Tuesday, June 30, 2009

Giving credit where credit is overdue

Contrary to what you might suspect, the National Restaurant Association’s annual mega-show in Chicago is not subsidized by Dr. Scholl’s. Indeed, you may be surprised to learn the conference, one of the largest in the nation, is largely the responsibility of one person, though Mary Pat Heftman has put together a stellar team.

Even if that group was bigger than NASA’s usual launch squad, it’d still be undermanned, given how much has to be done. In truth, it’s more the size of a Roman candle ignition team. Yet the convention comes together every year—in laudable fashion, judging from the 30 or so I’ve witnessed. Insiders say the key reason is Heftman.

Granted, I strongly suspect that Heftman is a cyborg, if not multiple people cloned by the NRA from a master Mary Pat to handle all the daunting details. Most of us would be doing asylum time if we so much as oversaw the badges for such a gathering. Yet you routinely see her throughout the show, darting here and there, often ready with a quip and a warm hello. This is a show with several thousand exhibitors and tens of thousands of attendees. It’s not natural, I’m telling you.

Turns out we were right to suspect that Heftman is out of the ordinary. The Trade Show Exhibitors Association has just announced her nomination for Favorite Show Manager of the year, one of the top honors in her field.

At the same time, the NRA show itself has been nominated for Best Show of 2009 honors. It's a double tribute to Heftman, her staff and her colleagues.

Exhibitors are being asked to vote for which of the nominees deserves the top accolade in each category . If you’ve exhibited at or attended the NRA convention in Chicago, I suspect you may have a favorite. Do the right thing and cast your votes at the TSEA's online ballot booth.

And don’t forget to let all the clones have a vote.

No green from a fibbing Pizza Hut

Pizza Hut has snagged a fair amount of press for its new building design, which made its official debut Thursday in Jacksonville, Fla. After announcing at almost the same time that it would not be changing its name to The Hut, the Yum! Brands-owned pizza specialist has stressed that the new format is a really a three-in-one restaurant. In addition to selling an array of pies, the store will showcase Toscani Pastas, previously marketed as delivery and takeout options, and WingStreet, a bolt-on Buffalo chicken wings concept that execs intend to advertise as a separate entity.

Oh, and about that rumor of a name change: Contrary to Pizza Hut’s assertions, the new prototype carries an exterior sign reading The Hut, as you can see in this picture from a local paper.

Management stresses that it’s just a test, and that the chain is indeed keeping the full Pizza Hut name. “We do use ‘The Hut’ in some of our marketing efforts,” CMO Brian Niccol said in last week’s statement.

The launch of a new prototype isn’t a “marketing effort,” especially when the new design is reportedly being stamped on 30 units already. I have trouble reconciling Assertion A with Fact B.

If you’re tallying such things, this is Stretched Truth No. 3 for Yum. Earlier this year, it made a big splash with Kentucky Grilled Chicken, which is really oven baked on a special plate that imprints grill marks. At the time of the introduction, coupons for a free sampling were distributed. Yet KFC ran a commercial that said in essence, “Sorry, but we’re not honoring those right now.” It stopped short of saying, Na-na-na-na-na-na.

Okay, perhaps there’s a disconnect between what Pizza Hut said and what it does. Such is corporate life.

But what should concern the public is what Pizza Hut didn’t say about the new prototype. In all the coverage, in all the comments made by executives to local media, there’s not one mention of a green feature. How can a resource-rich company introduce a new building design that omits conservation features? And why would it, given the savings that could be easily realized?

Maybe the chain is too busy asserting that it’ll continue to be known as Pizza Hut. It’s also important to keep The Hut sign clean and as visible as possible.

Monday, June 29, 2009

My day at the Fancy Food Show

I’ve just come from the Fancy Food Show in New York, or the closest an adult can come to being locked overnight in a candy store. Next time I’ll know to bring my own toothpick, so I can move more quickly from booth to booth, spearing whatever sample is being featured. The choices fill a huge swath of the city’s main convention hall, the Jacob Javits Center.

Cheese was by far the most common product featured. But I tried everything from a Pisco Sour to velvet cake to a juice-infused gummy candy, wholewheat pancakes, all kinds of cured meats, and, perhaps best of all, real licorice.

The trends that were evident:

--Healthful snacks were definitely in abundance. What made them healthful varied widely. There was a ginger snap, touted as a hangover aid because it had triple the usual amount of ginger; any number of teas ascribed with healthful qualities or ingredients, like a mangosteen additive; confections loaded with nuts; plain old nuts; dairy-based drinks, like kefirs, marketed as snack options; and new types of yogurts, like the more-pudding-like Greek variety. Other examples were familiar products, like vegetable chips, packaged in what were hailed as “smart portions.”

--A number of cheese purveyors tried to put some fruit into their products. I tried a cranberry-studded mild cheese, and I could’ve had any number of selections that were recommended to be served with fruit jams, as they are in Italy. I also saw cheeses that were topped with fruit compotes or stewed fruits, sort of like cheesecakes.

--Aggressively showcased were teas, teas, and more teas. Sold loose-leafed, in tea bags, in cans, in bottles, in concentrates.

--There were probably a half-dozen small-batch soft drink specialists, featuring drinks in traditional (cola, orange) and unusual (espresso, pomegranite, carbonated lemonade) flavors.

--Consistent with the recent surge in foodservice licensing, several restaurants were on hand to promote products they hope to sell through supermarkets or other eateries. Included were Peanut, Butter & Jelly, the New York restaurant that features nothing but variations on the PBJ, touting its peanut butter; Patsy’s, the New York landmark that can boast of being Frank Sinatra’s favorite restaurant, promoting its pastas and sauces; Rao’s, doing the same; and Sarabeth’s, the bakery institution, looking to sell more baked goods through alternative channels.

--At least two booths featured speck, from regions a long plane ride from Italy. One purveyor cured the pork-leg meat in Iowa. The other hailed from Asia.

Almost as telling was the lack of attention to products that were in the spotlight just a year or two ago: Coffees, unusual breads, craft beers, and alternative proteins, like ostrich or beefalo. There was some of each, but not as much as a sharp-eyed shopper might encounter at the National Restaurant Association show.

Okay, time to work off everything I ate during my three hours on the show floor. A 12-mile run should do it. Maybe.

Thursday, June 25, 2009

Closing the deal: Help for vendors

One of my favorite people is Ernie Renaud, a longtime restaurant-chain executive and an even longer-time attendee of the National Restaurant Association’s annual convention in Chicago.

Ernie, now in his 80s, has been attending the show since the mid-1960s, when it was a collection of booths on Navy Pier. He was there again this May, which made everything right in my universe, since I could ask him once again about his collection.

The “collection” is a shoebox of business cards he’s amassed over the years from salesmen whose booths he’s shopped. Ernie would ask them to get in touch with him after the show because he was interested in a product or service for whatever chain he was representing at the time (the list ranges from Jerry’s Diner to Long John Silver’s to Fazoli’s). The ones who never responded had their cards put in the collection. It was a marvel to Ernie that they never so much as made a follow-up attempt to get his considerable business.

That situation comes to mind because I just learned of a webinar the NRA will be offering this afternoon to those who exhibited at the show. It’s called the Exhibitor Success Institute: Post-Show Success, and it’s offered for free. Among the topics slated for discussion is the use of social media to spread the word about a vendor’s brand.

I’m going to participate, in large part out of curiosity. I can’t figure out why a company would invest considerable time and money in exhibiting at a show, only to squander opportunities by failing to make the most of the sales opportunity.

I encountered the problem firsthand when I was a co-presenter of the Menus conference for Restaurant Business magazine, which I served as editor. In attendance would be dozens of menu planners for restaurant chains, including McDonald’s. Yet our exhibitors would invariably complain about not having enough exposure and access. They’d be in their booths, waiting for prospects to come to them. Clearly they weren’t exploiting the opportunity that was gift-wrapped for them. And these were big companies with extensive sales forces.

It got so bad that decided to hold a sales primer for the exhibitors—only to catch guff that we were talking down to veteran marketers. So that idea was dropped.

The NRA appears to be taking a much more sophisticated tack in providing support to exhibitors. It’s a laudable effort that certainly appears to be worth the required time investment.

Restaurant chains' new marketing guru: Larry Flynt

Fast-food chains have been trying all sorts of sideshows to keep the main attraction going, from brewing better coffee to licensing their logos for retail products. But they’ve been oblivious to the big opportunity, even though it’s familiar turf: Porn. All they’d have to do is start charging for a “Chains Gone Wild” DVD, instead of rolling the T&A for free in commercials and promos.

Consider, for instance, the campaign that Burger King will air in Singapore to support the local rollout of a new value meal, the Super Seven Incher. Right now you’re no doubt thinking, “How could anyone turn a name like that into something dicey?” Amazingly, the chain that brought us the notorious Square Butt video has managed to find a way.

“It’ll Blow/Your Mind Away,” reads an ad for the new sandwich, which is basically a hero-shaped burger. The ad, as shown this morning on Gawker, depicts a young woman in silhouette, her mouth agape Linda Lovelace-style, about to engulf the Seven Incher.

The price shown in the ad is $6.25, as in U.S. dollars. The woman pictured is Caucasian. The copy is all in English. But Gawker posted an e-mail from BK that explained the ad would only run in Singapore, and only for a limited time.

I guess the chain should be given some slack because of what it was offering. Hero-style sandwiches just seem to bring out the hidden 15-year-olds in marketers. Quiznos, for instance, should’ve put a giggly laugh track behind the commercials for its 13-inch-long Torpedo heros. In perhaps the most infamous installment, an oven tells a worker, “Put it in me, Scott.” Scott balks, asserting he’ll never do it again because he was burned last time. But the oven prevails in his pleading that Scott say something in a sexier voice.

But that seems more like a National Lampoon parody than the blatant pole dancing of Carl’s Jr.’s spots. The chain’s parent, CKE Restaurants, has definitely cut through the clutter with its female spokespersons, starting with Paris Hilton and her infamous car washing in a bikini.

More recently, commercials showed the lovely Padma Lakshmi as she all but had a conjugal visit with a Carl’s burger, described in a voice-over as “more than just a piece of meat.”

No doubt Lakshmi was hired because of her two cookbooks, her knowledge of food, and her connection to the literary world (she was married to novelist Salman Rushdie). Given how much cleavage is shown, there might’ve been two other reasons for her casting.

Today, Carl's revealed that it's showcasing a new spokes-hottie in its commercials, TV sensation Audrina Patridge of"The Hills." She's in a straining bikini on a beach, savoring Carl's latest promotional sandwich, the Teriyaki Burger.

Maybe the sauciness of recent fast-food advertising is part of the industry’s obvious back-to-basics yen. Simple desserts are in vogue again, molecular gastronomy seems to be losing its mainstream hold, classic cocktails continue to win new converts, and burgers are the product of the moment in the full-service sector.

Why not a little cheesecake with the burgers?

Wednesday, June 24, 2009

San Francisco requires food-scrap separation

Much of the East Coast seems to have missed this, but San Francisco broke new ground yesterday in forcing restaurants and other businesses to operate in a more environmentally responsible manner. Mayor Gavin Newsom, a former restaurateur himself, signed a bill that will require restaurants, all other businesses and even households to separate food scraps and other compostable materials from recyclables and trash. It's the first city in the nation to adopt such a provision.

Restaurants will also be required to retain a company to haul away the refuse, as residential properties are currently required to do.

Here's precisely what will be required of restaurants, from an online town hall guide:
Owners or managers of food vendors and special events are required to maintain appropriate, color-coded (blue for recyclables, green for compostables and black for trash), labeled containers in convenient locations, and educate tenants, employees and contractors, including janitors, on how to separate materials.

Food vendors that provide disposable foodware must have appropriate containers for recyclables, compostables and trash for use by customers and visitors, placed inside near a main exit.

The Department of the Environment conducts free workshops, and provides materials and other assistance and to help produce zero waste events.

Places that fail to heed the new law will be warned by their carters. If the non-compliance continues, the haulers are expected to alert authorities, who could levy fines of up to $1,000. The penalty is capped at $100 for "small contributors," or businesses that generate less than a cubic yard of compostable material per week.

The restaurant industry has shown considerable interest in composting, both to reduce its hauling fees and to be greener. One of the complications has been a fear about sanitation. Do you want an open bucket of food scraps festering in a kitchen all day, when the temperatures could climb to a desert's level?

But, if you've ever composted, you know the solution is just to make frequent runs to the containers outside. It'll mean a little more diligence, not necessarily a health hazard.

In any case, lots of areas will no doubt be following San Francisco's lead and weighing whether they, too, should foster composting by requiring the separation of food scraps.

Thursday, June 18, 2009

Selling coffee by a different sort of cup

If you think a K cup is something for a Playboy model, you’re out of sync with the hottest trend in coffee selling.

The “K” stands for the Keurig, a single-cup coffee brewer that’s now a standard feature of corporate canteen areas. A user fits a sealed single portion of coffee grounds—a little package that looks like a larger-than-normal coffee creamer—into a receptacle inside the machine. The machine is closed, a button is pushed, and the coffee is brewed and dispensed.

Because the user’s discretion is removed, the cup of coffee tends to be of barista quality. You get the best of what’s in the little pre-portioned container, a.k.a. the K cup.

Quality aside, the machines are proving popular because there’s little maintenance. Someone has to empty a bin that catches the used K cups. But there’s very little additional work to be done by the host site.

No wonder the Keurig unit has made such inroads into the coffee-service market. But it’s also winning home-brewers, too. Green Mountain Coffee Roasters sold 771,000 of the units during the 2008 year-end holidays. Walmart has struck a deal with the company to sell Keurigs in 3,000 of its outlets. Clearly it’s the gadget of the moment.

And that’s orgasmic news for coffee processors who put their grinds in K cups. Once you have a machine, you have to buy the cups. It won’t work otherwise. It’s selling razor blades, so to speak.

Yet the phenomenon has landed roasters with retail outlets in a Catch 22. Players like Starbucks could sell a lot of K cups because of the brand appeal. But might they be undercutting themselves in the long run?

Rick Aristotle Munarriz, a frequent contributor to the The Motley Fool financial website, estimates that a K cup could be sold by Starbucks for 40 cents. It would deliver a cup of coffee close to what a café customer would have to pay $2 to get. How long would that disparity be tolerated, even with the delivery of the mystical Starbucks Experience that Howard Schultz is always crowing about?

So Starbucks isn’t selling K cups. Nor, apparently, is Peet’s, a brand with limited retail operations. Nor Dunkin’ Donuts. Or McDonald’s/McCafe. You won’t find Tim Hortons grinds or BK Joe in a K cup, either.

But Caribou sells its coffee that way. Coffee People, too. Diedrich sold its Gloria Jeans concept last week. But it held on to the K cup part of the business. The secondary brands seem to have shrugged and decided, What do we have to lose?

Which makes you stop and wonder: Are the big coffee brands missing an opportunity? Would there be a way to exploit the booming K cup market without cannibalizing walk-up café sales?

You know it’s a question that’s consuming the marketers in Seattle, Oakbrook and Canton, Mass.

Wednesday, June 17, 2009

Let's hear it for restaurants' smash fest

There’s a lot to be said for sledgehammers, especially if we’re talking mental health. Or economics. Think about it: Despite a calamitous scene right out of “Batman,” not a single restaurant chain went postal this recession. Oh, sure, there were a few eyebrow-raising moments from Quiznos and Burger King. But sanity, and profitability, more or less prevailed.

And for that, you have to acknowledge the role of the sledgehammer. If you don’t believe me, consider the words of Hudson Riehle, statistician and economist for the National Restaurant Association and definitely a Commissioner Gordon kind of guy. “The recessionary environment is fundamentally rewriting boundaries of market and brand definitions,” he said during a confab held last week by NASDAQ.

The translation for those of us who giggle when we hear “standard deviation”: Frustrated by the drop in business within their usual strongholds, savvy restaurateurs took a sledgehammer to the walls that once defined their segments. They busted out.

Fine-dining chefs opened burger joints. Quick-service burger places focused on coffee and raided the full-service sector for items like ribs, Teriyaki bowls and mac and cheese. Taco Bell crowed that it was now a place for the health-minded, and revealed in recent days that it would develop family style meals like the casseroles now offered by sister concept Pasta Hut—er, Pizza Hut.

It’d be like a pizza chain going into the sandwich business. Which, of course, Domino’s did as a way of cultivating a lunch trade. Beforehand, execs said, many of its outlets didn’t even bother to open until dinnertime.

Kentucky Fried Chicken went the other way. Buckets are what move at dinner, so it added Kentucky Grilled Chicken in hopes of selling more buckets to families.

Some operators needed a sledgehammer dropped on their toes to get hoppin’. A number of McDonald’s franchisees opposed the burger giant’s multi-million-dollar effort to recast itself as beverage specialist. Now, USA president Don Thompson told CNBC, 40% of the customers who buy a coffee drink where stopping at a unit specifically for that reason. It’s incremental business in a big, big way. No wonder the field-level opposition seems to be waning, at least here in the New York market.

The smash-and-charge approach definitely seems to be working. Jamba Juice, a chain whose products once all came in a cup, tested solid food in just six units before deciding to roll the wrap, salad and flatbread array into all of its California stores. The reception was enough to prompt CEO James White to predict the menu could generate as much as 20% of an outlet’s sales.

Yet, Riehle asserted, returns will likely surge as the economy improves. He explained that the diversifiers are winning “credibility” from consumers who might once have seen the brands as a one-trick pony. Now they’re being viewed as brands with a variety of viable options, which promises to expand the concepts’ scope and foster more frequent visits.

“We used to call it ‘the veto vote,’ where someone in a party would say, ‘No, I don’t want to go there because they don’t have whatever,’” Riehle said, no doubt making some bloggers feel old. The diversifiers are smashing that common objection, he suggested.

The industry might also stand to gain handsomely from the biggest boundary smash of all: Licensing, a sleeper part of the business that’s currently surging into a major trend. By moving beyond ready-to-eat food, into products as strange as body cologne (Burger King), pajamas (BK as well), casual wear (BK and Chuck E. Cheese's), and toys (Jamba Juice and McDonald’s), the chains are erecting their own Alaskan pipeline into new revenue sources.

And the key: Once again, the sledgehammer, used this time to smash pre-conceptions and limited forms of thinking about what a brand represents. The new perspective is to view a restaurant-chain brand name as more of a lifestyle badge, which adds considerable topspin to the licensing movement.

But it all comes back to that sledgehammer. So, please, stop drooling over your Blackberry and give heavy construction tools their due. Make this today Sledgehammer Appreciation Day.

Friday, June 12, 2009

Is Wendy's/Arby's shopping for another chain?

Last October I had lunch at a midtown Wendy’s with Roland Smith, the newly named CEO of the chain and its adoptive parent of a few weeks, Wendy’s/Arby’s Group. Smith and his team were blitzing the media to discuss how the company formerly known as Triarc was going to generate more value for shareholders as a two-concept fast-food franchisor.

Among the more surprising routes mentioned by Smith was the acquisition of more brands. The company had just spent $2.3 billion to buy Wendy’s after more than a year of contentious pursuit. Was it really open to other deals?

Fast forward to yesterday morning, when Wendy’s/Arby’s announced plans to raise $550 million in debt. About $125 million will be used to pay off outstanding loans—the equivalent of paying off a big credit-card bill. The other $425 million, the company said, would be used for “general corporate purposes.” It listed seven specific possibilities, including “acquisitions of other restaurant companies.”

Most of the other options are moves that would likely appease shareholders—things like new unit development, paying a dividend, or buying back stock. Yet the company’s share price dipped. “There’s clearly some hesitation on the part of investors,” Bob O’Brien wrote on a Barron’s blog. “The likeliest source of concern: that Wendy’s would make another big-ticket acquisition.”

Back in October, Smith wouldn't discuss possible acquisition candidates, nor even what kind of companies might have been on his shopping wish list. The only clue he provided was a comment that any target would have to be a high-quality rather than a low-cost provider.

It’s a safe presumption that it would also have to be a potential or current franchisor, since that’s Wendy’s/Arby’s business. Smith didn’t say anything about menus, but presumably the company would want something that wouldn’t compete with its burger or sandwich chains. That means it’d have to specialize in something like chicken, pizza or beverages.

The criteria are smoky at best. But there are plenty of candidates that would fit.

Jamba Juice, for one. It’s the hands-down leader in the smoothie segment, with a healthy average ticket.

Church’s has traditionally been a value provider, but it might be an affordable play in the chicken market, and is widely reported to be for sale.

The chain's sister concept, Caribou Coffee, would also meet Smith's vague criteria.

There are also any number of upstart, high-quality pizza concepts currently competing on a regional basis.

Since co-branding figures large in Wendy’s/Arby’s growth strategy, a dessert add-on might also make sense. A regional soft-serve specialist, maybe?

This, of course, is all speculation. But a $425-million down payment makes a lot more sense than “general corporate purposes.” That’s a lot of new carpet and paper clips.

Wednesday, June 10, 2009

Restaurants welcome a new menu labeling plan

Capitol Hill lawmakers have cleared the way for national menu disclosure standards by combining the pet bills of opposing sides into a new proposal that appears acceptable to all parties, including the restaurant chains that would have to abide by the law.

The compromise measure, jointly announced by the major stakeholders this afternoon, would mesh a labeling bill steadfastly opposed by the industry, Sen. Tom Harkin's Menu Education and Labeling Act (a.k.a. MEAL), with an alternative that was put forth last year by the restaurant business and its allies on the Hill, the Labeling Education and Nutrition Act (LEAN in sound bites). The breakthrough was acceptance by all parties of limiting the info disclosed on menus and menu boards to calorie counts. The other information that Harkin and his allies want chains to provide, like salt and fat content, would be provided in written forms available at the point of purchase.

The requirement would be binding on outlets of chains with at least 20 branches.

Sen. Tom Carper said the new measure, which has yet to be given a clever acronym as a name, has bipartisan support. Carper was a key sponsor of the LEAN Act, which the National Restaurant Association and other industry groups helped to craft.

The compromise bill is expected to be a component of any healthcare reform legislation that arises in the Senate in the next few weeks. The passage of such an omnibus measure would be an historic event, which suggests it will likely be hotly debated and undergo considerable consideration before anything is actually put on the books.

But the emergence of a bill less stringent than MEAL was hailed by the restaurant industry as a breakthrough. "We are pleased that industry, government and the public health community were able to come together and partner to reach a workable solution to this important issue," Clarence Otis, CEO of Red Lobster and Olive Garden parent Darden Restaurants Inc., said in a statement.

“We thank the Senators for their bipartisan leadership and for recognizing the importance of legislation that meets the needs of both the restaurant industry and our customers," Dawn Sweeney, CEO of the National Restaurant Association, said in her statement. "We look forward to working with Congress to enact this legislation."

Initial reports failed to reveal when the new labeling bill would take effect if passed, or what protections it would extend to chains that worry about legal challenges of the calorie counts they might post. Because food items can vary in size or even sugar content, a precise analysis might be impossible to deliver, they contend. They fear that consumers will allege in court that they were misled by the information provided.

The search is on. And on. And on.

KFC is hunting for the next Colonel Sanders. Papa John’s wants to find the muscle car that founder John Schnatter sold in 1984 to fund his first pizza. Applebee’s announced Tuesday that it’s commencing a search for America’s “real heroes.”

Add in the now-routine pursuit of customer’s ideas for new menu items, from doughnuts (Dunkin’ Donuts) to desserts (The Cheesecake Factory), and you have to wonder why restaurant chains still bother with ad agencies. They might be better off with Dog the Bounty Hunter, or even Elmer Fudd.

Call it the American Idol Effect. Restaurants are counting on the intrigue inherent in a quest to snag the attention of a public that avidly tunes into talent searches, “America’s Most Wanted” and the “National Treasure” franchise.

But they’re making a mistake if they view white-bread searches as the way to interact with customers, the arch objective in the age of Twitter and YouTube. They might as well announce a hunt to find America’s most adept flagpole sitter.

Many of the searchers should consider how Papa John’s is conducting its search. The objective is the 1972 Z 28 Camaro that Schnatter sold for his start-up investment in the restaurant business. The funds were used to convert the closet of a relative’s bar into a pizza stand.

The now-3,400-unit chain is backing up the search with live updates on Twitter and postings on a microsite, www.papasroadtrip.com. Schnatter himself is supposedly waging the search, but he brought along two interns to generate photos, videos and blog dispatches.

Papa John’s is also using a new gimmick that’s touted as a bridge between the real world and the virtual one. Customers can scan the image of a Z 28 from a Papa John’s pizza box and upload it as a virtual vehicle. The image then becomes an avatar of sorts, a visual point for taking the user on the search. It's as if the car is the sort of marker you'd use in a Monopoly game.

Finally, the search component is backed up with good ole TV advertising. Schnatter is shown delivering pies, so the focus isn’t completely off the chain’s product. There’s also the teaser of a $25,000 reward for the long-lost car.

The marketing ploy may be a search, but it’s supercharged with plenty of ways of interacting with consumers. That blend of the old with the new is increasingly being cited by social media gurus as the way to really cut through the clutter.

Tuesday, June 9, 2009

Rest in peace, Norman

A day I’ve long dreaded has come to pass: Norman Brinker, one of the most extraordinary persons I’ve had the privilege to interview, follow and know, died this morning at age 78.

It was a stroke of luck for the restaurant industry that Norman chose our business to make his mark. Had he chosen retailing, he no doubt would today be mentioned in the same breath as Sam Walton. Had he focused on the military (he served in the Navy), people would talk about Nimitz, Nelson and Norman. Whatever path he chose, he’d have been the Babe Ruth, just as his love of horses translated into a slot on the Olympic equestrian team, or his boyhood business of raising spaniels would have been the lifetime measure of success for most people.

But Norman seemed destined for restaurants. He learned the business from Jack in the Box while stationed in San Diego for the Navy. That led him to Dallas, where he opened an everyday sort of place called Brink’s. It would be a prototype for what we now know as casual dining.

But that was just the warm-up. He decided to launch a non-pretentious restaurant where your average middle-income family could have a steak and a few drinks without going broke. Because a movie called “Tom Jones” had left the nation infatuated with Merry Ole England, Norman called his place Steak & Ale.

The concept was such a success that Brinker would sell the multi-unit brand and a spin-off, a pub group called Bennigan’s, to The Pillsbury Co. for the sort of fortune that leads to private jets, Riviera retreats and ample time on the golf course, if not a course of your own. But Brinker made what he suggested was a bad choice, agreeing to work for Pillsbury, essentially a flour company, in its Minneapolis headquarters.

He never spoke warmly of that post, which was unlike him. Instead, he’d glow as he’d talk about some of the young restaurant execs he’d spotted for Steak and Ale. Among the talent he nurtured were future standouts like Dick Frank, Lane Cardwell, Dick Rivera, Wally Doolin, Chris Thomas, Bob Basham, Hal Smith, Rick Berman, Jeff Campbell and Herman Cain.

It was dealing with those sorts of talents, inspiring them to build a business, that appealed to Brinker. So he stepped down from his high-falutin Pillsbury job to buy a start-up concept called Chili’s. It’d be like a U.S. senator resigning his post to become the mayor of his 200-person town because that’s what he enjoyed.

And if that ex-senator had been Norman, cities from all over the world would soon be taking notice of what he was doing in Podunk, because he had a gift for leadership. Chili’s became, well, Chili’s, then Brinker International, a titan of casual dining.

But Brinker never lost his connection with the ground. He’d often recount how he’d stand outside a Chili’s in Dallas and ask the exiting customers if the place was worth a visit. It became such a ritual, he said, that people started recognizing him.

He became one of the richest men in America, yet never lost the spark, the uniqueness, that prompted some of the best in the business to follow him into whatever endeavor he set for the team.

As one explained it, “Norman would point at a mountain and say, ‘Look at that mountain! I bet it’d be great to climb that mountain. What do you say we climb that mountain?’ And before long you’re saying, ‘yeah, let’s climb that mountain. I really want to climb that mountain. Let’s go climb that moutnain!”

My wife would tease me that Brinker was my superhero, and she was right. We journalists are supposed to remain neutral, and I maintained that objectivity in covering him and his companies, even when the news or analysis wouldn't have been well-received. He was, after all, extremely human.

But you couldn’t help but feel that urge to climb a mountain when you were with him.

So I’ll celebrate Norman with my two favorite memories of him, both of which underscore his humility and uniqueness.

One came to light when I was dispatched with a team of Nation’s Restaurant News reporters to Brinker International’s headquarters, where we were to spend about three days interviewing executives for a full-issue profile of the company. As team leader, I gave myself the plum of profiling Brinker and shadowing him a bit.

When I approached his office that first morning, he was standing by the desk of his longtime assistant, Margaret, watching something on a VCR. I could see it was a tape of a high school marching band.

“I just can’t get enough of it,” he explained. An employee’s child had competed in a band contest and had brought in a tape to show the boss. Brinker was watching it over and over, analyzing and relishing it as much as the employee, who stood nearby, beaming.

Here was the chairman of a multi-billion-dollar public company, spending hours watching a high-school marching band on tape, as proud as any parent. You could tell he was sincerely interested in the competition, the child, and the parent.

As the day progressed, he would periodically wonder aloud about what prompted teenagers to work so hard, what had motivated that marching squad to give up mornings, weekends and evenings to drill. You could see the wheels turning. He was trying to figure out how to glean an insight and apply that lesson to Chili’s motivation efforts.

The other story was an anecdote he told at MUFSO, where he had a standing gig as the moderator of a CEO’s panel. It was magical to watch him, in part because of the brilliant off-the-cuff observations he’d serve up.

This time in the late 1980s, he was talking about how important it was for a CEO to get into a chain’s stores and see what was really going on. Why, just that past Saturday, he explained, he and his buddy Sam Walton had spent their day in a Walmart, standing at an end-cap to watch the people shop.

Two of the richest men in America, each a business icon who forever changed his trade, spending their Saturday in the household cleaners aisle of a Walmart to watch factory workers, housewives, mechanics and clerks. Brinker offered the anecdote off-handedly, as if there was nothing unusual about it. And for him, there wasn't.

I, for one, shall miss you terribly, Norman.

Monday, June 8, 2009

Give me 12 episodes, babe

Just when I was about to hang up the tuba, the industry sends word it could use my cover of "Enter Sandman”. What else could you make of the news that Pizza Hut is launching an in-store entertainment network?

The disclosure of Hut TV follows indications that McDonald’s, Hardee’s, Arby's and Wendy's, among others, are also installing proprietary entertainment networks for patrons to watch as they munch their fries. The trade is going on the air. Instead of placing fast-food products in TV shows, some brands are placing TV shows in fast food.

Which leads me to why I’m suggesting you pick a card, any card. I don’t know if you’ve seen any television recently, but clearly there’s not a deep pool of programming from which the established networks can draw. If Rob Blagojovich’s wife is being cast in a primetime show, “Paint Drying: The Mini Series” might already be in storyboards on some cable exec’s desk. My flaming baton work may finally get the showcase it deserves. Heck, the other guy from Wham! might end up a star. This could be the best news Vanilla Ice ever got.

Of course, there’s some concern about how my art will be received in a quick-service venue. I don’t know about you, but the last thing I need is more streaming entertainment. If Fast Food TV catches on, it’ll fill in that five-minute gap when I’m disconnected from computer screen, Twitter feeds, cell-phone calls, radio, television, land line and iPod. Whew. No more of that mind-numbing boredom of thinking without distraction. Or, even worse, relative silence.

The chains are betting the media-saturated will appreciate not having to struggle through a disruption in sensory input. They’re also counting on unique programming to provide a point of distinction, like a new sandwich or a head-turning bargain. Pizza Hut, for instance, reportedly views Hut TV as an integral part of recasting the brand as a cooler, more contemporary concept called The Hut.

It’s a bold wager. Done wrong, the entertainment could be seen as an annoyance, or the sort of background din that’s disparaged as elevator music. And picking programming is clearly dicey. Need I mention "Cop Rock," a musical police show that was backed by Stephen Bochco and NBC? Or the Fox Network's "The Tick," starring a regular from "Seinfeld"? If that's how the industry's luminaries can stumble, imagine what an upstart network could do.

But what do I know? I was sure my kazoo rendition of “Umbrella” would chart.

A 2000 forecast: How'd we do?

At the end of the last century, several industry associations commissioned McKinsey & Co. to craft a detailed picture of what the foodservice business would look like in 2010. It wasn’t intended as some what-if game, or a slab of Jules Verne-like imagineering. Foodservice 2010, released with considerable hoopla, was intended to serve as a roadmap for suppliers and restaurateurs who wanted to keep their businesses in sync with the marketplace. And that setting, McKinsey concluded, was likely to be much different from the world we knew in the year 2000.

But the think tank, it turned out, didn’t have the gift of Nostradamus. Nor The Amazing Kresgin. Or even Carnak. Here were some of the changes it foresaw:

  • "Chief among them,” wrote the researcher and consulting firm, was “a boost for full-service restaurants over the younger generation’s choice, fast-food restaurants.” Maybe that’ll happen next year, but for right now, fast-food places are walloping their up-market peers. Fine-dining is shrinking into a rarified sector where the Monopoly man can still tuck into a Coq au Vin after checking the polo standings. But that sector, in its classic form, seems to be going the way of the monocle. And casual dining is fighting to recover its relevancy.

  • Online purchasing would become the norm. If you’re buying music for an iPod, maybe. But the online commerce hubs that proliferated in foodservice during 2000 have faded into obscurity. Each promised at the time to provide a way for restaurateurs to compare prices and buy in an efficient manner that could essentially cut out the middleman. Better deals, consummated with manufacturers either directly or via third-party buying cooperatives. Distributors were expected to be recast as transporters, not wholesalers controlling the supply pipeline, as they traditionally had been. Alas, it clearly never happened. Sysco is probably dispatching a henchman to my house right now because I dared to air the possibility.

  • Technology would fundamentally change the restaurateur-customer interaction. “For example, PDAs will facilitate mobile commerce which could revolutionize the meaning of takeout,” asserted Foodservice 2010.

  • The percentage of women working outside the home would continue to rise, albeit at a slower rate. Even before the recession hit with full force, the number of working women had declined.

  • To be fair, the forecast was on the mark in several respects.

    For instance, it advised full-service restaurants to engineer more efficient ways of offering takeout, citing pent-up demand. Today, curbside service is a standard offering for the big casual chains.

    It also counseled full-service restaurants to differentiate themselves. Too bad they didn't heed that recommendation.

    Almost eerie was the prediction that consumers would simultaneously demand “individuality,” or what chains of all stripes would now label order customization, and “belonging,” or the sense of inclusion that social media is viewed as delivering.

    This isn’t meant as a knock on McKinsey or the groups that sponsored the study. It's actually a bit of self-criticism. One of the study's backers was Restaurant Business magazine, which I served at the time as editor. I was also one of the people who were interviewed to give input into the qualitative study.

    Rather, the look back underscores how difficult it is to peer a year into the future, never mind a decade. Credit-default swaps were unknown at the time. And yet they’ve profoundly changed the industry’s fortunes since last summer. Who could've imagined such a thing.

    Indeed, Foodservice 2010 was marketed as the best of its sort, with a price tag of $2,000 for non-members of the sponsoring organizations.

    Thursday, June 4, 2009

    Krispy Kreme to give bagels a try

    Krispy Kreme may have to rework its neon sign to read, "Hot pastries now." The doughnut chain announced this morning that the ink has dried on a new baked-goods menu that includes bagels, Danishes, muffins, and pecan and cinnamon rolls. 

    The bagels are particularly of note since they could be the chain's eventual means of adding sandwiches, breakfast or otherwise.

    In disclosing that the baked-goods menu is ready to be tested later this year, Krispy also noted that it's new soft-serve ice cream, Kool Kreme, will soon be available in seven stores. 

    Same-store sales for company-run units rose 2.1% during the three months ended May 3, the franchisor said. Profits for the quarter fell by more than half, to $1.9 million from $4 million.

    Wednesday, June 3, 2009

    Beverage wars give rise to healthy counter-attack

    Fast-food chains are scrambling like frat boys at a kegger to grab more coffee and smoothie servings. So how are the intended victims protecting their cup counts? In one of the great ironies of the business, drink specialists are countering with promises of better fast food.

    The Reuters news service carried an exclusive yesterday about Starbucks’ plan to replace its anemic food offerings with a new line-up of better-for-you choices. "Food has been the Achilles' heel of the company,” executive vice president of marketing Michelle Gass told reporter Lisa Baertlein. “That statement will be long buried after we launch this program."   

    The new selections will reportedly include salads, breakfast sandwiches made with egg whites, and a variety of baked goods sweetened with sugar rather than high-fructose corn syrup, which nutrition scolds put in the same category as Communism, puppy kicking and bathroom-grout mold.   

    The baked products will also be produced without dyes or artificial flavorings. Preservatives will also be eliminated wherever possible, Starbucks said.   The new array’s tagline will be “Real Food. Simply Delicious,” Gass told Reuters.  

    The news came to light a few days after Jamba Juice informed investors that it expects a new menu of “healthy on-the-go” food choices to generate as much as every fifth sales dollar (see below).   Included are grab-and-go wraps, salads and sandwiches.   

    The meal-in-a-cup specialist is also encroaching on Starbucks’ turf a bit with new cold teas.   Then again, Starbucks plans to extend its Vivanno smoothies line. 

    Jamba: Big dollars won't be coming through a straw

    The blenders will keep whirring, but Jamba Juice expects a still-in-test food menu to generate as much as one-fifth of the smoothie chain’s future sales.   

    “I don’t think that 20% target for the overall mix longer term would be out of the question,” CEO James White told investors last week.   

    His optimism is based on a six-unit test of food options like sandwiches, wraps and salads, which are now being rolled into 200 California stores for a more extended trial.   

    White also cited research indicating that 27% of Jamba’s drink customers consume their smoothies with food, purchased currently from other sources.   

    “They’d welcome high quality health foods offered at Jamba locations,” White said in a conference call with analysts. “In fact, when asked many of them have wondered what’s taken us so long.”   

    Right now, the only Jamba product that can’t be sucked through a straw is the steel-cut oatmeal introduced earlier this year. “It actually beat any of our internal projections and gave us great confidence to move forward on the current plan,” White said.   

    That new emphasis on food “transforms our business model and company” by drawing new customers and increasing sales from current fans, he contended.   

    Meanwhile, the franchisor is continuing to pursue a licensing program that’ll soon put the Jamba name on a variety of retail products. One of the more unusual is a blender from Think Wow Toys that kids can use to churn up their own smoothies. 

    Tuesday, June 2, 2009

    The worst news you haven't heard

    The automobile business may not be the only industry to suffer a permanent dislocation from the recession.  A study by McKinsey & Co. apparently shows that one-third of the consumers who’ve cut back on restaurant visits are unlikely to resume their old dining-out habits after the economy rebounds.  

    The revelation was shared by ketchup giant H.J. Heinz Co. during its recent conference call with investors. Because the company’s sales are so tied to the fortunes of the U.S. restaurant business, participants pressed officials for their take on the trade’s near-term future.  

    The forecast wasn’t a rosy one: A 5% drop in traffic for roughly the next 11 months, after a 5% drop during the just-concluded fiscal year, and a 1% decline in unit counts.     

    A transcript of the call quoted CEO William Johnson as also citing “a recent Mackenzie report,” though the translation appears to be an error. Johnson apparently said “McKinsey,” and the translator provided a phonetic translation.   

    The report “said about a third of consumers will return to their normal eating-out habits once the economy returns but about a third won’t,” said Johnson, who noted that Heinz’s business strategy is based in part on that research. As one listener put it, the company expects “consumer frugality will stay fashionable.”  

    “We’re expecting the worst and preparing for the best,” said Johnson.  

    Ironically, indicated North American CEO David Moran, Heinz is trying to offset the foodservice slump in part by delivering “a restaurant experience at home.” The company’s giant packaged-foods business will push more foodservice-quality heat-and-eat meals, including two marketed under the T.G.I. Friday’s brand name.  

    Monday, June 1, 2009

    Lend a shoulder for headhunters to cry on

    I’m holding a tissue drive for the industry’s executive placement specialists, commonly known as headhunters. They’ll likely be burning through Kleenex this week after what must’ve been excruciating months of watching the grass grow, the bills pile up, the accountants nixing luxuries like a communal box of nose dabbers. Now that the tears are being shed in joy instead of despair, why not let them sob and honk a bit?   

    The week is less than 48 hours old, yet we’ve already seen two screaming indications that companies are making big hires again. Lane Cardwell, a longtime veteran of casual dining, was appointed CEO over the weekend of Boston Market. On Monday evening, Carin Stutz, a standout who seemed on the CEO track at Applebee’s, was named COO of Global Business Development for Chili’s parent, Brinker International. They’re the sort of placements that give headhunters the vapors, a giddiness they likely haven't felt in awhile.  

    Both of the week’s marquee recruits are huge talents, and, interestingly, both were previously under-employed. Their return to full-time duty suggests the smart companies are starting to raid the considerable bench of talent that’s been formed by the cut, cut, cut imperative of the last nine months. The mindset might be shifting back to assembling a standout team, instead of hacking one to bits for the sake of a budget.  

    That possibility seems more likely when you consider a few big-name hirings in April, like Bennigan's recruitment of David Goronkin as its new leader, or Real Mex Restaurants' appointment of Dick Rivera as CEO. They, too, were previously under-employed What seemed at the time to be exceptions to the rule may in hindsight be the early indications of an emerging trend.

    If the recent developments are indeed the first signs of a shift, it’ll be high-five-worthy news for headhunters. So, please, do your part as they cry for joy. Steal all the tissues you can from your accounting department, and donate them to a worthy placement agency.