Tuesday, January 29, 2013

A fight's brewing for vegetarians' taste buds

Everyone’s buzzing about Taco Bell’s efforts to counter Chipotle Mexican Grill with a premium menu. Much more interesting is the struggle taking shape between Chipotle and the upstart Veggie Grill chain for the attention of vegetarians and vegans.
In the process, the would-be combatants are moving fast-casual menus in a decidedly progressive direction.
Today Chipotle announced that it’s begun a sales test of a tofu-based new entrée called Sofritas in seven San Francisco units. The new choice also marks a noble effort in the fast-casual effort to feature locally sourced ingredients. The organic, GMO-free tofu is supplied by Hodo Soy, a company located across the Bay in Oakland.
“Sofritas is a very different menu item not just for Chipotle, but for any fast food or fast causal restaurant,” founder and co-CEO Steve Ells in trumpeting a rare product introduction for the New Age chain. “It was really conceived with vegetarians and vegans in mind, but it’s so delicious that we believe it will have a broad appeal on taste alone.”
The flavor comes in part from undisclosed spices and roasted poblanos that are mixed with the tofu. The end result is a meat alternative that can be spec’d for burritos, bowls, tacos or salads.
About half a day earlier, Reuters reported that the 16-unit Veggie Grill chain had secured $20 million in additional growth capital from current and new investors. Those backers include Brentwood Associates, a private equity firm that’s no stranger to the restaurant industry (it also holds a stake in Zoe’s Kitchen.)
One of Veggie’s points of difference is a plant-based meat alternative that fans swear could rival burgers or chicken in its mainstream appeal.
It’s purely a coincidence, I’m sure, that all 16 of Veggie’s current units are located on the West Coast, or the same general region where Chipotle is testing its meat alternative.

Thursday, January 24, 2013

New menu obligations for restaurants?

You may have seen the recent news reports about lawyers getting a new opportunity to sue restaurants under an old bane of the foodservice industry. On first read, they sound as if Chicken Little somehow grabbed a soapbox again: Revamp your menus to accommodate people with food allergies or you could be brought to court under the Americans with Disabilities Act.

This time the sky might actually be falling.

The ADA requires public businesses to make reasonable accommodations for customers or employees with physical impairments, a mandate that spurred many eating places in the 1980s and ‘90s to revamp their layouts and operations.  Some were prodded to action by lawsuits or the threats of one. One way or the other, the burdens and obligations became part of doing business.

But those accommodations dealt largely with access. A lawsuit settlement recently reached between a college dining service and the U.S. Department of Justice ominously states, “Food allergies may constitute a disability under the ADA.”

That means the industry will have to make reasonable accommodation for persons with celiac disease or sensitivities to ingredients ranging from milk to soy.

The college cited in the 2009 lawsuit, Lesley College in Cambridge, Mass., agreed to provide allergen-free selections to students. Each foodservice crewmember will have to undergo training on accommodating allergies.

A separate area for the prep and storage of allergen-free selections has to be set up to avert cross-contamination. The stipulation extends to shelf and refrigeration space, and the installation of appliances just for the allergy-free dishes. For all extents and purposes, a separate kitchen has to be cordoned off.

The settlement also obliges the school to accept advance orders for allergen-free meals, and have them delivered at lunch to the students.

The college also paid $50,000 to each allergy sufferers whose complaints prompted the Justice Department to file the suit. 

Observers are quick to point out that the residential foodservice of a college is different from a streetside restaurant. The facility is serving the students where they live, for the stretch of a semester, so accommodation is theoretically easier and more important; the student has few other options than the dining hall.

But the settlement raises the possibility that food allergies must be accommodated to some degree by all public food sellers.

Most ominous of all might be the “may be covered” phrase in the settlement. Determining a restaurant’s obligation and the extent of accommodation it’s expected to provide could be matters settled in court. And that’s bad for everyone except lawyers.

Monday, January 21, 2013

DNA as a fast-food tool

Only in the fast-food business can Molten Fudge Bites be big news one week, DNA testing the next.  But, indeed, the revelations coded into genes and chromosomes are landing Burger King and McDonald’s in headlines overseas, though for much different reasons.

The DNA development involving Burger King is the more interesting. That descriptor is used here the way you’d laud a buddy set up on a blind date with your wife’s friend as still having all his teeth. Because in the case of the world’s Number Two fast feeder, DNA testing was used to allay fears that horsemeat wasn’t going into the King’s burgers in Ireland.

Burger King was dragged into a situation where it did nothing wrong and at no time used adulterated ground beef. The controversy was stirred up by one of the chain’s European meat suppliers, some of whose retail burgers were found to have traces of horsemeat. DNA technology exonerated the King and its signature product, though it’s unclear on this side of the Pond if unfounded fears altered customer behavior in any way.

McDonald’s involvement with DNA is more of a hold-your-horses variety. To deter robbers, or catch the ones who go ahead and pull an armed heist, the chain is testing a system in Australian stores that sprays the exiting thief with an organic spray. The marking is invisible to the naked eye, but a special black light reveals DNA markings peculiar to the restaurant that was robbed.

Police can not only find the perpetrator, but connect him or her to a particular restaurant. Cue the Law & Order case-closed sound.

Australia is a long way from the U.S. market, but a number of innovations uncorked at McDonald’s units there have made it to our shores, like the McCafe coffee menu.
And the last time we checked, robberies are still a problem here, too.

Friday, January 18, 2013

The evolution of Ronald McDonald

The latest ad from a well-known restaurateur focuses on the growers who supply the controversial meal peddler with one of its fresh, seasonal ingredients. That would be a dog-bites-man story if the restaurateur weren’t named McDonald’s.

Viewers who tuned into Sunday’s broadcast of the Golden Globes saw the family that owns a Michigan orchard talk about the four varieties of apples they grow for McDonald’s. The apples are sold in slices by the fast-food giant as an alternative to French fries.

The new commercial is part of a campaign that McDonald’s began awhile back to showcase the wholesomeness of its ingredients. The kick-off was a spot that featured one of the farmers who grow potatoes for the chain’s French fries.

The objective is to show that the route from farm to McDonald’s kitchens is a short and straight one, a contradiction of the notion that it’s the world’s leading purveyor of factory food. The campaign is also a big concession to consumers’ demands for transparency about what they’re being sold in groceries and restaurants.

It’s hardly the chain’s only effort in that regard. In the U.K., consumers were invited to stroll through the kitchens of McDonald’s units to see how their food was being prepared. On this side of the pond, the chain has invited mommy bloggers to get a similar first-hand view and spread the word.

Five years ago, we never would have suspected such a thing from the Golden Arches. But the multi-billion-dollar behemoth is doing some surprising things. Even casual industry-observers know the brand has zealously protected the integrity of its brand, both by suing any commercial entity with a remotely similar name (think Molly McButter) and by ensuring the McDonald’s name is never compromised. You can drink Coke or Coca-Cola, but you can only order from a McDonald’s.

Or at least until now. To celebrate the 40th anniversary of McDonald’s entry into Australia, the chain is temporarily changing the name of 13 restaurants Down Under to Macca’s, the brand’s nickname there.

It’s not the same old McDonald’s. Just a smarter one.

Friday, January 11, 2013

What a difference a CEO makes

Succeeding a company founder can be tricky. Push for too much change and you look disrespectful of the entrepreneurial god who built a storybook success out of nothing. Leave too much unaltered and you seem like a timid caretaker without a thought or conviction of your own. Indeed, why the hell did the board even bother to hire a big gun like you?

That’s not a question with J.J. Buettgen, the Darden Restaurants and Brinker International veteran who recently assumed the top job at Ruby Tuesday from founder Sandy Beall, one of the most forceful personalities ever to pass through the business. Fewer than 45 days after taking the scepter, Buettgen has made changes that any observer would term stunning. With dramatic action needed, he did nothing less than reverse a key strategic initiative of the larger-than-life Beall.

In case you missed the news, Ruby is backing off one of the industry’s most ambitious diversification efforts of recent times. Betting that some Ruby Tuesday locations had grown too old and creaky to continue operating under that brand name, Beall had decided to explore potential replacement concepts as well as new growth vehicles. But Buettgen clearly doesn’t believe that’s the way to go.

In one fell swoop, he’s closing the 13 units of Ruby’s homegrown seafood concept, Marlin & Ray’s, and the single-store Asian venture, Wok Hay, that started as a fast-casual format and evolved into a dinnerhouse likened by some to P.F. Chang’s.

For Sale signs were hammered into the front lots of the two Truffles Grill polished-casual restaurants that Ruby operated as a franchisee.

Already scrapped was a plan to develop franchises of the Jim ‘N Nick’s barbecue chain.  The concept was viewed as something that could be retrofitted into struggling Ruby Tuesday units, but a one-unit test changed Beall’s mind.

The parings leave Ruby Tuesday with its namesake brand and one of the most celebrated ventures in the fast-casual sector, Lime Fresh Mexican Grill, slugged by some as Chipotle 2.0.

Buettgen’s dramatic actions underscore that diversification has seldom worked for an extended period for restaurant companies. McDonald’s had one time gobbled up brands like they were M&M’s. Now it consists of its namesake powerhouse.

Ditto for Wendy’s, Burger King, Taco Bell and KFC, to name just a few of past diversifiers.
Right now, Bob Evans is looking to spin off its Mimi’s brand to be a single-concept company again.
The notable exceptions are Darden Restaurants, whose brands range from Olive Garden to Seasons 52, and Landry’s, which owns more brands than Lady Gaga has outfits.

It reminds me of a recent conversation with Fred LeFranc, the chain veteran who now leads a team of consultants and concept doctors who collaborate under the name Results Thru Strategy.

I’d asked him if there were any common remedies for the wide variety of turnaround situations he’s hired to address. He surprised me by explaining that the revival strategies are never cookie-cutter, but the problem is often the same.  Somewhere along the way, the concept lost whatever made it special and appealing in the first place. The operation had drifted away from what had brought it success.
Diversification, it seems, can super-charge that blurring process.

Certainly Buettgen is betting that the distractions have hurt Ruby.

Now we just have to see if he’s right.

Tuesday, January 8, 2013

Remembering Fred Turner

Everyone who’s made a dollar from chain restaurants should bow their heads in respect for the industry founding father who died yesterday without the tributes paid to the likes of Col. Harland Sanders, Dave Thomas or Ray Kroc. Yet Fred Turner could walk with all those giants. As a longtime head of McDonald’s and the godfather of its unflinching devotion to operations, he set a standard for the business. It’s not an overstatement to say he changed the way America eats.

Even those of us greybeards who were in the business during Turner’s tenure as McDonald’s CEO (1977 through ’87) didn’t have as much exposure to him as we did to, say, Jim Turner, Jack Greenburg, Ed Rensi or some of the other McDonald’s chiefs. But we knew the legend: He’d been Ray Kroc’s grill man, according to the lore, the force who’d been hired by Kroc himself in 1956 to standardize the operations that enabled McDonald’s to sell a consistent burger for 15 cents.

Knowing how to run restaurants propelled him to the president’s post at McDonald’s in 1968, which says a lot about the company’s DNA, and its view of operations in particular. Turner would remain in a leadership role until 2004, and executives said they’d still talk to him from time to time, for inspiration if not practical advice.

Trying to isolate his influence on the McDonald’s of today is like trying to tell which water in the Mississippi River came from its eastern side. The watchwords he coined for the chain are still part of the mantra uttered by everyone in the chain, from CEO to crewmember, to keep the brand focused on operations and execution: Quality, Service, and Cleanliness.

His focus on operations led to the opening of Hamburger University, the Olympic Training Center of restaurant operations. Today, every franchised chain has a training facility or program for is field partners. But McDonald’s was ahead of the pack, as it was with international development. Today, Hamburger U. has seven campuses worldwide, including the Fred L. Turner Training Center at headquarters.

I never had the experience of interviewing Turner one-on-one, but I did get the chance to interact with him at the press conferences McDonald’s would sort of hold at headquarters after its annual shareholders meeting. We ink-stained wretches would wait around, not knowing if we’d actually get some time with Turner and his senior team, or how long the session might last.  I once naively asked a member of McDonald’s PR team when the session would begin and end. He looked at me as if to say, Kid, it’ll start when Fred Turner’s ready, and it’ll finish when Fred Turner wants to go.

Turner showed a few minutes later, and, sure enough, after answering a few questions, he abruptly stood up, grabbed his cigarettes, and walked out.

Hey, he was an operations guy, a restaurateur with ketchup in his veins, not some glad-handing schmoozer who loved the limelight.  He may not have been the sort of high-gloss CEO we see today leading companies of McDonald’s size, but he was a restaurant guy, maybe one of the greatest the industry has ever known. Everyone in the business is poorer for his passing.

Turner died yesterday at age 80 of complications from pneumonia. 

Friday, January 4, 2013

So far in 2013, restaurant chains bite it

The confetti had barely stopped falling when restaurant chains started bombarding consumers with new food choices for 2013. If Week One’s “innovations” are true indicators, what direction are mainstream menus likely to take this year?

Let’s just say it’s Auld Lang Syne for value, Seasons Greetings for miniature indulgences and products with a health tinge.

The exception is the pizza sector, where deal-making remains more prevalent than mozzarella. Take Domino’s (very) short-lived Dollars promotion, where customers get a $5 credit toward their next pizza when they order at least two medium pies with two or more toppings each. The deal extends for a mere 11 days, or from Jan. 2 through Jan. 13—pizza delivery’s arctic winter before the NFL playoffs thaw.

If that doesn’t pry a few bucks out of families, there’s Pizza Hut’s come-on: Any pizza—though presumably a well-topped large—for $10, plus free Pizza Rollers, a sort of stuffed pizza-dough crescent roll, if you order online. For another $5, you can get a two-liter bottle of soda and an order of breadsticks.

Contrast those lures with what Burger King is fly-casting this winter:  Better chicken nuggets. Bite-sized choices are a big part of the chain’s current promotional menu; customers can also try tater tots and something called Molten Fudge Bites, or mini-brownies with a gooey melted-fudge core.

Molten chocolate also figures into a new made-to-order sundae.

Small indulgences are also in the spotlight at Sonic, whose new additions include Cheesecake Bites, and at Baskin-Robbins, where this month’s specials include a Red Velvet Ice Cream Cake Bites.

Full-serving treats figure into the promotional line-up of Baskin’s sister concept, Dunkin’ Donuts. Its latest menu additions include a French-toast flavored bagel and Dark Hot Chocolate.

But the repentant needn’t worry. Applebee’s has extended its line of diet choices with six new items that each pack fewer than 550 calories, and Jamba Juice added its first-ever kids’ meals, consisting of products squarely wearing a halo of health.

So what’s next? I’m going to make a prediction: One of the hot products of the New Year will be a revamp of a comfort classic. This might be the Year of the Bite-Sized, but grilled-cheese sandwiches will rival those mini-indulgences as a frequently used draw.

Indeed, you can now choose from three new grilled-cheese choices at Sonic, and Panera Bread is encouraging patrons to match its Big Boy Grilled Cheese Sandwich with tomato soup this winter.

Wednesday, January 2, 2013

Restaurant guests ask, Wi-Not?

One of the memorable moments from September’s FS-TEC conference was an exchange of opinions about providing free Wi-Fi service in restaurant dining rooms. The head techie for Carl’s Jr. and Hardee’s, Jeff Chasney, remarked on stage that his charges saw no need to offer the amenity. During tests, he explained, customers didn’t seem to care. Why incur the cost?

That raised the eyebrows of David Mattews, CIO of the National Restaurant Association. “There are some issues to it. [Data] security is one of them. Table occupation is another,” allowed Matthews.  But “if customers have a choice of going into an establishment across the street that does have Wi-Fi, you have to be very careful, because we see that becoming more important.”

New research underscores the competitive advantage that Wi-Fi provides, at least currently. Certify, a company that markets cloud-based services for managing employee expense accounts, reviewed the 6 million expense filings it processed during the first 11 months of 2012. The exercise revealed that the restaurant most often listed on the expense account of a business traveler was not Morton’s or Ruth’s Chris, but a unit of Starbucks.

Number Two was McDonald’s, followed by Subway and Panera Bread.

Three out of the four offer free Wi-Fi service. Burger King, which finished at Number Five on the list, offers the service in Europe and at a number of stores in the United States.

A coincidence? Speaking from experience, I’d emphatically say no. How many of us have turned Starbucks into an office-away-from-the-office, buying two or three coffees not for the buzz but to justify the use of the Wi-Fi connection?

McDonald’s tends to be a little more hectic, but walk into one of its dining rooms and you’re likely to see plenty of laptops and smartphones, many on them presumably connected to the internet.

It’s to the point now where I’ll look while on the road for a restaurant that has free internet service, and I can tell you many of the airports or terminals across the nation that offer it.

For the business traveler, the amenity has arrived.