

We don’t know. But maybe next week will provide an answer.