Saturday, October 31, 2009

Ugh I

Ruth’s Chris ran a promotion through the summer called Ruth’s Classics, built on several of the steakhouse chain’s most familiar specialties. The signatures were offered in specially priced meals that were intended to turn the heads of bargain hunters, but the chain decided to cut costs by holding back on advertising for the deals. “By and large the promotion was not seen as new to our customers,” acknowledged CEO Mike O’Donnell. All they saw were staples of the menu grouped together.

To make matters worse, O’Donnell added, competitors stepped up their promotions during the same timeframe, dealing Ruth’s “a slight setback” in market share.

During a conference call with investors, officials of the chain disclosed that six units are testing a Bistro menu consisting of items priced from $9 to $19. The limited menu is being offered in the test stores’ bars.

Ugh II

Tim Hortons is an institution in Canada, but the donut and coffee chain has had a tough time cracking the U.S. market. And it doesn’t look as if a deal with Cold Stone Creamery is going to be the inbound ticket investors had envisioned.

Hortons and Cold Stone’s franchisor, Kahala Corp., struck a deal to put their concepts on the same sites in dozens of locations both north and south of the U.S.-Canada border. At present, about 63 Tims, mostly in Canada, have been outfitted with a Cold Stone station featuring the chain’s signature mix-in ice cream. But only two Cold Stones in the U.S. have bolted a Hortons section to their operations.

“We were supposed to have 50 Cold Stones with Tim Hortons in [them] by spring. We are now at two,” Jim Durran, the restaurant analyst for National Bank Financial, remarked to Horton execs during a conference call yesterday. “What's the problem with that side of the equation?”

It’s all a matter of location, location, location, explained Hortons CEO Don Schroeder.

Because Hortons stores typically generate higher sales than a Cold Stone shop, they can be developed in pricier locations with higher visibility and traffic, he said. The addition of ice cream is a ring of a bell.

Cold Stone’s locations are a different matter, he continued. Because concept’s sales per unit are lower, stores are often developed in “’B’ sites” that “are not as supportive of putting a Tim Hortons into that location,” Schroeder added.

In short, the ice cream shops don’t have the traffic to feed a secondary concept, which might even dilute the concept’s weaker per-store sales.

In contrast, Schroeder expressed satisfaction with the additional sales a Cold Stone component can deliver to a Hortons.

Under questioning, he also disclosed that Hortons has the exclusive rights to develop Cold Stone outlets in Canada. That extends to all types of stores, including freestanding branches that aren’t paired with a Tim Hortons, he acknowledged. But the donut chain has no plans to develop ice cream-only units, Schroeder stressed.

Thursday, October 29, 2009

A candy dish of info treats

Panera Bread Co. is having a bang-up October, according to CEO Ron Shaich. He told investors yesterday that comp sales for company stores were running 6.9% above last year’s tally for the first 27 days of the month, and franchisees’ sales were tracking at a 6.3% rise.

Meanwhile, the bakery-café chain is busy plotting some significant menu changes. First on the list is the introduction of salmon, both as a sandwich ingredient and a salad component, said Shaich. That will be followed by the revamp of the concept’s panini sandwiches, which are currently pre-made, he said. New presses to be added around the middle of next year will enable units to make the grilled sandwiches to order because of their speed.

Nearer term, units will start merchandising holiday baked goods, from gingerbread men to Panatone to “holly cake,” at their registers.

Three days, three restaurant-chain bankrutpcy filings. Max & Erma’s efforts to secure Ch. 11 protection from creditors has been well-publicized. The bankruptcy of sister operation Damon’s International has been far less so. And largely unnoticed has been the Ch. 11 filing of Ham’s, operator-franchisor of a 20-unit namesake chain in North Carolina and Virginia.

More evidence that the Japanese fast-food market is whack-o: Authorities have reportedly concluded that the manager of a McDonald’s there worked herself to death by logging 20 hours a week of overtime. News reports say she’s one of about 150 people who work to the point of demise in Japan every year.

That news of course follows the introduction of a new Burger King Whopper that features seven beef patties, a tie-in with Microsoft’s new Windows 7 operating system. There are so many reasons for head-shaking over that one that it doesn’t pay to start.

Kerrii Anderson, the CEO of Wendy’s International during the chain’s final meltdown and subsequent sale, is being paid $175,000 a year to serve on the board of P.F. Chang’s. Anderson also serves on the board of Chiquita Brands International, the banana importer, where she’s paid at least $160,000 a year. And she was expected to make about $4.6 million from the company’s 2008 sale to Triarc, the parent of the once-rival Arby’s fast-food chain. In short, if you’re scheduled to have lunch with her in the near future, there’s no question of who’s paying.

Hotel unions have voted to strike at a handful of properties in both San Francisco and Chicago. It’s not clear whether its coincidental harrumphing or a concerted effort to prove that the union’s strength isn’t being undercut by the economy, as conventional wisdom holds.

Wednesday, October 28, 2009

Trends from U.S. chain menus, words from N.Y.

Fast-food, that most American of social constructs, is turning downright jingoistic in its sourcing.

Cock an ear to Wendy’s new ad campaign and you’ll hear the chain boast of using only North American beef in its square burgers. Fuddruckers, the chain that was fast-casual before fast-casual was cool, is more pointed in its nationalism. Units in Texas and New Mexico have switched to a proprietary grind called Fudds Prime, made exclusively with “All-American” prime beef from “select U.S. ranches,” the announcement sniffs. Chew on that gristle, Canada and Australia.

The rah-rah mentions of homefront ingredients are part of a larger struggle by the chain business to accommodate the public’s insistence that it be told the source of what it’s eating. Ideally, that point of origin would be a local one. Indeed, the demand for locally grown produce was forecast by chef-participants in a National Restaurant Association survey to be the Number One consumer trend of 2009.

The menus of many independent restaurants show those respondents were dead-on. The shorter the distance from field to fork, the louder the establishment tends to crow about it in menu descriptors. Not that it’s obnoxious at all. Guests want that sort of horn blowing. Why not brag about the seasonal items you’re putting on the plate?

But it’s hard to serve up that kind of lingo when you’re a sprawling chain with a nationwide supply system. Their economics call for low-cost ingredients hyper-processed to the point of absolute consistency and cooking readiness. Just add heat, forget about seasonal freshness. It was a trend many figured they’d watch independent counterparts enjoy without challenge.

Wrong. It took awhile, but regional chains are clearly finding religion. And even the national ones are buying local ingredients in some spots—or at least spotlighting the instances where that’s been the practice. Outback Steakhouses in the Louisiana area have apparently always used shrimp harvested by the state’s Gulf shrimpers. It briefly changed its mind because imported shrimp was selling at a lower price, then opted in the eleventh hour to stay local. The news prompted Louisiana Gov. Bobby Jindal to hold a press conference where he lauded the casual chain as the video cameras hummed.

Last month, New England-based Papa Gino’s Pizzeria and its sandwich-serving sister, D’Angelo’s, added a bunch of products that feature Cheddar cheese produced in Vermont. The chains were aiming for what one executive called “a distinctive New England flavor,” which you don’t usually associate with pizzas or subs. Yet “Vermont Cheddar” is included in all but one of the new products’ names (the exception, a Bruschetta, incorporates just “Cheddar”).

This summer, the New England outposts of Panera Bread Co. featured a lobster sandwich, a local favorite usually described as a lobster roll. It was priced at $16.99.

Units of the Smashburger fast-casual chain feature reginal riffs on burgers and hot dogs (i.e., Colorado units feature the popular local topping of green chilis), and the Kona Grill casual chain told investors that it'll introduce a menu next month that includes a section for local favorites from any given store's host area.

Then there’s the poster-concept of the localization movement among chains, the Pacific Northwest’s 38-unit Burgerville group. Right now the brand is featuring sweet potato fries made from local sweet potatoes, which are currently in season. It’s also featured Washington State cherries, in a Cherry Chipotle Pulled Pork Sandwich, and is currently touting a hotdog garnished with a slaw made of local apples.

The novelty of finding local ingredients on chains’ menus should start to wear off as several large-scale players start shopping closer to their stores. Chipotle Mexican Grill, for instance, has pledged to purchase 35% of at least one produce item per restaurant from local farmers.

With roughly 900 branches, Chipotle may be the largest chain to pursue seasonal fare. But it’s certainly not the first, nor the model example. Critics have noted that its so-called local fare may be drawn from a 250-mile radius, which certainly stretches the definition.

Contrast that with Eat’n Park, the Pittsburgh-based family dining chain. The company has a director of sourcing and sustainability who goes out to find farmers who can supply the chain. When local items like radishes are used by any of the brand’s 75 stores, notice is often given to customers via the chain’s blog.

Those early adapters are being joined by the likes of Darden Restaurants, best known as the parent of Red Lobster and Olive Garden. Its youngest brand, Seasons 52, features seasonal ingredients blended into entrees with fewer than 475 calories.

P.F. Chang’s, a strong competitor to Darden, has invested in a start-up concept called True Food Kitchen. Like Seasons 52, it features seasonal fare, but goes a step further to use local and organic foodstuffs.

Where chains can’t tout the use of local ingredients, they’re doing the next best thing of highlighting the source. Seasons 52, for instance, is currently featuring Colorado Buffalo Chili, Canadian Black Mussels Marinara and a Gulf Shrimp Cocktail.

Is there any doubt that the source-naming trend, and the local variant in particular, is going to continue?

Indeed, there’s one form in particular that we’re likely to see. It’s not widely known by the public, but outlets of the giant burger chains buy their buns from a network of regional or local bakeries set up by the home office. Those suppliers aren’t exactly mom-and-pop shops. But they do offer an opportunity for the behemoths of the business to tout a little localization. I bet we see that start to happen, sooner versus later.

Friday, October 23, 2009

Chipotle to try a new design, development strategy

Chipotle’s menu tweaks drew Balloon Boy-scale coverage when the burrito chain previewed them last spring. But changes in the concept’s design and development strategy are slipping past almost without notice. And that’s surprising, given how the concept is really tinkering with its DNA this time.

Officials disclosed plans yesterday to revamp the layout of stores to reduce energy consumption, crewmember motion, and construction costs. New stores will also have less stainless steel and more tiling in their kitchens, a switch that will ease cleaning operations, the execs said.

At the same time, the chain will broaden its development criteria to include what co-CEO Monty Moran characterized as “Tier 2 trade areas,” or locations with lower but acceptable traffic and enticingly low development costs. Because the so-called Model A restaurants will be less expensive to build, they can provide a better return than conventional sites, even with a lower sales volume, he explained.

He indicated that as many as 30 of those second-tier sites could be developed during 2010, or roughly one-fourth of all the locations that come on-line. CFO Jack Hartung said that mix would lower the average cost of new sites to $850,000 each, from the current $900,000.

Part of that rollback, Hartung indicated, will be generated by changes in the standard format and design of stores.

Founder and co-CEO Steve Ells explained that Chipotle wants to get back to what it was when he launched the concept.

“Our earliest restaurants were generally smaller, simpler and very efficient,” he told financial analysts during a conference call. “As we grew, our restaurants became larger, more architecturally complex, and in some instances less efficient than before.” Now, he said, it’s back to the future.

The layout of units will be revamped “to suggest a flow in the restaurants rather than physical barriers,” he said.

Ells didn’t explain how that would be achieved, but did offer that workstations would both be expanded and set up to eliminated wasted action on the part of employees. He did not say if those adjustments would reduce labor costs.

Definite savings would come from changes in lighting, equipment, and construction materials, he noted. For instance, the chain is switching to a “European-style plancha, which is a flat-top grill,” instead of using a griddle, Ells explained. The device is also smaller than the equipment it replaced, which in turn enables a smaller vent and HVAC system to be used, the CIA grad suggested.

“Over the years, we went through a 10-year period of double-digit comps, and as we saw our volumes go up, we needed to react to those volumes,” he told the portfolio managers participating in the call. “So as we built new restaurants, we built them bigger. We were cooking a lot more chicken and steak on the grill, so we got a bigger grill. In order to accommodate that bigger grill, you have to have a bigger hood. In order to have a bigger hood, you have to have more make-up air and have a larger air conditioning unit on top. In order to do that, you have to have more power coming to the building.”

He also noted the changeover to white tiles in the kitchens. When the new facings were first tested, some bloggers said the surface switch would make stores more eco-friendly, since tiles are easier to recover and reuse than stainless steel. But Chipotle execs didn’t mention any green advantages, other than the cash that would be saved overall with the new design.

Analysts on the call pressed Ells about the change, perhaps out of shock. Design has been hailed by Chipotle as an integral part of the concept. Indeed, any die-hard Chipotle follower knows that a design specialist was one of Ells’ first hires when he was building a team, and the look of stores is often cited as a key part of the chain’s character.

The stockpickers also voiced some concern about the new siting strategy. As Moran acknowledged, Chipotle has traditionally sought out locations that provide high visibility to a heavy stream of passers-by. Those developments were expensive, but the units would open to instant success, with “superior returns” from sales topping $1.3 million a year, he said.

Are you worried that these second-tier stores might siphon sales away from units in primo locations?, one analyst asked.

If anything, this approach will allow the chain to expand into more unfamiliar markets, lessening the chances of cannibalization, Moran said.

The analysts seemed more comfortable with Chipotle’s plans to expand abroad, another departure of sorts for the brand. Its one market outside of the United States at present is Toronto. But Ells said a restaurant will be opened in London during the second quarter of 2010.

A transcript of the conference call was made available by the SeekingAlpha financial information service.

Wednesday, October 21, 2009

Chili's to run tacos through the shrink ray

The menu miniaturization craze will get a mainstream boost when the Chili’s casual-dining chain adds a line of tiny tacos in, well, a short time.

Executives say the array will include pulled pork, pecan-smoked chicken, spicy beef and shrimp versions. But they were mum about the price and how the minis will be packaged into a selection (all of one, a sampler, pick two, etc.).

The addition is part of the menu and prep re-do that Chili’s announced a few weeks ago. That effort that is already revamping the way two signature items, baby back ribs and burgers, are cooked. The former will now be smoked longer, over pecan wood, while the latter will be hand-formed from fresh ground chuck rather than pre-portioned into patties.

Changes have also been made in Chili’s kitchens to ensure that French fry orders are always fresh and hot, according to executives of the chain’s parent company, Brinker International. But, in a conference call with financial analysts yesterday, they didn’t divulge how the preparation was upgraded.

The mini tacos are being added to the menu despite an overall trim in Chili’s bill of fare. The Brinker officials declined to say how big of a cut the menu will get. They characterized the likely deletions as item that fail to differentiate Chili’s from its competitors.

The execs would also not divulge how much the menu and prep overhauls would cost. But they noted that at least some of the profits from the recent improvement in Chili’s margins would be used to pay for kitchen tweaks and additional training.

“Wee are talking about small costs there,” Brinker CFO Chuck Sonetsby told participants in the conference call. “We are not talking about anything that is that expensive. We have had some things that cost $175 apiece.”

All told, he said, the investment should trim earnings by a penny or two per share.

The addition of mini tacos would be the latest in an ongoing shift by the industry to more Lilliputian fare. Uno Chicago Grill, for instance, debuted a pulled pork slider just last week.

It's now possible to have a complete meal out of Munchkin Land. You can get in your Mini Cooper, dash a short distance to the smaller restaurants chains are now building, have a slider for your meal, wash it down with sampler-sized cocktails or beers, and follow it with the shot-glass desserts that are now ubiquitous. It's the check that may not be so tiny.

My thanks to Seeking Alpha for making available a transcript of Brinker's quarterly conference call.

Monday, October 19, 2009

India's Rx for food safety: Poisoning courts

Because death is even less popular than taxes, you’d think more politicians would rail against the perils of food contamination and make it their headline-snagging cause.

Then again, look at how that tactic’s working for Kirsten Gillibrand, the junior senator from my state. The upstate Democrat held a press conference on Sunday to awaken the populace to the dire threats lurking in supermarkets and restaurants. More than 900 food products have been yanked off the market since 2005 because they posed a danger, the result of disturbing safety violations, she stressed.

You probably didn’t know she’s calling for all ground beef to be tested for E.coli contamination, a major step toward neutralizing a safety scourge. But who can bother with matters like that when Balloon Boy’s father is being questioned by the police?

You have to feel sorry for the proponents of food-safety reform. The reaction they’re drawing just seems out of sync with the cause. Today, for instance, 16 people personally touched by a food-poisoning catastrophe visited the White House to push for more stringent safeguards. They were foisted off on the assistant White House chef, Sam Kass, who was described in statements as one of President Obama’s advisors on food policy. “I’d recommend the sweet potato fries today because they’re in season, Mr. President.”

Okay, the entourage also snagged ear time from David Lazarus, a senior-level official at the U.S. Department of Agriculture, and Mariano-Florentino Cuellar, the lead White House staffer on Obama’s Food Safety Working Group. But the Beer Summit was treated as more important.

Maybe the notion of regulatory or legislative reform just isn’t sexy enough. Perhaps we should consider using the judicial branch of government as a powerful agent of change.

That’s what India is considering. A proposal has reportedly been aired there to create a secondary court system exclusively for cases involving alleged instances of food contamination. The new ministry would be a place of recourse when food-safety authorities find a processor that isn’t adhering to standards.

Not that infractions are difficult to detect, apparently. The news coverage notes that 1 million cases of alleged safety infringements are currently waiting to be heard by conventional courts.

Sunday, October 18, 2009

Getting hives from all this buzz

Years ago, a foodie friend complained that chefs were hounding him for liquid nitrogen, the prep aid any kitchen wanting to be hip at the time just had to try. They figured a guy as haute as him would have plenty at his disposal, my bud explained, letting me know how plugged-in he was.

I wonder if he’s being pressed these days for clover blossoms or live honeysuckle vines. To be on the current culinary edge, you have to be thinking about high-craft fresh honey, preferably from bees working just for you.

Having your own hive is a new phenomenon, embraced at present by only a few truly avant-garde restaurants, hotels and other feeding establishments. Right now it's still riding the coattails of other trends. Some of the converts have incorporated hives into their rooftop garden, a more noticeable manifestation of urban farming. The Fairmont lodging chain, for instance, has buzzing boxes atop at least three properties.

Beekeeping is also catching on as a component of student gardening, a veritable trend unto itself on college campuses. The University of Connecticut, for instance, uses some of its campus-produced honey as a sweetener in foodservice operations, with the balance sold in the college bookstore to visiting parents.

But the movement is clearly picking up some velocity. In what’s shaping up as its ongoing coverage of the bee boom, reported two weeks ago that a British company is now selling an urban hive kit that produces up to 50 jars of honey a year. It sells for about $760. The supplier, called Omlet, is already known to urban farmers as the seller of a self-contained chicken-coop kit.

Meanwhile, if you don’t want to get your hands all sticky (or stung), you can pay to have a hive managed for you in New Zealand, with the output going exclusively to you. If private reserve honey is still too much of a commitment, you can buy into a syndicate arrangement, where the hive is owned for a year by up to 10 parties.

As interest in “estate” honey moves in from the fringes, beekeeping is certain to generate considerable buzz (ugh) in the restaurant community. And that’s going to be a good thing, given how fascinated patrons will likely become with propriety hives.

The process is indeed intriguing. I grew up on a estate, owned by a millionaire and superintended by my father. That meant he took care of all the gardens, which were far more extensive than a single family could use, even with their extravagant dinners and parties.

Toward the end of my father’s tenure, back in the early 1980s, the family decided that it wanted to put some bee hives on the 200-acre property. My father had to learn about it, and passed on a little of what he absorbed to me.

Not that I ever touched the hives. A worker was designated to be the beekeeper, largely because he had to foster a relationship with the bees. They had to come to trust him, if you can believe it. He wore gloves and a pith helmet with netting, but expected to be able to go bare-skinned once some familiarity had been established.

When this whole beekeeping thing started to get some attention from chefs who were interested in sustainability, I started looking into buying myself a hive kit. I never got around to it, largely because of the cost, but it did give rise to a memorable laugh.

I told my wife that I wanted to get a beehive. She looked at me a long time, her eyes darting upward for a second, then back down to meet mine. “I don’t think you have enough hair to make that work,” she said.

Monday, October 12, 2009

Street food goes 5th Ave.

By official foodie standards, street foods are a mere Food Network hit away from being pronounced a fine-dining phenomenon. We already have big-name chefs spotlighting simple boulevard fare in Los Angeles (Susan Fenniger, at Street), Chicago (Rick Bayless at Xoco), New York (David Chang at Momofuku Ssam Bar, Zakary Pelaccio with his vegetable and pork buns at Fatty crab), and even Boston (Ming Tsai with his “bing” street dumplings at Blue Ginger.)

C’mon, San Francisco and Minneapolis, you need to get with it.

Otherwise you’re going to be left in the road dust from one of the more sensible trends to hit high-end dining in some time. Flavorful fare that’s inexpensive, a great complement to drinks, and likely at its best in an informal setting—I’m starting to tear up over here.

No doubt more momentum was added this morning with the news that Paul Kahan, the talent behind Chicago’s The Publican and Blackbird, will unveil his entry, Big Star, within the next few months (Kahan gets extra credit for naming the place after one of the greatest bands of all time; I’ll wear a sandwich board and hawk the place myself if he involves Alex Chilton in the publicity).

But the real sonic boom may well come next month, when the Culinary Institute of America devotes its annual foodie fest, the Worlds of Flavor conference in Napa Valley, to street foods. The culinary Harvard’s Greystone campus, one of the most advanced cooking facilities in the world, will focus on the simple fares of Latin, Asian and European marketplaces. Is there any doubt the trend is building to gale force?

Speaking as a consumer who always preferred casual over haute, I view this current right up there with the spread of electricity and the invention of the electric guitar. For the smokey delight of some unfamiliar protein or vegetable, cooked over flame or in some similarly simple fashion to deliver flavor, this is world-changing. It’s also the perfect antidote to molecular gastronomy, or what I tend to view as good eating’s NASA Period.

I may even have to celebrate by heading out to Queens for some real street food. Unlike the high-end variety now sweeping the market, it comes with the added thrill of a food-safety roll of the dice.

But have you tried that roasted ears of corn slathered with mayo and cheese--all for two or three bucks?

Thursday, October 8, 2009

Ruby Tuesday to roll 'best menu ever'

Ruby Tuesday is testing a new menu that “should lead to increased frequency,” marketing SVP Mark Young told investors Wednesday.

That, in turn, will help the chain attain its objective of raising guest tabs into the $12.50 to $14.50 range, from the current average of about $11.50, Young said during a conference call with financial analysts.

He did not disclose what selections will be featured on the new bill of far, but noted that they will include “several new items with bold flavors and more variety.” He also mentioned that the design spotlights an extended array of appetizers and “dinner-type items.”

The chain has been trying to boost sales in a two-pronged strategy of increasing guest counts, sometimes by offering deals, while also showcasing premium selections like a new lobster tail entree. Young said the concept will pare back its deal-making to facilitate a rise in the average check.

Beverage upgrades will also figure into that effort, he indicated.

Although Young said the new menu is still in a test phase, CEO Sandy Beall said the line-up is already set for a Nov. 3 rollout. He described it as “by far the best menu ever,” and said it was the result of “two or three years” of research and design.

Beall disclosed that the chain he founded 35-plus years ago now generates about 45% of sales with dinner-sized items, compared with a mix of 25% in past years. And that’s throughout the day—“we sell, gosh, probably 40% of all our dinners at lunchtime,” he said.

The chain’s objective, he added, is to raise that proportion to 65% of sales.

The new lobster entrée already accounts for 3% of sales, he commented. That compares with the 8% that comes from burgers, a signature of the chain, the executives indicated.

The chain’s officials noted that the recent rollout of Sunday brunch service to all but 100 stores has helped in drawing more visits from established customers.

Wednesday, October 7, 2009

Yum! steers its chains onto surprising turf

Yum! Brands has previewed some scrambles it’ll try in the next few months to juice up sales at its three major fast-food chains. But most were unrelated to the breakfast initiatives being plotted for Taco Bell and KFC.

Instead, the franchising giant is trying to remix its concepts' sales by venturing into some surprising territories. Here are some of the brand-bending undertakings Yum! described to financial analysts during a conference call on Wednesday:

--If you think Taco Bell is all about stuffing skateboarding dudes with as much bulk as they can buy for a buck, steel yourself. The chain will kick off 2010 with a national advertising for its Fresco line, a nine-item array of lower-fat and less-caloric selections.

If that's not enough of a departure from Taco Bell's traditional image, consider what looms on the horizon: "Longer term, we are most excited about breakfast," said Yum! CEO David Novak.

If the Taco Bell chihuahua hadn't passed away, he'd be letting out a Klingon death howl right about now.

--KFC--that's shorthand for Kentucky Fried Chicken, in case you're of a vintage that thinks Col. Harland Sanders was some Civil War hero--now derives 30% of its sales from Kentucky Grilled Chicken. "We have driven awareness to 75% of quick service restaurant users," said Novak, noting that the product is transforming the brand's image.

"We needed to broaden the appeal of this brand and we have done it," he said. Nevertheless, "continuing to drive trial is our top job."

--A major reason for Pizza Hut's 13% same-store sale drop in the third quarter was its image as a place for premium pizza, according to Novak. It shouldn't be a shocker, then, that the chain's new ads focus on chicken wings and a concept-within-the-concept, the bolted-on WingStreet wings brand. WingStreet is being positioned as a separate concept that piggybacks on Pizza Hut's delivery service.

Novak was far less effusive than he has been in past conference calls about Pizza Hut's new Toscani pasta line. He gave no reason why, but did note that the pizza chain has to do a better job of stressing the new diversity of its menu.

Novak noted that Yum! is in the process of choosing a new ad agency for Pizza Hut, precisely "to give the brand a fresh, more differentiated positioning." But he acknowledged that pastas already account for 10% of Pizza Hut's sales and figure into 30% of all transactions.

He also disclosed that breakfast is seen as a big international opportunity for KFC.

"When you look at KFC outside the United States, the only competitor we have is McDonald’s, so why can't we do breakfast?" he commented. "I mean, who is closer to the egg than Kentucky Fried Chicken?"

Novak also mentioned that Taco Bell is working on "a bigger beverage program," without divulging details. But the Orange County Register reported Wednesday night that at least two units in California are testing a juice bar featuring smoothies and a new frozen shake called the Frostbite.

Also available are fingerfood snacks like Mini Crispy Empanadas and Bacon Belly Bombers, along with cupcakes and cookies.

Burger King to get a facelift

Burger King will upgrade of all of its restaurants to an “edgy, futuristic” new look, CEO John Chidsey announced to a media circus today in Amsterdam.

In a pre-announcement interview given yesterday to the Associated Press, Chidsey apparently indicated that sales at the several dozen stores already renovated had risen by 12 to 15%. Sites were the building was razed and rebuilt with the new format enjoyed a 30% spike in intake, the article reported.

BK pegged the cost of the facelifts at $300,000 to $600,000 per store, a charge high enough to all but guarantee yelping from franchisees.

You can see more pictures of the new design here.

Tuesday, October 6, 2009

Pop go the obesity theories--and the corks

I wish I had the Champagne concession for Rick Berman’s office, at least for these 24 hours.

In case you missed the news, the folks who believe restaurant chains can fix America’s weight problem were made to look like conspiracy nuts by two research studies released today.

One refuted the rationale behind menu labeling, noting that consumers in New York City tended to order more-fattening meals and snacks after the city mandated calorie disclosures by chains last year. Almost every respondent said they noticed the calorie counts posted on menus and menu boards, and a large percentage reported that the information influenced their decisions. But when researchers examined the participants' receipts to see what had actually been purchased, they discovered that customers had said one thing but done another. Knowing how many calories were in a product didn’t stop the typical low-income minority New Yorker from eating it.

The other study flatly refuted the contention of the lawmakers who ram-rodded through a measure last year to suspend development of fast-food places in economically distressed South Los Angeles. The restrictions “are unlikely to improve the diet of residents or reduce obesity,” Rand Corp. noted in announcing its findings.

Berman, a restaurant-chain lobbyist who once said he comes at adversaries with a knife clenched between his teeth, couldn’t have hoped for better data if he’d cooked the numbers. But before Berman comes at me with a bite-marked Bowie, let me underscore the researchers’ own assurances to the contrary. Rand noted that its projected was funded by the National Institute of Health, not restaurant chains. The New York study was based on surveys by NYU and Yale University professors of more than 1,156 Big Apple residents. This wasn’t Mickey Mouse stuff.

Rick’s industry-affiliated advocacy groups have yipped for years about do-gooders misdirecting their obesity fixes at restaurants. It was hardly a surprise, then, that his Center for Consumer Freedom was quick to trumpet the studies. Its daily e-letter hailed the findings as “myth-shattering,” with a headline reading, “Obesity Science Catches Up With the Sound Bite.” The coverage was delivered in a section bannered, “Big Fat Lies.” Clearly the CCF was claiming vindication for its argument that foodservice wouldn’t work as a goad for healthier living.

“Yes, indeed, victory is sweet,” noted the e-letter. “The two studies go a long way toward bursting the activist fantasy that getting between Americans and the foods they enjoy is the road to better health.”

But, as it acknowledged without expressly saying so, the victory is qualified.

In an ironic twist, Rand concluded from its data that a nutrition-disclosure mandate might do more than a fast-food ban to change unhealthy eating habits.

California has already passed a law that requires menu labeling by chain restaurants, though the requirement does not go into full effect until 2011. But a number of states, counties and municipalities elsewhere are still considering such measures.

Similarly, an author of the New York study told The New York Times that perhaps a calorie-disclosure requirement isn’t a strong enough measure to change consumer behavior. NYU’s Brian Elbel didn’t elaborate on what type of further action he envisioned, or whether he was thinking of additional obligations for restaurants.

Casual restaurant chains may also be a bit disturbed by one of the asides from the Rand study. The report noted the public tends to view sit-down restaurants as offering healthier fare than fast-food joints, a definite “misconception.”

“When we looked at some common offerings, an average lunch sandwich in a sit-down restaurant had more than the combined calories of three Big Mac hamburgers; many dinner choices have over 2,000 calories and cover the energy needs for a full day,” Rand observed. “And that does not even include possible appetizers or desserts."

One of the few perceived advantages that casual places currently enjoy over quick-serve restaurants was squarely refuted.

Then again, a lot of perceptions were apparently skewered today. Along with a few adversaries.