Wednesday, March 30, 2011

Dirt and dish from the RLC

Here’s some of the gossip from the RLC. It’s bad journalism (no attribution or verification of most points), but some interesting reading:

ITEM: The U.S. Department of Commerce is bringing representatives from 13 American restaurant chains to India to interest local operators there in developing the concepts.

ITEM: If Mayor-elect Rahm Emanuel makes good on his promise to legalize truck restaurants in Chicago, look for one of the city’s most respected operators to hit the streets with a bao or dumpling concept.

ITEM: Mark Levy of Levy Restaurants fame is expected to make a splash in Chicago’s already-crowded steakhouse market with his entry, Chicago. It’s going into the downtown space formerly occupied by Wolfgang Puck’s Spago. Michael Jordon’s namesake beef house is also returning to the Windy City. Game on.

ITEM: Among the upstarts snagging attention from concept scouts was Los Angeles’ Veggie Grill. Ditto for Texas’ Twin Peaks and Phoenix’s Wildflower Bread Co.

ITEM: Chain restaurateurs were griping incessantly a few months ago about not being able to calculate an ROI on social media. Now benchmarking research is pouring into the marketplace (including from Restaurant Business; see our Social Media 50 report on starting tomorrow). I hope to do a roundup on the other sources in this space sometime next week.

Tuesday, March 29, 2011

A grab-bag of concepts from the RLC

After roughly 48 hours at the restaurant industry’s Restaurant Leadership Conference brain summit, a few unexpected trends are clearly emerging:

--We’re heading back into a deal-o-rama environment. Much of my networking time has been spent fielding questions from would-be buyers of restaurant chains. The criteria for acquisitions vary widely, but there are some similarities: A solid concept with an entrepreneur at the helm who needs the foundation to blast out new stores. Curiously, part of the new pitch from buyers is their ability to provide operational expertise as well as money and infrastructure.

--The restaurant-trucks phenomenon is still on the upswing. Sally Smith, chairman of the National Restaurant Association, called it the trend of 2011. That observation is echoed by the constant mention of trucks in sessions dealing with far-afield topics.

--Similarly, mentions of social media crept into discussions of all sorts of issues, including the political scene. Rick Berman, the Doberman of restaurant lobbying, noted how Facebook has become a battleground for advocacy issues affecting the industry. He noted that The Left seems to have the edge over The Right in wielding the internet as an opinion shaper.

--Restaurateurs have a great sense of humor. My favorite comment so far, offered at the end of a sessions on mobile marketing: “We’ve come a long way since the Sullivan nod was the cutting edge of marketing.

Monday, March 28, 2011


Among the new concepts just starting to appear is a new breed of bar that allows customers to bring their own food or have it delivered from elsewhere, Technomic’s Darren Tristano noted at the Restaurant Leadership Conference.

The places don’t have a kitchen, but they have the seats, he explained. Patrons will buy alcoholic beverages on-premise and enjoy whatever they want from the outside world. It’s the hang-out approach of Starbucks, with beer and drinks peddled instead of coffee.

Tristano noted that the phenomenon could create an opportunity for restaurants, providing them with another sort of outlet. Instead of having a truck or kiosk, a place could be the preferred food provider for a nearby bar.

Do's and don't's of mobile marketing

Highlights from this morning’s Restaurant Leadership Conference session on mobile marketing:

Tim McCallum, a Vapiano operator who also runs an online marketing consultancy, warned a packed room to avoid some common pratfalls with social media. Specifially…

*Don’t send out too many messages via Twitter, Facebook or texting. He finds that 1.5 to 1.7 messages per month—typically one brand-building type communication, the other more tactical—is just fine.

*Don’t equate texting with young users. Fifteen percent of the “elderlies” who have cell phones are using them to text, and that’s a huge number, McCallum said.

*Learn about QR codes, the two-dimensional bar codes rapidly coming into play as marketing tools. “I believe it’s going to be the next big thing,” said McCallum. Six percent of consumers say a code has led to their purchase of a good or service, and the approach makes tremendous sense for restaurants, he added.

*He expressed more than a little skepticism about restaurant-specific apps. Texting can do the same thing at a fraction of the cost, he asserted.

Sunday, March 27, 2011

Restaurant Leadership Conference--Live

Welcome to the live coverage of the Restaurant Leadership Conference, the restaurant industry’s outstanding top-to-top meeting. I’ll be covering the highlights via this space. For a chronological account, read the thread from the bottom up.

We'll also be covering it via Twitter. Follow @monkeydish, or search for #RLC2011.

6:45, Ingraham
"All of you in this room will have a crucial role to play in the next 2 years," Ingraham implored the crowd. She urged them to contribute in whatever way they can to the political process, be it running for office themselves or merely contributing to the right candidates.

"I'd submit that most of you in this room had more experience than Barack Obama when he took the job."

6:45, Ingraham
Ingraham is making the point that there really isn't a strong, obvious candidate to challenge Obama in 2012.

What's dismaying, she said, is how many people are qualified to run but would rather not. She cited Chris Christie, the governor of New jersey.

She also mentioned Jeb Bush, but speculated he wouldn't run until 2016.

"If you think your country is day-by-day swirling down the drain, and you're content to stay you're going to stay out of a race that you can win," that's reprehensible, Ingraham asserted. "The country is literally teetering."

"This is no time to sit on the sidelines--our country demands it," she stressed, drawing a smattering of applause.

6:30, Ingraham
Mitt Romney is the hands down favorite to win the nomination next time around, Ingraham said.

6:15, Ingraham
Ingraham is criticizing Obama for being pictured with a soccer ball while our jets were taking off for Libya. She said the split screen showing Obama dribbling a soccer ball on one panel and the jets embarking on the other to be "appalling."

"It's a tone deafness," she said.

6:10, Ingraham
Obama's downfall, Ingraham asserted, was healthcare reform. She described it as a game-changer. "People didn't fall for all the razzle-dazzle," she said.

"We knew they [Congress] didn't read the bill. We knew they were pressured by President Obama."

6:00, Ingraham
Finally, Ingraham is moving to the meat of her presentation. She's talking about where the country was when Obama was elected, and how tired the populace was of the status quo. "We went for someone who was really different. We went for someone who both Oprah Winfrey and Brad Pitt both really liked." She acknowledged that the country wanted a new vibe, not "that white haired guy" (John McCain).

5:50, Ingraham
Laura Ingraham has taken the stage. She's now ranking on the public figures of Washington, including Michelle Obama (couldn't come because the RLC doesn't provide calorie counts), Joe Biden (his hair plugs) and President Obama (he blew his NCAA brackers because he was distracted by Libya.

David Jobe, the godfather of the RLC, has just announced a surprise guest for the conference: Ed Smart, the father of kidnapped-and-returned Elizabeth Smart, will be here to speak about the need to help locate missing children. RLC will help to raise money for that cause.

Ready, set, RLC

I’m behind the scenes at the Restaurant Leadership Conference, watching a large hotel space be transformed into the industry’s outstanding top-to-top event. It’s hard to believe the room, still deep in set-up mode, will be packed in about two hours with 850 restaurant-chain executives looking for solutions and opportunities.

This evening they’ll get a decidedly unique perspective on the political scene from commentator Laura Ingraham.

Tomorrow we delve into a host of industry issues, from social media to who’s winning in the current business climate.
I’m going to try and blog it all here, live. You can also follow the highlights via our Twitter posts. Follow @MonkeyDish, or search for #RLC2011.

And if there’s questions you’d like me to pass along to our speakers, I’ll do my best to get the queries to them. E-mail me at

Thursday, March 24, 2011

Chinese check-in

A high-level conference on Asian opportunities drew plenty of investors, bankers, portfolio managers and other financial experts to New York yesterday morning. Too bad there wasn’t a restaurant-chain executive among them.

Today, that lone soul would understand the profound economic changes afoot for China, undeniably the restaurant market of choice right now. When the dislocation hits, and peers scramble in panic, the attendee could sit back, pour another cup of coffee, and relish knowing the downturn might not be so bad for the foodservice business.

Any U.S. chain with a presence in China has probably heard the dire predictions that were explored in depth yesterday. There’s a consensus that China’s torrid economic growth can’t be sustained. At the very least, there’s the risk of steeper inflation. There’s also the not-so-little matter of pushing the environment past the point of recovery. And other nations will surely look to curb unfair advantages like the lax enforcement of intellectual-property rights, or what one speaker euphemistically deemed “the migration of ideas.” Counterfeiting is huge there, and corruption is still a common practice in some areas, as one panel noted.

But the real sand in the gears, several speakers noted during the Asian Century Forum, is the unique imbalance of China’s economy. Here in the States, most of our economic activity takes the form of consumption—people, businesses or governments buying things.

In China, most of the Gross Domestic Product is generated by investment—the capitalization of factories and other means of producing products. Consumption accounts for less than 40% of China’s GDP, as one speaker noted.

The reason, Asian authority Michael Pettis explained, is the low buying power of Chinese workers. Output has exceeded wage growth, yielding more and more goods and services, but insufficient wealth to buy them. And it’s all the result of a government-controlled economy.

Pettis, a professor of finance for the Guanghua School of Management at Peking University, said the strange situation will probably prevail for some time to come. He expects a new five-year growth plan to revealed by the government next month, and doubts there’ll be any component to boost consumption.

The nation can’t stay on that course without risking social and political upheaval, other speakers suggested. More emphasis will have to shift to consumption and growing household income at one point or another.

Before the imbalance is righted, Pettis said, the economy will gag more than hiccup. “We should be prepared for a growth rate in China of three 5%. The days of a 10% growth rate are over,” he predicted, dropping what may have been the conference’s biggest bombshell.

A slowdown in the economy would no doubt be chilling for chains like Starbucks and McDonald’s, who have factored a penetration of China’s emerging consumer market into their near-, mid-, and long-term growth strategies.

I bet that Yum! Brands, parent of KFC and Pizza Hut, wouldn’t mind selling those brands’ U.S. presence to focus more resources on their expansion in China, where both are market titans with a jetpack on their backs. The franchisor already has a brand that operates only in China, East Dawning, and has an investment in a second, Little Sheep Hot Pot.

Halving China’s economic growth would have to be a serious worry to big U.S. operators like those. But, as attendees learned yesterday, the drop-off would be the price for shifting more of China’s economy to a consumption base. The emphasis would be on raising workers’ wages and household income, fostering a larger middle class.

For restaurants, that means putting more money in the pockets of consumers with a hunger for American culture, including its fast food. It’s a silver lining that was mentioned repeatedly yesterday.

Too bad no one from the industry was there to hear it.

Full disclosure here, as per the FCC’s blogging regulations: I was paid to live-blog and tweet from yesterday’s Forum, which was co-sponsored by the Paul Hastings lawfirm and the Financial Times. You can review the highlights here.

Sunday, March 20, 2011

Creepers and sleepers

Sometimes a shift in the business environment takes awhile to build. It seems to hit all at once, when in fact the pressure has been mounting for weeks or months.

So it is with several developments currently taking shape in the restaurant business. Consider these sleepers, for instance:

Watch for a spike in uniform and linen-service prices. The cost of raw cotton increased 136% between last August and February 2011. Most restaurant uniforms are made from tougher-wearing materials like polyester or poly-cotton blends. But soaring cotton costs could ratchet up demand for the synthetics, driving up those costs as well. Cotton figures more regularly into restaurant tablecloths and linens, particularly fine ones. Services may soon be paying more for tablecloths and napkins, with at least some of the cost possibly passed along.

Look for more investment interest in franchisees. One of Taco Bell’s largest franchisees, the 166-store K-Mac, recently moved from one private-equity firm to another. The price wasn’t disclosed, but the seller, Olympus Partners, disclosed that it collected eight times what it originally paid for the company, which also operates Golden Corrals. Investors are realizing that a brand’s owner may not provide the best cash flow after all. At the same time, there’s pent-up desire on the part of many franchisees to sell. Tough times made them want to cash in and move on, but business conditions prevented them from getting a reasonable price. That’s changed. And investors who’ve already shopped the franchisors are finding a whole new store aisle to peruse.

Green mandates could be the next industry bane. South Carolina restaurants, for instance, are bracing for a rise in hauling fees because the state wants to require recycling by any establishment with a bar license. The South Carolina Restaurant Association has estimated the increase at $800 to $4,000 per restaurant. But the state is hardly the only jurisdiction to be eying green obligations for eateries. California is widely expected to require composting, following the lead of San Francisco, and water-consumption limits have already been leveled from time to time when areas see their reservoirs dip. Those rare situations could become far more common as suburban sprawl taxes limited supplies.

QR codes may be The Next Big Thing in restaurant technology. If you don’t know what they are, think of supermarket bar codes that impart key marketing info about your operation. Consumers with a smart phone in essence take a picture of the codes, which look like a section cut out of a composition book’s cardboard cover. The pattern is actually a code that the phone reads with an app, which often comes pre-loaded as a freebie (iPhone and Droid users can download one for free). The process can call up a ton of info in just a few seconds. For instance, a code posted in a window could inform passers-by of the night’s specials, instantly and effortlessly. Or, if the restaurant prefers, reading the code could call up the place’s page on Yelp or Open Table. It’s a cinch to turn info into a QR code using a free program, and the info you can load is daunting. The tool makes tremendous sense for restaurants, though they’ve been slow to adopt the technology in the United States.

Wednesday, March 16, 2011

Believe-it-or-not time

The folks at Ripley’s are screwing with us again. Consider these hard-to-believe restaurant developments:

--Two out of three frequent guests—defined as consumers who dine out at least five times a week—would like servers to place orders through mobile entry devices. That’s one of the more surprising discoveries of a 1,277-person survey conducted for Pars, an industry supplier of POS components.

--Here’s a list of hazards that lawsuit plaintiffs are claiming they encountered in a chain restaurant: A needle in a ribs stack (at a Chili’s); a splinter (embedded in the finger of a Texas Roadhouse customer); and a fragile toilet seat (broken under a McDonald’s customer, who said she wanted $30,000 in compensation. The press coverage did not cite the woman’s weight.

--Ted’s Montana Grill is selling a new steak salad for $14, except in New York City. There you’ll pay an extra $3, a differential of 21%.

--About a third of consumers who visit a restaurant or bar tomorrow will choose the place because of traditional St. Patrick’s Day options like green beer, according to the National Restaurant Association.

Could it be a full moon?

Monday, March 14, 2011

A Whopper of a slip from BK's CEO

Burger King has been cranking out new eats under Brazilian owner 3G Capital Group. But what filled the mouth of CEO Bernardo Hees last week was clearly his foot.

In a recruitment speech to business students at the University of Chicago, the new BK jeffe reportedly made an aside about how easy it was to study in the United Kingdom, where he earned an MBA. “The food is terrible and the women are not very attractive,” so there were few distractions, he was quoted by the school’s paper, The Chicago Maroon, as telling the 50 pupils in attendance.

The remark didn’t snag much attention on this side of the pond. But in the U.K., it’s been taken as an insult to Queen and country. The Guardian, an old-guard British paper, is polling readers to assess their dismay at the comments. In the meantime, it ran an article about how the comments had offended British chefs and women.

"If he views women as potential distractions in academia, I wonder how he views them in the workplace?" Charli Fritzner, women's campaigns officer for the student union of Warwick University, Hee’s alma mater, told the paper. "It doesn't make Burger King an attractive employer for women."

Hees has apologized through the public relations department of Burger King. It contended that Hees, 41, was only trying to connect with students by employing the sort of humor they might appreciate.

Friday, March 11, 2011

McDonald's big green move

A posting for every foodservice supplier’s Facebook wall: McDonald’s is quietly up-ending what and how you’ll be selling to restaurants in the foreseeable future.

The changeover may actually be overdue. Pressure for an overhaul of what the supplier community peddles has been building in the upscale and independent sectors for some time. The message might’ve been ignored, but it was hard to miss: Sustainability is a consideration that’s increasingly going to shape a final decision on a product, particularly food and packaging.

The game-changer is McDonald’s announcement earlier this week that it will require suppliers using agricultural materials to have their source farms certified as sustainable, or having no harmful impact on the environment. That extends to the beef in McDonald’s hamburgers, the pork in its Egg McMuffin, and the corn that sweetens its soft drinks.

A former colleague once recounted how he’d worked for a fish supplier several decades ago, when seafood consumption was expected to soar because of health concerns. The firm opened a huge factory in anticipation, only to discover the demand amounted to a few cartons of breaded sticks and filets a week.

Then it landed a contract to produce the patties for the Filet-O-Fish, a small part of McDonald’s sales mix. Within days, the place was running 24/7 and thinking about expanding.

Today, McDonald’s is about three times the size it was then. An executive once remarked that she could create a worldwide sesame-seed shortage by adding a few more to the spec for a McDonald’s hamburger bun. McDonald’s may be the world’s largest purchaser of consumer food items.

Its pledge will have powerful repercussions. First, its suppliers will have to abide. You don’t antagonize a customer of that size.
But the scale of the adjustment will benefit many more buyers than McDonald’s. For one thing, the volume of production will ensure the price of sustainable fare declines. No longer will it be a specialty in limited supply.

Then there are the marketing pressures. If McDonald’s can boast about an all-sustainable menu, every other mainstream restaurateur will have to address the issue. It may well be the tipping point.

Before you suppliers start hyperventilating into a paper bag, note that McDonald’s didn’t say the changeover would be instantaneous. Indeed, it didn’t set a timeframe at all, save for its purchase of palm oil (it committed to an all-sustainable deadline of 2015).

Instead, it said the mandate would be phased in “over time.”

But the activity is already starting. McDonald’s noted in the announcement that it’s funding a three-year study of the carbon output of 350 cattle farms in the United Kingdom and Ireland. It’s presumably a first step to identifying best practices that could be adopted worldwide.

One of McDonald’s challenges on the green front is convincing eco-proponents that it’s sincere about changing. Wednesday’s announcement snagged relatively little attention outside of the environmentalist community.

But it should be big news to anyone who’s concerned about reducing the restaurant industry’s input, particularly restaurateurs themselves.

Tuesday, March 8, 2011

Social media is making my soup cold

Ordering was a breeze before social media interrupted the restaurant experience. You’d look at a menu, choose what you wanted, tell the server, then talk for a few moments until the apps arrived.

Now you’re a good 12 minutes into the visit before the menu’s scrutinized. First, there’s checking in via Four Square. Otherwise, how’re you going to get your points and badges? They bring you nothing other than the right to tell the wife, “I just got a badge for blah-blah-blah.” She responds with the sort of look Charlie Sheen must know well.

Then there’s checking in via your phone’s Facebook app. And why not? Isn’t it essential your friends know where you’re eating?
And don’t forget checking in on Yelp You’ve got a foodie rep to preserve.

By that time the server has flitted past three or four times to see if the pen can be uncapped to take orders. No such luck. More networking may need to be done.

If someone saw your Facebook alert, there might be a comment posted. How can you not check, read it, and respond? If could be a recommendation of what to order.

If you’re lucky, maybe the rest of the party orders appetizers for the table. Then you’re off the keypad until the food arrives. This is why cell phones have cameras. An image has to go on Flickr or Facebook.

Eating is when the pressure really builds. Enjoying the food is one thing. Sounding smart in your Yelp or Urban Spoon review is the challenge. And what if, God forbid, you’re the only citizen reviewer who loves or hates it?

I’m as much of a social media fan as anyone. But I wouldn’t mind if you could hand over your smart phone during a meal the way you check your coat. Certainly it’d help with table turns.

Thursday, March 3, 2011

Very berry changes in Wendy's menu

The next big surprises on Wendy’s menu: Blueberries and strawberries.

The berries will figure into a new salad and a new Frosty, executives revealed to investors this morning. The salad will take a “100% natural” acai dressing, the officials noted, giving the chain two superfoods in a serving (blueberries being the other).

As previously reported, the new entrée choice will also feature Asiago cheese and a cut-up chicken fillet.

The executives say the new salad and Frosty will be part of a new product flurry that starts later this month with the addition of fish and chips for Lent. In keeping with the chain’s effort to stress quality, they noted that the fish will be North Pacific cod and that the chips will be Wendy’s new skin-on natural fries.

The new Dave’s Hot ‘n Juicy cheeseburger line is still slated for a rollout in the second half of the year, they said, but they provided a higher assessment of what the kitchen retrofits for the sandwiches will cost. They were quoted in January as pegging the per-store outlay at $12,500 on average. This morning, they said the cost would run from $13,000 to $23,000.

Those expenses would be in addition to what franchisees would have to spend on new menu boards and equipment for Wendy’s long-awaited breakfast rollout. Roland Smith, the CEO of chain parent Wendy’s/Arby’s Restaurant Group, didn’t quantify that investment, but noted it’d cover the new coffee program that’ll complement the breakfast addition.

Wednesday, March 2, 2011

A second look at LYFE

The big-leaguers crafting the LYFE fast-casual concept have invested a year already in the quest to develop healthful dishes that won’t fail a blindfold test.

Take some of the public’s favorite foods, put them next to LYFE’s reformulated versions, and give the would-be customer a fork. If she can’t tell the difference, the LYFE recipe gets a thumbs-up from the chefs and former McDonald’s execs molding the Fast Food 2.0 upstart for a late-summer debut.

“If a truck driver decides he wants a classic burger with cheese and his wife wants a burger made of garden protein, neither will have to sacrifice taste to get something under 600 calories,” says Mike Donahue, one of the McDonald’s alumni behind the new venture.

Other specialties will likely include corn chowder that uses cashews instead of dairy products to make the soup rich and flavorful, he says. LYFE expects it to be a takeout signature, based on how many people have already asked chef Tal Ronnen if they can take home a pint or quart for the family.

Donahue also mentions a line of flatbreads that’ll hit the concept’s dual targets of taste and guiltlessness.
LYFE’s intended audience, he says, are women aged 19 to 49—the moms, sisters and significant others of the men usually targeted by traditional fast food places.

Mindful of new consumer sensibilities, the LYFE (“Love Your Food Everyday”) team is striving to make the concept as eco-friendly as it can be. That includes kicking the tires of alternative delivery vehicles like Smart cars and electric scooters, and shopping for uniforms and takeout materials made from sustainable materials, says Donahue.

A major thrust of that effort is using local, seasonal and sustainable foods whenever possible.

Tal Ronnen, one of the country’s most renowned vegetarian chefs, will be joined in crafting the menu by Art Smith, a favorite chef of the Obamas and a leader in teaching children how to grow their food and eat more healthfully.

On the business side are Mike Roberts, the former president of McDonald’s, and Stephen Sidwell, head of a boutique investment firm.

The prototype is slated for Palo Alto, Calif., in the heart of California’s high-tech corridor. The team will focus on building out the Palo Alto market before it begins expansion, said Donahue, who’s serving as chief communications officer.

He notes that social media will be LYFE’s major marketing channel.