Place your bets and get out of the way. We’re about to see who’s nailed the right future for an Asian restaurant chain, Chipotle or P.F Chang’s.
Unless you’ve been really, really preoccupied with Herman Cain’s political complications, you’re probably aware that Chipotle intends to launch a chain of fast-casual restaurants featuring authentically flavored Asian fare. Management hasn’t shared much information about the early performance of ShopHouse Southeast Asian Kitchen, which borrows Chipotle’s serving-line format. But founder Steve Ells has commented that patrons have complained about the spiciness of the food, much as customers did when Chipotle started. He’s proudly cited that pushback as proof the concept is positioned where few ethnic chains have dared American taste buds to follow.
Contrast that push-the-margins approach with the new direction P.F. Chang’s is exploring. The company announced that it’s opening a test lab of sorts today to try the recipes, design features and other elements that will likely figure into its namesake concept’s future. It’s “what we hope to become over the next five to 10 years,” said chain president Lane Cardwell.
Currently under test are seven entrees available only at the new southern California outpost. There’s a roast chicken served with shoestring fries, jazzed up with a Sichuan rub and other Asian touches (the fries are tossed with “crispy sesame,” for instance). But it still sounds a lot like roast chicken and fries, just with a little more spice.
There’s also a steak frites, served with fries, and a double-cut pork chop, which is fast becoming a casual-dining staple.
You can also get Alaskan black cod, Scottish salmon or Alaskan halibut, all served in one grilled entrée. Here again, the spices are Asian, but the foundation of the dish hails from elsewhere in the world.
Indeed, it sounds like Chang’s is trying a more mainstream American approach, perhaps to counter a traffic drop-off that’s been steeper than the slowdown for many grill-and-bar-type competitors. The change in strategy is surprising because Chang’s has always been a bit of a niche player, with a menu that goes far beyond what you'd find in your order-by-number neighborhood Asian joint.
The directional adjustment--and remember, it's still under test--may prove to be a smart strategy. It's just contrary to the body of 2012 prognostications, which almost unanimously foresaw exploration of unfamiliar ethnic dishes and flavors.
Then again, Chipotle might have the better idea. Or maybe authenticity works in the fast-casual market, but not in the full-service arena.
Whatever happens, it’s one of the most marked recent examples of chains moving in directly opposite directions.
Showing posts with label Chipotle. Show all posts
Showing posts with label Chipotle. Show all posts
Tuesday, December 13, 2011
Friday, October 21, 2011
Forget Twitter. Chipotle scores big with foil.
Social media may be the new frontier in restaurant marketing, but Chipotle Mexican Grill said it did just fine this summer with nothing more than some gold foil.
The industry’s non-conformist chain decided to call attention to its push for better ingredients by wrapping the concept’s torpedo-sized burritos in gold instead of the usual silver foil, which has figured into billboard campaigns in the past. The notion was subtle, to say the least. The gold standard—get it?
Well, people did. Executives revealed to investors yesterday that 94 percent of customers who saw the gold foil understood the implication that Chipotle uses better ingredients, strongly reinforcing the chain’s Food with Integrity pledge. Research also indicates that the campaign boosted awareness of Chipotle by 19 percent, said Steve Ells.
Unconventional marketing is being used more frequently by the burrito maker. Ells noted that an animated short movie illustrating the comeback of small-scale farming is currently being shown in 10,000 theaters, where some 20 million people will view it. It was funded by Chipotle as a way of calling attention to better agricultural methods.
It’s already been viewed more than 1.7 million times on YouTube, Ells said.
He noted that a message about sustainable farming was delivered about 32 million times through coverage of Cultivate Chicago, a recent food and music festival sponsored by Chipotle in the Windy City. The event drew some 16,000, who came to sample the specialties of big name chefs, hear some big-name bands, and maybe learn about sustainable farming in the process.
“We've always believed that if people discover where their food comes from, the more they'll appreciate what we do at Chipotle,” Ells told investors during a conference call.
Ells said that a second Cultivate festival will be held next year, most likely in the chain’s headquarters city of Denver.
Not on the schedule, he noted, is the development of a second ShopHouse Southeast Asian Grill. The company plans to focus on fine-tuning the prototype, which opened a few weeks ago in Washington, D.C.
Ells disclosed that patrons of the first ShopHouse have complained about the spiciness of the food. Those were the same sort of comments that he heard when the first Chipotle opened, Ells said.
The industry’s non-conformist chain decided to call attention to its push for better ingredients by wrapping the concept’s torpedo-sized burritos in gold instead of the usual silver foil, which has figured into billboard campaigns in the past. The notion was subtle, to say the least. The gold standard—get it?
Well, people did. Executives revealed to investors yesterday that 94 percent of customers who saw the gold foil understood the implication that Chipotle uses better ingredients, strongly reinforcing the chain’s Food with Integrity pledge. Research also indicates that the campaign boosted awareness of Chipotle by 19 percent, said Steve Ells.
Unconventional marketing is being used more frequently by the burrito maker. Ells noted that an animated short movie illustrating the comeback of small-scale farming is currently being shown in 10,000 theaters, where some 20 million people will view it. It was funded by Chipotle as a way of calling attention to better agricultural methods.
It’s already been viewed more than 1.7 million times on YouTube, Ells said.
He noted that a message about sustainable farming was delivered about 32 million times through coverage of Cultivate Chicago, a recent food and music festival sponsored by Chipotle in the Windy City. The event drew some 16,000, who came to sample the specialties of big name chefs, hear some big-name bands, and maybe learn about sustainable farming in the process.
“We've always believed that if people discover where their food comes from, the more they'll appreciate what we do at Chipotle,” Ells told investors during a conference call.
Ells said that a second Cultivate festival will be held next year, most likely in the chain’s headquarters city of Denver.
Not on the schedule, he noted, is the development of a second ShopHouse Southeast Asian Grill. The company plans to focus on fine-tuning the prototype, which opened a few weeks ago in Washington, D.C.
Ells disclosed that patrons of the first ShopHouse have complained about the spiciness of the food. Those were the same sort of comments that he heard when the first Chipotle opened, Ells said.
Friday, October 7, 2011
A-ha's that might've slipped past you
You can’t miss a wave that’s reshaping the restaurant business. Harder to spot are the ripples that could swell into powerful forces. Consider these recent developments, for instance:
‘Menu disclosure’ is redefined. The term was once synonymous with posting calorie counts and other nutritional metrics so consumers could make an informed choice. Now we’re seeing a secondary designation.
Amid all the hoopla over the opening of Chipotle’s ShopHouse Southeast Asian Kitchen was a little-noticed detail brought to light by the Washington Post: Not everything on the menu was what it purported to be. Two of the sauces for vegetarian were actually made with fish stock, a huge no-no to the more orthodox non-flesh-eaters.
As the Post subsequently reported, ShopHouse quickly rectified the situation by adding an asterisk to the menu listings, alerting customers that the sauces are non-vegetarian.
It must’ve been déjà vu all over again for the concept’s parent. About a week beforehand, a tweeter with a large following voiced 140 characters’ worth of indignation that Chipotle’s pinto beans were flavored with bacon. Co-CEO Steve Ells called the tweeter (he’s an editor of Maxim, the breasts-and-beer magazine), apologized, and explained that the menu description had been corrected.
Meanwhile, Wendy’s drew fire because of its switch to buttered hamburger buns for the new Dave’s Hot ‘n Juicy line. Websites pointed out that the butter could be a hazard to consumers who are allergic to dairy products, and faulted the chain for not flagging the newfound danger more clearly on its website.
Franchisors could be seriously ding’d by the tax man. It slipped past almost unnoticed, but KFC lost a landmark court decision this week that should worry every franchisor. The U.S. Supreme Court rebuffed an attempt by the Yum! Brans holding to keep Iowa from assessing it for state income taxes.
The franchisor pointed out that it doesn’t operate a single restaurant in the state; all the units there are franchise stores. It doesn’t even have a single employee.
But the Supreme Court rejected the appeal. KFC will have to pay the $250,000 that Iowa says it’s due in income taxes on the franchise royalties and fees that were channeled to chain headquarters in Kentucky.
Two days, two bankruptcies of Sun Capital holdings. Are economic realities catching up to the private-equity raiders?
No PE investor gobbled up as many restaurant brands before and during the Great Recession as Sun, whose portfolio extends from Captain D’s to Bar Louie. The acquisitions included stakes in Friendly’s and Real Mex, parent of the Chevys, El Torito and Acapulco chains, both of which are now being run under the scrutiny of a bankruptcy court. Sun is undoubtedly the owner of more concepts than any other entity in the business, and is likely one of the bigger operator-franchisors as well.
It’s become an industry parlor game to speculate about what Sun will do with those holdings. An IPO for a select chain? Or for several, packaged together? How about a sale to other PE companies? Or to a strategic buyer? Maybe some will be crunched up and sold piecemeal for their locations, the way an auto is sold for parts.
It’s safe to say that Sun didn’t buy anything with a hope of seeing it go bankrupt. What does that portend a company with that much vulnerability to a restaurant downturn on its books?
Looks as if the parlor game has just been updated.
‘Menu disclosure’ is redefined. The term was once synonymous with posting calorie counts and other nutritional metrics so consumers could make an informed choice. Now we’re seeing a secondary designation.
Amid all the hoopla over the opening of Chipotle’s ShopHouse Southeast Asian Kitchen was a little-noticed detail brought to light by the Washington Post: Not everything on the menu was what it purported to be. Two of the sauces for vegetarian were actually made with fish stock, a huge no-no to the more orthodox non-flesh-eaters.
As the Post subsequently reported, ShopHouse quickly rectified the situation by adding an asterisk to the menu listings, alerting customers that the sauces are non-vegetarian.
It must’ve been déjà vu all over again for the concept’s parent. About a week beforehand, a tweeter with a large following voiced 140 characters’ worth of indignation that Chipotle’s pinto beans were flavored with bacon. Co-CEO Steve Ells called the tweeter (he’s an editor of Maxim, the breasts-and-beer magazine), apologized, and explained that the menu description had been corrected.
Meanwhile, Wendy’s drew fire because of its switch to buttered hamburger buns for the new Dave’s Hot ‘n Juicy line. Websites pointed out that the butter could be a hazard to consumers who are allergic to dairy products, and faulted the chain for not flagging the newfound danger more clearly on its website.
Franchisors could be seriously ding’d by the tax man. It slipped past almost unnoticed, but KFC lost a landmark court decision this week that should worry every franchisor. The U.S. Supreme Court rebuffed an attempt by the Yum! Brans holding to keep Iowa from assessing it for state income taxes.
The franchisor pointed out that it doesn’t operate a single restaurant in the state; all the units there are franchise stores. It doesn’t even have a single employee.
But the Supreme Court rejected the appeal. KFC will have to pay the $250,000 that Iowa says it’s due in income taxes on the franchise royalties and fees that were channeled to chain headquarters in Kentucky.
Two days, two bankruptcies of Sun Capital holdings. Are economic realities catching up to the private-equity raiders?
No PE investor gobbled up as many restaurant brands before and during the Great Recession as Sun, whose portfolio extends from Captain D’s to Bar Louie. The acquisitions included stakes in Friendly’s and Real Mex, parent of the Chevys, El Torito and Acapulco chains, both of which are now being run under the scrutiny of a bankruptcy court. Sun is undoubtedly the owner of more concepts than any other entity in the business, and is likely one of the bigger operator-franchisors as well.
It’s become an industry parlor game to speculate about what Sun will do with those holdings. An IPO for a select chain? Or for several, packaged together? How about a sale to other PE companies? Or to a strategic buyer? Maybe some will be crunched up and sold piecemeal for their locations, the way an auto is sold for parts.
It’s safe to say that Sun didn’t buy anything with a hope of seeing it go bankrupt. What does that portend a company with that much vulnerability to a restaurant downturn on its books?
Looks as if the parlor game has just been updated.
Wednesday, September 28, 2011
Finally! A list of the most common restaurant office sounds
There’s no shortage of rankings in the restaurant business, as you’ll discover when the October issue of Restaurant Business arrives (you can also view it via our free app from iTunes.) As we report, at least five new listings of the best and most loved restaurant chains were released toward the end of summer—revealing that the industry has no fewer than four “best” chains (add a fifth if you believe one of our competitor’s rankings, which appeared too late to be included in our print round-up.)
There’s none of that confusion in the roster that’s been conspicuously overlooked in the recent fit of ranking, listing and arraying. Damn the politics!
Here, plugging the gap at long last, is the Loudest Sounds Heard This Summer from Chain Headquarters:
'Hmmm.' The industry has been agog over the debut of Chipotle’s ShopHouse Southeast Asian fast-casual concept. But cooler heads have remembered that Chipotle isn’t the first celebrated restaurant operation to fire up the wok. Cheesecake Factory similarly quickened pulses when it unveiled RockSugar Pan Asian Kitchen, and Ruby Tuesday tried unsuccessfully to keep the buzz down about its purchase of the Wok Hay fast-casual concept a few years ago. Neither of those have stunned the industry. Indeed, officials of both the casual dining chains say the ventures are still in the evaluation phase, and Ruby has transformed Wok Hay into something much different from what it bought.
Factor in the evident challenges of Pei Wei Asian Diner, P.F. Chang’s fast-casual sister, and you have several counterbalances to the ShopHouse hoopla. Of course, the whole MP3 phenomenon failed to boom until the iPod hit the market. But the breathless betters on ShopHouse’s success should at least splash some cold water on their faces and remember history.
‘Kill our signature’ When you’re known for your burger, it’s pretty dicey to mess with the recipe. Wendy’s says that’s why it spent four years on the development of the new Dave’s Hot ‘n Juicy. Former CEO Roland Smith boasted that it’s better than anything you’ll get from In-N-Out or Five Guys (both of which appeared atop several of the Best lists.)
But the burger chain is hardly the only quick-service brand to mess with its signature. Witness Domino’s launch of artisan pizzas, which are specialized versions of the new pizza the chain added about a year and a half ago.
But the list goes on from there. Sonic revamped its Coney, a signature of the quirky chain. Burger King is messing with “stuffed burgers,” while Carl’s Jr. and Hardee’s give “steakburgers” a try.
The one constant: All of the new items promise a considerable jump in quality, a reflection of the new mantra that value today means far better quality at a not-much-higher price.
‘I don’t care if sushi’s our specialty. Give me a burger!’ This is a really bad time to be a cow. Just when you think the upscale burger market has crested, along comes news of more big-name entrants, like Domino’s founder Tom Monaghan, or popular retail brands like Bubba Burger.
If the brand can’t do a true burger, it tries a similar product, like the steak sandwich at Panera Bread, or the countless cheeseburger pizzas that are now available.
Is it just me, or have the Chick-fil-A cows looked a little more nervous as of late?
‘Get me a headhunter! And keep them from calling the team!’ The restaurant industry has always been a continual game of musical chairs. When sales or profits sag and the music stops, a scramble erupts for new CEOs, ops specialists or marketing hotshots, which seem to be in greater than usual demand this year. Clearly we’re in the midst of that right now. Consider the recent changes: New CEOs or presidents at Wendy’s, Hooter’s, California Pizza Kitchen, Church’s, O’Charley’s, Texas Roadhouse, with a vacancy at Dunkin’ Brands’ international arm.
With industry veteran Brad Blum using his substantial stake in Cosi to demand the top job there, we might also add that situation to the tally.
Marketer changes include the departure of Dairy Queen’s chief brand officer, Michael Keller; the addition of Pepsico veteran Scott McDaniel to CEC, the parent of the Chuck E. Cheese’s chain; and the recruitment of Garfield the cartoon cat to serve as the new mascot of Straw Hat Pizza, the 53-year-old regional chain.
There are a number of executive placement services that work only within the restaurant industry. It’s a shame that they’re not publicly traded, or they’d bump Chipotle and McDonald’s as the hot foodservice stocks.
There’s none of that confusion in the roster that’s been conspicuously overlooked in the recent fit of ranking, listing and arraying. Damn the politics!
Here, plugging the gap at long last, is the Loudest Sounds Heard This Summer from Chain Headquarters:
'Hmmm.' The industry has been agog over the debut of Chipotle’s ShopHouse Southeast Asian fast-casual concept. But cooler heads have remembered that Chipotle isn’t the first celebrated restaurant operation to fire up the wok. Cheesecake Factory similarly quickened pulses when it unveiled RockSugar Pan Asian Kitchen, and Ruby Tuesday tried unsuccessfully to keep the buzz down about its purchase of the Wok Hay fast-casual concept a few years ago. Neither of those have stunned the industry. Indeed, officials of both the casual dining chains say the ventures are still in the evaluation phase, and Ruby has transformed Wok Hay into something much different from what it bought.
Factor in the evident challenges of Pei Wei Asian Diner, P.F. Chang’s fast-casual sister, and you have several counterbalances to the ShopHouse hoopla. Of course, the whole MP3 phenomenon failed to boom until the iPod hit the market. But the breathless betters on ShopHouse’s success should at least splash some cold water on their faces and remember history.
‘Kill our signature’ When you’re known for your burger, it’s pretty dicey to mess with the recipe. Wendy’s says that’s why it spent four years on the development of the new Dave’s Hot ‘n Juicy. Former CEO Roland Smith boasted that it’s better than anything you’ll get from In-N-Out or Five Guys (both of which appeared atop several of the Best lists.)
But the burger chain is hardly the only quick-service brand to mess with its signature. Witness Domino’s launch of artisan pizzas, which are specialized versions of the new pizza the chain added about a year and a half ago.
But the list goes on from there. Sonic revamped its Coney, a signature of the quirky chain. Burger King is messing with “stuffed burgers,” while Carl’s Jr. and Hardee’s give “steakburgers” a try.
The one constant: All of the new items promise a considerable jump in quality, a reflection of the new mantra that value today means far better quality at a not-much-higher price.
‘I don’t care if sushi’s our specialty. Give me a burger!’ This is a really bad time to be a cow. Just when you think the upscale burger market has crested, along comes news of more big-name entrants, like Domino’s founder Tom Monaghan, or popular retail brands like Bubba Burger.
If the brand can’t do a true burger, it tries a similar product, like the steak sandwich at Panera Bread, or the countless cheeseburger pizzas that are now available.
Is it just me, or have the Chick-fil-A cows looked a little more nervous as of late?
‘Get me a headhunter! And keep them from calling the team!’ The restaurant industry has always been a continual game of musical chairs. When sales or profits sag and the music stops, a scramble erupts for new CEOs, ops specialists or marketing hotshots, which seem to be in greater than usual demand this year. Clearly we’re in the midst of that right now. Consider the recent changes: New CEOs or presidents at Wendy’s, Hooter’s, California Pizza Kitchen, Church’s, O’Charley’s, Texas Roadhouse, with a vacancy at Dunkin’ Brands’ international arm.
With industry veteran Brad Blum using his substantial stake in Cosi to demand the top job there, we might also add that situation to the tally.
Marketer changes include the departure of Dairy Queen’s chief brand officer, Michael Keller; the addition of Pepsico veteran Scott McDaniel to CEC, the parent of the Chuck E. Cheese’s chain; and the recruitment of Garfield the cartoon cat to serve as the new mascot of Straw Hat Pizza, the 53-year-old regional chain.
There are a number of executive placement services that work only within the restaurant industry. It’s a shame that they’re not publicly traded, or they’d bump Chipotle and McDonald’s as the hot foodservice stocks.
Monday, April 25, 2011
McDonald's quietly adopts handhelds
The proliferation of iPad-based menus and wine lists is generating buzz, but far more interesting is the quiet adoption of hand-held ordering devices by several quick-service giants.
McDonald’s revealed to investors last week that one advantage of its new POS system is adaptability to handhelds, “which we're beginning to implement more and more [in] the restaurants,” commented president Don Thompson. He also noted that the new POS system is compatible with dual drive-thrus.
mcDonald's is updating its sales technology in large part because the next generation requires less user input. Franchisees say an order can be input with fewer keystrokes and screens, speeding up service during crunch periods.
The operators have groused a little about the cost, which they have to absorb after investing in equipment to produce coffees, frappes and other high-ticket beverages.
Meanwhile, I can attest firsthand that Chipowithin using handhelds at some stores, including the one near Restaurant Business' headquartersb in the Wall Street area of New York. A staffer was using one recently to take orders from the queue of 35 or so people. You placed your order and payed. Then, when you got to the serving area, less info had to be provided, and the line did move faster.
The revelation about McDonald's use of handhelds came during a conference call on Friday with financial analysts. During the call executives also offered these news nuggets:
--The January offer of a 20-piece serving size of Chicken McNuggets led to a double-digit increase in sales of the product.
--McDonald's sales of hot coffee rose 17% year-over-year during the just-concluded winter.
--A frozen strawberry lemonade will be introduced in May, a part of the chain's efforts to match new drinks with the season. Thompson noted that a new smoothie flavor is also in the works.
McDonald’s revealed to investors last week that one advantage of its new POS system is adaptability to handhelds, “which we're beginning to implement more and more [in] the restaurants,” commented president Don Thompson. He also noted that the new POS system is compatible with dual drive-thrus.
mcDonald's is updating its sales technology in large part because the next generation requires less user input. Franchisees say an order can be input with fewer keystrokes and screens, speeding up service during crunch periods.
The operators have groused a little about the cost, which they have to absorb after investing in equipment to produce coffees, frappes and other high-ticket beverages.
Meanwhile, I can attest firsthand that Chipowithin using handhelds at some stores, including the one near Restaurant Business' headquartersb in the Wall Street area of New York. A staffer was using one recently to take orders from the queue of 35 or so people. You placed your order and payed. Then, when you got to the serving area, less info had to be provided, and the line did move faster.
The revelation about McDonald's use of handhelds came during a conference call on Friday with financial analysts. During the call executives also offered these news nuggets:
--The January offer of a 20-piece serving size of Chicken McNuggets led to a double-digit increase in sales of the product.
--McDonald's sales of hot coffee rose 17% year-over-year during the just-concluded winter.
--A frozen strawberry lemonade will be introduced in May, a part of the chain's efforts to match new drinks with the season. Thompson noted that a new smoothie flavor is also in the works.
Tuesday, April 19, 2011
This just in from the courts
Chipotle’s design draws fire…
Chipotle may have to reconsider its standard design after the U.S. Supreme Court let stand a lower court’s ruling that customers in wheelchairs can’t be denied the experience of seeing their meals prepared.
Customers who walk through the serving line interact with the prep staffers on the other side of a glass partition, specifying what they want in their burrito and watching as the elements are added. The experience was cited in court actions as an essential part of the Chipotle experience.
But a barrier by the serving line prevents wheelchair-bound patrons from being able to see their meals being assembled.
In 2005, a California resident in a wheelchair sued Chipotle, asserting that he was the victim of discrimination because of his disability.
Chipotle had countered that the plaintiff, Maurizio Antoninetti, had sued a number of businesses because of alleged inaccessibility. Antoninetti is described in an online bio as a teaching associate at San Diego State University and a former “accessibility consultant,” with a degree in architecture.
The chain had also argued that it accommodated patrons who couldn’t walk the line. Staffers would in effect bring the assembly process to them, holding spoonfuls of ingredients and assembling the burrito so they could watch.
The lower court had decided that the remedy wasn’t fair to Antoninetti. The Supreme Court refused to hear the appeal, letting that ruling stand.
Chipotle has yet to issue any public statement about how it intends to respond to the action.
…while McD’s argues parents are the bosses
Meanwhile, McDonald’s is arguing that a lawsuit challenging its use of toys as kids-meal giveaways should be dismissed because the plaintiff acknowledges she wasn’t conned by the offer.
Monet Parham, a California mother of two, has admitted she knew exactly what was offered in the Happy Meals her children desired, and often refused their pleas to buy the bundled meals. McDonald’s asserted in court that the advertising was straightforward, and that a purchase wasn’t based on any misleading information from the chain.
Parham is represented in the suit by the Center for Science in the Public Interest.
An attorney for the plaintiff countered that McDonald’s was making Parham the victim because she couldn’t always counter the brainwashing that McDonald’s does with its advertising.
McDonald’s was still awaiting a reaction from the federal court as of this writing.
Chipotle may have to reconsider its standard design after the U.S. Supreme Court let stand a lower court’s ruling that customers in wheelchairs can’t be denied the experience of seeing their meals prepared.
Customers who walk through the serving line interact with the prep staffers on the other side of a glass partition, specifying what they want in their burrito and watching as the elements are added. The experience was cited in court actions as an essential part of the Chipotle experience.
But a barrier by the serving line prevents wheelchair-bound patrons from being able to see their meals being assembled.
In 2005, a California resident in a wheelchair sued Chipotle, asserting that he was the victim of discrimination because of his disability.
Chipotle had countered that the plaintiff, Maurizio Antoninetti, had sued a number of businesses because of alleged inaccessibility. Antoninetti is described in an online bio as a teaching associate at San Diego State University and a former “accessibility consultant,” with a degree in architecture.
The chain had also argued that it accommodated patrons who couldn’t walk the line. Staffers would in effect bring the assembly process to them, holding spoonfuls of ingredients and assembling the burrito so they could watch.
The lower court had decided that the remedy wasn’t fair to Antoninetti. The Supreme Court refused to hear the appeal, letting that ruling stand.
Chipotle has yet to issue any public statement about how it intends to respond to the action.
…while McD’s argues parents are the bosses
Meanwhile, McDonald’s is arguing that a lawsuit challenging its use of toys as kids-meal giveaways should be dismissed because the plaintiff acknowledges she wasn’t conned by the offer.
Monet Parham, a California mother of two, has admitted she knew exactly what was offered in the Happy Meals her children desired, and often refused their pleas to buy the bundled meals. McDonald’s asserted in court that the advertising was straightforward, and that a purchase wasn’t based on any misleading information from the chain.
Parham is represented in the suit by the Center for Science in the Public Interest.
An attorney for the plaintiff countered that McDonald’s was making Parham the victim because she couldn’t always counter the brainwashing that McDonald’s does with its advertising.
McDonald’s was still awaiting a reaction from the federal court as of this writing.
Tuesday, January 25, 2011
Snapshot from southern Cal
Restaurant veteran John A. Gordon was kind enough to pass along what he saw and heard at the recent ICR XChange Conference, a powwow in southern California for restaurant companies and investors specializing in the field. The meeting is different from most financial conferences because the presenters include private companies as well as public ones. In this case, that meant a peek inside such interesting up-and-comers as Le Pain Quotidien, a bakery-café concept, and Ignite Restaurant Group, the multi-concept parent of Brick House Tavern + Tap and Joe’s Crab Shack.
Gordon proved to be as astute in observing as he is in analyzing restaurants’ financial situations, a skill that has made him a popular source for those of us who write about the industry. He passed along these insights from the conference:
The mood of the conference was upbeat, with most of the presenters citing positive sales trends. Generally, they indicated that traffic is still weak, but the damage is being tempered by rising guest tabs.
Smashburger drew the most probing by the investors in attendance, despite the concerns voiced by some that the “better burger” segment may be overcrowded.
One extreme down note: Participant Steve West asserted that casual dining traffic will never rebound to pre-Great Recession levels, a result of the shakeout being too anemic.
Domino’s CEO Patrick Doyle noted that many of the chain’s franchisees are unable to grow because of a funding drought. The stores aren’t throwing off sufficient cash flow to justify a rubber-stamped loan, and banks are reluctant to touch any franchisee except the larger ones with whom they’ve done business over a long stretch.
A Sonic executive offered the hindsight that the drive-in chain should have included fewer items on its dollar menu, and promoted them in a more nuanced fashion. The budget line translated in some patrons’ minds into diminished quality.
Chipotle and BJ’s Restaurants, two of the industry’s high achievers, cited a lack of desirable real estate sites and a shallow pool of labor talent as curbs on growth. Others cited rising gasoline prices and escalating food costs.
Texas Road House, Chipotle and Krispy Kreme all cited an effort to shrink their back-of-the-house areas, part of an overall effort to reduce the footprint of new units.
My thanks to John, a principal in Pacific Management Consulting Group, for passing along his observations. You can get more of his food from thought at John's blog,
Gordon proved to be as astute in observing as he is in analyzing restaurants’ financial situations, a skill that has made him a popular source for those of us who write about the industry. He passed along these insights from the conference:
The mood of the conference was upbeat, with most of the presenters citing positive sales trends. Generally, they indicated that traffic is still weak, but the damage is being tempered by rising guest tabs.
Smashburger drew the most probing by the investors in attendance, despite the concerns voiced by some that the “better burger” segment may be overcrowded.
One extreme down note: Participant Steve West asserted that casual dining traffic will never rebound to pre-Great Recession levels, a result of the shakeout being too anemic.
Domino’s CEO Patrick Doyle noted that many of the chain’s franchisees are unable to grow because of a funding drought. The stores aren’t throwing off sufficient cash flow to justify a rubber-stamped loan, and banks are reluctant to touch any franchisee except the larger ones with whom they’ve done business over a long stretch.
A Sonic executive offered the hindsight that the drive-in chain should have included fewer items on its dollar menu, and promoted them in a more nuanced fashion. The budget line translated in some patrons’ minds into diminished quality.
Chipotle and BJ’s Restaurants, two of the industry’s high achievers, cited a lack of desirable real estate sites and a shallow pool of labor talent as curbs on growth. Others cited rising gasoline prices and escalating food costs.
Texas Road House, Chipotle and Krispy Kreme all cited an effort to shrink their back-of-the-house areas, part of an overall effort to reduce the footprint of new units.
My thanks to John, a principal in Pacific Management Consulting Group, for passing along his observations. You can get more of his food from thought at John's blog,
Friday, July 23, 2010
Chipotle takes steps to speed service
Chipotle has established a new serving-line position as part of stepped-up effort to handle more customers during lunch and dinner rushes.
The expediter scrambles to complete a patron’s order—adding the drink, grabbing some chips or extra guacamole, bagging to-go items—so the cashier can focus on ringing up the order. Executives explained to investors yesterday that the set-up speeds service because the cashier now handles only the sales transaction, instead of juggling that function with finishing an order.
The high-flying burrito chain is also trying to handle more customers during crunch periods by ensuring that all prep work is completed before the rushes hit. Instead of chopping or slicing, staffers can be on the line, handling orders.
Executives said the production of stores is being boosted without an increase in labor costs through more astute scheduling and deployment.
They were less forthcoming about another new initiative for the chain, Burritos by the Box. They declined to answer questions about the Box, a program for handling bulk orders.
According to earlier press reports, each Box contains six identical burritos or burrito bowls, along with containers of guacamole, sour cream and salsa so the items can be customized before being eaten. The Box order, which also includes six bags of chips, is reportedly selling for just under $44, or roughly $7.30 per person.
The program was being tested in Las Vegas and California.
The expediter scrambles to complete a patron’s order—adding the drink, grabbing some chips or extra guacamole, bagging to-go items—so the cashier can focus on ringing up the order. Executives explained to investors yesterday that the set-up speeds service because the cashier now handles only the sales transaction, instead of juggling that function with finishing an order.
The high-flying burrito chain is also trying to handle more customers during crunch periods by ensuring that all prep work is completed before the rushes hit. Instead of chopping or slicing, staffers can be on the line, handling orders.
Executives said the production of stores is being boosted without an increase in labor costs through more astute scheduling and deployment.
They were less forthcoming about another new initiative for the chain, Burritos by the Box. They declined to answer questions about the Box, a program for handling bulk orders.
According to earlier press reports, each Box contains six identical burritos or burrito bowls, along with containers of guacamole, sour cream and salsa so the items can be customized before being eaten. The Box order, which also includes six bags of chips, is reportedly selling for just under $44, or roughly $7.30 per person.
The program was being tested in Las Vegas and California.
Thursday, January 28, 2010
Party on, Garth
Not since the medical-marijuana movement have toga wearers heard news this good: Slowly yet surely, the fast food industry is making it possible to catch a buzz with your burger or burrito.
Those of you just deplaning from the space shuttle might’ve missed the news that Burger King will serve beer in its new Whopper Bar concept, an upscale riff on the chain’s usual fast-food emporiums. The kegger will start at the branch under development in South Beach, Miami’s own little stretch of Gomorrah, and spread to outlets like the one planned for New York’s Times Square, according to press reports.
The hubbub suggested that the fast-food world has never tried such a thing before. Yet a number of other chains had beaten BK to the bottle opener. Prominent among them is Starbucks, which is selling beer and wine at its new “neighborhood” stores, the individually named cafes that call to mind eccentrics in berets reading poetry.
Even more ambitious is the bartending of Baja Fresh, the fast-casual burrito chain that’s now offering margaritas in a few outlets. The stores also offer bottled beers, as competitors like Chipotle have done since their start.
The slow seep of alcohol into fast food has been happening for years. Three decades ago, a point of distinction for Taco Cabana was selling margaritas through the drive-thru, and the regional chain still sells a frozen version by the glass and in pitchers. If memory serves me correctly, McDonald’s even tried beer at an outlet in the Miami airport back in the ‘80s.
But the trend is particularly intriguing now because it shifts fast-feeders closer to casual dining, a stretch of quicksand during much of the Great Recession. Why wade into that marshland when the casual chains were scrambling not long ago to recast themselves as fast-food places that happened to use silverware? They certainly narrowed the gap between their prices and what you’d be charged at a grab-and-go burger shop. Ditto for the menu items they featured.
So why inch onto ground the traditional occupants are forsaking to some degree? Maybe the seam between the sectors is the place to be. That, after all, is the turf targeted by fast-casual chains.
Yet they’ve not fared as well during the downturn as their conventional quick-serve predecessors. No, it seems more a matter of pushing out the edges of a brand’s market, regardless of what sector serves as its base. Even more so than a year ago, chains of all stripes are trying to hold their traditional turf while pushing out in slight increments into new territory.
The question is, does that sharpen their appeal or just blur their image?
It’s enough to make you crave a drink.
Those of you just deplaning from the space shuttle might’ve missed the news that Burger King will serve beer in its new Whopper Bar concept, an upscale riff on the chain’s usual fast-food emporiums. The kegger will start at the branch under development in South Beach, Miami’s own little stretch of Gomorrah, and spread to outlets like the one planned for New York’s Times Square, according to press reports.
The hubbub suggested that the fast-food world has never tried such a thing before. Yet a number of other chains had beaten BK to the bottle opener. Prominent among them is Starbucks, which is selling beer and wine at its new “neighborhood” stores, the individually named cafes that call to mind eccentrics in berets reading poetry.
Even more ambitious is the bartending of Baja Fresh, the fast-casual burrito chain that’s now offering margaritas in a few outlets. The stores also offer bottled beers, as competitors like Chipotle have done since their start.
The slow seep of alcohol into fast food has been happening for years. Three decades ago, a point of distinction for Taco Cabana was selling margaritas through the drive-thru, and the regional chain still sells a frozen version by the glass and in pitchers. If memory serves me correctly, McDonald’s even tried beer at an outlet in the Miami airport back in the ‘80s.
But the trend is particularly intriguing now because it shifts fast-feeders closer to casual dining, a stretch of quicksand during much of the Great Recession. Why wade into that marshland when the casual chains were scrambling not long ago to recast themselves as fast-food places that happened to use silverware? They certainly narrowed the gap between their prices and what you’d be charged at a grab-and-go burger shop. Ditto for the menu items they featured.
So why inch onto ground the traditional occupants are forsaking to some degree? Maybe the seam between the sectors is the place to be. That, after all, is the turf targeted by fast-casual chains.
Yet they’ve not fared as well during the downturn as their conventional quick-serve predecessors. No, it seems more a matter of pushing out the edges of a brand’s market, regardless of what sector serves as its base. Even more so than a year ago, chains of all stripes are trying to hold their traditional turf while pushing out in slight increments into new territory.
The question is, does that sharpen their appeal or just blur their image?
It’s enough to make you crave a drink.
Wednesday, October 28, 2009
Trends from U.S. chain menus, words from N.Y.
Fast-food, that most American of social constructs, is turning downright jingoistic in its sourcing.
Cock an ear to Wendy’s new ad campaign and you’ll hear the chain boast of using only North American beef in its square burgers. Fuddruckers, the chain that was fast-casual before fast-casual was cool, is more pointed in its nationalism. Units in Texas and New Mexico have switched to a proprietary grind called Fudds Prime, made exclusively with “All-American” prime beef from “select U.S. ranches,” the announcement sniffs. Chew on that gristle, Canada and Australia.
The rah-rah mentions of homefront ingredients are part of a larger struggle by the chain business to accommodate the public’s insistence that it be told the source of what it’s eating. Ideally, that point of origin would be a local one. Indeed, the demand for locally grown produce was forecast by chef-participants in a National Restaurant Association survey to be the Number One consumer trend of 2009.
The menus of many independent restaurants show those respondents were dead-on. The shorter the distance from field to fork, the louder the establishment tends to crow about it in menu descriptors. Not that it’s obnoxious at all. Guests want that sort of horn blowing. Why not brag about the seasonal items you’re putting on the plate?
But it’s hard to serve up that kind of lingo when you’re a sprawling chain with a nationwide supply system. Their economics call for low-cost ingredients hyper-processed to the point of absolute consistency and cooking readiness. Just add heat, forget about seasonal freshness. It was a trend many figured they’d watch independent counterparts enjoy without challenge.
Wrong. It took awhile, but regional chains are clearly finding religion. And even the national ones are buying local ingredients in some spots—or at least spotlighting the instances where that’s been the practice. Outback Steakhouses in the Louisiana area have apparently always used shrimp harvested by the state’s Gulf shrimpers. It briefly changed its mind because imported shrimp was selling at a lower price, then opted in the eleventh hour to stay local. The news prompted Louisiana Gov. Bobby Jindal to hold a press conference where he lauded the casual chain as the video cameras hummed.
Last month, New England-based Papa Gino’s Pizzeria and its sandwich-serving sister, D’Angelo’s, added a bunch of products that feature Cheddar cheese produced in Vermont. The chains were aiming for what one executive called “a distinctive New England flavor,” which you don’t usually associate with pizzas or subs. Yet “Vermont Cheddar” is included in all but one of the new products’ names (the exception, a Bruschetta, incorporates just “Cheddar”).
This summer, the New England outposts of Panera Bread Co. featured a lobster sandwich, a local favorite usually described as a lobster roll. It was priced at $16.99.
Units of the Smashburger fast-casual chain feature reginal riffs on burgers and hot dogs (i.e., Colorado units feature the popular local topping of green chilis), and the Kona Grill casual chain told investors that it'll introduce a menu next month that includes a section for local favorites from any given store's host area.
Then there’s the poster-concept of the localization movement among chains, the Pacific Northwest’s 38-unit Burgerville group. Right now the brand is featuring sweet potato fries made from local sweet potatoes, which are currently in season. It’s also featured Washington State cherries, in a Cherry Chipotle Pulled Pork Sandwich, and is currently touting a hotdog garnished with a slaw made of local apples.
The novelty of finding local ingredients on chains’ menus should start to wear off as several large-scale players start shopping closer to their stores. Chipotle Mexican Grill, for instance, has pledged to purchase 35% of at least one produce item per restaurant from local farmers.
With roughly 900 branches, Chipotle may be the largest chain to pursue seasonal fare. But it’s certainly not the first, nor the model example. Critics have noted that its so-called local fare may be drawn from a 250-mile radius, which certainly stretches the definition.
Contrast that with Eat’n Park, the Pittsburgh-based family dining chain. The company has a director of sourcing and sustainability who goes out to find farmers who can supply the chain. When local items like radishes are used by any of the brand’s 75 stores, notice is often given to customers via the chain’s blog.
Those early adapters are being joined by the likes of Darden Restaurants, best known as the parent of Red Lobster and Olive Garden. Its youngest brand, Seasons 52, features seasonal ingredients blended into entrees with fewer than 475 calories.
P.F. Chang’s, a strong competitor to Darden, has invested in a start-up concept called True Food Kitchen. Like Seasons 52, it features seasonal fare, but goes a step further to use local and organic foodstuffs.
Where chains can’t tout the use of local ingredients, they’re doing the next best thing of highlighting the source. Seasons 52, for instance, is currently featuring Colorado Buffalo Chili, Canadian Black Mussels Marinara and a Gulf Shrimp Cocktail.
Is there any doubt that the source-naming trend, and the local variant in particular, is going to continue?
Indeed, there’s one form in particular that we’re likely to see. It’s not widely known by the public, but outlets of the giant burger chains buy their buns from a network of regional or local bakeries set up by the home office. Those suppliers aren’t exactly mom-and-pop shops. But they do offer an opportunity for the behemoths of the business to tout a little localization. I bet we see that start to happen, sooner versus later.
Cock an ear to Wendy’s new ad campaign and you’ll hear the chain boast of using only North American beef in its square burgers. Fuddruckers, the chain that was fast-casual before fast-casual was cool, is more pointed in its nationalism. Units in Texas and New Mexico have switched to a proprietary grind called Fudds Prime, made exclusively with “All-American” prime beef from “select U.S. ranches,” the announcement sniffs. Chew on that gristle, Canada and Australia.
The rah-rah mentions of homefront ingredients are part of a larger struggle by the chain business to accommodate the public’s insistence that it be told the source of what it’s eating. Ideally, that point of origin would be a local one. Indeed, the demand for locally grown produce was forecast by chef-participants in a National Restaurant Association survey to be the Number One consumer trend of 2009.
The menus of many independent restaurants show those respondents were dead-on. The shorter the distance from field to fork, the louder the establishment tends to crow about it in menu descriptors. Not that it’s obnoxious at all. Guests want that sort of horn blowing. Why not brag about the seasonal items you’re putting on the plate?
But it’s hard to serve up that kind of lingo when you’re a sprawling chain with a nationwide supply system. Their economics call for low-cost ingredients hyper-processed to the point of absolute consistency and cooking readiness. Just add heat, forget about seasonal freshness. It was a trend many figured they’d watch independent counterparts enjoy without challenge.
Wrong. It took awhile, but regional chains are clearly finding religion. And even the national ones are buying local ingredients in some spots—or at least spotlighting the instances where that’s been the practice. Outback Steakhouses in the Louisiana area have apparently always used shrimp harvested by the state’s Gulf shrimpers. It briefly changed its mind because imported shrimp was selling at a lower price, then opted in the eleventh hour to stay local. The news prompted Louisiana Gov. Bobby Jindal to hold a press conference where he lauded the casual chain as the video cameras hummed.
Last month, New England-based Papa Gino’s Pizzeria and its sandwich-serving sister, D’Angelo’s, added a bunch of products that feature Cheddar cheese produced in Vermont. The chains were aiming for what one executive called “a distinctive New England flavor,” which you don’t usually associate with pizzas or subs. Yet “Vermont Cheddar” is included in all but one of the new products’ names (the exception, a Bruschetta, incorporates just “Cheddar”).
This summer, the New England outposts of Panera Bread Co. featured a lobster sandwich, a local favorite usually described as a lobster roll. It was priced at $16.99.
Units of the Smashburger fast-casual chain feature reginal riffs on burgers and hot dogs (i.e., Colorado units feature the popular local topping of green chilis), and the Kona Grill casual chain told investors that it'll introduce a menu next month that includes a section for local favorites from any given store's host area.
Then there’s the poster-concept of the localization movement among chains, the Pacific Northwest’s 38-unit Burgerville group. Right now the brand is featuring sweet potato fries made from local sweet potatoes, which are currently in season. It’s also featured Washington State cherries, in a Cherry Chipotle Pulled Pork Sandwich, and is currently touting a hotdog garnished with a slaw made of local apples.
The novelty of finding local ingredients on chains’ menus should start to wear off as several large-scale players start shopping closer to their stores. Chipotle Mexican Grill, for instance, has pledged to purchase 35% of at least one produce item per restaurant from local farmers.
With roughly 900 branches, Chipotle may be the largest chain to pursue seasonal fare. But it’s certainly not the first, nor the model example. Critics have noted that its so-called local fare may be drawn from a 250-mile radius, which certainly stretches the definition.
Contrast that with Eat’n Park, the Pittsburgh-based family dining chain. The company has a director of sourcing and sustainability who goes out to find farmers who can supply the chain. When local items like radishes are used by any of the brand’s 75 stores, notice is often given to customers via the chain’s blog.
Those early adapters are being joined by the likes of Darden Restaurants, best known as the parent of Red Lobster and Olive Garden. Its youngest brand, Seasons 52, features seasonal ingredients blended into entrees with fewer than 475 calories.
P.F. Chang’s, a strong competitor to Darden, has invested in a start-up concept called True Food Kitchen. Like Seasons 52, it features seasonal fare, but goes a step further to use local and organic foodstuffs.
Where chains can’t tout the use of local ingredients, they’re doing the next best thing of highlighting the source. Seasons 52, for instance, is currently featuring Colorado Buffalo Chili, Canadian Black Mussels Marinara and a Gulf Shrimp Cocktail.
Is there any doubt that the source-naming trend, and the local variant in particular, is going to continue?
Indeed, there’s one form in particular that we’re likely to see. It’s not widely known by the public, but outlets of the giant burger chains buy their buns from a network of regional or local bakeries set up by the home office. Those suppliers aren’t exactly mom-and-pop shops. But they do offer an opportunity for the behemoths of the business to tout a little localization. I bet we see that start to happen, sooner versus later.
Friday, October 23, 2009
Chipotle to try a new design, development strategy
Chipotle’s menu tweaks drew Balloon Boy-scale coverage when the burrito chain previewed them last spring. But changes in the concept’s design and development strategy are slipping past almost without notice. And that’s surprising, given how the concept is really tinkering with its DNA this time.
Officials disclosed plans yesterday to revamp the layout of stores to reduce energy consumption, crewmember motion, and construction costs. New stores will also have less stainless steel and more tiling in their kitchens, a switch that will ease cleaning operations, the execs said.
At the same time, the chain will broaden its development criteria to include what co-CEO Monty Moran characterized as “Tier 2 trade areas,” or locations with lower but acceptable traffic and enticingly low development costs. Because the so-called Model A restaurants will be less expensive to build, they can provide a better return than conventional sites, even with a lower sales volume, he explained.
He indicated that as many as 30 of those second-tier sites could be developed during 2010, or roughly one-fourth of all the locations that come on-line. CFO Jack Hartung said that mix would lower the average cost of new sites to $850,000 each, from the current $900,000.
Part of that rollback, Hartung indicated, will be generated by changes in the standard format and design of stores.
Founder and co-CEO Steve Ells explained that Chipotle wants to get back to what it was when he launched the concept.
“Our earliest restaurants were generally smaller, simpler and very efficient,” he told financial analysts during a conference call. “As we grew, our restaurants became larger, more architecturally complex, and in some instances less efficient than before.” Now, he said, it’s back to the future.
The layout of units will be revamped “to suggest a flow in the restaurants rather than physical barriers,” he said.
Ells didn’t explain how that would be achieved, but did offer that workstations would both be expanded and set up to eliminated wasted action on the part of employees. He did not say if those adjustments would reduce labor costs.
Definite savings would come from changes in lighting, equipment, and construction materials, he noted. For instance, the chain is switching to a “European-style plancha, which is a flat-top grill,” instead of using a griddle, Ells explained. The device is also smaller than the equipment it replaced, which in turn enables a smaller vent and HVAC system to be used, the CIA grad suggested.
“Over the years, we went through a 10-year period of double-digit comps, and as we saw our volumes go up, we needed to react to those volumes,” he told the portfolio managers participating in the call. “So as we built new restaurants, we built them bigger. We were cooking a lot more chicken and steak on the grill, so we got a bigger grill. In order to accommodate that bigger grill, you have to have a bigger hood. In order to have a bigger hood, you have to have more make-up air and have a larger air conditioning unit on top. In order to do that, you have to have more power coming to the building.”
He also noted the changeover to white tiles in the kitchens. When the new facings were first tested, some bloggers said the surface switch would make stores more eco-friendly, since tiles are easier to recover and reuse than stainless steel. But Chipotle execs didn’t mention any green advantages, other than the cash that would be saved overall with the new design.
Analysts on the call pressed Ells about the change, perhaps out of shock. Design has been hailed by Chipotle as an integral part of the concept. Indeed, any die-hard Chipotle follower knows that a design specialist was one of Ells’ first hires when he was building a team, and the look of stores is often cited as a key part of the chain’s character.
The stockpickers also voiced some concern about the new siting strategy. As Moran acknowledged, Chipotle has traditionally sought out locations that provide high visibility to a heavy stream of passers-by. Those developments were expensive, but the units would open to instant success, with “superior returns” from sales topping $1.3 million a year, he said.
Are you worried that these second-tier stores might siphon sales away from units in primo locations?, one analyst asked.
If anything, this approach will allow the chain to expand into more unfamiliar markets, lessening the chances of cannibalization, Moran said.
The analysts seemed more comfortable with Chipotle’s plans to expand abroad, another departure of sorts for the brand. Its one market outside of the United States at present is Toronto. But Ells said a restaurant will be opened in London during the second quarter of 2010.
A transcript of the conference call was made available by the SeekingAlpha financial information service.
Officials disclosed plans yesterday to revamp the layout of stores to reduce energy consumption, crewmember motion, and construction costs. New stores will also have less stainless steel and more tiling in their kitchens, a switch that will ease cleaning operations, the execs said.
At the same time, the chain will broaden its development criteria to include what co-CEO Monty Moran characterized as “Tier 2 trade areas,” or locations with lower but acceptable traffic and enticingly low development costs. Because the so-called Model A restaurants will be less expensive to build, they can provide a better return than conventional sites, even with a lower sales volume, he explained.
He indicated that as many as 30 of those second-tier sites could be developed during 2010, or roughly one-fourth of all the locations that come on-line. CFO Jack Hartung said that mix would lower the average cost of new sites to $850,000 each, from the current $900,000.
Part of that rollback, Hartung indicated, will be generated by changes in the standard format and design of stores.
Founder and co-CEO Steve Ells explained that Chipotle wants to get back to what it was when he launched the concept.
“Our earliest restaurants were generally smaller, simpler and very efficient,” he told financial analysts during a conference call. “As we grew, our restaurants became larger, more architecturally complex, and in some instances less efficient than before.” Now, he said, it’s back to the future.
The layout of units will be revamped “to suggest a flow in the restaurants rather than physical barriers,” he said.
Ells didn’t explain how that would be achieved, but did offer that workstations would both be expanded and set up to eliminated wasted action on the part of employees. He did not say if those adjustments would reduce labor costs.
Definite savings would come from changes in lighting, equipment, and construction materials, he noted. For instance, the chain is switching to a “European-style plancha, which is a flat-top grill,” instead of using a griddle, Ells explained. The device is also smaller than the equipment it replaced, which in turn enables a smaller vent and HVAC system to be used, the CIA grad suggested.
“Over the years, we went through a 10-year period of double-digit comps, and as we saw our volumes go up, we needed to react to those volumes,” he told the portfolio managers participating in the call. “So as we built new restaurants, we built them bigger. We were cooking a lot more chicken and steak on the grill, so we got a bigger grill. In order to accommodate that bigger grill, you have to have a bigger hood. In order to have a bigger hood, you have to have more make-up air and have a larger air conditioning unit on top. In order to do that, you have to have more power coming to the building.”
He also noted the changeover to white tiles in the kitchens. When the new facings were first tested, some bloggers said the surface switch would make stores more eco-friendly, since tiles are easier to recover and reuse than stainless steel. But Chipotle execs didn’t mention any green advantages, other than the cash that would be saved overall with the new design.
Analysts on the call pressed Ells about the change, perhaps out of shock. Design has been hailed by Chipotle as an integral part of the concept. Indeed, any die-hard Chipotle follower knows that a design specialist was one of Ells’ first hires when he was building a team, and the look of stores is often cited as a key part of the chain’s character.
The stockpickers also voiced some concern about the new siting strategy. As Moran acknowledged, Chipotle has traditionally sought out locations that provide high visibility to a heavy stream of passers-by. Those developments were expensive, but the units would open to instant success, with “superior returns” from sales topping $1.3 million a year, he said.
Are you worried that these second-tier stores might siphon sales away from units in primo locations?, one analyst asked.
If anything, this approach will allow the chain to expand into more unfamiliar markets, lessening the chances of cannibalization, Moran said.
The analysts seemed more comfortable with Chipotle’s plans to expand abroad, another departure of sorts for the brand. Its one market outside of the United States at present is Toronto. But Ells said a restaurant will be opened in London during the second quarter of 2010.
A transcript of the conference call was made available by the SeekingAlpha financial information service.
Wednesday, September 30, 2009
Random thoughts II
Two weeks ago I gave a presentation on restaurant concepts to a class at the Institute of Culinary Education in New York City. It was the second time I’ve guest-lectured at the facility, which is one of the under-appreciated gems of the New York culinary scene.
Like last time, the students seemed obsessed with Chipotle, particularly its distinction as a sizeable chain that didn’t make them cluck in disapproval.
Unlike last time, I was asked during this guest lecture for my opinion of what chains are leading the pack in their green efforts. I cited Starbucks, Burgerville and McDonald’s. Interestingly, the mention of McDonald’s drew nods of agreement, not dumbfounded surprise.
Like last time, the students seemed obsessed with Chipotle, particularly its distinction as a sizeable chain that didn’t make them cluck in disapproval.
Unlike last time, I was asked during this guest lecture for my opinion of what chains are leading the pack in their green efforts. I cited Starbucks, Burgerville and McDonald’s. Interestingly, the mention of McDonald’s drew nods of agreement, not dumbfounded surprise.
Thursday, July 23, 2009
Chipotle offers update on value-menu test
Chipotle Mexican Grill said it will maintain the test of its new lower-priced menu items at the current single-market extent, though “we are seeing some encouraging signs,” co-CEO Steve Ells told financial analysts Wednesday. One of the more reassuring finds of the Denver sales trial, he explained, was the effect on check averages: Customers tended to spend the same amount, even though they could trade down to less-expensive options.
Co-tested with those value-oriented selections was a kids’ menu. “We have seen enough demand for our kids menu that we plan to test that part of the menu in all of our Salt Lake City restaurants as well,” Ells said.
CFO John Hartung noted that at least half of Chipotle’s new stores in 2010 will be conversions rather than newly built outlets.
Co-tested with those value-oriented selections was a kids’ menu. “We have seen enough demand for our kids menu that we plan to test that part of the menu in all of our Salt Lake City restaurants as well,” Ells said.
CFO John Hartung noted that at least half of Chipotle’s new stores in 2010 will be conversions rather than newly built outlets.
Monday, July 13, 2009
This just in
Here’s a quick sampler of news tidbits that might have slipped past you this Monday. Indeed, they seem to have escaped attention by the restaurant industry in general, which is strange, given the surprise they pack. And that surprise isn’t going to be regarded by all as pleasant.
Chris Sullivan is building another chain. The co-founder of Outback Steakhouse and an icon of the business is a partner in a fledgling casual-dining chain called Café Caturra, the Tampa Bay Business Journal reported Friday. A spokesperson for OSI Restaurant Partners, the current parent of Outback, describes Sullivan’s role as being “more of a mentor” for the Richmond, Va.-based start-up. But the article suggests his participation is more extensive than that.
Chipotle pushes “Food, Inc.”, the controversial documentary about factory farming and the ills ascribed to it, including E. coli outbreaks. Chipotle is sponsoring free airings of the movie in 32 cities, and units are also urging patrons to see the flick. The burrito chain said it add a bonus feature to the DVD of the film when it’s released later this year to highlight Chipotle’s commitment to sustainable agriculture.
Terms of the promotional arrangement weren’t revealed.
In years past, a mob of noose-wielding restaurateurs would have formed if one of their own had supported sharp criticism of the food served in their establishments. Chipotle suggests it’s supporting the flick in a classic show of capitalism, albeit from a unusual vantage point. “I hope that all our customers see this film,” said Chipotle founder and co-CEO Steve Ells. “The more they know about where their food comes from, the more they will appreciate what we do.”
In any case, the chain is bravely taking a different stance in the ongoing debate over how the nation’s feeders—the very food supply system—may be contributing to major societal ills.
Jason’s Deli goes on the road with a health message. Chipotle’s claims about the purity and sustainability of its food are well known to the general public. Indeed, “Food with integrity” is a key marketing message.
Lesser known, probably, is the pure-foods stance of Jason’s Deli, the 200-unit southern chain (as compared with Chipotle’s 800-plus stores). It can’t crow as loudly about its extensive use of organic ingredients, and its efforts to reduce the salt, fat and calorie content of its fast-casual fare.
Now Jason’s is going on tour to spread the word about the importance of consuming such fare—not to consumers, but to school-board officials, academics and even fellow restaurateurs. Execs are traveling the country to meet with educators in 14 nations for a discussion of food’s impact on health, according to a news report last week in The Packer, a publication for the food industry. In addition, “We’re trying to get restaurants interested in cleaning up their menus,” Jason’s co-owner Rusty Coco told The Packer.
The same posse that might’ve formed for Ells in bygone years would no doubt have had Coco’s name right below his.
Sir Richard Branson, restaurateur. The mogul behind the various Virgin businesses—airlines, record stores, etc.—has quietly added a U.S. foodservice holding to his empire. The avid environmentalist is building a “farm-to-fork” eco-resort, Natirar, in Raritan, N.J., not far outside New York City (Natirar is Raritan spelled backwards).
The facility sounds as if it will be a Stone Barns-like complex, with fields growing the produce served in a restaurant on the grounds. The twist is the eco-minded cooking school also envisioned for the 90-acre complex.
It’s scheduled to open later this summer. Perhaps Chipotle could lend it a copy of “Food, Inc.,” with an intro from Jason’s.
Chris Sullivan is building another chain. The co-founder of Outback Steakhouse and an icon of the business is a partner in a fledgling casual-dining chain called Café Caturra, the Tampa Bay Business Journal reported Friday. A spokesperson for OSI Restaurant Partners, the current parent of Outback, describes Sullivan’s role as being “more of a mentor” for the Richmond, Va.-based start-up. But the article suggests his participation is more extensive than that.
Chipotle pushes “Food, Inc.”, the controversial documentary about factory farming and the ills ascribed to it, including E. coli outbreaks. Chipotle is sponsoring free airings of the movie in 32 cities, and units are also urging patrons to see the flick. The burrito chain said it add a bonus feature to the DVD of the film when it’s released later this year to highlight Chipotle’s commitment to sustainable agriculture.
Terms of the promotional arrangement weren’t revealed.
In years past, a mob of noose-wielding restaurateurs would have formed if one of their own had supported sharp criticism of the food served in their establishments. Chipotle suggests it’s supporting the flick in a classic show of capitalism, albeit from a unusual vantage point. “I hope that all our customers see this film,” said Chipotle founder and co-CEO Steve Ells. “The more they know about where their food comes from, the more they will appreciate what we do.”
In any case, the chain is bravely taking a different stance in the ongoing debate over how the nation’s feeders—the very food supply system—may be contributing to major societal ills.
Jason’s Deli goes on the road with a health message. Chipotle’s claims about the purity and sustainability of its food are well known to the general public. Indeed, “Food with integrity” is a key marketing message.
Lesser known, probably, is the pure-foods stance of Jason’s Deli, the 200-unit southern chain (as compared with Chipotle’s 800-plus stores). It can’t crow as loudly about its extensive use of organic ingredients, and its efforts to reduce the salt, fat and calorie content of its fast-casual fare.
Now Jason’s is going on tour to spread the word about the importance of consuming such fare—not to consumers, but to school-board officials, academics and even fellow restaurateurs. Execs are traveling the country to meet with educators in 14 nations for a discussion of food’s impact on health, according to a news report last week in The Packer, a publication for the food industry. In addition, “We’re trying to get restaurants interested in cleaning up their menus,” Jason’s co-owner Rusty Coco told The Packer.
The same posse that might’ve formed for Ells in bygone years would no doubt have had Coco’s name right below his.
Sir Richard Branson, restaurateur. The mogul behind the various Virgin businesses—airlines, record stores, etc.—has quietly added a U.S. foodservice holding to his empire. The avid environmentalist is building a “farm-to-fork” eco-resort, Natirar, in Raritan, N.J., not far outside New York City (Natirar is Raritan spelled backwards).
The facility sounds as if it will be a Stone Barns-like complex, with fields growing the produce served in a restaurant on the grounds. The twist is the eco-minded cooking school also envisioned for the 90-acre complex.
It’s scheduled to open later this summer. Perhaps Chipotle could lend it a copy of “Food, Inc.,” with an intro from Jason’s.
Thursday, April 23, 2009
Chipotle: 'Natural' may not be the hook it thought
Say it ain’t so, Steve. Chipotle’s use of natural ingredients was the example everyone cited to prove the consumer mainstream cared about more-wholesome foods. If a chain of more than 800 units could do it, and make a fortune in the process, couldn’t others? It was the reason chain execs across the spectrum were yelping out a “Yes I can!,” as if they were at a tent revival meeting.
But the spirit didn’t move customers as much as everyone might have thought, Chipotle co-CEO and founder Steve Ells admitted to financial analysts Wednesday evening. Consumers would hear the chain’s Food with Integrity marketing promise and fail to see the light.
“One of the things that we found in our research is that we have not been getting credit for the Food with Integrity initiative,” Ells explained. “People understand that Chipotle food tastes better. They don't necessarily associate higher quality ingredients, sustainably raised ingredients, with Food with Integrity…These kinds of things are important, we think, in how we source our food, but our customers tell us this is not the kinds of things that are important to them."
So, he said, the chain will downplay the integrity boast in a new campaign that breaks next month, themed “My Chipotle.” Ells explained that the campaign will tout variety, customization and flavor, with the latter attributed in part to “great quality raw ingredients.” He did not give any indication that the chain would actually downplay its use of natural foodstuffs, just the crowing about it.
The heart of the My Chipotle campaign, Ells said, will be a new website, MyChipotle.com, where patrons can testify about their love for the food. Customers will be invited to post pictures, videos and audio clips about their favorite items on the menu. Some of that material may then be used in television, radio or print ads, he said.
Among the other gems served up during the quarterly conference call was a quantification of culture’s impact on Chipotle’s finances. Co-CEO Monty Moran observed that a typical outlet of the chain employed a crew of 22 people in 2006, when unit sales average $1.5 million. Today, he said, the headcount is down to 19 staffers, but the per-store mean has jumped to $1.75 million.
The cause, he said, was a carefully cultivated culture that aims to put “our highest performers in the highest impact positions.” In the past year, Moran added, favorable customer comments have doubled, while complaints have fallen.
A thank-you to SeekingAlpha.com for posting a transcript of yesterday’s call.
But the spirit didn’t move customers as much as everyone might have thought, Chipotle co-CEO and founder Steve Ells admitted to financial analysts Wednesday evening. Consumers would hear the chain’s Food with Integrity marketing promise and fail to see the light.
“One of the things that we found in our research is that we have not been getting credit for the Food with Integrity initiative,” Ells explained. “People understand that Chipotle food tastes better. They don't necessarily associate higher quality ingredients, sustainably raised ingredients, with Food with Integrity…These kinds of things are important, we think, in how we source our food, but our customers tell us this is not the kinds of things that are important to them."
So, he said, the chain will downplay the integrity boast in a new campaign that breaks next month, themed “My Chipotle.” Ells explained that the campaign will tout variety, customization and flavor, with the latter attributed in part to “great quality raw ingredients.” He did not give any indication that the chain would actually downplay its use of natural foodstuffs, just the crowing about it.
The heart of the My Chipotle campaign, Ells said, will be a new website, MyChipotle.com, where patrons can testify about their love for the food. Customers will be invited to post pictures, videos and audio clips about their favorite items on the menu. Some of that material may then be used in television, radio or print ads, he said.
Among the other gems served up during the quarterly conference call was a quantification of culture’s impact on Chipotle’s finances. Co-CEO Monty Moran observed that a typical outlet of the chain employed a crew of 22 people in 2006, when unit sales average $1.5 million. Today, he said, the headcount is down to 19 staffers, but the per-store mean has jumped to $1.75 million.
The cause, he said, was a carefully cultivated culture that aims to put “our highest performers in the highest impact positions.” In the past year, Moran added, favorable customer comments have doubled, while complaints have fallen.
A thank-you to SeekingAlpha.com for posting a transcript of yesterday’s call.
Monday, April 13, 2009
What you won't read in the papers
Last week delivered a few indications the restaurant industry may be entering a recovery. Relief couldn't come too soon, given how the trade appears to be one moon howl away from snapping. A bunch of places have even forgotten they're supposed to charge for food instead of doling it out for a reminder of what customers look like.
In all the craziness, some urban myths have clearly taken hold. Here, as a public service, is a delineation of fact and fiction:
In all the craziness, some urban myths have clearly taken hold. Here, as a public service, is a delineation of fact and fiction:
- There’s absolutely no truth to reports that T.G.I. Friday’s is giving away a restaurant franchise with every appetizer ordered this week. You have to buy an entrée, too, though they’re down to $1.
- Michelle Obama has not challenged Alice Waters to go hoe-to-hoe over who has the best organic string beans. Nor will Bo the Dog be trained to bite Waters in the onions. Or not as long as she shuts up about a First Garden.
- It’s a complete myth that restaurants’ latest promotion is giving customers the keys and asking them to lock up when they’re done gorging for free. Denny’s, however, declined to comment.
- Tao, pegged by Restaurants & Institutions as having sales in excess of $68 million a year, is not buying General Motors to replace valet parking with a car giveaway program.
- Steve Wynn is not relocating the state of Rhode Island into his restaurant-studded Encore casino as an entertainment feature. However, the governor of Maryland commented that he’s constitutionally obliged to do what’s financially best for constituents.
- Gordon Ramsay has not been serially watching “The Wrestler” in hopes of aping Mickey Rourke’s career comeback.
- Police discount reports that hundreds of seders were wrecked when college-aged participants insisted that Chipotle’s Steve Ells is really the prophet Elijah. They also wanted to know where the bitter herbs had been grown.
Monday, February 23, 2009
A news round-up
The start of the business week brought the usual flood of news reports from the restaurant industry. Most are merely in-box cloggers, but here are a few worth noting:
A huge I.O.U. for the business: The restaurant industry has a serious debt problem, according to a story posted today by USA Today. The article notes that 20 restaurant and retail companies are on S&P’s list of concerns that are struggling to keep up with their debt-service payments. And it quotes Thomas Reuters as saying that public restaurant companies on average owe 83 cents for every $1 of shareholders’ equity.
Simpler permitting for Gotham: New York City willstreamline the processes that typically delay the opening of a local restaurant or other small business, City Council speaker Christine Quinn promised yesterday. She specifically cited such time-saving steps as having necessary pre-opening inspections conducted on the same day, rather than arranging separate appointments with each agency.
There's no better price: The Quiznos sandwich chain announced it will give away 1 million sub sandwiches “as part of its effort to offer better prices for a better world.” The offer is in addition to the franchised chain’s promotional contest to award free subs for a year to a “hometown hero” nominated by visitors to a new website, www.millionsubs.com.
Even Chipotle's giving it away: Subscribers to the Arizona Republic found a collapsed brown paper bag slipped into yesterday's edition. It entitles them to a free burrito at Chipotle, a chain you wouldn't expect to be in need of that sort of traffic help these days.
Alabama restaurants to go dry: Restaurants in Alabama’s Shelby and Houston Counties will likely have to cease selling alcohol on Sundays because of a change in policy by state regulators and the apparent unwillingness of lawmakers to address the situation. Liquor licenses for the two jurisdictions allow establishments to sell alcohol only Monday through Saturday. But most got around that stipulation by also obtaining a permit to operate as a supper club on Sunday. Now state authorities say they’ll not honor the club license, and county lawmakers aren’t rallying to the industry’s defense.
Hey, Elliott Ness is dead: Meanwhile, Pennsylvania’s Cumberland and Perry Counties are reconsidering Prohibition. Some 25 towns there reportedly forbid or severely limit alcohol sales. Apparently there’s still some bad blood about permitting the direct election of senators and giving women the vote.
Size does matter: Carl’s Jr. is offering a 42-oz. soda in a Rob Dyrdek-themed “collector’s cup” as part of its tie-in with the pro skateboarder and reality TV star. The bucket-sized, reusable cup is free with the purchase of a large (?) drink or a combo meal.
Size does matter II: Concept sibling Hardee’s is making a pitch for big eaters with the rollout of new breakfast sandwiches made with Texas toast. The oversized bread holds egg, cheese and breakfast meats, and sells for about $1.69 a la carte or $3.69 in a combo.
A huge I.O.U. for the business: The restaurant industry has a serious debt problem, according to a story posted today by USA Today. The article notes that 20 restaurant and retail companies are on S&P’s list of concerns that are struggling to keep up with their debt-service payments. And it quotes Thomas Reuters as saying that public restaurant companies on average owe 83 cents for every $1 of shareholders’ equity.
Simpler permitting for Gotham: New York City willstreamline the processes that typically delay the opening of a local restaurant or other small business, City Council speaker Christine Quinn promised yesterday. She specifically cited such time-saving steps as having necessary pre-opening inspections conducted on the same day, rather than arranging separate appointments with each agency.
There's no better price: The Quiznos sandwich chain announced it will give away 1 million sub sandwiches “as part of its effort to offer better prices for a better world.” The offer is in addition to the franchised chain’s promotional contest to award free subs for a year to a “hometown hero” nominated by visitors to a new website, www.millionsubs.com.
Even Chipotle's giving it away: Subscribers to the Arizona Republic found a collapsed brown paper bag slipped into yesterday's edition. It entitles them to a free burrito at Chipotle, a chain you wouldn't expect to be in need of that sort of traffic help these days.
Alabama restaurants to go dry: Restaurants in Alabama’s Shelby and Houston Counties will likely have to cease selling alcohol on Sundays because of a change in policy by state regulators and the apparent unwillingness of lawmakers to address the situation. Liquor licenses for the two jurisdictions allow establishments to sell alcohol only Monday through Saturday. But most got around that stipulation by also obtaining a permit to operate as a supper club on Sunday. Now state authorities say they’ll not honor the club license, and county lawmakers aren’t rallying to the industry’s defense.
Hey, Elliott Ness is dead: Meanwhile, Pennsylvania’s Cumberland and Perry Counties are reconsidering Prohibition. Some 25 towns there reportedly forbid or severely limit alcohol sales. Apparently there’s still some bad blood about permitting the direct election of senators and giving women the vote.
Size does matter: Carl’s Jr. is offering a 42-oz. soda in a Rob Dyrdek-themed “collector’s cup” as part of its tie-in with the pro skateboarder and reality TV star. The bucket-sized, reusable cup is free with the purchase of a large (?) drink or a combo meal.
Size does matter II: Concept sibling Hardee’s is making a pitch for big eaters with the rollout of new breakfast sandwiches made with Texas toast. The oversized bread holds egg, cheese and breakfast meats, and sells for about $1.69 a la carte or $3.69 in a combo.
Thursday, February 12, 2009
What're the pacesetters trying next?
Three of the industry’s most closely monitored performers conferred with their investors yesterday in quarterly conference calls. Apparently the SEC has quietly changed its regulations to require that each confab include questions about bundled meals and other ways of coaxing open tightly clutched wallets. Here are some of the highlights:
McDonald’s is the indisputable king of fast-food, based on its consistently strong financial results. By the same gauge, you’d have to give the crown in casual dining to Buffalo Wild Wings.
Comp sales for the first three months of Wild Wings' fiscal 2009 are running at 7% for franchises, 8% for company stores, CEO Sally Smith told investors yesterday. No one else in the sector is coming close to those sorts of gains.
Smith also detailed some of the new products slated for rollouts, and they’re absolutely brilliant—because they’re so simple. For instance, one of the new items is merely a twist on chicken fingers, quite literally. Twisted Chicken is exactly that.
Those products are being readied after the introduction late last year of flat-bread items that intended to be dipped before they're munched. Sauces, developed for BWW’s wings, are one of the chain’s signatures.
The other new items—barbecue-flavored nachos and Pepperoni Kickers, presumably a type of appetizer—are also simple extensions, which promise to keep serving times tight.
Executives noted that BWW opened 67 stores last year, and has $44.5 million in cash and marketable securities on hand.
Chipotle clearly feels it’s no bank in a bailout situation. The chain said categorically that it would not cut 2008 bonuses across the board for restaurant managers, a reflection of that position’s importance and the stellar performance of many doing the job. If they excelled, execs indicated, they’ll be collecting their promised incentive pay-outs.
Nor is the chain following the lead of Starbucks and virtually the rest of the industry by bundling menu items into bargain-priced packages. The approach would work against Chipotle’s founding principle of customizing each order, executives explained.
But, they acknowledged, the chain is experimenting with new menu boards that may be less intimidating to first-time visitors. A new set-up might also help regulars discover new flavor or meal combinations, they added, though they weren’t forthcoming with details.
P.F. Chang’s is testing several ways to underscore value at its Pei Wei Asian Diner fast-casual concept, including portion cuts with an accompanying price rollback, executives said during their conference call yesterday.
“We’re looking at offering some of the existing products in a smaller portion, smaller price opportunity. We are looking at the possibility of doing some more all-inclusive dining opportunities. And then we are also evaluating the general format of the menu as it sits today in relationship to its current price,” said co-CEO Rick Federico.
He also cited the possibility of doing bundled meals, where a drink, cup of soup, side salad or spring roll could be offered as part of the meal. And, he said, nine stores are offering certain meals as bowls instead of a plated offering.
Federico said the concept has evolved into more of a low-priced alternative to casual restaurants instead of a true quick-casual place, which has been “a bit of a competitive disadvantage.” Part of the remedy, he said, will be a step-up in the development of new menu items.
He also acknowledged under questioning that the company may hire someone out of the fast-casual sector to lead Pei Wei, which has been without a president since Russell Owens resigned late last year.
P.F. Chang’s closed 10 Pei Weis last year.
McDonald’s is the indisputable king of fast-food, based on its consistently strong financial results. By the same gauge, you’d have to give the crown in casual dining to Buffalo Wild Wings.
Comp sales for the first three months of Wild Wings' fiscal 2009 are running at 7% for franchises, 8% for company stores, CEO Sally Smith told investors yesterday. No one else in the sector is coming close to those sorts of gains.
Smith also detailed some of the new products slated for rollouts, and they’re absolutely brilliant—because they’re so simple. For instance, one of the new items is merely a twist on chicken fingers, quite literally. Twisted Chicken is exactly that.
Those products are being readied after the introduction late last year of flat-bread items that intended to be dipped before they're munched. Sauces, developed for BWW’s wings, are one of the chain’s signatures.
The other new items—barbecue-flavored nachos and Pepperoni Kickers, presumably a type of appetizer—are also simple extensions, which promise to keep serving times tight.
Executives noted that BWW opened 67 stores last year, and has $44.5 million in cash and marketable securities on hand.
Chipotle clearly feels it’s no bank in a bailout situation. The chain said categorically that it would not cut 2008 bonuses across the board for restaurant managers, a reflection of that position’s importance and the stellar performance of many doing the job. If they excelled, execs indicated, they’ll be collecting their promised incentive pay-outs.
Nor is the chain following the lead of Starbucks and virtually the rest of the industry by bundling menu items into bargain-priced packages. The approach would work against Chipotle’s founding principle of customizing each order, executives explained.
But, they acknowledged, the chain is experimenting with new menu boards that may be less intimidating to first-time visitors. A new set-up might also help regulars discover new flavor or meal combinations, they added, though they weren’t forthcoming with details.
P.F. Chang’s is testing several ways to underscore value at its Pei Wei Asian Diner fast-casual concept, including portion cuts with an accompanying price rollback, executives said during their conference call yesterday.
“We’re looking at offering some of the existing products in a smaller portion, smaller price opportunity. We are looking at the possibility of doing some more all-inclusive dining opportunities. And then we are also evaluating the general format of the menu as it sits today in relationship to its current price,” said co-CEO Rick Federico.
He also cited the possibility of doing bundled meals, where a drink, cup of soup, side salad or spring roll could be offered as part of the meal. And, he said, nine stores are offering certain meals as bowls instead of a plated offering.
Federico said the concept has evolved into more of a low-priced alternative to casual restaurants instead of a true quick-casual place, which has been “a bit of a competitive disadvantage.” Part of the remedy, he said, will be a step-up in the development of new menu items.
He also acknowledged under questioning that the company may hire someone out of the fast-casual sector to lead Pei Wei, which has been without a president since Russell Owens resigned late last year.
P.F. Chang’s closed 10 Pei Weis last year.
Wednesday, February 11, 2009
More dark clouds, but is that a glimmer of sun?
The financial results released this morning by P.F. Chang's, once one of the industry's over-achievers, are less interesting than the company's projections for 2009: "a significant reduction in average weekly sales" of about 6 percent for both if its concepts. And, actually, that might be good news.
The figures are consistent with the comps posted for P.F. Chang's and Pei Wei Asian Diner for the last three months of 2008. Since the numbers reflect year-over-year comparisons, they suggest the downturn is leveling off. Might the industry be finding the bottom?
The announcement follows several promising additional developments, including yesterday's disclosure by beleagured GE Capital that it has lent $5.8 million to the eight-unit Boston Blackie's casual chain for expansion. Any loan extended to a restaurant company in the current environment is an encouraging sign, given how scarce capital has been. It's especially noteworthy because GE Capital has been the poster company for lenders that have been hurt by the banks' liquidity crisis.
This morning also brought the news that Tremblant Capital, a New York hedge fund, has increased its stake in Chipotle to 5.7%. Clearly the well-known, multi-billion-dollar fund believes shares are under-valued, or soon may be.
Similarly, fund manager John Hussman has greatly increased his stakes in Panera Bread Co. and Starbucks, and purchased shares of Darden for the first time.
A brightening view of restaurant stocks could only help the industry.
Still, the trade has a long way to go before it can claim the recovery is underway. P.F. Chang's profits for the last quarter of 2008 fell about 23%, to just $5.4 million.
The figures are consistent with the comps posted for P.F. Chang's and Pei Wei Asian Diner for the last three months of 2008. Since the numbers reflect year-over-year comparisons, they suggest the downturn is leveling off. Might the industry be finding the bottom?
The announcement follows several promising additional developments, including yesterday's disclosure by beleagured GE Capital that it has lent $5.8 million to the eight-unit Boston Blackie's casual chain for expansion. Any loan extended to a restaurant company in the current environment is an encouraging sign, given how scarce capital has been. It's especially noteworthy because GE Capital has been the poster company for lenders that have been hurt by the banks' liquidity crisis.
This morning also brought the news that Tremblant Capital, a New York hedge fund, has increased its stake in Chipotle to 5.7%. Clearly the well-known, multi-billion-dollar fund believes shares are under-valued, or soon may be.
Similarly, fund manager John Hussman has greatly increased his stakes in Panera Bread Co. and Starbucks, and purchased shares of Darden for the first time.
A brightening view of restaurant stocks could only help the industry.
Still, the trade has a long way to go before it can claim the recovery is underway. P.F. Chang's profits for the last quarter of 2008 fell about 23%, to just $5.4 million.
Thursday, January 15, 2009
Colicchio, Orman, valet parking & other tidbits
News tidbits have been piling up in my Miscellaneous folder like coffee grounds at the bottom of a barista trainee’s espresso. Indulge me as I review a few restaurant-industry developments that might’ve slipped past you in recent days:
Chicago wants standards for restaurant valets: An ordinance passed Tuesday by the City Council would require valet companies serving restaurants to provide enough lot parking for 15% of a capacity crowd’s cars. The measure was pushed through, after being toned down from a 25%-of-capacity requirement, to combat what government officials have dubbed fly-by-night valets—concerns that go into business with nothing more than a few matching windbreakers for the attendants. They merely double-park cars on the street, creating a hazard. Other areas have taken aim at the same problem with proposals to mandate insurance as well as off-street facilities.
Suze Orman leaves restaurants steamed: The quirky personal-finance guru has tossed a hornet’s nest into restaurant management offices from coast to coast by urging consumers to forego dining out for at least a month. The advice is one of the core recommendations of her new book, “2009 Action Plan,” which aims to help readers weather the times. It also urges them not to spend anything for a day, and not to use their credit cards for a week.
Some members of the industry expressed dismay and disbelief that the popular TV figure would issue such advice when the restaurant industry is reeling (this week’s standout casualties in New York alone: The Plaza Hotel’s Palm Court, Ruby Foo’s and Fiamma). I’m sympathetic, but dining out is not a patriotic duty.
China gives U.S. brands the finger with new piracy mall: If you lament the homogenization of world culture, consider the retailing concept that’s reportedly about to open in the People’s Republic. Among the establishments shoppers can peruse: McDnoalds, Bucksstar Coffee, a fried-chicken place called KLG, and Pizza Huh. After having a meal, they could continue their hunt for the best price on Adidos or Dama sneakers.
Those aren’t typos. The place’s schtick is to offer knock-offs of copyrighted brands without the usual nod and a wink. And this is all out in the open, completely on the up-and-up, though U.S. restaurant brands may have a decidedly different opinion.
Tom Colicchio has another big idea: Regular readers will know I regard the New York chef’s recent brainstorm, Tom: Tuesday Dinner, as a more innovative idea than anything that’s come out of Detroit since the minivan. Now, according to the blog site Eater.com, he’s followed up that brilliant stroke of with a new marketing venture: Damon: Frugal Friday.
Damon is Damon Wise, the chef de cusine of Colicchio’s Craft restaurant. Every Friday beginning tomorrow, Wise will develop a one-day menu of items priced under $10. According to promotional information cited by Eater, the dishes will fall into eight categories, ranging from the familiar (salads, small pizzas, cheese plates) to the eyebrow-raising (“food in a jar,” “meat on a stick”). The materials cite such examples as crispy pig ear, deviled egg salad, and caper berries and piquillo marmalade.
Like Tom: Tuesday Dinner, the new special-night meal will be served in one of Craft’s private dining rooms. With the downturn in New York’s party business, it’s a smart way to put vacant space into money-generating use.
Chipotle is heading abroad: After poking a toe into a foreign market with the opening of a lone store in Toronto, the college students’ cult favorite is jumping across the pond. The company disclosed this week that it will develop a single restaurant in London as a possible beachhead to European expansion. Since the 800-unit chain doesn’t franchise here, it’s unlikely to license overseas. It’s a shame that the company isn’t still a half-sister to Pret a Manger, the all-natural grab-and-go chain that, like Chipotle, once counted McDonald’s as an owner. The two might be compatible partners, and Pret owns London.
Starbucks offers to caffeinate those who give back: The coffee giant continues to play to the socially minded with a new promotion keyed to Obama’s inauguration. The President-Elect has asked every American to volunteer their time for the public good next Monday. Agree to do your part, Starbucks announced yesterday, and there’ll be a free tall coffee waiting for you afterward.
Meanwhile, some media have reported that Starbucks is about to announce an arrangement with MSNBC whereby the cable channel’s live coverage of the inauguration will be simulcast within the coffee chain’s 650 U.S. stores.
Chicago wants standards for restaurant valets: An ordinance passed Tuesday by the City Council would require valet companies serving restaurants to provide enough lot parking for 15% of a capacity crowd’s cars. The measure was pushed through, after being toned down from a 25%-of-capacity requirement, to combat what government officials have dubbed fly-by-night valets—concerns that go into business with nothing more than a few matching windbreakers for the attendants. They merely double-park cars on the street, creating a hazard. Other areas have taken aim at the same problem with proposals to mandate insurance as well as off-street facilities.
Suze Orman leaves restaurants steamed: The quirky personal-finance guru has tossed a hornet’s nest into restaurant management offices from coast to coast by urging consumers to forego dining out for at least a month. The advice is one of the core recommendations of her new book, “2009 Action Plan,” which aims to help readers weather the times. It also urges them not to spend anything for a day, and not to use their credit cards for a week.
Some members of the industry expressed dismay and disbelief that the popular TV figure would issue such advice when the restaurant industry is reeling (this week’s standout casualties in New York alone: The Plaza Hotel’s Palm Court, Ruby Foo’s and Fiamma). I’m sympathetic, but dining out is not a patriotic duty.
China gives U.S. brands the finger with new piracy mall: If you lament the homogenization of world culture, consider the retailing concept that’s reportedly about to open in the People’s Republic. Among the establishments shoppers can peruse: McDnoalds, Bucksstar Coffee, a fried-chicken place called KLG, and Pizza Huh. After having a meal, they could continue their hunt for the best price on Adidos or Dama sneakers.
Those aren’t typos. The place’s schtick is to offer knock-offs of copyrighted brands without the usual nod and a wink. And this is all out in the open, completely on the up-and-up, though U.S. restaurant brands may have a decidedly different opinion.
Tom Colicchio has another big idea: Regular readers will know I regard the New York chef’s recent brainstorm, Tom: Tuesday Dinner, as a more innovative idea than anything that’s come out of Detroit since the minivan. Now, according to the blog site Eater.com, he’s followed up that brilliant stroke of with a new marketing venture: Damon: Frugal Friday.
Damon is Damon Wise, the chef de cusine of Colicchio’s Craft restaurant. Every Friday beginning tomorrow, Wise will develop a one-day menu of items priced under $10. According to promotional information cited by Eater, the dishes will fall into eight categories, ranging from the familiar (salads, small pizzas, cheese plates) to the eyebrow-raising (“food in a jar,” “meat on a stick”). The materials cite such examples as crispy pig ear, deviled egg salad, and caper berries and piquillo marmalade.
Like Tom: Tuesday Dinner, the new special-night meal will be served in one of Craft’s private dining rooms. With the downturn in New York’s party business, it’s a smart way to put vacant space into money-generating use.
Chipotle is heading abroad: After poking a toe into a foreign market with the opening of a lone store in Toronto, the college students’ cult favorite is jumping across the pond. The company disclosed this week that it will develop a single restaurant in London as a possible beachhead to European expansion. Since the 800-unit chain doesn’t franchise here, it’s unlikely to license overseas. It’s a shame that the company isn’t still a half-sister to Pret a Manger, the all-natural grab-and-go chain that, like Chipotle, once counted McDonald’s as an owner. The two might be compatible partners, and Pret owns London.
Starbucks offers to caffeinate those who give back: The coffee giant continues to play to the socially minded with a new promotion keyed to Obama’s inauguration. The President-Elect has asked every American to volunteer their time for the public good next Monday. Agree to do your part, Starbucks announced yesterday, and there’ll be a free tall coffee waiting for you afterward.
Meanwhile, some media have reported that Starbucks is about to announce an arrangement with MSNBC whereby the cable channel’s live coverage of the inauguration will be simulcast within the coffee chain’s 650 U.S. stores.
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