Saturday, December 26, 2009

How Bob Evans almost wrecked my Christmas Eve

A pox on you, Bob Evans Farms.

On Christmas Eve, while I was ardently researching what adult refresher to leave Santa, word broke of a new venture by the venerable family chain. Keep in mind that NORAD, the nation's missile tracking service, maintains a Santa watch on that night, so it’s not as if the world is abuzz with important activity. Yet here was real industry news: The launch of a new restaurant format intended to blunt competition from supermarkets and food shops. For the sake of restaurant journalism and world peace, I was going to have to write about it.

Fortunately, my quest to nail the ideal eggnog-to-rum ratio pre-empted any blogging that night, as did the holiday festivities of the big day itself. But here, finally, is the rundown of Bob Evans’ notable restaurant experiment.

The test restaurant, near the chain’s Columbus, Ohio, headquarters, features a street-facing retail section called Taste of the Farm, according to news reports. Available for takeout are seven complete meals in family-sized portions, as well as Bob Evans-branded pantry items like muffin and pancake mixes. Also available are Bob Evans sausages and other port products.
The section is an adjunct to a sit-down Bob Evans restaurant. The idea, according to the ample coverage of the concept, is to offer consumers a choice of how they want to be fed. They can sit down for a meal, grab something pre-prepared to eat at home, or buy groceries for something they partially prepare.

Brainstorming a concept that gracefully bridges restaurants and the ready-to-eat sections of supermarkets and food shops has been a longtime (and long elusive) goal of the restaurant business.

The quest has assumed new importance in recent years because the brains working for the other side seem to be closer to finding the formula. It’s painfully obvious to restaurants that they’ve lost share of stomach during the recession to retailers. People are cooking more, buying more ready-to-eat meals, or pursuing the middle court of purchasing some pre-made elements and preparing the rest.

It remains to be seen if Bob Evans, one of the industry’s sleepier concepts, can synthesize a potent counterattack.
In the meantime, I’m just wondering if the Taste of the Farm sells eggnog.

Wednesday, December 23, 2009

That's a lot of $1 double cheeseburgers

A Missoula, Mont., TV station broke a story yesterday that could nab honors as the weirdest restaurant-related news flash of the year. If a golf club or reality-TV star had been involved, former Burger King marketing chief Russ Klein would've almost certainly snagged the media circus' center ring.

Klein recently left his post as president of BK marketing for what the chain stressed were personal reasons. It adamantly refused to disclose any details, indicating that the matter was private.

Jump to Kalispell, Mont., a city farther from BK's home city of Miami than the distance alone attests. It seems that Klein was traveling with a backpack containing a laptop and $6,000 in cash. Okay, maybe he's a big tipper.

Certainly he's careless, according to the report by station KECI. The NBC affiliate explained Sunday that Klein had placed the cash-packed knapsack in what he believed to be his rental car. But the vehicle turned out to be someone else's.

The driver of that car found the cash and turned it in, and even refused the reward Klein had offered for the backpack's return, KECI said in a follow-up report yesterday. Klein and his wife then decided to give KCEI and the local police some $8,000 for local charities, to be divvied up as they saw fit.

Trust me on this, but it's highly unusual for a news outlet to be forwarded a tidy sum of money by someone it's covering. Ditto for a police department that's been called upon to help in the situation. Put those two rarities together, and you have something of legendary uniqueness. We're talking something on a Lady Gaga scale.

"Before you're owed anything, try to give ahead of time, and it creates a certain vibe in your life," Klein was quoted as telling the station. He explained that payback was complete, but that he wanted to pay the money forward.

Call me cynical, but I don't think we've heard the last about this.

Tuesday, December 22, 2009

Meanwhile, in non-Tiger news...

‘Tis the season to hunker down and hope for a better next year, so the restaurant business hasn’t exactly been cranking out news like an elf production line. But a few little-noticed developments in recent days might prompt some hmm’s among the ho-ho-ho’s.

Applebee’s experiments with a server-calling system. A number of franchised stores here and there are testing a tabletop device that allows guests to summon their server if something is needed. Patrons press a button on a tabletop console, which causes a watch-like device worn by their waiter or waitress to vibrate, according to a story in the Sun News, a South Carolina newspaper.

The set-up also monitors how long the guests initially sit before a server approaches. When a hostess seats a party, she waives a watch near the tabletop console. That causes the watch of the wait staffer assigned to the table to vibrate, and an unseen timer starts. If the server doesn’t show within a minute, the manager’s watch buzzes. Then a painful electric shock is directed at the tardy server. Okay, I made that up. But it’s an interesting idea.

Server alerts have been tried for eons. The 160-year-old Tadich Grill in San Francisco, for instance, features tableside buttons on the wall that patrons can press for service. A similar set-up is a signature of a classic watering hole in New York City, the International Bar.

It says a lot that those places are known for the novelty (and kitsch) of having a server-summoning system. Plenty of other converts presumably discovered that the set-up detracted from a guest’s experience. When you have to buzz for someone to take an order, you’re unlikely to coo over the attentive service you’re getting. Unless it’s handled well, patrons might as well take a number, as if they were at the supermarket deli.

Goofy has been pink-slipped by a Disney World restaurant. Other characters had their hours cut, according to a recent post on Examiner, the network of blogs that’s been set up as grassroots news service.

If the posting is accurate, I might soon spot Goofy in a state unemployment classes. The ‘Ohana Restaurant in the Polynesian Resort of Disney World was dropped Pluto’s packmate from the character rotation, or the circulation of people in Disney character costumers during meals, according to the report.

I initially suspected he got a job as the mascot for a Major League Baseball team, since a Goofy would fit just about any of the squads. But that doesn’t explain why Rabbit, a Winnie the Pooh character to which Disney owns the rights, is also gone.

Meanwhile, Eeyore, Piglet, Tigger and Pooh himself reportedly had their circulation hours cut.

And all you see on the airwaves is non-stop reporting about healthcare.

Restaurant marketing makes the list of 2009 campaigns to remember. Unfortunately, the campaigns may not be remembered for reasons the industry should cherish.

For instance, the Wall Street Journal ranked Burger King’s de-friending crusade on Facebook as the year’s fourth best marketing program. In case you’ve forgotten the furor it sparked, the campaign rewarded Facebook users with a Whopper coupon for every 10 acquaintances they “de-friended,” or publicly designated as someone they didn’t want as a friend anymore. About 234,000 people were informed of their newfound leper status before Facebook asked Burger King to knock off the high school nonsense.

It’s vexing to see that effort on the Best of the Year list when KFC’s plug from Oprah Winfrey is on the Worst-of roster. The talk-show hostess informed viewers that they could try KFC’s new Kentucky Grilled Chicken for free, triggering a run on the Colonel’s old Kentucky chicken home.

KFC halted the giveaway, saying supplies had been depleted. But it was never clear if the chain rain out the new product or merely didn’t want to give away that much free food.

In any case, the cut-off triggered more media coverage than we’d see until Tiger was brushing broken car window off his Nike shirt. The logo would be torn off later, no doubt to Woods' delight that nothing else was torn off his body.

Wednesday, December 16, 2009

Dunkin' to give table service a try?

Press coverage of a zoning board meeting is usually a viable alternative to Ambien. If you're not in REM sleep by paragraph four, it's time to cut back on the Red Bull.

But a recent report from Middlebury, Conn., would make a fast-food executive snap upright with the alertness typically reserved for a letter from the IRS. The news article recounted the efforts of a local Dunkin' Donuts franchisee to secure the go-ahead for a new store inside an existing building there.

That per se has all the excitement of a supermarket special on canned okra. But the story by Voices, a local newspaper, revealed that the proposed donut outlet would sport 58 seats, or far more than is typical for a 1,100-square-foot donut shop. As a lawyer for the franchisee was quoted as telling the Planning and Zoning Commission, "Fifty-eight seats are not normally expected in a take-out restaurant."

That's because the unit plans to add table service, Voices quoted attorney Michael McVerry as saying.

Baskin-Robbins, Dunkin' Donuts' sister chain, has experimented with the sort of modified service that's become routine in the fast-casual restaurant market. At the Baskin-Robbins Cafe that opened in the summer of 2008, guests place their ice cream or coffee orders and take a seat. A staff member bring them their orders.

McVerry didn't reveal whether that's what Dunkin' has in mind for the new Middlebury store. But he did note that the concept has been drifting upmarket through changes like the addition of sandwiches and bagels.

Might the chain be thinking about adding table service?

We'll see, because the Dunkin' development was approved.

Trend or fad: Two to handicap

As I’ve mentioned here before, two publications where I worked had hard and fast rules to differentiate a fad from what we could suggest was a trend. If there were two or fewer examples of something new, it was a hula hoop. But if at least three instances could be cited, all hail the next mini-dessert or slider.

I’ve been rethinking that standard as I consider the flurry of new items appearing on restaurant menus, especially the ones that have been adopted by more than one concept. Two products in particular seem as if they could have legs, even if they haven’t yet met The Rule of Three.

Consider, for instance, funnel cakes, or variations there of. Scanning the food court at a Florida airport last week, I noticed that a conventional funnel cake, just like the one you’d munch at a country fair while viewing the prize zucchinis, was being offered at a combination Nathan’s/Arthur Treacher’s walk-up counter.

A few hours later, a business acquaintance mentioned that he’d tried a new dessert at Burger King the day before, a serving of “funnel cake sticks” that he adjudged “right on.” A day later, BK issued an announcement that the product, first tested at its Whopper Bar spin-off concept, would be rolled into every conventional U.S. store. The dessert consists of long, separate sticks of a chewy cake, rather than the tangled rope of fried dough that constitutes a traditional funnel cake.

Consider for a second that fast-food restaurants haven't exactly been printing their dessert menus in pencil to handle the slew of the changes. There’s been a new strawberry shortcake here, a new cheesecake on a stick there. But that section of the menu board has hardly been the scene of dizzying switches. Might funnel cakes be on their way to joining deep-fried fruit pies as a new add-on staple?

Fast-food chains would no doubt appreciate that a funnel cake requires a fryer rather than a freezer or refrigerator space. As long as they could fry it without cutting into French fry production, they'd be happy to use a piece of equipment that is in virtually every quick-service kitchen out there. There's a lot going for the product, speaking purely in operational terms.

But, alas, we’ve yet to see that third example that verifies this is a true wave rather than a coincidence.

The other potential trend is already at the 2.5-instance mark, with an asterisk. Fresh asparagus is hardly a rarity on restaurant menus. But recent appearances suggest the spears may be set for more of an embrace by mainstream chains.

Consider, for instance, the Sausage Sandwich at Parasole Restaurant Group’s just-unveiled concept, Il Gatto in Minneapolis. Parasole is the independent group that has hatched such concepts as Oceanaire, Buca de Beppo, Manny’s, and Burger Jones. Il Gatto is being promoted as a casual place featuring "uptown Italian" fare.

In an early look at the concept, blogger James Norton touted the Sausage Sandwich as a must-try selection. It consists of a sausage made on premise, garnished with stracchino cheese and nestled atop a toasted bun with several stalks of asparagus. “Asparagus gives the sandwich a bit of vegetal balance and a pleasant textural snap,” writes Norton.

The picture he posted suggests the asparagus delivers considerable eye appeal as well.

Asparagus is being similarly wielded by Dogmatic Gourmet Sausage System, the upscale, organic hot dog concept that chain-restaurant veteran Brad Blum opened in 2008 in New York City.

The injection of color, flavor and a snappy texture could be a strong differentiator for fast-casual sandwich concepts—provided the high-volume users could buy sufficient supplies of acceptable quality at a reasonable cost.

Those are all big if’s, of course. But Mimi’s, the family chain that’s more of an upscale casual brand than a competitor of Denny’s, has featured asparagus as an ingredient for several years now.

Granted, it’s incorporated in the spring, when asparagus is in season. But if demand were high enough, areas whose growing seasons fall in the winter would presumably start cultivating the vegetable. If we can get strawberries all year long, why not asparagus?

Maybe with a funnel cake for dessert.

Tuesday, December 15, 2009

Shareholders as mystery shoppers

I recently moderated a webinar where the participants cited the need for new ways of gauging customers’ service experiences. The prevailing method, of inviting patrons to take an online or telephone survey in exchange for a freebie, has apparently lost its impact, though they did not explain why. Instead, they suggested there has to be a more effective way of soliciting input, using new technology or at least fresher techniques.

Sardar Biglari, the activist investor who took over Steak n Shake’s corner office last year, told investors yesterday of a feedback mechanism he’s put in place to short-circuit the process between guest experiences and a restaurant’s better financial performance.

The mechanism also fits his self-avowed cheapness. “We are demons on costs,” he proudly told stockholders in a letter posted on Steak n Shake’s corporate website. “Trimming them is
now embedded in our corporate DNA.”

The system he’s set up in effect turns Steak n Shake’s thousands of stockholders into mystery shoppers. As Biglari explained in his letter to those investors, the family restaurant chain set up an e-mail hotline a year ago,, so any stockholder could recount their experiences in a unit to the home office.

If they spotted something good or bad, executives will take note, Biglari stressed. You can be assured that each message is read, and when necessary the Steak n Shake team is dispatched quickly to remediate any problems,” he said.

In addition to fixing problems before they can fester, the arrangement demonstrates that headquarters will be accountable to the company’s owners, even over such things as the cleanliness of the silverware.

So far, Biglari indicated, the system has been a success: “The email, which goes to all members of the restaurant operation’s senior leadership team, has been both effective and cheap — in line with our motto.”

To keep the system from being commandeered by suppliers trying to flog a product, Biglari has set some stern ground rules: Do it once and you'll be assured of never doing business with Steak n Shake.

Any other non-stockholder who uses the e-mail address will be boiled in oil. Okay, I made that up. But I don't think the response from headquarters will have its i's dotted with little hearts or flowers.

Biglari recently surpassed Nelson Peltz as the gadfly most likely to be covered by Restaurant Reality Check. His prescriptions for reviving a restaurant company, and most definitely his means of putting them forward, are hardly cookbook, as his feedback mechanism and shareholder letter readily attest.

But it’s hard to argue with his approach, given the results. When Biglari assumed control of Steak n Shake, the company was losing money at the rate of $100,000 a day, he told shareholders. For its most recently completed quarter, the concern posted a net profit of $3.4 million, compared with a net loss a year ago of $9.2 million.

The bounce back was even more dramatic on an annual basis. Steak n Shake enjoyed a profit for the fiscal year of $6 million, compared with a loss the year beforehand of $23 million.

Granted, the most recent fiscal year encompassed 53 weeks instead of 52. Still, same-store sales during the fourth quarter leapt 10% on a 20% quantum leap in traffic.

Biglari might ruffle some feathers, but he’s delivering to Steak n Shake’s shareholders, employees and guests.

Monday, December 14, 2009

The hot restaurant concepts of 2010?

Last week I helped some culinary students flag the differences between John Schnatter and Mickey Rooney.

Unless your cable service was down last summer, chances are high you saw Schnatter trying to give a bundle of cash to the current owner of the Camaro he sold in the ‘80s to enter the restaurant business. Schnatter used the proceeds to convert a section of his father’s bar into a walk-up pizza counter. Literally a closet operation, the venture grew to become Papa John’s, with annual sales exceeding $2 billion. Because of Schnatter’s skill at hatching a concept, he could forget a Camaro and buy General Motors instead.

Mickey Rooney, for those of you who don’t recognize the name, was one of Hollywood’s biggest draws during the 1930s. Indeed, he was the George Clooney of his time, at least in terms of fame and screen appearances. But, astoundingly, his round-hotdog restaurant chain never quite caught on during the ‘70s, even though the product fit so neatly on a circular bun.

Efforts to start a restaurant concept have yielded more train wrecks than the film careers of Pauly Shore and Tom Green, combined. Need I mention the failed attempts of Muhammed Ali, Steven Spielberg, Alice Cooper, Johnny Carson, Arnold Schwarzenegger and Mike Piazza, to name just a few?

Yet the list of aspirants continues to grow, with names like Richard Branson, Rolling Stone magazine and boxer Julio Cesar Chavez added to the roster just in the last month or so.

Because I’ve witnessed so many crashes and triumphs, I was invited last Tuesday to address a class at New York’s Institute of Culinary Education, an often-overlooked contributor to the city’s phenomenal restaurant scene. My mission was to opine on what separates a Schnatter-ly restaurant venture from the Rooney-esque, something very important to the students because they’re all in the process of brainstorming a concept of their own.

Instead of talking in the abstract and risking a symphony of text-message alerts from the kids’ phones, I handicapped what I believe will be the Hot Restaurant Concepts of 2010.

My picks aren’t new to the scene at all. Rather, these are concepts likely to enter the mainstream next year, even if they no longer elicit oohs and aahs from the black-dressed sport diners on the coasts.

Here’s the list, along with a few thoughts.

Places specializing in street foods: This is a surer thing than Tiger Woods having his text messages screened for the next month. Indeed, I can’t understand why it wasn’t on all the forecasts that were pecked out of foodie keyboards in recent weeks.

Street food certainly fits the times. Peasant fare sold in bazaars or along busy thoroughfares is simple, and simplicity (or its fellow traveler, back to basics) was on virtually every list.

The ingredients tend to be fresh—another check mark on the trend inventory—and inexpensive, which holds the price to a level consistent with the current Age of Thrift.

Foods patterned after the street fare of Third World nations also tend to be grilled, roasted or boiled—relatively healthful prep methods that fit the sometimes contradictory goals of being flavorful and better for you.

Finally, we’ve already seen street foods snag interest from a few of the industry’s Mount Olympus set—gods and goddesses like Rick Bayless, Susan Feniger, David Chang, and Ming Tsai. The trend has even merited its own Flavors of the World conference, the foodie equivalent of the Burning Man Festival.

Confidence in this one is high.

Taquerias: A sub-set of the street-food craze, authentic tacos are drawing sufficient attention from big-name chefs and restaurateurs to merit their own Hot Trend designation. Celebrity proponents include Traci Des Jardins, Bayless, and Paul Kahan, to name just a few.

As I’ve noted in this space before, the interest from fine-dining chefs makes you wonder if taquerias will supplant burger joints as their low-end concept of choice.

Burger restaurants: It’s still on my list, but only because of bandwagon-jumping. The ranks of patty specialists will undoubtedly grow, but I bet we start to see some wheezing in this sector, or at least at its pricier end. There’s just not sufficient differentiation, and the novelty of a burger flipped by a Michelin-caliber chef is going to wear off.

This is my pick of Fade of the Year, largely because of the differentiation issues.

Gastro pubs: Indeed, why couldn’t these places co-opt whatever pent-up demand is left for high-end burgers?

But gastro pubs offer so much more, including comfort and casualness, two positives that aren’t going to lapse from fashion anytime soon. They’re also prime proponents of the high-caliber beer trend, which shows every appearance of having legs.

I know, I know: Gastro pubs have been around for years. But watch for a proliferation, particularly in areas inland from the current strongholds of Chicago, Los Angeles and Minneapolis. They’ll become the choice of indulgence.

Then again, maybe I’m prejudiced. Gastro pubs are the trend I’d most like to see catch fire in 2010, speaking as a consumer.

Restaurant trucks: We’ll undoubtedly see more chefs serving from a wheeled kitchen next year, though I’m far less certain of this trend’s staying power.

Right now, there’s considerable appeal to turning the key on a new truck concept. Consumers like the convenience and typically lower prices of a mobile operation. Operators appreciate the reduced overhead and start-up costs, which in turn allow them to keep their menu prices in check.

But I can’t help but wonder if novelty figures large in the appeal that was evident in 2009. Once you’ve tried the sardine truck, are you really going to build your night around it? And what about the yearning for a dining environment, even if it’s just a table and a chair?

Most of the trucks also specialize in a particular menu item, and history has shown us that a one-trick pony has a tough time in this business. Consider such flashes as soup, muffin, croissant and frozen yogurt concepts. Most were either co-opted or abandoned by a clientele that wanted more of a selection.

The jury’s still out here, though a proliferation of kitchens on wheels should prompt a verdict.

Authentic-food chains: This is a sleeper, an up-and-comer that’s not getting as much attention as, say, Spanish restaurants, or gourmet fried-chicken places.

Perhaps the potential trend is still going unnoticed, a reflection of its limited exposure to date. There are really two proponents of note: Seasons 52, Red Lobster’s high-end little sister, and True Food Kitchen, a one-off that P.F. Chang’s is carefully studying as a possible expansion vehicle.

Both feature seasonal, fresh fare with healthful overtones. Seasons 52, for instance, could boast that its entrees are under 500 calories.

But it downplays that plus to stress the integrity and freshness of its fare. Seasons 52 is the chain embodiment of the yearning for off-the-farm ingredients you don’t have to feel guilty about consuming.

True Food Kitchen, a brainchild of Phoenix restaurateur Sam Fox, goes one step further by featuring organic and natural ingredients. It professes to “nourish body, mind and spirit,” which is music to the yoga-and-couples-massage set.

The brakes on this one are the logistical challenges—finding enough seasonal fare of consistent quality, and doing it at a cost that translates into reasonable prices. But it’ll come, especially as medium-sized agriculture continues to make a comeback.

Whim restaurants: This is a forecast virtually peculiar to me, but I’m more convinced than ever there’s something here.

As I mentioned in an earlier posting, “whim restaurants” is my term for the ventures of high-end chefs who want to do something creative, small scale, and highly spur-of-the-moment. Such luminaries as Thomas Keller and Tom Colicchio are embracing these home-style niche places as a way of featuring the dishes they like to cook and eat themselves, with menus determined no farther in advance than their home dinner plans.

Since I last wrote about Keller’s Ad Hoc and Colicchio’s plan for an extension of his Tom: Tuesday Dinner into a full-scale restaurant, several other whim ventures have come to light. Michael Bauer of the San Francisco Chronicle devoted a blog installment to the phenomenon, though he didn’t use my label.

Leslie Brenner, in a blog for The Dallas Morning News’ website, described a whim sort of place, but used the term “guerilla restaurant.” She described a place envisioned by local restaurateurs that will be used to raise funds for charities. The hours and nights of service will be limited, and the chef will vary as readily as the menu does.

The concept may still sound alien to the U.S. market, but it’s already become established in the U.K., where the term “pop-up restaurant” is being stretched to cover places that chefs are opening to indulge their culinary whims of the moment.

Friday, December 11, 2009

Being part of the train wreck

A butterfly flaps its wings in China and McDonald’s ends up cutting its breakfast prices. Okay, there’s the profound factor in there of consumers waving new pink slips, but you get the idea. Despite considerable efforts to counter a stinking economy, restaurants are still being skunked by cascading forces beyond their control, unemployment being the main one.

Yesterday’s development was resounding confirmation. When the economy slipped in ‘07, breakfast afforded a rare spot of opportunity for fast-food restaurants. A majority of consumers still consumed their first bite of the day at home, posing a gigantic potential market. Not surprisingly, the big chains mobilized for an a.m. market surge, often starting with an upgrade of their coffee.

Few charged as forcefully as McDonald’s, already the sector’s breakfast king. Breakfast, beverages and snacks would be its growth areas, executives assured investors and franchisees. And it looked as if they were dead-on; those markets fueled a sales increase for the chain, at a time of significant decreases for most of the major fast-food slingers.

But rising unemployment started taking its toll. With almost one in five Americans “under-employed,” according to the experts, fewer consumers were venturing beyond their front doors in the morning. Breakfast traffic eroded, and those who still were heading to an office or shop floor were far more stingy with their pennies, a reflection of declining pay and often fewer incomes within a household.

McDonald’s responded by posting a new cut-rate breakfast menu in some of its markets. Yesterday, amid indications of further sales erosion, headquarters confirmed that the new a.m. bargain array would become an across-the-chain feature. Consumers trying to tighten their budgets will be enticed with a Dollar Menu of five items priced under $1, beginning next month, officials told the business media.

The brand’s closest rival, Burger King, had adopted dollar breakfast deals some time beforehand.

And if those two bellwethers are doing it, the pack is sure to follow.

But breakfast isn’t the only meal where lines have been thinned by unemployment. Yesterday I moderated a webinar that included representatives of several quick-service chains. One pointed out that it’s far tougher to sell lunches when fewer people are away from home for the midday meal. Those who do work are brownbagging it more often, and spending as little as they can when they do have someone else prepare their meal, he said, echoing the grim assessments of other experts.

And then there’s the phenomenon of furloughing, or cutting employees’ work schedules. Many employers now require those still on the payroll to skip several Fridays a month, with their compensation trimmed accordingly. Others are being forced to take additional weeks of vacation, though without compensation.

In short, the lunch market is being cinched far tighter, and those still in it have less money to spend.

Of course, it’s not as if the dinner market is booming. One of my webinar panelists works for a high-end concept that figures about 80% of its checks are charged back to employers on expense accounts. And it’s not as if travel or entertainment budgets have escaped the machete.

Most restaurant chains have tried to counter the curtailed spending at all times of day by flashing some astounding bargains. Even if that worked as well as they might hope, it leads to all kinds of problems, not the least of them being how the public can be weaned off deals when unemployment falls back to conventional levels.

In the meantime, those of us who are unemployed are grateful to have our Sausage McMuffin for a mere buck, or what we once might’ve given as a tip to the guy at the deli who prepared out usual breakfast.

Wednesday, December 9, 2009

More thinking outside the bun

The news seeping out of Yum! Brands' annual financial conference in New York suggests 2010 could be a year of hyperactive menu development for Taco Bell, the franchise company's biggest brand.

Among the changes previewed was the Mexican chain's use of two proteins that have yet to appear on its regular menu: carnitas, or Mexico's version of pulled pork, and shrimp, which is scheduled to be used in a premium ($2.79/each) taco.

Among the other products already been greenlighted, according to Janney Mongtomery Scott analyst Mark Kalinowski, are a bargain priced (89-cent) 5-Layer Burrito, and Taco Bell's first soft taco, which will feature the new carnitas.

Every year Yum holds a meeting with restaurant analysts like Kalinowski to familiarize them with the strategies of the company's chains. For the benefit of those who've been caught in a pesky time warp for the last four decades, the other brands include Pizza Hut and KFC.

Monday, December 7, 2009

A situation to watch, Part I

So many jaw-dropping situations, so little time.

During this extraordinary period for the restaurant industry, you can get a research-worthy case of whiplash from trying to watch all the dramas unfolding in the business. Instead of rubberizing your neck, consider a focus on this standout among the nail biters. Its only rival as a potential tell-all book is the other situation that's not to be missed, detailed in Part II below.

Steak 'n Shake 'n Biglari, or What Would Warren Do?
If Warren Buffett asked business bravehearts who should succeed him as Holding Company Guru, Sardar Biglari would be the guy jumping up and down with his hand in the air, yelling, “Me! Me! Pick me!!”

Instead, Biglari has set out to prove himself the de facto heir to the Bard of Omaha. Buffett became the second richest man in America in large part by spotting repairman’s specials that were undervalued. He gathered them into what’s now Berkshire Hathaway, a holding company he turned into a cash-flow machine by adding insurance companies to the portfolio.

Biglari, a thirtysomething business school grad who has cast a former professor as his Charlie Munger, is apparently trying to follow Buffett’s blueprint to a T-square. First he bought the wheezing Western Sizzlin buffet chain, then turned around and amassed a major stake in Steak 'n Shake, a burgers-and-fries chain with the distinction of offering table service. His investment allowed him to wrest control of Steak 'n Shake from a management team that was likely drawing death threats from investorsecs.

Amazingly, Biglari has been able to bring his two flagging operations together without being lynched by those investors, probably because they welcomed any change in leadership. Among the reasoned objections they might have posed was how a company could turn around both brands simultaneously, when reviving just one of the flatliners would be a Harvard Business case study.

Then again, hasn’t Buffett done that time and again?

Even more of a parallel was Biglari’s use of Steak 'n Shake Holdings to buy about a 10% interest in—surprise, surprise—an insurance company, Fremont Michigan InsuraCorp.

You can read all about Biglari’s efforts when he releases an extended and likely candid letter to investors next week. It’s exactly what Buffett does every year in his legendary reports to Berkshire’s shareholders.

The key question to keep in mind as you munch some popcorn and watch this CNBC saga unfold: Has Biglari actually duplicated Buffett’s magic formula, or is he merely reciting a spell without the mojo to make it work? Is he really going to conjure the money?

A situation to watch, Part II

Kona Grill: Hail the brave newcomer
Not so long ago, fans of professional wrestling could get their oohs and aahs from the conference calls of Kona, a small casual dining chain known for its sushi. You couldn't stage the sort of hostility that crackled between investors and management.

Here’s a snippet that’ll probably make it to the Kona Grill: Grill This boxed set, which the home office should consider marketing as a gift option this season. It starts with the preamble to a question that portfolio manager Thomas Lynch really, really wanted Kona CEO Marcus Jundt to answer, and goes downhill from there:

Marcus, I’ve noticed on previous calls and on this call that you’ve been a little bit reticent about answering questions. So as I go forward, I’d like to give you the opportunity to show shareholders that you’re accountable and you really know how to operate this business… What changes are you going to make? Who is personally accountable? And specifically in management, what changes will you make?...Can you address that?

Jundt, it immediately became apparent, was no Dale Carnegie disciple. “I’ll address the question in the manner in which I want to address it,” he shot back.

Lynch followed with questions about an agreement to sell a big chunk of stock to Jundt’s father at a price of just $1.19 per share.

Other investors joined in with questions about high turnover on Kona’s board, and what criteria was used to find directors.

The April call clearly did not go well for Jundt and his fellow execs.In the background, you can almost hear a mob forming, anoose in hand.

Stunningly, Jundt resigned a few months later, followed by his interim replacement several months after that.

And who’s ridden into the chain to revive its fortunes? One of the sector’s whitest hats, Mark Buehler. He was a standout marketer at Applebee’s, and was later hired to clean up Tony Roma’s and Lone Star. He’s earned his spurs and six-shooter.

Now he’ll be polishing up the badge and striving to right Kona as the new CEO and president.

There's no confirmation that shareholders bypassed a headhunter and actually summoned Buehler with the Bat Signal. But I’m betting Liam Neeson plays him in the movie.

Thursday, December 3, 2009

More flamebroiling tempers at BK?

A financial analyst may have inadvertently fanned the broiler flames at Burger King, where franchisees have squared off with the home office over the deeply discounted Double Cheeseburger.

The Wall Street Journal reported online this afternoon that Morgan Stanley had advised investors to reconsider their positions in McDonald’s because the burger giant is being sapped by competitors’ discounts. BK’s $1 Double Cheeseburger was specifically cited by the brokerage, where analyst John Glass handicaps the restaurant sector.

If investors pull their money out of McDonald’s because it’s being hurt by Burger King, is it such a leap to assume some will shift it over to Burger King Holdings, the keeper of BK’s castle?

In other words, the Double Cheeseburger appears to be helping the franchisor’s stock price. And that’s going to go down like three-week-old Onion Rings with franchisees.

They’ve argued that the quarter-pound Double Cheeseburger is boosting traffic and sales, the base for the home office’s revenues and profits, at the expense of unit-level profits. In filing a lawsuit a few weeks ago to halt the head-turning offer, an association of franchisees alleged they’re losing a dime on every Double they sell for a buck.

Now comes word that the deal is not only helping BK Holding’s revenues, but also boosting its stock valuation.

If you should see a torch-toting mob of BK franchisees outside the chain’s Miami headquarters, you’d best run for cover. It could get ugly.

Tuesday, December 1, 2009

My crystal ball has some static

Call me old-fashioned, but there’s something perverse about running Christmas commercials during World Series broadcasts. Marketers are so determined to get a jump on the all-important sales season that we can only hope they’re flogging gift ideas for this year’s holidays, not 2010’s.

It shouldn’t be a surprise, then, that the year-end prognosticators are breaking out the tea leaves and animal entrails a bit earlier this year. It’s only Dec. 1, but at least seven lists of next year’s restaurant trends have already been divined and released by wise seers.

They vary greatly, to a degree I intend to explore here when the forecast tally climbs to 10, or probably sometime tomorrow morning. But suffice it to say we’re heading into a year where restaurants will simplify their menus, use more animal innards, and hawk fried chicken the way they ballyhooed sliders in 2009. Yes, fried chicken is widely expected to be the next pork belly, or the new bacon, depending on which forecast you read.

What surprises me on first flush is how few noted the two trends that will certainly be on my predictions list, which is on the to-do list right after “Finish leftover cranberry sauce.” Perhaps that’s because they’re not really great leaps from what was happening in ’09.

Chefs and restaurants at all price levels will continue to showcase burgers, to be sure. But, as a colleague from Restuarants & Institutions noted in a recent Twitter posting, tacos are replacing burgers as the low cost/high flavor item that’s being taken up by fine-dining chefs. Rick Bayless is featuring them at Xoco, Paul Kahan is showcasing his riff at Big Star, and today brought news that Traci Des Jardins will extend her early lead in the taqueria wave by opening a second Mijita in San Francisco.

The other prediction is more of a stretch, though there is some evidence to support my supposition. I think we’re going to see the opening next year of what, for lack of a better term, I’m calling whim restaurants—places were chefs can forego a set menu and instead indulge their creativity with whatever’s seasonably available and they feel like cooking. It’s sort of like being invited over to their home for dinner.

It’s exactly what Thomas Keller is doing to great effect at his Ad Hoc in the Napa Valley, or close to what Tom Colicchio has attempted with Tom: Tuesday Dinner, one of the more creative responses we saw last year to the economic freefall. When private-room bookings tanked at Colicchio’s Craft in New York City, the chef turned one of his function spaces in a restaurant-within-a-restaurant twice a month that he called Tom: Tuesday Dinner. The hook was that he’d plan the dinner and cook it himself while you watched, just as you might at the home of a friend. Except in considerably posh surroundings, with a polished staff waiting on you.

Tom: Tuesday Dinner was only open on two non-successive Tuesdays per month. Today Colicchio told Eater NY that he plans to open a restaurant next year that will use the same approach as the limited-time Tom: Tuesday. He suggested that the menu might not change nightly, a result of what he learned with Tuesday Dinner. He explained to Eater that he and his staff needed some time to master each dinner roster. Yet it was all for naught because then the menu would change. So they decided to stay with a menu for at least two successive Tuesday sessions, he recounted.

It remains to be seen if other chefs follow those two kitchen gods in developing concepts where they can indulge their creativity as the spirit moves them.

Fortunately, with probably a few dozen more forecasts to go, we may get an indication as to whether it will happen in 2010.

When to stay home

There are times when a restaurant employee provides the sort of experience you’d only believe if Larry David were on the scene. Witness what happened yesterday to my wife when she stopped at a Moe’s Southwest Grill to grab a quick dinner for us:

Wife, joshingly: “Hey, you forgot to say ‘Welcome to Moe’s!’”

Counter employee: “My mother just died so I really don’t have it in me. So, (very sprightly) what’ll you have?”