Monday, November 17, 2008

Googling food safety

Plug “E. coli” into Google’s news search feature and you’ll pull up the latest on an outbreak in Canada, where officials are trying to verify that contaminated lettuce is what sickened more than 50 people. You’ll also be getting a test drive of what could become a powerful but controversial new tool in promoting food safety: The Google search itself.

The New York Times reported last week that a philanthropic arm of the internet powerhouse is experimenting with a new service designed to help U.S. health officials detect a flu outbreak at least a week before the Centers for Disease Control and Prevention typically spots a cluster. The premise of the program is that sufferers or their families will search for symptoms of the illness via Google in hopes of determining what ails them. The search engine notes the spike in queries and pinpoints where they’re arising, thereby flagging an outbreak. See it for yourself at

Right now, the only incarnation of the service is Google Flu Trends. But the same concept would presumably work with such food-related illnesses as norovirus or E. coli. “From a technological perspective, it is the beginning,” Google CEO Eric E. Schmidt told the Times.

The capability would seem like a no-brainer of a breakthrough. But it’s already stirred up controversy as well as hopes. The Times’ popular technology blog Bits has aired the fears of some groups that the detection function could lead to breaches of privacy. Google has issued assurances that disease-related search results would be aggregated rather than recorded by searcher, but public advocates are worried the capability could be misused to identity persons coming down with a particular ailment.

Potential risks aside, what’s the pay-off for such a system? In tests, Google Flu Trends spotted an East Coast flu outbreak a full 14 days before the incidences were collated by the CDC. That news came to light as health authorities in Canada were looking at reports of diarrhea and other potential signs of E. coli poisoning from a school in North Bay, the town where a Harvey’s family restaurant was implicated as the source of the lettuce-related outbreak.

Fortunately, it looks as if the school children were afflicted with the flu, not ailments caused by the potentially deadly bacteria. But if the Google system had been in place there (right now it’s only used domestically), and the agent was indeed E. coli 0157:H7, health officials might’ve gotten a jump that could’ve saved lives.

With a benefit that important, it seems like a service worth adopting, especially if reasonable privacy safeguards are put in place.

Thursday, November 13, 2008

Set phasers on stun

Depending on which side you believe, a Starbucks in Minneapolis either was or wasn’t unionized this week. Either way, it may be a preview of a disconcerting future for chain restaurants nationwide.

First, the dueling realities: According to the Industrial Workers of the World, better known to our grandparents as the Wobblies, employees of the downtown coffeehouse voted yesterday to be represented by an affiliate called the Starbucks Workers Union. A statement on the Wobblies’ website said management of the store had been presented with a 500-signature petition demanding that a security guard be hired. The posting also asserted the unit’s baristas walked off the job and declared an affiliation with the SWU, though the connections between those developments was not explained.

The statement convinced the Minneapolis St. Paul Business Journal and other media to report that the store had unionized and thereby become the second Starbucks in the state to organize. But as that coverage noted, Starbucks' corporate office experienced a much different reality. No baristas walked off the job, no other Starbucks in Minnesota has been unionized, no employees had so much as asked for a union vote, and the Starbucks Workers Union isn’t even really a union.

Apparently the company’s spokeswoman had a point. The paper posted a correction under the story to acknowledge that no unionization vote had actually taken place at the store.

This is hardly a “Roshamon” kind of thing, where an event witnessed by several advisers is perceived and recounted as totally unique experiences. It sounds more like one of those “Star Trek” episodes where a character is stretched between separate and conflicting universes and facing certain oblivion unless a brilliant solution is hatched.

And guess who's playing that character in this potential pilot for the seasons ahead? That'd be you, bunkie.

Even before Barack Obama was elected last week, business groups were bracing for doom because the Illinois senator was sympathetic to unions—and, by extension, presumably their new organization tactics. Much has been written in Nation’s Restaurant News and elsewhere about card check legislation, a measure that could force employees to vote publicly on proposals by their peers to unionize. It’s hard to cast a ‘nay’ when everyone, including the zealots, can see how you balloted.

But that’s just one of the tactics that unions might use to foster the organization of restaurants, the new frontier for the labor movement. Presenting alternative realities may be another. The situation in Minneapolis underscores just how far organizers will go to push their cause. Clearly it may be a matter of going where no man has gone before.

Wednesday, November 12, 2008

Gift cards get a loud, 'Bah, humbug'

Gift cards have consistently been a holiday blockbuster for the restaurant industry. But that streak’ll end if several public watchdogs have their way. They’re warning shoppers to forego the no-brainer gifts because the chain or restaurant accepting the card could go bankrupt after the holly wreaths and mistletoe come down.

Those Scrooges include Richard Blumenthal, the attorney general of Connecticut. He’s cited in a Hartford Courant column by George Gombossy as flatly advising consumers to bypass the cards because “many more restaurants” will throw in the napkin. Indeed, Blumenthal said he’s speaking with the Connecticut Restaurant Association about forming what amounts to an insurance pool. Restaurants offering gift cards would all contribute small amounts to the fund, which would be used to make good on gift cards issued by operations that go under. Consumers could tap the kitty for a refund, then use the cash on places still in business.

Blumenthal is clearly using some broad strokes to tar the industry. Is a well-capitalized chain steakhouse really as likely to go under as Salty Ed’s Fry House and Bait Emporium? Yet he’s reportedly saying gift cards from all restaurants should be shunned like an I.O.U. from Michael Jackson. No wonder Gombossy titled his column, “Use Gift Certificates Now, And Don't Give Any.”

But Gombossy and Blumenthal are hardly alone in suggesting Aunt Lil give you an argyle sweater instead of that $100 piece of plastic for Ruby Tuesday. An article in yesterday’s Los Angeles Times was headlined, “Consumer Alert: Are your gift cards safe?” It cited a warning from the Tower Group consulting firm that shoppers could lose $75 million charged on gift cards because the issuing store or restaurant goes bankrupt.

The story doesn’t point out that $75 million is a tiny, tiny portion of what will be charged just on restaurant chains’ gift cards. The figure for all restaurants, never mind retailers, runs into the billions. The National Retail Federation has pegged the total for both channels at more than $26 billion. Such a small potential loss means only a tiny percentage of card-issuing restaurants are believed to be at risk. Yet the article—and possible the Tower research—fail to provide that context.

Instead, the story notes that consumers reportedly held $20 million in gift cards when Sharper Image went bankrupt. It also reports that Bombay Co. paid cardholders 25 cents for every dollar that was left on their cards when the retailer soaped over the plate glass windows of 388 stores in August.

Both that article and the Courant column appeared before “Taps” was sounded for Circuit City, the big-box electronic retailer that presumably sold a lot of gift cards.

Yeah, there’s a danger to buying cards. But the industry needs to remind consumers that it’s routine for one restaurant chain to honor the coupons of another, even when both are still in business. It may become even more of a convention if additional concepts flat-line. When Bennigan’s company-run restaurants went bust, Texas Roadhouse offered to provide a free entrée to consumers who had gift cards from the chain. The patrons presumably could’ve also used the cards at franchise establishments, which stayed open.

For six or seven years running, gift cards have been the restaurant-industry equivalent of finding a new sports car parked in the driveway on Christmas morning. It would be a shame to see that Maserati repo’d because consumers were frightened away from a holiday staple that giver, getter and seller all appreciate and value.

Tuesday, November 11, 2008

This just in!

The American Medical Association declared its unflinching support yesterday for bans on trans fat use by restaurants and bakeries. Equally progressive stances were no doubt taken on dinosaur bites and something called fire.

Sure, it must take time to fill out all those insurance forms. But where has the group been for the last two years? At this stage, trans-fat bans are about as controversial—and necessary—as bar signs warning pregnant women not to knock back drinks.

If this group is the voice of the medical community, you can only hope it gets up to speed before the dialogue starts on universal health care.

Well, I better get back on AMA watch. It could issue its revised policy on battery licking at any second.

Friday, November 07, 2008

No Happy Meal toy, though

Discounting, it seems, is highly relative. Knocking $2 off the price of a pie may work in the pizza business, but the high-ticket Ruth’s Chris chain has to operate on a different scale. So, after posting a 15-percent drop in comp sales for its non-franchised steakhouses, the wheezing brand is planning a mail drop of $25-off coupons. It's also experimenting with the fine-dining equivalent of value meals.

Upper-bracket bargain hunters will already find a new steal at the (steak)house that Ruth built: A five-ounce lobster tail stuffed with crab meat and coupled with a six-ounce beef filet for $39.95. Not exactly a Chicken Snack Wrap, but clearly a deep discount by the standards of the chain's market.

Three other Cadillac-echelon combos are in test. The Ruth’s Classic comes in two versions. For $39.95, patrons can pick an entrée, side and dessert. If they pop for the $49.95 version, the choices also include a full-sized rib eye, a lobster tail and lamb chops.

Simultaneously, the chain is testing a three-protein deal that would make Michael Jacobson overheat before he could condemn it as an obesity booster: A meat, a fish, and a chicken selection, accompanied by a side and a dessert, for $44.95.

“Frankly it's too much food,” Ruth’s Chris acting CEO Michael O’Donnell told shareholders.

And, perhaps, too much of an outlay. O’Donnell said the Ruth’s Trio will be recast with smaller portions and a price “in the $29.95 range.”

During a financial conference call convened by the chain’s parent, Ruth’s Hospitality Group, O'Donnell also mentioned a re-affiliation with Cameron Mitchell, the Columbus, Ohio, restaurateur who sold the company his Mitchell’s Fish Market and Mitchell’s Steakhouse chains. O’Donnell wasn’t clear on the nature of the affiliation, but indicated that the entrepreneur would be accessible if the company needed his expertise. “He has kindly agreed to be available to us on a limited basis,” O’Donnell said.

Thursday, November 06, 2008

Light bulbs above some heads

A few weeks ago, the restaurant industry was reeling from a shortage of customers, and hence sales, and therefore profits. Worst of all was an acutely low supply of something just as critical: Creative ways of contending. Now, at least, it looks as if that drought is easing.

A glimmer here and a rumbling there suggest economic conditions are separating the industry thinkers from the Dan Quayles—the folks who think brilliant leadership is picking the right idea to copy. They’re lemmings looking for the parade sign reading, “Cliff this way.” It’s the mindset that has landed much of casual dining in its current predicament.

Contrast that spud-headedness with a few initiatives that have come to light in recent days. Daily Grill’s parent company is cutting its cash outlays by paying executives 10 percent of their compensation in stock instead of dollars. It gives new meaning to the cliché, “win-win.” The company saves on salaries, the executives get paper that could be worth far more if they can drive up the stock price, and other shareholders get a management team that’s highly motivated to work for their benefit. Raise the value of the stock and everyone gains.

There’s also the public relations value of letting the world think the home office has cut its top-paid execs’ take-home, when in fact it’s given them something with the same face value and the potential of being far more precious. Indeed, from the recipients’ standpoint, it’s better than getting stock options—provided they don’t let the stock price decline any further (see earlier reference to management’s and shareholders’ perspectives being aligned.)

But that’s not the only ah-ha notion that’s been aired recently. Consider Sonic’s plan to lower its labor expenses while boosting customer service and possibly increasing the take-home pay of carhops. The drive-in chain is in effect reclassifying the runners who bring orders to patrons’ cars as tipped servers. It hasn’t said how it’ll trumpet that recasting to customers, but executives said in disclosing the plan that most guests already leave a gratuity. By formalizing the tendency and encouraging carhops to strive for tips, the chain can claim a tip credit, thereby cutting what it’s required to pay the staffers as a minimum wage. Yet the carhops are likely to end up with more money than they did when they were collecting the full wage.

What’s more, with an hourly-staff turnover of about 100 percent, the chain can phase in the program by merely extending it to new hires. The transition would only take a year, presumably with no shock to carhops who are accustomed to getting the full minimum wage.

Not all of the innovations are far afield. The Pollo Tropical fast-food chain, for instance, merely replaced its sandwiches with wraps. It correctly anticipated that wraps would be easier to eat on the go, and presumed that benefit would appeal to the chain’s mobile clientele. Units are selling 50 to 60 wraps a day, compared with the 15 to 20 sandwiches they formerly peddled, executives told investors Wednesday.

In still other instances, the course was apparent. It just took leadership and courage to pursue it. Every franchisor would readily attest that its success rests on the financial wellbeing of franchisees. Yet few have backed up that assertion with the sort of action that Papa John’s and Domino’s have recently taken.

The former made news Tuesday when executives revealed that the franchisor’s commissary operation would roll back the prices of the cheese it sells to franchisees. The wholesale cost paid by corporate likely hasn’t receded; Papa John’s must be absorbing the cut in its margins. It’s taking the hit to enhance the profitability of franchisees, even though royalties are based on sales, not the bottom line. But by keeping licensees healthy and thriving, the home office is betting it will benefit in the end.

To keep franchisees growing, Papa John’s is also looking at ways of becoming their bank. Because they’re struggling to find the capital needed for expansion, the franchisor is willing to serve as their pipeline until the tap is reopened by more traditional sources. One of the core rationales for franchising is the use of licensees’ capital to build a chain. Papa John’s, much to its credit, is rethinking that tenet of the situation.

It may be inspired in part by arch-rival Domino’s, which disclosed last month that it was providing franchisees with financing. “It will never be my preference to provide financing to our franchisees,” CEO David Brandon commented to investors. “We would rather keep our relationship with them focused on being the franchisor rather than their bank. However, we are wading through uncharted waters.”

Better to be slogging through them than being carried along by the current, hoping you’ll eventually land upright.

Tuesday, November 04, 2008

Live election coverage

I'm sitting in my kitchen, watching CNN and eagerly waiting for the election results to trickle in, probably like every other American on this historic night. My objective here is to provide live updates of the races involving restaurateurs or known supporters of the industry, such as former National Restaurant Association executive Jo Ann Emerson (now running for re-election on the Republican ticket as the congresswoman from the eighth district of Missouri). The thread is probably best read from the bottom up. All times are EST.

According to our count, there are eight current restaurateurs running for office. You can find out who they are, and learn about the other "friends of foodservice," by checking out the story on our website,

Here's how some of those races stand as of the time posted.

12:07 a.m. New Mexico, Alabama
The networks have just projected that the industry's victory streak has come to an end. Ed Tinsley, a co-owner of the K-Bob's Steakhouse chain and a longtime director of the National Restaurant Association, has apparently been defeated in his effort to win the congressional seat for the second district of New Mexico. Tinsley, a Republican, lost by six points to oil-industry veteran Harry Teague. At MUFSO, Tinsley commented that unions had poured money into the election in hopes of pushing Teague into office.

Things aren't looking too good for Subway area developer Jay Love, either. Love, the Republican looking to win Alabama's second district, is running about two percentage points behind his Democratic opponent, with 97 percent of the ballots counted.

11:15 United States of America
The hooting and hollering outside were a tip-off to the news flash that came seconds later from The New York Times, CNN, The Miami Herald and Crain's New York: Barack Obama will be our next president.

I can't say I'm surprised. The poll I've been conducting on this page put him 10 points ahead of John McCain. And that's with a sampling size of 22 people. Julia Stewart landed two votes, by the way.

10:12 Oklahoma, Florida
CNN has just projected that Dan Boren, a co-owner of two Roly Poly quick-service outlets, has kept his House seat for the second district. A Democrat, Boren won almost three out of every four votes cast (71 percent).

The vote was closer in Florida, but racetrack concessionaire Tom Rooney still won the House seat for the 16th district by considerably more than a nose. The Republican challenger is projected to win with 60 percent of the vote. He beat Democrat Tim Mahoney, who had been funded by the National Restaurant Association's Political Action Committee.

8:54 General observations
I didn't vote tonight until about 7 p.m. The volunteer who checked me in at the neighborhood firehouse said the traffic was about triple the norm.

It's kind of a surprise that so many people were still sober by that time. I was one of the few NRN staffers who was not going to watch the returns on a barstool. It's the sort of thing my co-workers normally do during March Madness, the World Series or the Olympics. Then again, Tuesday is sometimes enough of an excuse for some pub time. It must be that whole "third place" social phenomenon.

8:30 Florida, Oklahoma
The industry's candidate in Oklahoma, Democrat Dan Boren, is looking like a shoo-in. Only 2 percent of votes have been counted, but Boren, an investor in Roly Poly wrap shops, is leading Republican Raymond Wickson by a 69 percent to 31 percent margin.

Things are much tighter in Florida, however. With slightly more than a fifth of the votes counted, dog-track concessionaire Tom Rooney (of the Pittsburgh Steelers Rooney's) has 54 percent of the ballots, compared with incumbent Timothy Mahoney's 46 percent.

Results thus far suggest Rooney could be an exception to a Republican backlash. As of this moment, two Democratic restaurateurs have been projected as the winners of their respective races, and Boren would make it three. Might the tide be hurting Rooney?

At Nation's Restaurant News' MUFSO conference in Washington, D.C., industry lobbyists speculated that the Democrats could pick up 10 Senate seats and 20 slots in the House. The early counts haven't disproved those forecasts.

8:00 Kentucky
CNN has projected Yarmuth as the winner in Kentucky.

7:36 Virginia
Mark Warner, a co-owner of Majestic Cafe in Alexandria and the former governor, has been declared the winner in the race for the Senate seat that had been vacated by the retirement of the legendary John Warner (no relation). Mark Warner is projected to have beaten Republican contender James Gilmore III with 57 percent of votes.

7:26 Kentucky
John Yarmuth, the Republican incumbent from the third district, is creaming challenger Anne Northup, 57 percent to 43 percent, with 42 percent of precincts reporting. Yarmuth is a part owner of the Sonny's BBQ chain, which his brother serves as chief executive.

Follow the election from a restaurant perspective

I'll be blogging live tonight to cover the races where restaurateurs will be vying for a ticket to Capitol Hill. Check back as soon as the results start rolling in.