We had an earthquake this week in New York City, but the restaurant business likely felt a few tremors of its own, judging from recent developments.
In short order, we had the most significant executive change in years; further proof the business can be one big hurt for the unwary; and a strong reminder of why you should always wear clean underwear while dining out in the city, if you wear any at all.
Temblor 1: First, the personnel shift. It wasn’t shocking that California Pizza Kitchen named a new CEO after being acquired by a private-equity firm. The surprise was the selection: G.J. Hart, the longtime range boss at the Texas Roadhouse casual chain.
I always figured he owned too much Roadhouse stock to leave. The only way he’d exit would be if a P.E. firm took the company private and installed its own honcho.
Turns out Hart only holds 289,000 shares, or less than 1% of shares outstanding, according to last year’s proxy.
Which will undoubtedly work in CPK’s favor. Roadhouse was a standout among the crowded field of casual faux-honkytonks, a group that also includes LongHorn, Lone Star and at least seven or eight strong regional chains.
The other national brands went through some significant retrenchment. Roadhouse has been the steady ride in the field, the result of what strikes me as a customer as an intense focus on operations and the integrity of the brand. You have a sense of what the concept is all about.
Sometimes when I visit a CPK, I feel as if I’m in a Sbarro with waitress service. Is it a pizza place, a casual restaurant, an Italian dinnerhouse, a café? Hart’s skills will likely play directly into the chain’s needs.
Temblor 2: The MaggieMoo’s mix-in ice cream chain is led behind the barn. The concept will be absorbed into its sister brand (and what most observers cite as the originator of the format), Marble Slab.
Moo’s wasn’t exactly an industry powerhouse. But it did have its moments of interest as a franchise option, particularly when arch-rival Cold Stone Creamery was growing so quickly.
That wouldn’t be such a big deal on it’s own. But there’s also…
Temblor 2.5: A new flurry of media reports about Quiznos financial plight. The Wall Street Journal reported some time ago that the chain was struggling under a whopper of debt. New coverage, including in the Journal, suggest that the problem hasn’t eased at all.
Quiznos is no MaggieMoo’s. It made a splash in the sandwich market, both by growing at head-turning speed and undercutting competitors on price. It was also one of the franchise chains that everyone seemed to be talking about.
Franchise relations within the chain soured long ago. Not the operators are watching a train-wreck of a situation, and one that many of them predicted when the advertised price of sandwiches left crumbs for margins.
The moral here: Restaurant franchising has stepped up appreciably in recent years as franchisors sold off company stores, displaced white-collar workers decided to start their own businesses, and fast-casual emerged as a hot area of growth. Activity increased, but the risk didn’t decline.
Choosing the wrong franchise can still be disastrous, even though the emphasis today is on finding experienced operators who might already have other chain concepts in their brand portfolios.
Temblor 3: New Yorkers have turned their city’s exalted restaurants into one big orgy, according to a story in the most believable tabloid this side of The Onion, the New York Post.
“Tableside naughtiness is so widespread, the issue’s no longer whether you’ve had a dalliance at an NYC eatery; it’s when, where and how,” reported the Ruppert Murdoch-owned daily.
Bragging about where you’ve had sex is now as much of a status setter as being able to namedrop where you ate, or what celebrity works out at your gym, according to the piece.
My favorite quote, from Joseph Couture, the author of a book on public sex: “The only thing people drop faster than their inhibitions after a bottle of wine is their pants.”
Which makes you wonder how many restaurant patrons took the earth moving beneath their feet this week as a completely routine experience.