New Orleans restaurants batten down

The Big Easy's celebrated restaurant industry certainly hasn't had an easy time of it. Now, three years after the Big One, comes The Even Bigger One, a storm that's been described by New Orleans mayor Ray Nagin as "the storm of the century." This from a man who was on the ground during Katrina.

It comes as no surprise, then, that the city's restaurants are shutting down and encouraging their staffs to seek safety. An AP story said that Arnaud's, one of the landmark places, threw away some of its food and donated the rest to local fire departments. Why suffer that degree of spoilage, as so many places did in 2005. And the local newspaper, The Times-Picayune, has this to say about other establishments there.

The Scoop, by the way, was launched in the wake of Katrina as a service to the local industry there. Though it wouldn't take that name for awhile, the blog was intended to serve as a bulletin board of sorts, where New Orleans restaurateurs and restaurant employees could reconnect. Our hope was to let employers and employees know of each other's safety, and then to start addressing such nuts-and-bolts matters as getting paychecks or seeing about healthcare coverage. We also hoped to put employees in touch with other restaurants that might be able to add them to the payroll while their prior employer was getting on its feet.

This is a helluva way to celebrate the anniversary of NRN's first blog. Hopefully, this time it'll be filled with stories of how astutely the city contended with a natural disaster, and how quickly it rebounded.

We wish everyone down there the best of luck. Needless to say, if this space can be used in any way to help the members of New Orleans' restaurant industry, just let me know, either through a comment here, or by e-mailing me at promeo@nrn.com.

The "I" in choice

Historians, as you probably know, are prone to fight at the drop of a three-cornered hat. Just mention the Strong Man Theory, for instance, and you’re likely to see a headlock here, an eye jab there. Before long, medieval curses will be flying, and enough tweed will be ripped to make James Lipton wince. Still, even after all the bloodshed, one faction will insist that history is driven by extraordinary individuals acting on personal agendas. And their opponents will refuse to budge from the conviction that circumstances, not strong men or women, are what change the path of human development.

So, please, if you’re holding a kegger this weekend for that rowdy bunch from Elizabethan Studies, do not mention the latest initiatives from Starbucks or Danny Meyer.

After all, USA Today’s exclusive on Starbucks’ latest menu overhaul left little doubt the chain is adopting more healthful choices because of developments in the life of CEO Howard Schultz. The article recounted how Schultz discovered during a physical that his cholesterol was too high and that he needed to pursue a more healthful lifestyle. He changed his ways, the story noted. And, at virtually the same time, so did Starbucks. First it rolled out its new healthful smoothie line. Then, Schultz disclosed to USA Today’s Bruce Horovitz, it drafted the new reduced-fat, higher-fiber breakfast array that’ll be introduced on Tuesday.

A coincidence? Ask anyone historian with a well-thumbed copy of “Julius Caesar: The Early Years” on his or desk.

Then there’s the new diversification by Danny Meyer’s Union Square Hospitality Group. The operator of such fine-dining shrines as Gramercy Tavern and Union Square Café is planning to open restaurants in the Mets’ new stadium, Citi Field, when it opens in Flushing, Queens, next year. Nation’s Restaurant News broke the story after speaking with Meyer, who acknowledged that this is more than a cold, calculated business decision. “We think Citi Field is a great opportunity in which to parlay our love of sports and launch a new division,” he told NRN’s Elissa Elan.

Clearly, neither businessman is stepping outside himself to look with complete detachment at possible new directions for their businesses. Yet both have repeatedly demonstrated they’re no Dan Quayle when it comes to spelling out opportunity. These are some of the most respected figures in the business, if not American commerce. Does that mean those of us yet to climb Mr. Olympus should consider a little more Yoda and a little less Peter Drucker? Should we indeed yield a little more to The Force we feel?

The record is at best murky. In the late 1980s, a businessman named Victor Kiam decided he really appreciated a certain type of electric shaver. “I like it so much I bought the company,” he famously told consumers in a long-running TV campaign for Remington razors. That bit of strongman business savvy worked well for Kiam; he would grow the company and remain its chairman until his death in 2001.

But personal preference also led him to buy the New England Patriots football team. It was a financial disaster for him.

Less ambiguous are the bankruptcy notices for restaurant and after restaurant that were opened because the entrepreneur liked the idea of being in that business, or really enjoyed cooking, or loved hanging out in star-studded establishments. Ego equaled disaster in those instances.

Of course, those decisions were often based solely on bias, not on business sense. Schultz and Meyer probably couldn’t have suspended their commercial intuition if they had wanted to do so.

So my bet is they’ve made good decisions, even if each choice may have been more influenced by personal criteria than other moves they’ve made.

We’ll certainly see. Perhaps starting on Tuesday.

Be afraid. Be very afraid.

Wal-Mart treats competitors the way Moe worked through conflict with Curly or Shemp. If Al Qeda had controlled a market the retailer wanted, Osama Bin Laden would be straitjacketed in some Middle Eastern asylum right now, whimpering, “It’s yours. Just don’t lower your prices again.”

Which is why I have to play Paul Revere and warn you of a story we posted on our website today: Wal-Mart is trying a new concept called Marketside, which is positioning itself as the place to buy dinners a consumer might’ve otherwise purchased from a restaurant. Customers can pick up the ingredients to whip together a meal themselves. Or they can opt for one that’s ready to plate and serve the family. Indeed, “easy meal solutions” is the cornerstone of the venture. Except here you can get them for what the nation’s notorious discounter coyly terms “affordable prices.”

“With us,” says the one-time home-supplies source that now dominates virtually every merchandise category it’s entered, from music to toys, “you¹ll never have to compromise quality to get a lower cost.”

Wal-Mart says it has no plans to open more than the first four green-lighted Marketsides, all of which are slated for the Phoenix area. But it slipped up and acknowledged in ads for Marketside staffers that it envisions 1,000 units cranking $10 billion in annual sales. Darden Restaurants, the king of casual dining, garners about $6.7 billion.

News of Wal-Mart’s interest in stealing your customers follows a similar development during the Olympics: The retail chain exploited coverage of the games by advertising its in-house take-and-bake pizza as a more-economical alternative to restaurant-made pies. The primetime commercials sum it up bluntly: If your family buys only one pizza a week, it’d be saving $312 a year by grabbing a pie from the nearest Wal-Mart.

We in the United States are worried that the Olympics were reason to be more fearful of the Chinese. Restaurateurs should be more concerned about a rival named Wal-Mart. It’s a nightmare that appears to be coming true.

A news sampler

My cubicle usually makes FEMA's newsletter two or three times a year. Mentions like, "Congratulations to Joe Smith in Dispatch for scaling Mount Everest this summer. What’s next, Joe, cleaning Romeo’s desk???” And there was that discovery of a condor colony during a routine bulldozing of the guest-chair area in ’06.

It’s not that I prefer the post-cyclone look of my workspace, despite its likelihood of being the next “Survivor” setting. I just can’t bring myself to bury news tidbits in files that defy easy labeling. I prefer to maintain a desktop Miscellaneous mound, so I can savor informational details that would otherwise be lost. Consider, for instance, these gold flakes in the recent stream of news.

Wal-Mart wants your pizza business. During primetime Olympics coverage, the retailing bully aired a commercial that should’ve had pizza chains sweating like Chinese gymnasts being asked for proof of age. The spot explains that ordering a pizza from a restaurant usually costs about $14, while bringing home a take-and-bake pie from Wal-Mart will set a family back just $8. “If your family eats pizza once a week, you could save $312 a year,” the voice-over explains. Better push those pastas, Pizza Hut.

Little burgers are now Chili’s biggest. Big Mouth Bites, Chili’s version of the mini-sandwiches that competitors of all stripes seem to be sporting these days, are now the chain’s best selling burgers, according to officials of parent Brinker International.

McCormick & Schmick take a different group-business tack. Everyone targets local businesses for catering and party business. M&S is trying the different path of pursuing companies on a national basis. The high-end seafood chain is reaching out to corporate accounts that are planning road shows to hawk their wares or services. The restaurant company offers those road warriors the ease of setting up the feeding operations of the whole tour with just one call to a centralized sales and support center.

Cheesecake Factory isn’t alone in trying delivery. BJ’s Restaurants, the high-volume chain headed by Cheesecake alumnus Jerry Deitchle, is already offering the service at 71 of its 75 casual-dining restaurants, according to executives. If it’s indeed blazing a path for Cheesecake, the latter may soon be seen walking the aisles at BestBuy. BJ’s is also upgrading its TVs to flat-screen models.

Outback’s parent sells its plane to familiar parties. As it was losing $176 million during the second quarter, OSI Restaurant Partners decided it was time to thin out its fleet of aircraft. It sold one on July 1 for $8.1 million to a company called Billabong Air II Inc., which happened to be owned by two of the company’s founders, co-owners and executives, according to securities documents. That’s not to say other residents of the executive floor will always have to fly commercial. As part of the deal, Billabong agreed to let OSI lease the plane for up to 200 hours a year, at a cost of $2,500 per hour. Blankets and pillows were apparently not part of the deal.

There are probably far more tidbits I could share with you, but there's movement under the pile of papers near my keyboard, and it could be something alive. Unfortunately, that’s also where I left the number of Animal Control.

In search of service

This is a true tale of good service, bad service, and the sort of customer nightmare you’d expect from nuns running a singles bar. Just as diverse is the cast of characters: A brand-new hospitality school, a diner that was probably slinging hash when America’s top chefs’ school was the Culinary Institute of the Colonies, and a disembodied voice serving as a phone-company support specialist. But the results from column A might not match up exactly as you expected with the parties in column B.

To be sure, the phone company’s automated customer handling system still out-sucked the other service providers. But that’s where you’d stop smacking your head and uttering, “Of course.”
Here’s what happened.

Last weekend I decided to try the student-staffed cafe of a new culinary school in my area, a godsend to a region that has a significant tourism industry but sorely lacks the resources to develop it more fully. It was late on a Saturday, well past the lunch peak. But the doors were open, and there were five school representatives inside, including what seemed to be two instructors. We would be the only patrons. How much better could it get?

Much, we were soon to learn. We walked in and stood there, loudly fidgeting to signal our entrance, yet completely ignored by all parties. At first I thought they were cleaning up to close down, given how intently they focused on banging pots and containers behind the hot line. But close scrutiny indicated they were very much ready for business. If only they’d take our orders, then our money.

A few throat clearings failed to get their attention, so we cleverly resorted to the old attention-getting ploy of asking for a menu. A staffer leaned over, grabbed one from the walk-up ordering station, and held it out in our direction. “We’re out of whatever’s been crossed off.”

About 40 percent of the listing, including staples like a Caesar salad, had been crossed off.

But we looked, and waited. No one said a word to us.

Finally, we bolted, the tiny café still as quiet as a church.

Across the street was a classic diner, long on ambience and big on portions, but hardly a standout in what it offered or the caliber of the food. Yet hunger trumped any reservations, and in we went.

A waitress hauling two manhole-cover-sized plates stopped mid-dash in her trip to a table to welcome us. “Try the lobster salad, it’s really great,” she said in a stage whisper. “We make it ourselves, fresh.”

In a millisecond, she was at our table, explaining that she could now give us a proper hello and answer any questions. We asked about the specials. Instead of reeling off a canned spiel about what was on the blackboard that day, she chatted with us: “Are you in the mood for a sandwich, or more of a salad? If you like salads, try the seafood salad. It comes with potato salad and coleslaw, and its all made right here. Just be sure to leave room for pie, because we’re known for that. Our puddings are great, too. But pretty much everything here is made from scratch.”

A special order didn’t phase her in the least. And our cups and glasses never went unfilled, even though we had to share her with at least six other tables.

I was tempted to implore her, “Wait right here a minute,” and then dash across the street to bring back the culinary-school students—or, to really fix the problem, their instructors. But I was afraid they’d turn up their noses and fail to view service as something other than a degree requirement. They might miss the glaring contrast between their empty café and a diner that was packed at 2:30.

Instead, I think I’ll head back to the school’s café and ask the instructors if they or their charges would be interested in a job. Then I’ll give them the number of the phone company’s service center.

The full-service barbell

From an infomercial yet to be filmed:

FRENETIC VOICE-OVER: Tired of sagging customer counts and flabby marketing efforts? Show investors who’s their daddy with this breakthrough way to keep patrons coming back. Soon your only worry will be getting all that extra money to the bank![Background image of an armored car being loaded with sacks marked “$$.” Cut to a guy who looks like Danny DeVito, tossing fistfuls of Benjamins into the air with near ecstasy.]

VOICE-OVER RESUMES, SPEEDED UP TO 78 RPM: Introducing…the Barbell Concept!! Already used by chains like McDonald’s, Taco Bell and Wendy’s, the Barbell Concept is now fully adaptable to full-service operations. Here’s how it works: Offer a menu of everyday bargains, like the section of entrees now offered for as little as $7.95 on most McCormick & Schmick menus. But there’s more! While you capture bargain hunters with those head-turning deals, boost your check averages with premium products. Enticed by wild halibut, Alaskan salmon or sea bass? McCormick & Schmick is selling it to “high end guests” for $30!!

[Cut to a picture of a buxom woman in a bikini, holding a fake old-fashioned barbell as she oohs and ahhs. The weight on one end is marked “Value,” the one other, “Premium price.”]

VOICE-OVER: Here’s what management has to say:

[Cut to a photo of Doug Schmick, the company’s chairman and CEO. He addresses the camera as “ACTUAL COMMENTS” flashes under the image.]

SCHMICK’S VOICE: With a consumer with household incomes lower than $75,000 who visit us one to two times a year, the majority of our menus have what we call a ‘value band,’ which is made up of anywhere from 10 to 14 items priced between $7.95 and $13.95. The value band accounts for only three to five percent of our menu mix, but appeals with the middle-income consumer.”

[Cut to a picture of a restaurant manager happily pushing a wheelbarrow full of greenbacks.]

VOICE-OVER RESUMES: Be part of the trend that’s remaking casual dining. Outback features a $9.99 steak and an average check in New York of $32! Texas Roadhouse has 19 entrees priced under $10, PLUS a $17.99 prime rib!!

Don’t miss out on today’s hottest full-service trend!! Get your barbell strategy today!!!

Our operators are standing by.

[Close with this disclaimer, presented in type too small for a sharp-eyed mouse to read:]

All information taken from recent conference calls.

Brutes of a different sort

A recent conversation within the NRN Online department:

Speaker #1: “Lisa is working on a news item about a plan to fight restaurant crime in Oakland. Apparently there’s been a rash of what they’re calling ‘takeover’ robberies.

Speaker #2: “What’s a takeover robbery?”

S.#1: “Guys come in with guns and take over the restaurant.”

S. #2, after a pause: “Are they sure they’re not just investors?”

Another view of restaurant closings

The top story of this week’s Nation’s Restaurant News deals with the wholesale closing of restaurants by a number of big chains. The article is a solid business article, a hardnosed look at the qualified opportunities those shutdowns are posing for growth-minded operators.

But one of The Scoop’s readers wanted us to be aware there’s another side to the situation. Here’s her communication, edited a bit for clarity. The identity of the chain involved is obscured because we’d be unfair to blast it without giving the operation a chance to respond. Normally we’d do that, but I fear the employee would somehow be implicated and might certainly lose her job. So the purported culprit is not revealed. But you get the idea.

Dear Peter,

I know that you don't know me or anything, but I have got to say this. I am an employee for [a family-oriented chain] here in [the Southeast], and I have already been through one store closing back in 2007. [My situation now] goes to show how a really big company really could care less for their employees. They don't know what we go through to make our customers happy. They told us they could make more money off the building alone than what we were bringing in on sales. Well, guess what? That building is up for sale.

The restaurant was great. Yea, some of the [other units in the chain] had their good and bad days, [but] lots of people were disappointed with the closing.

We all here are worried about losing our jobs now just because of the way the company treats us.

Thank you for listening to me. We need all the help we can get.

Keep an eye out for a story in next week’s NRN. It deals with how prospective hires are picking restaurant jobs on the basis of the employer’s reputation and perceived culture, not the wages it offers. And that’s true for management personnel as well as hourlies.

Best of breed: franchisee or franchisor?

Did chain headquarters forget to tell franchisees we’re in a downturn? Maybe franchisors are just too embarrassed to gripe about the times when so many licensees are turning conditions to their advantage. Consider what happened recently within several of the industry’s oldest chains. Franchisees proved once again that they can adapt far more readily than the home office to changes in the marketplace, no matter how trying. Their pockets may not be as deep, but their street smarts often make them better.

S&A Restaurant Corp. went bankrupt in spectacular fashion, turning away employees and patrons in preparation for a fire sale of the 200 Bennigan’s and Steak & Ales it operated. And franchisees? As the Bennigan’s on Pittsfield Road in Lenox, Mass., boasted on a banner this weekend, “Locally operated and still open.” It may not be one of the licensees that are looking to scoop up the franchisor’s shuttered stores, but it appeared to be doing just fine, capitalizing on local events like the area’s fifth annual Zucchini Festival and Sunday morning’s crafts fair/pancake breakfast fundraiser in a local park. All told, Bennigan’s franchisees hope to turn S&A’s inability to stay solvent into a chance to swell their ranks by 40 to 60 properties, presumably at prices that would make Wal-Mart wince.

S&A’s franchisees weren’t the only ones to spot an opportunity amid what many brand parents portray as the third circle of hell. Pizza Hut, another greybeard of the business, saw franchisee NPC Corp. ink a deal to buy 99 of the chain’s units from a fellow licensee for $35 million—or roughly $354,000 per store. Pizza Hut seems to be gaining sales traction after some difficult years, thanks to a new pasta takeout line and the addition of a bolt-on chicken wing concept called Wing Street. But while the home office is getting on its feet, NPC is galloping.

To be sure, not all franchisees are finding the current market to be a time of opportunity. Papa John’s recently acknowledged to investors that it’s “subsidizing” franchisees by eating some of increased costs of items it distributes from its commissaries to the field, instead of directly passing along the heightened expenses. It also noted that it sometimes exercises patience with franchisees whose situations make royalties a tough nut to cover.

But, as executives stressed during a conference call with analysts, nothing keeps a system healthier than able franchisees. “We are very focused on keeping good franchisees healthy during these tough times,” said CEO Nigel Travis.

There are probably a lot of franchisees saying the same thing these days about their franchisor.

Your eyes don't deceive you

Rumors have been popping up this week like a Whac-a-Mole game stuck on Espresso Drinkers mode. The Scoop feels compelled to set the record straight by smashing the restaurant-related falsehoods among them. Consider, for instance, these double whoppers making the rounds.

Planet Hollywood DID NOT buy Buca di Beppo at a yard sale. A price of $9.7 million for an 88-unit chain is completely major-market, though the deal includes a barely used bowling ball and a crock pot still in its original box. Nor is it true that Bruce Willis’ colander will become a standard part of Buca’s wall décor.

Similarly, Brinker IS NOT trying to sell Romano’s Macaroni Grill on CraigsList.

The Food and Drug Administration DID NOT use a dartboard to pick a suspect for the salmonella outbreak. The agency wielded cutting-edge epidemiology to determine that the culprit was not a tomato, as it maintained for several weeks, even when another agency was citing peppers as a possibility. That same caliber of detective work later pinpointed a pepper as the likely perp. Oops—make that two types of peppers. And maybe throw in a tomato, too. In an unrelated development, the FDA announced that its dart team beat the CDC’s squad by hitting two bull’s eyes, a jalapeno and a Scotch bonnet.

Hardee’s newest menu item IS NOT the Whole Steer on a Bun. It’s actually called the Half-Slab Slider.

Ben Bernanke HAS NOT turned to Ronald McDonald for advice on jump-starting American business. It was apparently an instance of wishful thinking.

Emeril Lagasse’s head IS NOT being added to Mount Rushmore. Authorities have yet to choose between the visages of Simon Cowell and Gordon Ramsay.

Nelson Peltz HAS NOT been cast for Hellboy III.

And we walked five miles uphill to school--both ways

From a colleague at Nation's Restaurant News who, like me, was of course far too young to remember prices like these. This looks to be from the time when Woolworth's reigned as one of the industry's largest foodservice operators as well as a category-killing retailer.