Jaw-dropper of the day (so far)

From the Wall Street Journal's website:

Trouble with the tax man: Dunkin’ Brands disclosed that the IRS is currently auditing its federal income tax returns for 2006, 2007 and 2008. The company’s IPO filing said the IRS “has proposed adjustments for fiscal years 2006 and 2007 to increase our taxable income as it relates to our gift card program, specifically to record taxable income upon the activation of gift cards.” Dunkin’ Brands said it is fighting the IRS on this point.

Call me cynical, but if the tax men are going after Dunkin', they're likely drawing a bead right now on other chains. if not every single one that offers gift cards.

News roundup from the long weekend

Holiday cheer…
Mall restaurants should be in a jolly mood after watching retail neighbors host 8.7% more shoppers on Black Friday than they did a year ago, according to the National Retail Federation. Presumably some of those shoppers rested their tired feet while munching a sandwich, salad or slyder. The 212 million bargain hunters went home with wallets lighter by $364.34 on average—$22 more then they typically spent last year on the traditional start of the holiday shopping season. The NRF termed the turnout an “encouraging” sign for the rest of the year.

But a touch of the Grinch
But there’s at least one “bah, humbug!” for restaurants this year. The NRF projects that sales of restaurant gift cards will hold at last year’s depressed levels. The association didn’t cite a reason, but a survey of consumers found a high percentage who believe they can get more for their buck by buying merchandise on sale.

Natural instinct
“Natural” is emerging as the menu descriptor of the moment. Panera Bread Co.’s newest menu item is a chili made with brisket trumpeted as “all-natural.” It’s served with chunks of cornbread on top. The introduction follows Wendy’s rollout of what it’s touting as natural-cut French fries, with the skin left on.

Something fishy to the BK deal?
The Securities Exchange is investigating the $4-billion purchase of Burger King Holdings for evidence of insider trading, according to HuffingtonPost columnist Dan Dorfman. The veteran deal-watcher reported Friday that the SEC and another watchdog group are asking brokerages for information about customers’ purchase of BKH shares prior to the announcement of the takeover by the Brazilian private equity group 3G.

Random scuttlebutt
Nation’s Restaurant News is being sold to Penton Media, the parent of Restaurant Hospitality and Food Management magazines, according to a blog posting on MediaBistro…Jack in the Box should spin off its Qdoba burrito chain to focus on its core business, asserts stock-picker Ryan C. Fuhrmann.

Putting some merry olde English on gift card sales

 A reading from the sacred sales scripture of Hallmark Cards:   

And the idea came unto them who were called marketers: If-ith  thou can silence the swine in Finance with the merciful sales of a special occasion, why canst thou not create more special occasions? Why, if Mother’s Day proves bountiful, could there not be a Secretary’s Day, a De-Louse Your Wench Day, a Thank the Hangman Tuesday?   

And so it was done, and many greeting cards were sold.   

And thus it came unto the special breed known as restaurant marketers: If-ith thou sold a shit-load of gift cards for the year-end holidays, couldst thou not invent another time to push-eth the cards like hell?   

And so were born the new restaurant card occasions, known to those far and near as Father’s Day and graduation. Merrymakers would christen the opportunity “Dads & Grads.”   

Few were the early converts—sage seers like Buffalo Wild Wings, which gave a $5 kickback to anyone buying a $20 card for males who hath spawned or youngsters who had known the chalk. Sonic, too, waved the banner, though it focused on the family and friends of graduates.   

Others, like Hooters, promoted myrrh and other presents specifically for Dads & Grads, but failed to offer gift cards. Still, industrious bloggers frequently checked the website, just to be certain. Perhaps would-be recipients feared the battle axe of Mom or Wife.   

Soon, many of the fork were featuring gift cards as a standard choice for Dads & Grads. The magic of the cards would wane as (Burger) King and clown all hawked their versions. But the sellers savored the spring sales bump, and the investors amongst them rejoiced and grew mellow with wine.   

And thus it came to be that Hallmark  introduced its Glad You’re Out of Rehab  and Enjoy Your Ferrari cards.

A news sampler to start the week

The last few days brought a number of interesting yet little-noticed developments within the restaurant industry. Taken separately, they’re mere curiosities. But as connected dots, they form a picture of how the business is changing with brutal times.

Gordon Ramsay said to be in financial trouble: The New York Post reported Sunday that stardom hasn’t shielded the ill-tempered chef from the economic free-fall. Foxtrot Oscar, his celebrated London restaurant, is now closed two days a week, and two of his other eateries there are rumored to be for sale, though Ramsay insists he’s not looking for a buyer, according to the tabloid.

“21” loosens its dress code: The famed New York playground of the rich and wrinkled has reportedly dropped the requirement that men wear neckties at dinner. Spats, however, are still recommended. Okay, I made that last point up. But the tie rule was equally as outmoded. Most old-guard restaurants would let you dine buck naked these days to put a butt in a seat. What’s covering said butt shouldn’t matter in an economic situation as dire as the present. It’s enough to make you fall off your polo pony—which, by the way, can no longer be valet-parked.

No more lunches for Boston’s Locke-Ober: The Beantown landmark has been keeping its doors shut until dinner since Jan. 1, but even a hometown newspaper didn’t notice until last week. That may explain why the service was discontinued. But it must’ve been a monocle-dropper to all the old Brahmins and blue hairs who’d been lunching there since the riffraff and nouveau riche started showing up. Where can a guy in tie and spats eat comfortably in a big city these days?

Pigall’s nee Maisonette fires down its ovens: The lone restaurant in the heart of the Midwest to earn a four-star Mobile rating has thrown in the napkin. Jean-Robert at Pigall’s, the Cincinnati restaurant that replaced the city’s famous Maisonette, is reportedly closing Feb. 28 because of strife among its partners and weak finances, which seem to go hand-in-hand these days. As a local newspaper notes, the announcement came on the same day the place was awarded its fifth four-star designation from the Mobile dining guide. It was reportedly the only eatery in Ohio, Indiana and Kentucky to earn that lofty assessment. The closing speaks volumes about the state of fine dining outside the coastal enclaves that serve an international trade.

Gladstone’s to open in LAX: A riff on the mega-volume Malibu landmark is scheduled to be unveiled on Thursday in Los Angeles’ Marquis de Sade-sanctioned airport. The outlet will be run by contract feeder HMSHost Corp., which is also operating a La Brea bakery inside LAX, whose lone redeeming quality is being only a shuttlebus away from an In-N-Out.

Brinker’s in-store gift-card sales tanked: Not all of last week’s news tidbits were cooked up by independents. The parent of Maggiano’s and On The Border told investors last week that its workhorse Chili’s brand suffered a 14% drop in sales of gift cards within the chain’s restaurants.

The impact was tempered, CEO Doug Brooks explained, by year-over-year increases in sales of the cards by retailers and other third parties. A major factor for the in-store decline, Brooks said, was the discontinuation of a “bounce-back” deal--exactly like the ones countless other chains adopted this year. Persons buying a card were given a $5 credit, a sort of commission, that they could redeem during a later visit.

Brinker determined that the incremental business wasn’t worth the give-away. So it dropped the deal for 2008—a year marked by the availability of similar come-ons from other chains.

A seal of security for gift cards

Sales of gift cards are expected to be bah-humbugged this year by fears the issuing restaurants will go bankrupt, leaving card holders with worthless plastic. Today several major chains revealed they’re hoping to allay those worries by promoting what amounts to a Good Shopping Seal of Approval.

They’ve formed a self-policing trade group, the Retail Gift Card Association, that will extend membership solely to restaurant and retailing brands with “longevity in the marketplace” and a commitment to “customer friendly practices.”

In addition, participants are required to meet “a set of principles” that protect card buyers, according to the announcement.

The charter members include Applebee’s, Subway and Marriott. Their partners are the retailing giants Best Buy and Home Depot.

The association said it will be strict in enforcing its membership requirements, but expressed hopes that all retailers will meet those standards and qualify for inclusion.

Research from the National Retail Federation indicates that 3.1 percent of shoppers are cutting back their gift card purchases this year because of fears that the issuing store or restaurant will go out of business. The NRF is forecasting that sales of cards will drop 5% overall from last year’s levels, to about $24.9 billion.