Phil Romano as Simon Cowell?

Concept creator Phil Romano must be taking his inspiration these days from “American Idol” founder Simon Cowell. News reports arising from Dallas say the father of Macaroni Grill and Fuddrucker’s, to name just a few of his brainchildren, is funding a restaurant “incubator” where entrepreneurs pitch their concept to a panel of chefs and potential investors, a la any number of reality talent contests.

A winning idea earns a match-up with potential backers and 2,500 square feet of space in a 13-acre complex Romano and his partners have purchased to redevelop.

The jury members recruited so far include such towering toques as Stephan Pyles, Dean Fearing and Kent Rathbun, according to the coverage. Members with more of a business background include Butch McGregor and Stuart Fitts.

Romano and other investors in the Trinity Grove project will receive a percentage of sales from any venture that’s awarded space as a result of getting a thumbs-up vote from the committee.

Romano has predicted that restaurant companies will come to the complex to scout for concepts they could develop.

He told the Dallas Morning News’ Karen Robinson-Jacobs that his group has already signed letters of intent with 14 would-be restaurateurs who want space in the Trinity Grove complex, and that 30 in total have submitted ideas.

Chipotle speaks

When Chipotle executives speak, other restaurateurs snap their heads to listen. Here to save them a little neck strain are the pearls from management’s conference call Wednesday with Chipotle investors:

Co-CEO Steve Ells, on the first ShopHouse Southeast Asian Kitchen:

While we're still working to perfect the concept, it reminds me very much of the first Chipotle when it originally opened. Many current customers aren't quite sure how the system works or what to order when they first come in and sometimes have issues with flavor combinations or the level of spice in their food. But they like it and from the very beginning, you see that the customers are coming back, week after week.

Ells, on Obamacare:

We, today, have a limited insurance program that we offer our crew. Most of our crew chose not to pick that up. And so we would go from very few of our crew being involved in the voluntary program to us being required to provide insurance to all of our employees. So it would be pretty significant change to our business

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Co-CEO Monty Moran, on Chipotle’s Restaurateur management development program (where managers get a big bonus for hiring employees who then become managers):

This GM taught all of us a lesson: She came from a Restaurateur store herself and had a strong vision for what a winning team looked like. Weeks before her new store opened, she spent days on the sidewalk in front of her new restaurant, interviewing candidates for crew positions…Once she had selected her team, she trained each of them in an existing Chipotle and then invited all of them to her apartment to explain to them her vision for her restaurant and to watch videos from the 2010 All Managers Conference to be sure that each of these people understood Chipotle's unique culture. She made a commitment to each of them to help them grow and carefully described exactly how they would be able to become managers and future leaders at Chipotle themselves. At the same time, she secured a commitment from each of them to devote themselves fully to becoming part of the Restaurateur store very quickly.

Moran, on seasonal changes in traffic:

Our peak hour transactions are sort of more in the 100 range during the winter months. And during the summer months, it's historically gotten up sort of more in that 110 to 115 range…Obviously, with this coming spring and summer season, we hope to set some new records in those areas because of our new emphasis

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Ells, on menu development:

One of the reasons that we continue to grow so strongly is because we continue to improve our core offerings, which is what people come for. We have experimented here and there with a new menu item. We've tried soup. We've tried chili. We've tried smaller menu items, single taco, things like this. But it seems that people keep coming back for their chicken burrito or their barbacoa tacos or whatever it is that they've landed on.

Bonus tidbit:

Brown rice, one of the chain's most recent menu additions, now accounts for about a third of all rice served by the chain.

Better forecast

With all the post-holiday hubbub, I didn't have a chance to air my forecast for 2012. It's a shame because the task is outrageously easy this year. Every major trend boils down to "better."

Not "better" in terms of business conditions, though the National Restaurant Association yesterday forecast a slightly easier time for the industry in 2012 (apparently I wasn't the only laggard in presenting year-ahead predictions. Until a few years ago, the issued its annual economic preview during December of the preceding year. Now the data isn't released until we've torn the first page off the New Year calendar.)

The byword is "better" because it's the G-string that gets the consumer's dollar these days. Palms get all sweaty when shoppers spy something of truly superior quality at a can-do price. It's as unavoidable as admiring Mitt Romney's hair.

The industry has been jabbering for years about redefining value as affordable quality. This year, talk has given way to unprecedented action. Much of the chain-related restaurant news to date has centered on better food, better service, better environment and better business practices.

Wendy's is upgrading its burgers--again. Taco Bell is "reinventing" the taco and striving to match the quality of Chipotle. Jack in the Box is installing fireplaces as part of a design overhaul. Domino's is hawking artisan pizza and a better signature side.

McDonald's is crowing about a personal connection with the farmers who grow its food. Chipotle's spin-off Asian concept features high-end small-batch beers. Panera Bread is currently promoting salmon.

On the full-service front, Ruby Tuesday is providing fresh bread and tossing its Caesar salads tableside.

The whole gourmet-burger craze is built on the concept of providing what's better. It, in turn, is part of a larger movement by high-end chefs into fast-food, where they hope to make a name (and a bagful of loot) by providing white-tablecloth-quality fare. Late last year the NRA cited that emerging fast-fine segment as one to watch.

The problem is, "better" is relative. What's a notch above the usual today becomes tomorrow's norm. So what will be the new manifestations of better?

--Better sodas. Everyone is infatuated with the fast-casual market, where several of the standouts have spec'd small-batch artisan colas and flavored soft drinks. Skinny Pizza, for instance, offers a fountain version of Boylan Diet Black Cherry soda, a favorite that I've never seen in fountain form before. Expect to see more of those high-craft drinks populating the coolers of limited-service brands, including some of the big names.

--Better condiments. There have been fits and starts in that direction, and the foodservice supplier community is certainly anticipating the process, with better mayo, catchup and salsas already in distributors' warehouses. But that might be only the start.

--Better packaging. When was the last time you said, "Wow, that's a really cool takeout package we're using"? Customers frequent a place because of the food, the convenience or the price. But a truly breakthrough sort of packaging could help in delivering that overall sense of "better."

--Better French fry alternatives. The apple slices are now a standard. Carrot and celery sticks are tight there, too. So what's next? Sweet potato fries are certainly cropping up everywhere (and are rumored to be in test by Wendy's). A personal plea: Please, someone add raw broccoli florets as an option so I can get my sister off my back.

--Better veggie options. I'm talking about new choices from the mainstream chains and brands. It's time to go beyond veggie burgers and sandwiches with the meat omitted.

--Better pizza. This isn't a swipe at Domino's, since I've not tried its new artisan pies. it's directed at all the pizzerias in the eastern regions of the U.S., and New York in particular, that have coasted on the strength of their ovens for decades. They've turned pizza into a commodity, instead of striving to do something different. Like something better than the mass of pie makers out there.

--Better prices on better drinks. I'm not lost in some nostalgic dream about nickel candy bars, but a $12 beer is overpriced, especially when I know it retails and wholesales at a completely different tier. Wine prices are also getting crazy. A $40 tab for two glasses of wine on the way home for work just doesn't make sense.

--Better office catering. I say that as a consumer. More flavorful and extensive choices, please. The portable taco bar is the last innovation I can remember in that realm.

Don't look now but...

Because of Twitter, you can get a heads-up on restaurant developments long before they’re covered in the traditional sources of industry news. But the story behind the news story is a different matter. Consider, for instance, these little-noticed wrinkles in two heavily covered recent events.

Danny Meyer is selling splinters of his empire. The famed restaurateur drew tremendous coverage (including here) when he disclosed in a cookbook that he had agreed to sell his Eleven Madison Park to the starched outpost’s manager and executive chef. Less noticed was the bombshell that he’d served up another piece of his business, this time to the company led by the owner of the Miami Dolphins, Stephen Ross.

Ross’ Related Cos., perhaps best known as the developer of New York’s chi-chi Time Warner Center, acquired an undisclosed stake in Meyer’s Union Square Events catering and restaurant-management operation for an amount that wasn’t revealed. The purpose is to pair the two companies’ expertise in developing real estate complexes worldwide, but the process is starting with the partners’ backyard.

They’ve announced that they’ll be part of the 26-acre Hudson Yards project in New York, a venture that aims to turn the old train tracks and industrial space on Manhattan’s Far West Side into a new hub of consumer activity. Few details have been revealed about the foodservice aspect, but Meyer isn’t known for peddling the same ol’ same-old.

Taco Bell redefines who’s a competitor. No, this has nothing to do with the much-covered Cantina Bell menu, which has been identified in virtually every news story as the Mexican giant’s response to Chipotle’s success. I’m talking about the new breakfast menu, a.k.a. the First Meal bill of fare, which is studded with names that vie with Taco Bell for share of stomach and franchisees.

The roster includes a pastry item from Cinnabon, Focus Group’s bakery chain, and coffee from Starbucks branded as Seattle’s Best (curiously, a former sister of Cinnabon). You can find those brand names in a number of locations beyond their namesake stores. Seattle’s Best, for instance, is also available in Burger Kings, Subways and plenty of other foodservice outlets.

There’s even a Seattle’s Best coffee flavored with Cinnabon-brand cinnamon. Clearly licensing has become a big business for each.

But each still has a sizeable network of its own retail outlets. At one time, the industry would’ve clutched its chest at such brand-name mixing. Certainly franchisees would have. Then they would’ve dialed their lawyers.

It’s part of a new wave of cross-branding—led at least in part by franchisees. A Burger King franchisee, for instance, is serving as the test partner for a new collaboration with Friendly’s. The ice cream chain hopes to open at least 10 downsized Friendly’s Scoop fast-casual-style outlets this year. The first is co-branded with a Burger King store run by New Jersey franchisee.

Bet you might’ve missed that angle in all the coverage of Friendly's comeback efforts.

Drugstore cowboys

A bunch of drug sellers plan to muscle into restaurants' turf, so some heads are likely to get banged. Luckily, bandages and aspirin will be near at hand.

Gauze, pills, lotions, and trusses were how those interlopers formerly made their money. But now drugstore dons like Duane Reade, CVS and Walgreen's are ripping out aisles of stethoscopes and canes to showcase sandwiches, salads, muffins, coffees and a host of other lunchtime and breakfast staples. At one of the prototypes near our New York offices, you can grab some made-to-order sushi along with a tube of Preparation H.

The restaurant business has harumphed a little about the charge of discount retailers into foodservice. Walmart, Target and Kmart could all draw blood because of their traffic and sheer might, as any thinking chain-restaurant operator will tell you. But until that happens, how much hand-wringing can you do? There's next week's sales target to hit.

If that lukewarm concern has been voiced about drugstores, I've yet to hear it. The business seems to regard the phenomenon as more of a curiosity than a threat.

That's not the case in the c-store industry, which fears a distraction from its quest for more fast-food sales. At a recent conference for that business, drugstores were repeatedly cited as a looming threat, as were dollar stores, the super-discount retailers who've presumably been helped by the economic downturn. They, too, are experimenting with ready-to-eat foods, mindful that the big quick-service restaurant chains don't have a monopoly on 99-cent sandwiches and drinks.

The issue for all those challengers is quality. Can they match the caliber of what's offered in a downtown takeout shop where food is the focus, not the add-on sale to a prescription for suppositories.

Here's some food for thought on that question, a video shot by Angel Abcede from our sister publication, CSP. It's a look at Walgreen's new food-heavy prototype in Chicago. You'll get a good read on the quality of food that's being offered by that chain. Afterward, you might want to see what sort of deal you could get on ulcer remedies.

Presidential hopefuls & the restaurant business

Everyone knows that Herman Cain honed his leadership style in the restaurant business, first at Burger King, then Godfather’s, and finally the National Restaurant Association. But his departure from the presidential campaign hasn’t left the industry without an associate in the race.

With the exceptions of Ron Paul and Rick Santorum, all of the major candidates have a connection of some sort. Here’s a quick review of those sometimes scandalous ties:

Mitt Romney: The biggest check ever signed by the private-equity pioneer was a $1 billion pay-out to Tom Monaghan for Domino’s Pizza, which Romney’s employer, Bain Capital, would own for a number of years. The company subsequently purchased a piece of such industry giants as Dunkin’ Donuts and Outback Steakhouse. Bain earned a significant return from Domino's and Dunkin' through their respective stock offerings.

Newt Gingrich: An early scandal for the former House Speaker centered on his second career as educator. The restaurant business caught a little mud in that flap, too.

The fiery polemicist was accused of taking sizeable contributions from lobbyists who allegedly wanted him to air the views of their clients to the business students he was instructing at the undergraduate level. News reports identified one of those contributors as the Employment Policies Institute, a group formed by S&A Restaurants alumnus Rick Berman in part to protect the interests of several major casual-dining chains.

According to the allegations, the EPI wanted Gingrich to present minimum-wage employers in an attractive light. The group never commented on the assertions, and Gingrich denied that he skewed his lectures to accommodate its interests. But one of the documents that came to light at the time included a note from Berman to Gingrich, thanking him for his help.

Jon Huntsman: His connection is on the supply side of the restaurant business. Huntsman’s father, Jon Sr., was the founder of a chemical company called Hunstman Corp., which invented the clamshell burger box. Its major customer: McDonald’s, which spec’d the new container for the Big Mac.

The elder Huntsman later founded a private equity firm, HuntsmanGay, whose investments include a stake in a company that sells Mama Rosa’s pizza through convenience stores. Mama Rosa’s also supplies pizzerias with dough balls and pizza crusts.
I’ve yet to find a connection between the restaurant industry and Rick Santorum, the former Pennsylvania senator, though I first learned of him and some industry-aligned views from the then-director of the Pennsylvania Restaurant Association.

Similarly, there’s yet to be a direct tie revealed with Ron Paul, the libertarian candidate. But he does share the name of perhaps our industry’s best-known researcher.

Ruby sweats its upkeep bills

Ruby Tuesday hasn’t exactly pursued a me-too strategy for the post-Recession, as Restaurant Reality Check noted six months ago. So how’s that contrarian approach working?

Not well, judging from the company’s financial results for the October-through-November period. As you might have heard, Ruby lost $2 million for the quarter, compared with a net income of $4.6 million for the same period of the prior year.

Buying restaurants from franchisees, a 180-degree departure from what most chains are doing today, helped to raise revenues by almost 6 percent. But the gain was far more than offset by debt expenses and a steeper-than-expected decline in unit sales, which came despite new service and value initiatives.

Does that mean the company is scrapping its contrarian views? Well, yes and no.

As we noted here in July, the company’s namesake chain is betting it can win more bargain-hunters by giving customers access to its salad bar without an add-on charge. It’s sticking with that more-is-lots-more approach. In a call with financial analysts, executives spoke cryptically of additional service enhancements that are currently in test at 10% of company-run Ruby units.

They didn’t reveal all the components of the new Surprise & Delight initiative, but did divulge such components as shaking martinis tableside, and having servers grate Parmesan cheese onto patrons’ entrees after they’re served.

But the biggest disclosure was a mention that Ruby plans to follow the herd for a huge savings on routine restaurant upkeep—repair & maintenance, or R&M, in industry parlance. Instead of letting each restaurant handle that function, Ruby is going to centralize control, “which a lot of the QSR chains and some of the other casual dining chains have gone to,” explained CEO Sandy Beall.

Ruby is confident it can deliver millions in savings by consolidating its expenditures for R&M. “It's approximately [a] $40 million spend a year annually, and we believe that through using a consolidated group that we can better monitor our rates and our costs on the actual parts and what have you,” said EVP and operations specialist Kimberly Grant.

“It's basically bulk buying power for the services we're participating with,” added Beall. “It's like a huge co-op, so better pricing.”