Monday, October 29, 2012

A bird's-eye view of Sandy watch

Greetings from pre-Sandy New York, where we’re hunkered down in anticipation of a storm that’s growing scarier by the moment. The real wallop isn’t supposed to hit us until late afternoon, at the earliest, but you wouldn’t think that after looking outside and hearing the wind howl.

Low-lying areas of my town (Port Washington, on the north coast of Long Island) and the three surrounding towns have already been evacuated, and the sirens haven’t stopped this morning, which means trees and power lines are already falling. You can’t help but wonder, How can this get any worse?

But, obviously, it will. The offices of Restaurant Business, at the southern tip of Manhattan, lie in an evacuation area. The building’s management has alerted us that the windows have been secured, the doors have been locked, and the heat is off. Con Ed, the city’s utility company, plans to turn off all electricity in the area to limit the damage to generators if the brackish waters of the East and Hudson Rivers cover the tip of Manhattan as expected.

But enough about me. What about restaurants and how they’re fairing?

I’ve yet to venture out this morning to check the ones in my neighborhood, but I did make the rounds last night. They were expecting to shut for at least two days, but not because of a lack of customers. The problem was getting enough employees to form even a skeleton staff. All public transportation, as you probably heard on the news, has been shut.

There’s also the issue of getting supplies. Last night our takeout choice was practically pushing freebies on us, knowing the food would probably just rot over the next few days if power is lost. Many have also taped or boarded over their windows, so dining out was like eating in a war zone.

Stay tuned. I’ll try to post dispatches for as long as I still have power and an internet connection.

And wish us well.

Friday, October 26, 2012

Restaurant what-if's

Covering developments in the restaurant industry can be like chasing a pack of greyhounds after they’ve spotted a squirrel. With five of the former racers at home, I speak from experience.

Almost as challenging is contemplating what might happen in the business—how things could transpire if conditions, attitudes and variables were just a hair different. Some might say those scenarios are the preferable course.

Consider, for instance, these what-if’s:

What if Homeland Security is what puts the brakes on food trucks? The whistleblower website Public Intelligence got its hands on a PowerPoint presentation the Fire Department of New York (City) recently drafted about the potential dangers of food trucks. FDNY aired concerns that the wheeled kitchens could be used by terrorists because the vehicles are typically parked in high-value sites where a lot of damage could be inflicted.

At the very least, the department noted, yahoos could use the trucks as “an excellent surveillance platform” because they’re on the street for long stretches.

The audience for the presentation wasn’t identified. But a credible terrorism threat usually draws prompt and forceful action, regardless of who’s hearing the message.

What if chains have been wrong about the practicality of serving fresher, less-processed foods? The argument has always been that, first, customers don’t want it, and, second, that a multi-unit operation can’t afford the caliber of raw ingredients and prep talent to feature choices like seasonal produce. It’s just too pricey and time-consuming.

Yet Chipotle, Pizza Fusion, Jason’s Deli and a number of other freethinkers are proving the prevailing wisdom is inaccurate. Chipotle, for instance, recently revealed that it’s testing a GMO-free rice oil as a potential replacement for soybean oil because the environmental profile is preferable. In most instances, it’s already using sunflower oil.

Or consider the new prototype from LYFE Kitchen, the better-for-you quick-service concept that’s being developed by several McDonald’s alumni. The new design features an interior wall where 25 varieties of herbs and spices are grown, and a second growing area where vegetables are grown hydroponically.

The operation is already identifying the family-run farms that supply the concept.

Remember, this is quick-service, and the goal is to make it a multi-unit operation.

What if the outrage over Pizza Hut’s goofy presidential ploy is a sign the industry's marketing should grow up? In case you missed it, the chain was offering prize to any wiseass who’d use his question at the recent town hall-style presidential debate to ask the candidates about type of pizza they prefer.

The chain justifiably drew a storm of protest for trivializing an important event. It was offering a bribe to anyone who’d turn an education system into a publicity ploy. To its credit, the chain backed off and stopped promoting the offer, though it didn’t kill it altogether.

Contrast that with the most recent marketing tactic used by McDonald’s Canadian operations. That branch of the burger empire is airing a video that traces how its French fries are sourced, from farm to fryer.

The account isn’t sugarcoated. At one point a processor notes that the fries are rinsed in the plant with a solution to preserve their whitish color.

But overall the vid demonstrates that the fries are less processed than many customers might think. For instance, dispelled is the urban myth that the fries are formed from some kind of potato meal instead of being cut from peeled whole potatoes.

It’s serious input to the dialogue about food integrity.

What if the dominance of the CIA’s cross-country team is confirmation that tomorrow’s chefs are being trained to consider their own health along with the wellbeing of patrons? Yes, we’re talking here about our CIA, the Culinary Institute of America. The school’s women’s running team has finished first in its conference for three consecutive years.

If this what-if comes true, it’d be the end of a longstanding irony that reaffirmed the old adage about the cobbler’s children having holes in their shoes. While commercial kitchens were re-gearing to foster healthier eating habits among customers, many chefs still looked like the Before picture in an ad for a dieting aid. They weren’t practicing what they were passively preaching.

Okay, back to chasing those hounds now.

Wednesday, October 24, 2012

Restaurants' new opportunities

Opportunism is crucial to the ongoing success of a restaurant or chain. So where are operators hunting opportunities today?

Buffalo Wild Wings can’t seem to slosh a beer without hitting a way to boost sales. Next month the chain will add six “share-a-bowl” snack items that patrons can dip into as they watch college or pro football games.

The wings specialist is also about to try a new restaurant design that showcases televised sporting events and “feels like being in a stadium,” CEO Sally Smith told investors yesterday. The layout will encourage customers to settle into a game—sipping beers and sharing snacks or apps as they do, of course.

Adaptation is not underappreciated by the casual darling, either. As Smith explained, poultry producers are growing bigger birds today, which means the wings are meatier, too. A pound will contain fewer wings, yet the price is also rising because of feed-cost issues. That means BWW would have to really jack up its prices for a six- or 12-wing order if it wanted to protect margins.

Instead, it’s experimenting with a new wing formation. Instead of selling a certain number of wings, the chain is testing a variable count. You might get five in one order, six in another, or even four in yet another.

It’s the same approach seafood places take when they sell crab legs or other pricey proteins by the pound. Guests are told that an order typically ranges from four to six legs, say, but there’s no set count.

Of course, BWW can’t turn every challenging situation into an opportunity. Last year the franchisor’s stores in Texas greatly benefited from the playoff and World Series appearances of the Texas Rangers. This year the four teams that made it to the league championship series weren’t in company-run markets, though the franchisees in those areas still got a payoff.

Elsewhere in the industry, a new term is cropping up: pack-and-go, the tag for selling holiday meal packages at Thanksgiving, Christmas, Easter and the like.

I’m on the hunt for chains that are taking that approach to the booming tailgate market this football season. Alumni of big colleges tell me I’m chasing a snape; any true-blooded tailgater would never dream of putting out a store-bought pre-game spread in the parking lot.

Still, I wonder if that’s an opportunity waiting to be exploited.

Monday, October 8, 2012

New chapter in the marketing handbook?

Regardless of what you sell, don’t miss the splendid marketing battle that’s forming between two giants of casual dining. It’s an education in how the behemoths of a segment can change the competitive dynamics for all players through volume alone. And don’t be surprised if it leaves a lasting influence on the whole industry, just as one of the tactics forever changed the shoe and eyeglass businesses.

The fracas started late last week when Olive Garden forged ahead with a strategy to re-invigorate the don of the casual Italian market. In recent months, the Darden Restaurants brand had struggled as consumers gave more weight to quality, healthfulness and other considerations in their assessments of a dining-out value. Olive Garden decided that it had to be more things to more people, instead of just targeting bargain-hunters.

The result was a passel of new initiatives trumpeted through the chain’s first new ad campaign in a decade. Themed Go Olive Garden, the program addresses splinters of the market that the brand might have drifted away, like the health-conscious, or the more sophisticated wine drinker.

But it didn’t forget the value-sensitive patrons who made the chain such a stellar success. They were informed of a new limited-time deal that sounds conspicuously like the one arch-rival Maggiano’s has been offering for three years: Buy an entrée from a certain section of the menu and you can choose a second selection at no extra cost to take home. The price of the Dinner Today & Dinner Tomorrow promo: $12.95.

Just as the ads for the limited-time offer started to air, Maggiano’s countered with a noteworthy twist to its two-for-one, dine in/take-home deal. For a limited time, the Brinker International chain will provide a third meal to a charity for every two-for-one Classic Pasta dish that’s purchased. The offer will run until 1 million meals have been given away, Maggiano’s explained.

The new age BOGO—Buy One, Give One—was the point of differentiation that turned the online retailer TOMS Shoes into a major force in the footwear business. So many consumers warmed to the idea of doing good while buying a pair of loafers that other shoe sellers had to copy the idea.

TOMS has since branched into the eyeglass business, taking its One for One slogan with it. It has company there in Warby Parker, an online retailer that similarly donates a pair of frames for every set that’s sold. If the popularity of those glasses within our offices are any indication, the strategy has been a slam-dunk.

Which leaves us with several important questions for restaurants: Will buy one/take one become a new standard for broad-market Italian chains—the ante they’ll have to absorb if they want to compete with Olive Garden, Maggiano’s, and whatever other national chains follow suit?

And what about the buy one/donate one tactic? Will that proven draw be the next two-entrees-for-$20 deal for casual chains? And why wouldn’t the same offer work for virtually any restaurant?

'McDonald's on aisle 9'? Really?

The business world caught a caffeine buzz last week when fellow blogger Scott Hume broke the story that McDonald’s had trademarked the use of its name for ground and whole-bean coffee. Did that mean we’d soon see McDonald’s-brand coffee on store shelves, next to the brew-at-home options of Starbucks, Dunkin’ Donuts and Peet’s?

There wouldn’t have been such an outpouring of coverage if market watchers weren’t leaning strongly toward a yes. If they’re right, we’re witnessing an historic departure for McDonald’s, a company that learned the pratfalls of entering new businesses just a few years ago.

Remember Hearth Express, McDonald’s answer to Boston Market? How about McDonald’s with a Diner Inside, the chain’s foray into full service? Don’t forget Aroma, the British coffee chain that was briefly a part of its portfolio—along with controlling interests in Chipotle Mexican Grill, Boston Market, Pret A Manger and Fazoli’s.

Today the company laments that period of experimentation as the time its focus shifted from being the best to being merely bigger. Investors know the price that was paid in sales and profits.

Entering the grocery business, even though a third-party licensing deal, is more of a departure than any of those alternate restaurant plays. Yes, McDonald’s has licensed its name before, but for use on toys, clothes and merchandise, not food.

This time, the name would not only go on a consumable, but something that customers consume in McDonald’s-brand restaurants. And that could sour what insiders agree is really the fast-food giant’s secret sauce: Its franchisees.

Carvel learned the risk several decades ago when the franchisor started selling frozen cakes through supermarkets. Franchisees grabbed a noose and started looking for a stout branch outside the chain’s headquarters at the time (the brand was subsequently sold.) They felt the home office was raiding their protected turf. Wouldn’t consumers feel less of a need to visit units if shoppers could buy the brand’s products along with their cornflakes, bread and lettuce?

The same thing happened when chains of all stripes started shoehorning corporate stores into non-traditional sites like sports arenas, colleges and airports. As franchisees explained to their lawyers, they supposedly had the exclusive rights to sell the brand’s food in their area. What was this “captive site” malarkey?

I have trouble believing that McDonald’s would risk a similar outcry and revolt from its franchisees, truly the backbone of the chain.

Maybe it’s developed a new licensing model where franchisees would get a significant share of grocery proceeds. But a more likely explanation is that the chain wants to hold open the possibility of selling bagged coffee through its own stores, not a Kroger or a Piggly Wiggly.

McDonald’s, after all, is a global-scale toy retailer. Those transactions take place in the chain’s units, not in a Toys “R” Us.

It’s also an avid student of Starbucks. Witness the McCafe coffee program, or new designs that encourage customers to hang out for awhile and enjoy a beverage as they surf the internet. Why not follow the coffee giant’s lead in merchandising and selling products for home-use, too?

All in all, I’ll put my money on in-store sales, not a McDonald’s section of your local supermarket.

Wednesday, October 3, 2012

When the message gets pissy

Looks like all those negative campaign ads are having an effect on restaurant advertising. Consider, for instance, the mud that’s slung in the new commercials from Arby’s and Domino’s.  

Both chains take aim in the spots at supposedly anonymous competitors that even a dim-witted hermit from the planet Zargon couldn’t mistake as anything but what they are. The target for Arby’s, for instance, is obviously a sandwich chain, with a green logo that’s blurred out but still easy identifiable as “Subway.”

On camera is a retired New York City police detective who explains that he’s uncovered the truth about deli-meat slicing.  The real-life detective then takes viewers to a Midwestern factory-like facility to show where the sandwich meats for the not-so-anonymous green-logged chain is actually sliced. Cut to visuals of turkey being sliced in-store for Arby’s currently promoted sandwich line.

Domino’s is a bit slyer in its approach. Commercials for the delivery giant’s new pan pizzas, a product pitted directly against Pizza Hut’s signature pie, play up Domino’s use of hand-tossed freshly made dough, not the frozen globs that competitors use. The radio commercial acknowledges that frozen dough has its place; you hear a skeet shooter talking about the viability of using the frozen dough balls as clay pigeons.

Comparative advertising is of course not new to the restaurant business. But with sales still proving sluggish at best, and share of market still reigning as a goal, it’s not surprising that us-vs.-them campaigns would gain favor. The difference is the edge evident in campaigns like Arby’s, and the focus on aspects of a meal that are truly back-of-the-house factors, like the state of pizza dough or how meat is sliced.

In both case, the emphasis is on freshness, which infers a better taste, rather than on the taste per se.

And the spots are consistent with the overriding trend in chain foodservice: Better, in this case defined as fresher and more artisanal in a way.

Look for more brands to follow a similar strategy.