This is a good time to be in the sign business. First KFC reveals that it might replace its familiar exterior logos with ones reading, “Kentucky Fried & Grilled Chicken,” a dramatic act of support for the chain’s new roasted chicken (it’s roasted on a plate that leaves grill marks; hence the name. Apparently “Kentucky Fried & Roasted/Grilled Chicken” was adjudged to be a bit much.)
Then sister chain Pizza Hut disclosed that the home office in Dallas will replace its exterior nameplate with one reading, “Pasta Hut,” a not-so-subtle shill for the $11.95 trays of pasta that will be added to stores’ delivery menu on April 6. The rechristening is supposed to happen next Tuesday, otherwise known as April Fool’s Day, and last for a month. But, remember, Pizza Hut is run by the same company that announced on a past April 1 that it had purchased the Liberty Bell for promotional use by its Taco Bell chain.
You have to wonder what Taco Bell’s parent has in store for the exterior signs of that chain. If it follows the patterns set with its other holdings, Yum! Brands will be swapping out the current trade dress for logos reading, “Taco Platters,” or “Taco Smoothies.” Platters were introduced a short ways back, and smoothies are on the rollout schedule for this summer.
But in the meanwhile, the signage business can pick up a little more coin from Ruth’s Chris Steak House Inc. The high-end operation doesn’t feel that its corporate identity should be based on only one restaurant brand when the fold was enlarged through a recent acquisition to include the Mitchell’s Fish Market, Mitchell’s Steakhouse and Cameron’s Steakhouse concepts. It reportedly plans to ask shareholders at their annual meeting on May 22 to approve a switch to the more inclusive handle, “Ruth’s Hospitality Group Inc.”
Thursday, March 27, 2008
Signs of the (new) times
Tuesday, March 25, 2008
Chicken fight
Truth be told, Goliath usually squashes David. So when KFC lunged for the public’s attention with a carefully choreographed announcement of its new non-fried, non-grilled yet still sear-marked roasted chicken, El Pollo Campero must’ve realized the heat would be on. Yet the plucky Guatemalan chain countered with some marketing ju-jitsu. A day after KFC drew headlines in everything from USA Today to The Podunk Press with its plan to introduce Kentucky Grilled Chicken by next year, Campero, a chain with 38 restaurants in the United States, announced that its new grilled chicken would be offered as of today. “Pollo Campero beats competition to market with choice of grilled and fried bone-in chicken,” the much-smaller chain crowed in a press release. And presumably it’s a true grilled chicken at that.
Campero president Roberto Denegri acknowledged that the chain was bringing its non-fried option to the U.S. “a little early,” but attributed the timing to America’s love of grilling during the spring. He failed to explain why that should be a factor, given that the restaurants would be grilling the chicken, not their patrons.
But back to KFC. We at NRN were astonished other media failed to note a monumental point that didn’t slip by executive editor Richard Martin. To call attention to the rollout, Col. Sanders’ brainchild is allowing franchisees to rename their stores, “Kentucky Fried & Grilled Chicken.” In the world of restaurant reportage, this is a big move. Huge, in fact. Though it remains to see if it will be adjudged a smart one.
We were also surprised by the chain’s efforts to prolong the announcement, asserting at one point that the news was “embargoed” until March 24, or provided only on the understanding that it not be disclosed until that date. Yet it allowed selected media to go ahead and publicize the year-away rollout (the product is currently only in test, albeit it on a large scale) as soon as they heard about it, rendering an embargo void by the rules of publicist-journalist engagement. Nor did we make any pact prior to being fed the info on the product last week. So we went ahead and reported it.
Maybe the chain is preoccupied with its ambitious goal of convincing the public that KGC is truly grilled, when in fact KFC acknowledged to journalists that it’s cooked in a high-tech oven, up to 80 pieces at a time. The claim to being grilled comes from the use of a special plate in the roaster that sears grill marks onto the meat. That’s like putting “singer” on your resume because you sometimes belt out a tune while soaping up in the shower.
Thursday, March 20, 2008
A grande serving of what?
There had to be a secret message encoded in Howard Schultz’s presentation yesterday, because even Mike Tyson would know better than to pin Starbucks’ turnaround to rickety measures like adding a new coffee roast or installing a newfangled coffee maker. And let’s not forget the pledge to do more for the environment and the startup of a social-networking site. But maybe the real message of his address to shareholders was blurred by all the specifics. If you step back and view the elements as a package, it’s clear Schultz is taking a bold gamble. The one-time coffee-carafe salesman is trying to infuse the brand with more showbiz than the industry has seen since the heyday of eater-tainment.
Schultz described Starbucks’ purchase of a company that makes a new type of coffee brewer, a device called the Clover, as the most dramatic of the steps he and other execs detailed for investors. The machine supposedly makes a cup of coffee superior enough to justify a price of more than $2.50. Schultz said he saw it being used by a place in New York that charged $7 a cup. But how it generates the nectar of the bean may be as important as the quality of finished brew. Starbucks described the machine as a cross between a French press pot and a vacuum-style coffee maker, which provides a bit of a show with every cupful that’s produced.
Similarly, Starbucks disclosed that it’s rolling out a new espresso maker that gives the baristas more control over the coarseness of the coffee grind and the way the milk is steamed. Not coincidentally, the devices are not as high as the machines currently being used, which will allow patrons to see their drinks being made, and possibly even interact with the coffee maker.
Even the new frequent-guest program has some dazzle to it. Guests present their cards to be wowed a little by the service they’re then given. The benefits rendered don’t sound that amazing. Free half-and-half or soy milk? Whoa. But the give-and-take about the freebies does give the counter servers and baristas a chance to strut their stuff a little.
The bland-sounding moves that Schultz disclosed yesterday may prove anything but. It’s a bit of razzle-dazzle from someone who could prove to be a very adept ringmaster.
Sunday, March 16, 2008
Don't picture this
Trend worshippers are hailing a new restaurant feature as the mark that differentiates a merely haute place from one that might actually be a haunt of Mary-Kate Olsen, Lindsay Lohan or other bold-faced tastemakers. To make fashionistas’ must-try list, say the sort who care about such matters, a newcomer has to set a policy—ideally through an exterior sign—that photography is prohibited on the premises. How else can Brittney Spears cross her legs without worry?
Yet some of the places using that sign of distinction don’t seem like worthy shooting ranges for the paparazzi. Take the newest Pinkberry frozen yogurt outlet in New York. Grub Street, New York magazine’s excellent blog site, revealed last week that the store is banning picture-taking. As it pointed out, the treat shop is located in the heart of the East Village, a haven for the ridiculously body-pierced and absurdly tattooed. Are Brad and Angelina really going to stop by for a yogurt with mixed-in Captain Crunch?
Other Pinkberry outlets feature a similar warning, suggesting it’s a corporate policy. You can see for yourself by checking out any number of blog postings—many of which document the feature with photos of the signs.
The trend seems to be more prevalent in Europe and Asia. But the smattering of examples suggests it’s catching hold here in the States as well—on the coasts first, as per the usual process for a trend.
But fashion zealots may be surprised to learn the policy was first adopted more than a decade ago, and not just by private clubs or other hangouts for persons who stood a chance of seeing their names in a gossip column. The most-noted proponent was not some velvet-roped club, but Eatzi’s, the prepared-food cathedral of Chili’s parent Brinker International. So many people from the industry came in with their Nikons snapping during competitive reconnaissance missions that management had to curb the spying with a no-shooting rule. It certainly wasn’t to protect Miley Cyrus or Paris Hilton from appearing in the supermarket tabs. I’m not sure either gal was even walking yet.
Monday, March 10, 2008
'President Skinner here'
It’s 3 a.m. and American families are safe and asleep. But there’s a phone ringing in the White House. Who do you want to answer it? If it’s a financial crisis, I’d vote for Jim Skinner, CEO of McDonald’s. With the chain posting an 8.3 percent leap in domestic same-store sales for February, after a nearly unbroken stream of bad news from other restaurant chains, he and his team have shown they know how to pull prosperity out of a trying situation. Indeed, we might want to consider steroid testing.
Okay, okay—Leap Year helped a lot, with Feb. 29 getting credit for four percentage points. But we’re still talking about a pretty heady jump in comps. And from what? The chain says the pole vault over last year’s tally is due to the push behind breakfast, coffee and everyday bargains. With the exception of Yum’s and CKE Restaurants’ brands, what quick-service chains aren’t doing that right now? How many have succeeded the way McDonald’s has?
Of course, it helps to have the chain’s marketing kitty, which is roughly equivalent to NASA’s budget for the Saturn project. But even competitors will have to acknowledge that they must be doing something right up at Oak Brook. Barack and Hillary should stop by for a quick tutorial on turning a wheeze into a “Whoa!”
Divide and conquer?
I hope you can hear me over all that fiddling. It’s that damned pack of economists, wailing away as they watch the business climate soften like an overripe peach. They’re more concerned about declaring a recession at precisely the warranted moment than they are about the meltdown already evident in industries like the restaurant business. It’s a good thing the trade is taking matters into its own hands. While the Brooks Brothers set jams away, restaurateurs are trying R-word remedies like this recent phenomenon of adding more pricing tiers.
If you stop by an Au Bon Pain bakery-café right now, you can forego the usual salad or sandwich and economize a bit with one of the regional chain’s new small plates. But your options don’t end there, or even with picking which of the 14 new Portions you’d like. Go for the hummus and cucumbers, and you pay $2.99. Trade up to one that includes meat, like the Thai peanut chicken, and you’ll have to pop for $3.49.
In another economic climate, might the fast-casual chain not have bothered to create two pricing groups a mere 50 cents apart?
Similarly, if you wanted to trade up from fast food to a full-service breakfast, Denny’s has just the option for you. Or options, really. Try one of its three new “real” breakfasts (as opposed to the “fake” ones purportedly offered by quick-service restaurants), and you’ll pay $5.99. But each has a trade-up option: Pay a buck more, and get a few add-ons—another bacon strip, sausage link and hash browns, maybe.
The notion is certainly not new. It’s a staple of the industry to offer a soup or salad add-on for a slight bump in the price of an entrée.
But the tactic seems to be gaining momentum, and sometimes with a twist. In the standard version, you offer a lower priced option, like Quiznos’ $2 Sammies sandwiches. In some instances, even that price is segmented, into Bargain and Bargain Plus.
Perhaps the poster concept is Starbucks. Once upon a time, the coffee king offered its drinks in three sizes, in prices ranging from high to stratospheric. Now the chain is testing a $1 “short” option that comes with free refills. Some stores are also experimenting with coffee made in a press pot, priced at more than $2. That price falls between the charge for a standard cup of Coffee of the Day and the usual hit for premium espresso-based drinks.
Friday, March 07, 2008
Ming sings about his blings
Having a famous chef join your table for a preview of his next restaurant project is just another can of Schlitz for my blogging colleague Bret Thorn. But it’s a heady treat for a non-food-writing, chain-focused schlub like me. So when Ming Tsai pulls up a chair at his Blue Ginger restaurant in the Boston suburb of Wellesley, you tend to listen raptly as he details the venture he’s undertaking with rock-star designer David Rockwell. Not that the endeavor needs any underscoring by a celeb. A 50-seat lounge with a menu limited to “bings,” a lstyle of Asian dumpling, isn’t exactly another burger place.
Yet Tsai invoked White Castle in explaining the rationale for Ming’s Bings, which will be the only items offered at the 50-seat lounge he's adding in the space adjacent to Blue Ginger. With young kids at home, Tsai has not gone for a namesake Vegas restaurant or the other bling of celebrity chef-dom. The add-on lounge and accompanying private dining rooms will be the first extension of his single-restaurant empire, despite the offers he’s fielded continuously in the 10 years since Blue Ginger opened. But Tsai slyly suggested that Ming’s Bings might not be his last undertaking. He explained that the bings he’ll serve are light, healthful riffs on the simple Asian street foodknown as xian bing. Usually the potstickers are made with gingered pork. Tsai indicated that his array might include a burger that’s encased in a dumpling-style wrap and served in a box—“like White Castle,” but “with a thinner layer of carbohydrate around the protein.”
So, asked NRN executive editor Richard Martin, are you going to see Ming’s Blings pop up in airports and other the other usual sites for chef-created finger fare?
“It all depends on what kind of a write-up I get in a leading industry publication,” he joked with our party, which also included NRN editor-in-chief Ellen Koteff, executive editor Robin Allen, regional business development manager Chris McCoy, and his wife, Martha.
Tsai graciously fielded our questions about high and low points in his career, including the moment he knew a career in engineering wasn’t for him. During a test in college, he was supposed to compute the speed of a dot traveling atop a tube that was riding on on a 33 1/3-rpm record. Instead of computing the answer, Tsai scrawled in his test booklet, “I don’t care,” and stormed out with the conviction he was destined to be a chef, not a bridge or skyscraper builder.
He also shared his secret for cooking calamari, which is served at Blue Ginger with what he described as a sweet potato coating. His chefs learn to cook it to the restaurant’s standards by closing their eyes and listening to the sound. The loud SHHHH of the calamari hitting the oil, or what Tsai calls the “crescendo,” quickly tails off to a near hush. The calamari has to come out of the oil at precisely that point because Tsai estimates the window for “perfect” calamari extends only for 40 seconds. The expeditor ensures the chef’s ear was acute by tasting a piece from each plate; Tsai noted that the expeditor might sample 60 pieces in a night.
In keeping with the blogging style set by the esteemed Thorn, it’s only right that I end this installment with a list of what I ate: Hawaiian Bigeye Tuna Poke served on a crispy cake of sushi-style rice, followed by Mom’s Famous Three Vinegar Sauteed Organic Shrimp, and completed by a shared platter of hush-puppie-like delectables that were sold as donuts. Bret could tell that this dish was perfected with a kiss of tamarind, or that one featured an ingredient you could only get in one section of China on a spring Tuesday, but I’d be out of my league. But if you’re ever looking for the lowdown on a Bloomin’ Onion, I’m your man.
Thursday, March 06, 2008
No longer coverage-worthy
Two days ago, a 60-year-old in a suit and tie walked into a Wendy’s in West Palm Beach, Fla., and pulled a pistol. First he fired at the lunchtime crowd clustered near the counter, killing an off-duty EMT who’d already eaten but had come back into the restaurant to exchange the toy his child had gotten in a kid’s meal.
The shooter then turned toward the dining room and blasted away at random, hitting four people. Without having uttered a word, Alburn Edward Blake then shot himself in the head and died. The police say any explanation went with him.
Google any of the details and you’ll snag dozens of stories about the incident in local and even some national media. But you won’t see a word about it (other than these) on the pages or website of Nation’s Restaurant News. Because we’re a national news outlet focused narrowly on the business of restaurants, a multiple shooting in a lone fast-food place just isn’t coverage-worthy. The situation per se offers no business insight, and the incident is no longer sufficiently extraordinary, like the shootings some 15 years ago at a Luby’s in Killeen, Texas, or the rampage a few years earlier at a West Coast McDonald’s. It’s a heartless call, but a sound one news-wise.
But it’s unnerving to think we’ve reached a point where a random multiple shooting is no longer enough of an unusual occurrence to merit a spotlight.
Tuesday, March 04, 2008
Off your chest
I was polishing my Olympics medals when the President called to let me know that two more best-selling authors had just admitted they'd bent the facts of their blockbuster non-fiction works. If I hadn’t been for my C.I.A. training to withstand shock, I would’ve toppled for sure into the Pope, who had popped over for lunch with Angelina Jolie and me (he loves those pizzas I developed for Wolfgang Puck). But it only got worse: The New York Times reported this morning that restaurateur Robert Irvine was replaced as host of a Food Network show because of acknowledged exaggerations on his resume, like claims he’d been knighted and counted Prince Charles among his buds.
At least all three of the truth stretchers admitted their fudging, obviously hoping that confession truly is good for the soul. It would only be appropriate that we keep the good karma building by making a few candid admissions here on the part of the industry:
• Twelve or 14 dollars for a glass of wine should only be collected by servers wearing bandanas over their faces, a la Butch Cassidy. Unless the bottle wholesales for a few hundred dollars, there’s no way a wine should be priced that high, especially in a casual place.
• Restaurant groups named after a famous chef often only see their namesake at the Christmas party.
• Part of casual dining’s current woes is the lousy food that’s offered by even some of the most respected players. The sector seems to be suffering the same inertia in that regard that tripped up the big quick-service chains before they realized a frozen hockey puck of ground beef might not be that appealing to a public that spends its leisure time watching the Food Network. The segment needs to shake out of its lethargy and catch up with the higher standards of the times.
• Bio-diesel fuel, though a smart re-use of something that might otherwise end up in refuse pits, is not as green as the industry suggests. It’s not the cleanest-burning fuel available, and, thought it minutely lessens our reliance on imported oil, it’s not as much of an eco-boon as some of the publicity suggests.
Monday, March 03, 2008
Splashing into the family market
Fast food’s success with beverages clearly hasn’t gone unnoticed by family specialists one notch up the pricing spectrum. Today brought news of IHOP and Steak n Shake both giving their drink menus a tweak, possibly foreshadowing an overhaul by the whole sector. And all you can think is, What took ‘em so long?
With few exceptions—IHOP and Steak n Shake among them—the segment has been squeezed flatter than a short stack by casual chains edging down market and quick-service players, particularly fast-casual upstarts, creeping upscale. Beverages were always a part of the casual sector’s assault, since places like Friendly’s or Denny’s could hardly compete mojito a mojito. Then came the more recent onslaught of the quick-service restaurants, touting their coffees and floats the way they once hyped burgers. What’s a family restaurant chain to do?
Village Inn responded with a new format that incorporates a distinct coffee bar inside. Clearly the venerable chain is giving more than a nod to Starbucks, the concept that kicked everyone’s butt until the QSRs started kicking back.
But it’s not alone in flycasting new beverage choices into the public’s pool of options. Today IHOP opened the curtain on its new Dr. Seuss-inspired promotional items, including one that sounds like a Bill Cosby hangover remedy. The Beezlenut Splash consists of cherry and blueberry-flavored Jello cubes plopped into lemon-lime soda. It’s just the thing to sip while wolfing down the limited-time special of Green Eggs and Ham, which aren’t nearly as Cat and the Hat-appropriate as they sound. The eggs are your conventional color, though scrambled with spinach to justify the name. “Green” only modifies the eggs; the ham is roughly the hue of a Spalding Pinky.
Steak n Shake’s new drinks are far less surreal. In a breakfast marketing push aimed directly at QSRs, the always-open concept today added a line of morning smoothies. Curiously, although the equipment to whip up the smoothies is obviously always there, the drinks will only be offered at breakfast, suggesting the concept doesn’t want to undercut its lunch or dinner selections, or possibly slow service.
Those brands may actually be a little behind one of the sector’s sumos, Denny’s, which has been steadily expanding its roster of drink choices. Last April, it added a new line called Juicy Fruit Fusion Favorites—basically, blends of juices and soft drinks reminiscent of mocktails.
It remains to be seen if beverages will deliver the sort of sales boost that has helped the QSR segment during a trying time for the industry as a whole. But clearly the family sector is giving that route a try.
Thursday, February 28, 2008
Will there be another fajita?
Wendy’s touted its Frescata line as a major point of different—deli sandwiches made with bread baked in the restaurants. It was canned in December. Panera Bread said its Crispani pizza would rev up dinner sales and please patrons looking for all-natural options. The franchisor quietly yanked the item sometime after November. In 2006, Starbucks trumpeted its new premium-priced breakfast sandwiches as the long-sought way for the chain to grab more food sales. Instead, the array is on the way out. Is the blockbuster new product going the way of two-for-one happy hours and free matchbooks?
Well, there is the incredible success of sliders, the mini-sandwiches that everyone from Good Time Burgers to Cheesecake Factory is selling these days. They, in turn, are part of the miniaturization that has also led to the widespread availability of spoon-sized desserts, small plates and even small-pour glasses of wine. But, as your nearest White Castle or Krystal attests, that mini mania is nothing new.
Ditto for burgers, which are truly undergoing a second coming. Sure, they may be made now with Kobe or Angus beef, but it’s still the American classic, just gussied up with better ingredients and garnishes.
Indeed, with the exception of beverages (the mojito, cosmopolitans, Pisco sours) can you name a new chain menu addition since the middle-decade premium salad blitz that has really wowed consumers? Double points if it’s something other than McDonald’s Snack Wrap.
The dearth says something about the growing sophistication of consumers. They’re not as dazzled as they once might have been by sheer novelty. Instead, they’re looking for a true advance—better flavor, a meal more in keeping with their lifestyles or eating habits, a meaningful alternative to what they know. If that’s not in the set of options, then go with the best among the choices offered.
And, of course, now it will no longer extend to Frescattas, Crispanis or a microwaved Egg McMuffin a la Starbucks.
Wednesday, February 27, 2008
The night Starbucks went cold
At 5:31, a manager escorted two customers to the door, apparently explaining why the Starbucks would be closing. As she was saying good-bye, two more people tried to squeeze past her into the café for their after-work caffeine fix. They, too, apparently hadn’t heard that all 7,100 Starbucks in the United States would be closing yesterday evening for what the media alternated between calling a massive teach-in and a chainwide coffee break.
But before the unit on 57th St. in New York could move to a refresher on how to make a killer cup of coffee, the staff had to fend off customers first. The manager had locked the door and taped a cardboard sign to the window, explaining that the store was closed. But every time employees would open the door to lug a back of trash to the curb, a few more patrons would blithely push through the door, oblivious to the sign and the historic shutdown of the whole chain. Each time they’d be shepherded out by the manager, who seemed as cheerful as a 7-year-old at her birthday party.
Of course, those patrons could have satisfied their caffeine craving for a mere 99 cents by trekking just a few blocks. In an absolutely brilliant stroke of guerilla marketing, Dunkin’ Donuts cut the price of its espresso-based drinks for the afternoon and night to under a buck. Sure, the doughnut specialist might’ve snagged a few Starbucks aficionados who presumably could switch allegiance. But the real benefit was the publicity. Starbucks’ three-hour closure drew a ton of coverage in every sort of media imaginable. By tying into that event in a sly way, Dunkin’ made sure that its name was in the second paragraph, if not higher. Starbucks took the sales hit and snagged its share of hoopla. But Dunkin’ was right there with it.
One more accolade to bestow on the matter: The Chicagoist website, for coming up with the headline, All Starbucks Closing Tonight for 3 Hours, Apocalypse Imminent.
Monday, February 25, 2008
Crunch time?
The business week is only a few hours old, but it’s already yielded indications that restaurant chains are trying two new tacks in their product introductions: Tout texture, and crow about being better if you can’t brag about being first.
Both trends are evident in KFC’s new product, a knock-off of McDonald’s Snack Wrap called the Toasted Wrap. Like McDonald’s chicken snack, a home run by anyone’s standards, the new Toasted Wrap snack is priced at $1.29. It, too, consists of all-white chicken, lettuce and a flavored sauce, all wrapped in a flour tortilla. But the little bundle is then grilled, giving it a bit of a chewy texture. The chain is touting that difference in feel with consumer “touch” tests, presumably pitting the Toasted Wrap against the Snack Wrap in head-to-head comparisons where consumers indicate which feels preferable.
KFC makes no bones about following McD’s lead; the latter’s product is cited in the announcement of the Toasted Wrap’s introduction.
Meanwhile, Papa John’s, an arch-rival of KFC sibling Pizza Hut, is pursuing a similar strategy with its latest product promotion. The chain is touting the texture of its re-formulated pan pizza, the Papa’s Perfect Pan. “The product features a crust that’s irresistibly crunchy on the outside and soft and chewy on the inside,” explains the promotional materials. The literature also describes the pizza as tasting better than ever, without a word about the flavor.
The chain is offering a free perfect pan to anyone whose birthday falls on Feb. 29.
Interestingly, arch-rival Domino’s Pizza also launched a promo today tied to the current Leap Year, though you have to do more to cash in than merely have a Feb. 29 birthday. The delivery chain is offering to throw a pizza party for every family that has a child on Feb. 29 and names it “Brooklyn,” a tie-in with Domino’s Brooklyn-style pizza. The first to use the name gets a sweetener of $1,000. Which, no doubt, will go toward later therapy for a kid who was named after a pizza so his or her family could get a free party.
Saturday, February 23, 2008
Where have you gone, Joe Lee?
Casual dining has never needed Joe Lee as much as it has in the last few weeks.
It’s not as if the former Darden Restaurants CEO has some superhero ability to yank the sector, a market he helped to create, out of its current blues jam. But his 40 years or so in the business gave him a perspective, a wise-man-on-the-mountain sagacity, that most of today’s standout executives have yet to cultivate. They stand in front of shareholders, analysts or employees and spout assurances the company’s recovery plan will work. After all, they somberly assert, we have the best concept, the best people, the best food, the best investors, the best corporate mission statement.
Yet they seem more than a little shaken themselves. You expect some to reach inside their suit-jacket pocket, take a quick nip from a flask, and resume with the platitudes.
Joe, as proper a man as ever worked in the industry, would stand up there and draw his share of arrows from financial analysts who wanted better returns for their institutional customers. Yet even during the most blistering times, he would calmly explain that the sector was in a downturn, that it’s been in downturns before, and that it’ll be in downturns again. He’d seen it two or three times in his career, and each time casual dining snapped back to be stronger than ever.
No one in the room could doubt it because most of them hadn’t lived as long as Joe had run the New York Yankees of casual dining. This was the guy who managed the first Red Lobster, back before there was a T.G.I. Friday’s, a Chili’s, an Applebee’s, an Outback or a Ruby Tuesday. And who could challenge a man who’d left the market only once since then, to work at the top of Red Lobster’s then-parent, a little multinational called General Mills.
The footnotes to his message were clear: There’s no need to cash out to a private equity firm, jump to a new market position, clean out your “C”-level officers, fire the ad agency, or even rewrite the mission statement. Instead, execute well, seize the opportunities that may be afforded by the players who fail to executive well, and ride it out.
No doubt the current freefall in casual dining is going to eliminate some weaker brands. But the sector as a whole?
Tell ‘em, Joe.
Friday, February 22, 2008
Forget Botox. Have a brewski.
My wife is out of work, my profession is in a nosedive, and the industry I cover is limping through a financial quagmire. Yet today I’m a happy camper, albeit of the camping-on-a-barstool variety. A scientist in Japan has developed a beer that purportedly fights wrinkles. Now, through a discovery akin to inventing fire, you can catch a buzz and come away with the forehead of a 20-year-old.
Best of all, the active ingredients are fairly natural, so the beer doesn’t fall into the category of frankenfoods. It’s basically a matter of supercharging the production process with extra hops and polyphenols, the anti-oxidants that develop during fermentation.
The as-yet-unnamed beer is one of a growing number of alcoholic beverages that have been formulated to deliver health benefits along with a warm glow. VeeV, a new spirit made from the Latin fruit acai, promises a hangover-free head because of its anti-oxidant-rich core ingredient and the added minerals and vitamins of prickly pear. You can avoid colds, fend off vampires, aid your digestion and realize other purported health benefits by drinking a garlic-flavored vodka. Or slow the aging process by sipping a pomegranate liqueur, yet another quaff abounding in anti-oxidants. And if you need a pick-me-up, try a Four malt beverage energy drink.
If this continues, pretty soon you’ll be able to go on a three-day bender and come back looking as if you were munching celery sticks at Canyon Ranch.
Tuesday, February 19, 2008
Your pink slip is showing
Today brought news that Lone Star Steakhouse had laid off 1,500 full and part-time workers as a result of closing 26 restaurants. About two weeks ago, Brinker International eliminated 125 corporate jobs. CEO Wally Doolin was among the 13 percent of Buca Inc.’s employees who lost their jobs through cutbacks that took full effect Feb. 1 (though Wally continues to serve as board chairman of the Buca di Beppo parent). In early December, Rock Bottom Breweries cut its support staff by 19 percent. Clearly manufacturing, media and financial services aren’t the only sectors of the economy to hack their payrolls in recent days. Their axes just whistled louder because of the scale.
The few foodservice economizers to snag headlines were the ones that made a public confession. No doubt plenty of other restaurant home-office staffers were quietly put out of work after their companies were acquired in the ongoing swap-a-rama. The euphemism for that scenario is “rationalization,” were the buyer eliminates redundancies in finance, marketing, administration, HR, even payroll management itself. Why bother to buy a company if you can’t wring some economies and redundancies out of the combined operations?
Others were likely let go with a dash of stealth because of the general economic malaise that’s hanging on like a mooching relative.
I wish I were starting a restaurant company, because the pool of available talent is richer than a Britney Spears blooper tape. It’ll almost certainly deepen as more deals are done, more expansion plans are scrapped, and tougher times keep bean counters scrambling to find new ways of making their numbers.
It’s a shame to see such brainpower squandered. It’s especially galling when you consider that the industry will likely whine about the dearth of middle and senior-level executive candidates when the trade pulls out of its malaise in a year or two. Instead of fire-hardening their skills and judgement, the would-be leaders will lose precious time—if the industry doesn’t lose them altogether.
Monday, February 18, 2008
Do have a cow, man
Coincidence or calculation? On Sunday, the U.S. Department of Agriculture announces the biggest beef recall in the nation’s history, citing the failure of a southern California slaughterhouse to heed a particular protection against mad cow disease. Earlier, employees at the plant had been videotaped using prods to force “downer” cows—animals unable to stand, a possible symptom of mad cow disease—to stand and be slaughtered. On Monday, Chipotle Mexican Grill announces that its restaurants in Minnesota are switching to “natural” beef from animals that were “humanely raised” and fed a purely vegetarian diet. Mixing animal matter into cattle feed has been identified as a cause of mad cow disease and hence is no longer legal in the U.S.
“Our commitment to working with like-minded suppliers who share our belief that food should be raised with respect for the environment, the animals, and the people involved is helping us make superior quality food, including naturally raised meat, accessible and affordable so everyone can eat better,” Chipotle CEO and founder Steve Ells said in the announcement.
Chipotle has been gradually buying more and more hormone-free meats to supply its 700-plus restaurants. Ditto for organic beans. Insiders say the chain would hurry up the changeover if it could secure enough of a supply at a feasible price. So today’s announcement was probably in the works for some time.
If that’s the case—and I for one presume it is—then the sequence of events underscores what a compelling point of difference Chipotle is offering the public. Consumers read in their daily newspaper that 143 million pounds of beef have been recalled because of a slight food-safety concern. When they log into FaceBook, they learn from one of the dozens of Chipotle sites in that network that the chain is lessening the chances that its patrons would be exposed to a peril like that, no matter how slight. And it’s promoting the humane treatment of animals in the process.
Is it any wonder the company posted a 70 percent leap in profit last year?
Friday, February 15, 2008
A Ruth's by any other name
Restaurants routinely name menu items after people, be it the Gene Simmons Sandwich (tongue with lots of dressing) or a Paris Hilton dessert (tart or cheesecake, take your pick). But it’s far less routine to dedicate a section of the dining area to someone, especially when that person is another restaurateur.
But if you book a private function at the Ruth’s Chris Steak House in Knoxville, Tenn., you’ll options will now include the Regas Room, a tribute in carpet, wood and wall coverings to a famed local clan of restaurateurs. Oldtimers still cite Bill Regas as one of those unsung giants of the business, an entrepreneur who put the same emphasis on people, training and service that persons of a younger vintage would associate with the likes of Danny Meyer. He was also active in industry affairs through his service to the National Restaurant Association. Hence the Ruth’s Chris connection. The chain is headed by Craig Miller, a former chairman of the NRA and still an active director.
Bill and his business partner/cousin, Gus, are the sons of the Regas brothers who opened the landmark local Regas Restaurant. The family sold a part of their business in the 1980s to Brinker International, which eventually sold it to Quality Dining, with the name changed along the way. Now the Regas name will enshrined inside the Ruth’s Chris, which itself pays tribute to legendary restaurateur Ruth Fertel.
Family's restaurant gripes become a business plan
An idea for a family-friendly café—think of a Panera Bread Co. crossed with a Playland-outfitted McDonald’s—drew enough votes from a website for entrepreneurs to bag $40,000 in start-up funding.
Alissa and Noah DeRouchie hatched the notion for their Sprout Soup concept after wincing through innumerable meals with their two toddlers. The taller of the four family members knew what they prized in the less-than-perfect options they’d prioritize when the whole household dined out: Healthful food, preferably in the form of sandwiches, served up in a comfortable, attractive setting at a reasonable price. But they wanted the place to entertain the kids while they ate, which means shifting the playgrounds typical of fast-food joints to the center rather than the back of the dining room. And the activities would extend beyond a run through the ball crawl, to events like sing-alongs or story readings.
The DeRouchies entered their idea in a contest run by the accounting software supplier Intuit. It was chosen from among 1,500 submissions for the prize of $50,000 in seed money—still not enough to get the operation off the ground, but still a major infusion of capital. According to news reports, the DeRouchies will supplement their prize with $60,000 from a credit line and $30,000 of cash. The funds were apparently generated in part from the couple’s website, Sproutsoup.com, a virtual store featuring baby carriers.
According to their website, the DeRouchies plan to open a retail operation this spring, presumably in their hometown of Columbus, Ohio. They’ll start to remodel it into a restaurant by offering juice and coffee, and then presumably progress step by step into a full-fledged café.
Sunday, February 10, 2008
In the name of research
Attorneys used to chase ambulances. Now they announce an “investigation” into a public company’s pending acquisition and wait for aggrieved shareholders to come forward. Consider the solicitations that have been posted on the internet just in regard to the proposed buyout of Landry’s.
Two days after chairman, CEO and founder Tilman J. Fertitta submitted an offer to buy the 61 percent of Landry’s he doesn’t already own, the Little Rock, Ark., firm of Cauley Bowman Carney & Williams PLC sent out a press release announcing its probe of the $1.3 billion proposal. The deal had been announced just a day earlier. The firm offered to provide advise to Landry’s investors on shareholder rights. Without soliciting stakeholders for a possible lawsuit, the statement noted that Cauley Bowman “is a national law firm that represents investors in securities fraud and corporate governmance class actions.”
Now the firm has competition in the emerging realm of Landry’s related research. On Friday, the Rosen Law Firm of New York City said it was commencing its own investigation. The announcement explained that media outlets had called Fertitta’s $23.50-per-share offer low.
“As a result of this and other information,” the statement explained, Rosen was investigating the fairness of the transaction to shareholders.
Purely coincidentally, shareholders who are dissatisfied with the price might be interested in suing Landry’s if it accepts Fertitta’s offer. Chances are they might need a law firm familiar with the specifics with the situation. One, perhaps, that may have done some research. Looks as if they might have a choice of at least two.
But that’s purely speculation, of course. More investigation would be needed to say something like that outright.