Wednesday, December 29, 2010

Biggest story of 2010 will be the standout of '11, too

The Editorial Police kicked in my door last night to nab me for serious violations of the columnist’s code. Here it is, Dec. 29, and I still haven’t aired my picks of the past year’s biggest stories, nor my list of predictions for the year ahead. In some metro markets they make you dance on “Glee”—to an ABBA song—for far less.

Inspired by the current comeback tour of PeeWee Herman, I’m going to buck convention and skip the recap of restaurant developments that changed the business’ trajectory in 2010. To me, there’s only one that’s really worth noting, and that’s the trend that should top every prognosticator’s read of what’s ahead.

The industry, and our culture for that matter, are seeing a new mob mindset take hold. The highly processed, mass-produced, nutritionally suspect foods that somehow became our norm are being rejected faster than telemarketers who interrupt date night.

The public is demanding more integrity and wholesomeness in its food—not just the all-in-black hipsters in New York, Seattle and Los Angeles, but persons from all social strata. With schools planting student gardens and thought leaders preaching the virtues of sustainably produced foods, Tang and Tab (which, accordingly to lore, stands for Totally Artificial Beverage) may be doomed.

Consider for a moment that Frito-Lay has pledged to offer all-natural versions of Lay’s Potato Chips and Tostitos toritilla chips by the end of 2011.

Chain restaurants are lagging behind the trend. With the exception of Chipotle and the its little-noted fellow travelers, the Jason’s Deli chain, very few brands are shifting to less processed, more local, more natural options.

Non-believers say there’s no need—their patrons don’t want it. I suspect they also think the internet is a fad that’ll pass.

A greater number profess they’d adopt to the trend if they could, but the cost, limited availability and inconsistency of more natural foods make the task unfeasible. They haven’t found a way to do it while maintaining their margins.

They’d better try harder. The current is not going to abate, in 2011 or the years thereafter.

Tuesday, December 28, 2010

Isn't this supposed to be a slow news time?

We’re about to ring in the new, but a number of restaurant greybeards aren’t ready to sound the gong on their careers quite yet.

Veterans of McDonald’s in particular have been making considerable news with fresh endeavors. Today brought word that Robert Doran, a one-time operations EVP, was taking the helm of the Granite City brewpub chain. He’ll be joined on Granite’s reconstituted board by Mike Rawlings, a former president of Pizza Hut.

They’ll oversee a company that’s just been injected with a $9-billion equity infusion by Doran’s company, Concept Development Corp.

Doran might be able to get a discount if he eats at Tom & Eddie’s, a new burger joint in Geneva, Ill. The just-opened eatery is a collaboration between Ed Rensi, a supposedly retired president of McDonald’s USA, and Tom Dentice, once EVP of operations and training for fast-food’s Lebron James.

But they’re not the only ones who can’t seem to get enough of the restaurant business. Catterton Partners, a co-owner of such chains as Outback, Carrabba’s, Cheddar’s and First Watch, today announced that has acquired Noodles & Co., once the poster-concept for the fast-casual sector.

Catterton has yet to announce who’ll be assisting Noodles president Kevin Reddy as he leads the chain into a new chapter. But my bet’s on some industry veterans.

'And the winner is...'

Here's the winner in McDonald's Legends of McRib contest, in which fans of the perennial limited-time product were asked to make their own videos celebrating the sandwich's carefully planned scarcity. It won the submitter, Sawyer Frye of Carthage, N.C., $10,000 and a trip to Germany, where he'll be able to have his fill of McRibs.

His selection will officially be announced later today.

Here's the gold-earning submission:

Wednesday, December 22, 2010

Is the restaurant industry really at risk?

One of the first conferences I attended after 9/11 was a convention on food safety. The meeting had been planned in the pre-September days when viruses and other micro-pathogens were regarded as the main threats. But the terrorist attacks in New York and Washington hijacked the focus, shifting it to food security. Instead of discussing accidental restaurant poisonings from E. coli and other bugs, speakers spoke of the supply chain’s vulnerability to purposeful contaminations by fanatics looking for a stealth weapon of mass destruction.

In one memorable breakout session, two renowned safety experts worked with the audience to identify the greatest risks. They noted that common ingredients like spices and coffee lent themselves to tampering, and were often harvested in areas known to be at odds with the United States.

Sugar was cited as a particular vulnerability because it wasn’t very regulated and was used in so many processed foods. Poisoning that ingredient sounded so easy that I used a made-up name for the sweetener in a column covering the conference. As crazy as it sounds today, I didn’t want to give terrorists any ideas.

We were all worried about monsters under the bed back then. After awhile, that level of suspicion seemed almost hysterical. Life for the food business remained more normal than the conference might’ve suggested, and bacteria and viruses again emerged as the main threats.

Then came the CBS News report earlier this week that terrorists were planning to poison the salad bars of restaurants and hotels in a coordinated weekend attack. It said an anonymous intelligence official had confirmed the threat as “credible,” and noted that the U.S. Department of Homeland Security had gathered safety officials from the restaurant and lodging industries to brief them on the potential danger.

The report was exclusive to CBS. In the news business, that makes you suspicious. If the account was true, why couldn’t any other medium independently verify it? Certainly they would’ve tried with a story that big.

Nor have other authorities come forward to confirm it.

But they haven’t denied it, either.

Joe McInerney, the straight shooter who heads the American Hotel & Lodging Association, told USA Today that his group wasn’t invited to any security briefing by Homeland Security.

But he did shed some light on the matter. There was what he described as a standing meeting between Homeland and hospitality officials on the Friday before the CBS report. He also noted that the hotel industry has long been considered a “soft target” for terrorists.

And he said the lodging trade is taking precautions. The AH&LA is putting together a webinar for hotel employees on averting an attack on buffets, McInerney explained to USA Today.

It will also provide properties with info cards that can be inserted in employees’ paycheck envelopes, alerting them to say something if they see something suspicious.

The restaurant industry has so far been mute. But it’s just a matter of time until the issue gets a finer, more prodding point. What happens at a salad bar or buffet concept with employees who are believed to be Muslims? Will management try to hide them? Or just dismiss them? It's not a stretch to think buffet places could take a hit, regardless of who's working for them.

Similarly, how will employees and other customers react when they see a possibly Muslim patron head to the buffet?

Clearly there are two issues the industry has to address.

First, there’s the report itself. Is it true?

Second, and perhaps regardless of the answer to that first question, how is the industry going to deal with the suspicions? At the very least, the report poses a very real threat to places with salad bars and buffets, whether the story is accurate or not. Consumers may not be willing to undertake what they see as a risk.

Time extinguished a lot of fears after 9/11. But the restaurant industry shouldn’t count on that remedy this time around.

Monday, December 20, 2010

Terrorists plan to poison salad bars, CBS reports

Security experts from the U.S. restaurant and hotel industries have been warned by the U.S. Department of Homeland Security that terrorists plan to poison a large number of salad bars in a coordinated attack on an upcoming weekend, CBS reported this evening.

The network said it had confirmation from an unidentified intelligence report that the threat is credible.

Homeland Security declined to comment, CBS reported, but it quoted a spokesman as observing that terrorists have said they'd pursue unconventional attacks.

As of this writing, CBS appears to be the only news medium to be carrying the story.

Friday, December 17, 2010

Overlooked news of the day

Here are some stories you might’ve missed on what’s proving to be a big news day:

NOW, NOW: Hooters can't say it's adult entertainment and then feed kids
The National Organization of Women reportedly petitioned authorities in the San Francisco area to shut down local Hooters restaurants because they were licensed as hootchie-koochie places but actually fed kids along with the drooling lechers in raincoats. Actually, the lawyers might’ve used different language, but that was the essential contention of the legal action. Hooters doesn’t deny that it’s become more of a family place, acknowledging that 10 percent of its parties are families.

KFC lightening up?
KFC units in the United Kingdom will switch to a healthier frying oil next year, according to a report yesterday from Marketing Week. The online story didn’t say if the change would be chainwide or just an undertaking by British stores. A switch like that for KFC would be like Burger King tinkering with its ground beef mix or McDonald’s fiddling with its fries.

But the Colonel didn't like mood lighting!
The same story reported that KFC is testing a new and surprisingly upscale design across the pond. It sounds like KFC’s take on the trend of quick-service giants making their dining rooms more comfortable and inviting for young people, with amenities like entertainment and more bar-like features. In KFC’s instance, that means a room with red glass walls and red lighting. There again, Marketing Week didn’t say if the new prototype would be peculiar to the U.K. or something that could appear here in the United States.

The King's demand were a royal pain, bankrupt zee says
One of Burger King’s larger franchisees filed for bankruptcy protection, contending that it was bled dry by the capital outlays required by the brand’s former owner. Duke and King reportedly operated 92 stores in the Midwest. It also hissed at the franchisor for blocking the purchase of 66 stores in 2007, arguing that those units were healthier and could’ve provided the cash flow to rejuvenate units elsewhere. The situation underscores that one of the bigger challenges for BK’s new owner is winning the support of the franchise community.

Luby's nickel and dime ops
The most surprising tidbit in Luby’s quarterly financial report is the $153,000 in revenues ascribed to vending operations. Who knew it had any? They must’ve been picked up in the Fuddruckers and KooKooRoo acquisition because there’s no vending revenue listed for the first quarter of the prior year.

Buyer's remorse?
The revelation followed the little-noticed news that a court has directed Luby’s to buy nine Fuddruckers franchises, as the cafeteria operator agreed when it bought Fudd’s parent, Magic Brand, back in June. Luby’s had balked at that part of the deal, contending that it hadn’t been given an accurate account of the franchises’ financial health.

Wednesday, December 15, 2010

Restaurant rage

Some ugly exchanges have erupted at restaurants this holiday season, in a few instances while patrons were still in their cars. Regardless of whether guests or employees were at fault, the spate of horror stories is sure to be bad news for an industry that’s been striving for decades to burnish its reputation.

Consider the developments of just the last week or so:

A 20-year-old employee of a Burger King in Detroit is facing murder charges because he allegedly punched an elderly man who’d tried to slug him during what was reported as a "disturbance." The deceased, a 67-year-old homeless person, fell to the ground and apparently struck his head. He died of blunt trauma.

A 21-year-old employee of a Wendy’s in Fort Myers, Fla., was reportedly arrested for attacking a customer whom she couldn’t hear through the drive-thru intercom. According to the local coverage, the staffer felt dissed because the patron didn’t speak up.

Simultaneously, a Wendy’s guest was being arrested in Jefferson, N.J., after throwing a Frosty at the employee who was working the drive-thru window. The nature of their friction was not reported. But stories noted that the customer parked her car and went into the restaurant to attack the employee after hurling the frozen drink. She wasn’t arrested for assault, but rather for being under the influence of marijuana.

You almost hope the kids who burned a Boston Market employee in Riverside, Calif., had been smoking something. Otherwise, they were just doorknob-dumb criminals, though no one’s been arrested, and it doesn’t seem as if a warrant’s been issued. The Einsteins pulled up to the restaurant’s drive-thru window and ordered a dish of sautéed spinach. They then flung it back at the employee who handed it to them, yelling, “Fire in the hole!,” a gag that’s been waging for years. The 21-year-old employee had to be treated at a hospital for second-degree burns.

Meanwhile, a woman filed a lawsuit against McDonald’s because an employee in Chicago allegedly spat at her a year ago because she’d ordered a cheeseburger while the breakfast menu was being offered.

The only ones who’ll benefit from any of this: Lawyers. Otherwise, you have victim and victim—a dead man, but a 20-year-old whose life has just taken a catastrophic turn.

And let’s not forget the owners of the restaurants, and the industry in general. It’s not exactly a jolly image to pin to the trade.

Tuesday, December 14, 2010

They really want to direct

It’s surprising that restaurant leaders have any time left to manage after fulfilling all their reality-TV gigs.

Chefs started it. They moved in fast-forward from cooking demos to cooking on TV to competing in televised cooking competitions to demonstrating for at-home audiences that tyranny thrives in restaurant kitchens. They can become celebrities without feeding a single consumer.

Now we have chain executives trailing the culinarians’ apron strings. Enough headquarters biggies have appeared on “Undercover Boss” to merit one of the annual rankings that the industry loves so much (“Top 100 ‘Undercover’ Chains”).

An episode featuring a disguised Don Fertman, the chief development officer for Subway, aired Nov. 21. Three weeks later, the show focused on Johnny Rockets CEO John Fuller.

Aren’t there other industries with photogenic officials?

Now other programs are following suit. This morning brought word of a new TV reality show, “The Mentor,” a program on the 24-hour Bloomberg business channel that matches the leaders of upstart companies with seasoned vets. The notion is to foster a meeting between Grasshopper and the Kung Fu master, all while the cameras roll.

An episode to air later this year will feature James White, the CEO of Jamba Juice, serving as a mentor to Michael Laundau, the leader of a franchised hair-drying business called Drybar. And, yes, there is a chain whose core service is using blowers on consumers’ hair.

With all this screen time, chains should forget about sales boosters like catering or takeout and focus more intently on negotiating contracts for residuals and syndication.

So long to a legend

One of the establishments that shaped the U.S. restaurant industry—the trade’s own Chuck Berry—will shut its doors for good on Dec. 31. After 91 years, Regas Restaurant will no longer show the business how important service can and should be.

You might not have heard of it, but the chances are extremely high that you’ve felt its influence. If you dined at a P.F. Chang’s, for instance. The company is co-led by Rick Federico, one of the many, many industry standouts who learned the business from paterfamilias Bill Regas, a true legend.

When I was the editor of Restaurant Business magazine, we ran an annual feature called the Undercover Service Report, where the editors and our freelancers acted as finicky customers to test the service mettle of various restaurant chains. Bill wrote me a letter, saying that the story would be a yawner if places could just remember to put the customer first. By all accounts, his family’s Knoxville institution never forgot that imperative.

Dave Thomas, the founder of Wendy’s, would remember his education at Regas decades later. Thomas started working there at age 12. According to the legend, he was fired in short order because he didn’t agree with management. He supposedly vowed never to repeat his mistake and lose another job. Working with management became a hallmark of his time at KFC, where he first became a multi-millionaire, and then Wendy’s.

Despite the trajectory of Thomas’ career, the Regas’ influence was felt mainly in casual dining, not quick service. Indeed, Brinker International, the parent of Chili’s, bought rights to build a chain of Regas-inspired restaurants. The name was changed to Grady’s, and the concept was watered down, starting with the ice cream, then moving to other aspects.

It proved to be a bomb for Chili’s, which sold the rights to Quality Dining, a Burger King and Chili’s franchisee,
which completely re-engineered the DNA.

The times apparently caught up with the Regas, however. Business by all accounts has been down, so the current owners decided to shut down with the close of the year.

But fans should take heart: The restaurant closed once before, in 2000, only to reopen in ’02.

It’s been navigating the changes in consumer tastes and its local market place ever since. That process may end, but the restaurant’s influence lives on.

Thursday, December 9, 2010

Restaurants' use of social media by the #'s

How much is social media worth to restaurant chains? A new study has pegged the values for the nation’s largest fast-food brands, proving in the process that Twitter and Facebook can be great levelers.

Jamba Juice, for instance, wracked up the equivalent of $2.1 million in marketing exposure through social media mentions—its own, plus consumers’—during September, October and November. That provided more online exposure than what bigger players like Dairy Queen fostered, and roughly as much attention as Subway snagged, according to the study, which was prepared by a company called General Sentiment. You can see the study here.

The report is part of a recent wave of statistics on restaurants’ use of social media. A San Francisco-based company called Freshendo, for instance, recently benchmarked Twitter use by the local restaurant community. Only 10% of local places use the micro-blogging service, the upstart found. Yet some of the users generate as much as 20% of their business through that medium, with the number of followers averaging 900.

The concern intends to help more restaurants hit and exceed that number by using Twitter as a real-time promotional tool.

The unexploited potential of social media is also underscored by the survey that was recently conducted by and covered by Technorati. The research revealed that only 42% of restaurant operators and managers use social media to promote their establishments, and 23% see no value in starting.

The figures taken together suggest that the opportunities afforded by social media are still largely neglected because restaurateurs lack the time to tweet, post or blog themselves, and are short on the funds to hire a keyboard jockey.

Yet the ones that have embraced the new media are clearly reaping dividends. The supply of social-media-susceptible consumers is clearly outstripping demand, at least at the present.

Tuesday, December 7, 2010

Restaurant news you might've missed

BK has sweet treats for Brits, pink slips for Yanks
First there was the Whopper Bar, a more adult riff on the conventional Home of the Whopper. It focused on Whoppers, Whoppers and more Whoppers—sometimes combined into one dish (the “pizza” consists of three Whopper patties arrayed in a single layer, like pepperoni slices, on an oversized bun).

Now Burger King has unveiled another potential addition to its fold, hold the pickles, hold the lettuce. The freestanding Dessert Bar will feature BK-brand ice cream and mini-pancakes, according to the first report in the U.S. media.

The prototype is in London, which could keep it a European phenomenon. But Whopper Bars are already sprouting overseas.

The chain’s home office should have probably crowed louder about the venture. The ballyhoo might’ve drawn attention away from the news that BK’s new owner, Brazil-based 3G, is canning more than 400 people, just in time for the holidays. Reports of The King sharing a limo with Scrooge at the Dessert Bar opening have yet to be confirmed.

Friendly’s tries new menu & look
The venerable New England chain is reportedly spending $2 million to give its 17 restaurants in Albany, NY, a facelift and new food options. Details weren’t provided in the slew of local coverage, but one report did describe the new menu as “lighter.” That could be a good thing, judging from TV news coverage like this. Virtually every customer (and many of the servers) appears to be considerably overweight.

Among the items being tested are chicken wings, a turkey platter, a grilled chipotle-flavored chicken, and several new sandwiches, including a Caprese grilled-chicken option that packs just 400 calories. Otherwise, the least fattening of the trial choices is the smaller wings order, at 740 calories for six. But the menu does note that a grilled-chicken or vegetarian patty can replace the beef in any burger.

‘WARNING: Unroll at your own risk’
A Michigan courtroom may soon be turning a spotlight on a little-noticed restaurant danger: The toilet paper dispensers in the restrooms. A state court has cleared the way for a woman to pursue a lawsuit against a Texas Roadhouse in Detroit some three years after she suffered alleged injuries from a dispenser that had been left open. The woman says the lid of the device fell on her hand, breaking it.

‘Good gig, eh?’
A recent survey found that more than one in five Canadians found their first job at a restaurant. Apparently our neighbors to the North have a warmer picture of the business than we do. Seventy percent reportedly said the nation’s eateries are an important part of the economy, and 75% of the respondents who worked in restaurants characterized the experience as helpful in developing life skills. The study was sponsored by Kraft’s Canadian operation, so we doubt there were any questions about the loyalty that Starbucks has personified.

The importance of exorcising
We all know the locations: No matter what type of restaurant you put there, it bombs, usually quickly. Clearly the setting is cursed.

Rather than tempt the fates by meekly following four failures into a site in New York’s Chelsea area, the latest outlet of New York Burger Co. sought some divine help. It brought in a priest, a rabbi and a Buddhist spiritualist to bless the operation and stave off the demons of empty tables. Linda Blair has yet to put in an appearance, but plenty of reporters have, providing the newcomer with tremendous free publicity.

Thursday, December 2, 2010

Promotional events catch restaurants' malaise

Restaurants’ financial struggles are spreading to dining-out promotional events.

News emerged yesterday of an involuntary bankruptcy filing for Taste of Minnesota, an annual food fair where restaurants set up booths to provide paying attendees with samples of menu specialties. More than 40 restaurants reportedly participated in the most recent festival, which was held over the July 4th weekend in Minneapolis.

Now comes word that the presenter of Texas’ Austin Restaurant Week is having financial problems as well. The local branch of the Business Journal newspaper chain said the fate of the weeklong promotion of local restaurants is now “uncertain.”

Those developments are in sharp contrast with the recent disclosure that California will hold a Restaurant Month next year as a complement to local week-long promotions.

Wednesday, December 1, 2010

Attention, Webster: Hyper-local's the word

Pencil a new term into the restaurant glossary: Hyper-local, which has nothing to do with a customer who lives really, really close.

That’s the label the National Restaurant Association has given the newest wrinkle in local and sustainable sourcing. The group explained that the phrase covers ingredients that don’t have to be trucked to the restaurant, even from nearby farms.

Rather, these are items that originated on the premises—produce grown in a rooftop or chef’s garden (or the new manifestation, interior “green walls” of living plants), or meats that were trimmed from whole carcasses on site.

Presumably it’d also cover fish grown in the restaurant’s aquarium, or, more probably, beverages that are made right there.

If the phenomenon sounds like something reserved for New Yorkers who dress only in black, consider that a shift to hyper-locals is expected to be one of the most noticeable trends in restaurants next year. Indeed, it was projected in an NRA-backed survey of chefs to be the fifth most powerful influence on menus in 2011.

Among the few forces scored higher by the 1,500 respondents in whites were locally sourced meats and seafood, which topped the list, and locally grown produce, at Number Two. Sustainability considerations was Number Three.

The annual survey is the third in a row to put the local/sustainable movement at the top of the trend rankings.

In short, local sourcing and its fellow traveler, sustainably grown foods, are not going away. They’re less a trend than a shift that will be with us for some time.

Remember the days when “imported” was the mega-trend?