A pox on you, Bob Evans Farms.
On Christmas Eve, while I was ardently researching what adult refresher to leave Santa, word broke of a new venture by the venerable family chain. Keep in mind that NORAD, the nation's missile tracking service, maintains a Santa watch on that night, so it’s not as if the world is abuzz with important activity. Yet here was real industry news: The launch of a new restaurant format intended to blunt competition from supermarkets and food shops. For the sake of restaurant journalism and world peace, I was going to have to write about it.
Fortunately, my quest to nail the ideal eggnog-to-rum ratio pre-empted any blogging that night, as did the holiday festivities of the big day itself. But here, finally, is the rundown of Bob Evans’ notable restaurant experiment.
The test restaurant, near the chain’s Columbus, Ohio, headquarters, features a street-facing retail section called Taste of the Farm, according to news reports. Available for takeout are seven complete meals in family-sized portions, as well as Bob Evans-branded pantry items like muffin and pancake mixes. Also available are Bob Evans sausages and other port products.
The section is an adjunct to a sit-down Bob Evans restaurant. The idea, according to the ample coverage of the concept, is to offer consumers a choice of how they want to be fed. They can sit down for a meal, grab something pre-prepared to eat at home, or buy groceries for something they partially prepare.
Brainstorming a concept that gracefully bridges restaurants and the ready-to-eat sections of supermarkets and food shops has been a longtime (and long elusive) goal of the restaurant business.
The quest has assumed new importance in recent years because the brains working for the other side seem to be closer to finding the formula. It’s painfully obvious to restaurants that they’ve lost share of stomach during the recession to retailers. People are cooking more, buying more ready-to-eat meals, or pursuing the middle court of purchasing some pre-made elements and preparing the rest.
It remains to be seen if Bob Evans, one of the industry’s sleepier concepts, can synthesize a potent counterattack.
In the meantime, I’m just wondering if the Taste of the Farm sells eggnog.
Saturday, December 26, 2009
Wednesday, December 23, 2009
That's a lot of $1 double cheeseburgers
A Missoula, Mont., TV station broke a story yesterday that could nab honors as the weirdest restaurant-related news flash of the year. If a golf club or reality-TV star had been involved, former Burger King marketing chief Russ Klein would've almost certainly snagged the media circus' center ring.
Klein recently left his post as president of BK marketing for what the chain stressed were personal reasons. It adamantly refused to disclose any details, indicating that the matter was private.
Jump to Kalispell, Mont., a city farther from BK's home city of Miami than the distance alone attests. It seems that Klein was traveling with a backpack containing a laptop and $6,000 in cash. Okay, maybe he's a big tipper.
Certainly he's careless, according to the report by station KECI. The NBC affiliate explained Sunday that Klein had placed the cash-packed knapsack in what he believed to be his rental car. But the vehicle turned out to be someone else's.
The driver of that car found the cash and turned it in, and even refused the reward Klein had offered for the backpack's return, KECI said in a follow-up report yesterday. Klein and his wife then decided to give KCEI and the local police some $8,000 for local charities, to be divvied up as they saw fit.
Trust me on this, but it's highly unusual for a news outlet to be forwarded a tidy sum of money by someone it's covering. Ditto for a police department that's been called upon to help in the situation. Put those two rarities together, and you have something of legendary uniqueness. We're talking something on a Lady Gaga scale.
"Before you're owed anything, try to give ahead of time, and it creates a certain vibe in your life," Klein was quoted as telling the station. He explained that payback was complete, but that he wanted to pay the money forward.
Call me cynical, but I don't think we've heard the last about this.
Klein recently left his post as president of BK marketing for what the chain stressed were personal reasons. It adamantly refused to disclose any details, indicating that the matter was private.
Jump to Kalispell, Mont., a city farther from BK's home city of Miami than the distance alone attests. It seems that Klein was traveling with a backpack containing a laptop and $6,000 in cash. Okay, maybe he's a big tipper.
Certainly he's careless, according to the report by station KECI. The NBC affiliate explained Sunday that Klein had placed the cash-packed knapsack in what he believed to be his rental car. But the vehicle turned out to be someone else's.
The driver of that car found the cash and turned it in, and even refused the reward Klein had offered for the backpack's return, KECI said in a follow-up report yesterday. Klein and his wife then decided to give KCEI and the local police some $8,000 for local charities, to be divvied up as they saw fit.
Trust me on this, but it's highly unusual for a news outlet to be forwarded a tidy sum of money by someone it's covering. Ditto for a police department that's been called upon to help in the situation. Put those two rarities together, and you have something of legendary uniqueness. We're talking something on a Lady Gaga scale.
"Before you're owed anything, try to give ahead of time, and it creates a certain vibe in your life," Klein was quoted as telling the station. He explained that payback was complete, but that he wanted to pay the money forward.
Call me cynical, but I don't think we've heard the last about this.
Tuesday, December 22, 2009
Meanwhile, in non-Tiger news...
‘Tis the season to hunker down and hope for a better next year, so the restaurant business hasn’t exactly been cranking out news like an elf production line. But a few little-noticed developments in recent days might prompt some hmm’s among the ho-ho-ho’s.
Applebee’s experiments with a server-calling system. A number of franchised stores here and there are testing a tabletop device that allows guests to summon their server if something is needed. Patrons press a button on a tabletop console, which causes a watch-like device worn by their waiter or waitress to vibrate, according to a story in the Sun News, a South Carolina newspaper.
The set-up also monitors how long the guests initially sit before a server approaches. When a hostess seats a party, she waives a watch near the tabletop console. That causes the watch of the wait staffer assigned to the table to vibrate, and an unseen timer starts. If the server doesn’t show within a minute, the manager’s watch buzzes. Then a painful electric shock is directed at the tardy server. Okay, I made that up. But it’s an interesting idea.
Server alerts have been tried for eons. The 160-year-old Tadich Grill in San Francisco, for instance, features tableside buttons on the wall that patrons can press for service. A similar set-up is a signature of a classic watering hole in New York City, the International Bar.
It says a lot that those places are known for the novelty (and kitsch) of having a server-summoning system. Plenty of other converts presumably discovered that the set-up detracted from a guest’s experience. When you have to buzz for someone to take an order, you’re unlikely to coo over the attentive service you’re getting. Unless it’s handled well, patrons might as well take a number, as if they were at the supermarket deli.
Goofy has been pink-slipped by a Disney World restaurant. Other characters had their hours cut, according to a recent post on Examiner, the network of blogs that’s been set up as grassroots news service.
If the posting is accurate, I might soon spot Goofy in a state unemployment classes. The ‘Ohana Restaurant in the Polynesian Resort of Disney World was dropped Pluto’s packmate from the character rotation, or the circulation of people in Disney character costumers during meals, according to the report.
I initially suspected he got a job as the mascot for a Major League Baseball team, since a Goofy would fit just about any of the squads. But that doesn’t explain why Rabbit, a Winnie the Pooh character to which Disney owns the rights, is also gone.
Meanwhile, Eeyore, Piglet, Tigger and Pooh himself reportedly had their circulation hours cut.
And all you see on the airwaves is non-stop reporting about healthcare.
Restaurant marketing makes the list of 2009 campaigns to remember. Unfortunately, the campaigns may not be remembered for reasons the industry should cherish.
For instance, the Wall Street Journal ranked Burger King’s de-friending crusade on Facebook as the year’s fourth best marketing program. In case you’ve forgotten the furor it sparked, the campaign rewarded Facebook users with a Whopper coupon for every 10 acquaintances they “de-friended,” or publicly designated as someone they didn’t want as a friend anymore. About 234,000 people were informed of their newfound leper status before Facebook asked Burger King to knock off the high school nonsense.
It’s vexing to see that effort on the Best of the Year list when KFC’s plug from Oprah Winfrey is on the Worst-of roster. The talk-show hostess informed viewers that they could try KFC’s new Kentucky Grilled Chicken for free, triggering a run on the Colonel’s old Kentucky chicken home.
KFC halted the giveaway, saying supplies had been depleted. But it was never clear if the chain rain out the new product or merely didn’t want to give away that much free food.
In any case, the cut-off triggered more media coverage than we’d see until Tiger was brushing broken car window off his Nike shirt. The logo would be torn off later, no doubt to Woods' delight that nothing else was torn off his body.
Applebee’s experiments with a server-calling system. A number of franchised stores here and there are testing a tabletop device that allows guests to summon their server if something is needed. Patrons press a button on a tabletop console, which causes a watch-like device worn by their waiter or waitress to vibrate, according to a story in the Sun News, a South Carolina newspaper.
The set-up also monitors how long the guests initially sit before a server approaches. When a hostess seats a party, she waives a watch near the tabletop console. That causes the watch of the wait staffer assigned to the table to vibrate, and an unseen timer starts. If the server doesn’t show within a minute, the manager’s watch buzzes. Then a painful electric shock is directed at the tardy server. Okay, I made that up. But it’s an interesting idea.
Server alerts have been tried for eons. The 160-year-old Tadich Grill in San Francisco, for instance, features tableside buttons on the wall that patrons can press for service. A similar set-up is a signature of a classic watering hole in New York City, the International Bar.
It says a lot that those places are known for the novelty (and kitsch) of having a server-summoning system. Plenty of other converts presumably discovered that the set-up detracted from a guest’s experience. When you have to buzz for someone to take an order, you’re unlikely to coo over the attentive service you’re getting. Unless it’s handled well, patrons might as well take a number, as if they were at the supermarket deli.
Goofy has been pink-slipped by a Disney World restaurant. Other characters had their hours cut, according to a recent post on Examiner, the network of blogs that’s been set up as grassroots news service.
If the posting is accurate, I might soon spot Goofy in a state unemployment classes. The ‘Ohana Restaurant in the Polynesian Resort of Disney World was dropped Pluto’s packmate from the character rotation, or the circulation of people in Disney character costumers during meals, according to the report.
I initially suspected he got a job as the mascot for a Major League Baseball team, since a Goofy would fit just about any of the squads. But that doesn’t explain why Rabbit, a Winnie the Pooh character to which Disney owns the rights, is also gone.
Meanwhile, Eeyore, Piglet, Tigger and Pooh himself reportedly had their circulation hours cut.
And all you see on the airwaves is non-stop reporting about healthcare.
Restaurant marketing makes the list of 2009 campaigns to remember. Unfortunately, the campaigns may not be remembered for reasons the industry should cherish.
For instance, the Wall Street Journal ranked Burger King’s de-friending crusade on Facebook as the year’s fourth best marketing program. In case you’ve forgotten the furor it sparked, the campaign rewarded Facebook users with a Whopper coupon for every 10 acquaintances they “de-friended,” or publicly designated as someone they didn’t want as a friend anymore. About 234,000 people were informed of their newfound leper status before Facebook asked Burger King to knock off the high school nonsense.
It’s vexing to see that effort on the Best of the Year list when KFC’s plug from Oprah Winfrey is on the Worst-of roster. The talk-show hostess informed viewers that they could try KFC’s new Kentucky Grilled Chicken for free, triggering a run on the Colonel’s old Kentucky chicken home.
KFC halted the giveaway, saying supplies had been depleted. But it was never clear if the chain rain out the new product or merely didn’t want to give away that much free food.
In any case, the cut-off triggered more media coverage than we’d see until Tiger was brushing broken car window off his Nike shirt. The logo would be torn off later, no doubt to Woods' delight that nothing else was torn off his body.
Thursday, December 17, 2009
Wednesday, December 16, 2009
Dunkin' to give table service a try?
Press coverage of a zoning board meeting is usually a viable alternative to Ambien. If you're not in REM sleep by paragraph four, it's time to cut back on the Red Bull.
But a recent report from Middlebury, Conn., would make a fast-food executive snap upright with the alertness typically reserved for a letter from the IRS. The news article recounted the efforts of a local Dunkin' Donuts franchisee to secure the go-ahead for a new store inside an existing building there.
That per se has all the excitement of a supermarket special on canned okra. But the story by Voices, a local newspaper, revealed that the proposed donut outlet would sport 58 seats, or far more than is typical for a 1,100-square-foot donut shop. As a lawyer for the franchisee was quoted as telling the Planning and Zoning Commission, "Fifty-eight seats are not normally expected in a take-out restaurant."
That's because the unit plans to add table service, Voices quoted attorney Michael McVerry as saying.
Baskin-Robbins, Dunkin' Donuts' sister chain, has experimented with the sort of modified service that's become routine in the fast-casual restaurant market. At the Baskin-Robbins Cafe that opened in the summer of 2008, guests place their ice cream or coffee orders and take a seat. A staff member bring them their orders.
McVerry didn't reveal whether that's what Dunkin' has in mind for the new Middlebury store. But he did note that the concept has been drifting upmarket through changes like the addition of sandwiches and bagels.
Might the chain be thinking about adding table service?
We'll see, because the Dunkin' development was approved.
But a recent report from Middlebury, Conn., would make a fast-food executive snap upright with the alertness typically reserved for a letter from the IRS. The news article recounted the efforts of a local Dunkin' Donuts franchisee to secure the go-ahead for a new store inside an existing building there.
That per se has all the excitement of a supermarket special on canned okra. But the story by Voices, a local newspaper, revealed that the proposed donut outlet would sport 58 seats, or far more than is typical for a 1,100-square-foot donut shop. As a lawyer for the franchisee was quoted as telling the Planning and Zoning Commission, "Fifty-eight seats are not normally expected in a take-out restaurant."
That's because the unit plans to add table service, Voices quoted attorney Michael McVerry as saying.
Baskin-Robbins, Dunkin' Donuts' sister chain, has experimented with the sort of modified service that's become routine in the fast-casual restaurant market. At the Baskin-Robbins Cafe that opened in the summer of 2008, guests place their ice cream or coffee orders and take a seat. A staff member bring them their orders.
McVerry didn't reveal whether that's what Dunkin' has in mind for the new Middlebury store. But he did note that the concept has been drifting upmarket through changes like the addition of sandwiches and bagels.
Might the chain be thinking about adding table service?
We'll see, because the Dunkin' development was approved.
Trend or fad: Two to handicap
As I’ve mentioned here before, two publications where I worked had hard and fast rules to differentiate a fad from what we could suggest was a trend. If there were two or fewer examples of something new, it was a hula hoop. But if at least three instances could be cited, all hail the next mini-dessert or slider.
I’ve been rethinking that standard as I consider the flurry of new items appearing on restaurant menus, especially the ones that have been adopted by more than one concept. Two products in particular seem as if they could have legs, even if they haven’t yet met The Rule of Three.
Consider, for instance, funnel cakes, or variations there of. Scanning the food court at a Florida airport last week, I noticed that a conventional funnel cake, just like the one you’d munch at a country fair while viewing the prize zucchinis, was being offered at a combination Nathan’s/Arthur Treacher’s walk-up counter.
A few hours later, a business acquaintance mentioned that he’d tried a new dessert at Burger King the day before, a serving of “funnel cake sticks” that he adjudged “right on.” A day later, BK issued an announcement that the product, first tested at its Whopper Bar spin-off concept, would be rolled into every conventional U.S. store. The dessert consists of long, separate sticks of a chewy cake, rather than the tangled rope of fried dough that constitutes a traditional funnel cake.
Consider for a second that fast-food restaurants haven't exactly been printing their dessert menus in pencil to handle the slew of the changes. There’s been a new strawberry shortcake here, a new cheesecake on a stick there. But that section of the menu board has hardly been the scene of dizzying switches. Might funnel cakes be on their way to joining deep-fried fruit pies as a new add-on staple?
Fast-food chains would no doubt appreciate that a funnel cake requires a fryer rather than a freezer or refrigerator space. As long as they could fry it without cutting into French fry production, they'd be happy to use a piece of equipment that is in virtually every quick-service kitchen out there. There's a lot going for the product, speaking purely in operational terms.
But, alas, we’ve yet to see that third example that verifies this is a true wave rather than a coincidence.
The other potential trend is already at the 2.5-instance mark, with an asterisk. Fresh asparagus is hardly a rarity on restaurant menus. But recent appearances suggest the spears may be set for more of an embrace by mainstream chains.
Consider, for instance, the Sausage Sandwich at Parasole Restaurant Group’s just-unveiled concept, Il Gatto in Minneapolis. Parasole is the independent group that has hatched such concepts as Oceanaire, Buca de Beppo, Manny’s, and Burger Jones. Il Gatto is being promoted as a casual place featuring "uptown Italian" fare.
In an early look at the concept, blogger James Norton touted the Sausage Sandwich as a must-try selection. It consists of a sausage made on premise, garnished with stracchino cheese and nestled atop a toasted bun with several stalks of asparagus. “Asparagus gives the sandwich a bit of vegetal balance and a pleasant textural snap,” writes Norton.
The picture he posted suggests the asparagus delivers considerable eye appeal as well.
Asparagus is being similarly wielded by Dogmatic Gourmet Sausage System, the upscale, organic hot dog concept that chain-restaurant veteran Brad Blum opened in 2008 in New York City.
The injection of color, flavor and a snappy texture could be a strong differentiator for fast-casual sandwich concepts—provided the high-volume users could buy sufficient supplies of acceptable quality at a reasonable cost.
Those are all big if’s, of course. But Mimi’s, the family chain that’s more of an upscale casual brand than a competitor of Denny’s, has featured asparagus as an ingredient for several years now.
Granted, it’s incorporated in the spring, when asparagus is in season. But if demand were high enough, areas whose growing seasons fall in the winter would presumably start cultivating the vegetable. If we can get strawberries all year long, why not asparagus?
Maybe with a funnel cake for dessert.
I’ve been rethinking that standard as I consider the flurry of new items appearing on restaurant menus, especially the ones that have been adopted by more than one concept. Two products in particular seem as if they could have legs, even if they haven’t yet met The Rule of Three.
Consider, for instance, funnel cakes, or variations there of. Scanning the food court at a Florida airport last week, I noticed that a conventional funnel cake, just like the one you’d munch at a country fair while viewing the prize zucchinis, was being offered at a combination Nathan’s/Arthur Treacher’s walk-up counter.
A few hours later, a business acquaintance mentioned that he’d tried a new dessert at Burger King the day before, a serving of “funnel cake sticks” that he adjudged “right on.” A day later, BK issued an announcement that the product, first tested at its Whopper Bar spin-off concept, would be rolled into every conventional U.S. store. The dessert consists of long, separate sticks of a chewy cake, rather than the tangled rope of fried dough that constitutes a traditional funnel cake.
Consider for a second that fast-food restaurants haven't exactly been printing their dessert menus in pencil to handle the slew of the changes. There’s been a new strawberry shortcake here, a new cheesecake on a stick there. But that section of the menu board has hardly been the scene of dizzying switches. Might funnel cakes be on their way to joining deep-fried fruit pies as a new add-on staple?
Fast-food chains would no doubt appreciate that a funnel cake requires a fryer rather than a freezer or refrigerator space. As long as they could fry it without cutting into French fry production, they'd be happy to use a piece of equipment that is in virtually every quick-service kitchen out there. There's a lot going for the product, speaking purely in operational terms.
But, alas, we’ve yet to see that third example that verifies this is a true wave rather than a coincidence.
The other potential trend is already at the 2.5-instance mark, with an asterisk. Fresh asparagus is hardly a rarity on restaurant menus. But recent appearances suggest the spears may be set for more of an embrace by mainstream chains.
Consider, for instance, the Sausage Sandwich at Parasole Restaurant Group’s just-unveiled concept, Il Gatto in Minneapolis. Parasole is the independent group that has hatched such concepts as Oceanaire, Buca de Beppo, Manny’s, and Burger Jones. Il Gatto is being promoted as a casual place featuring "uptown Italian" fare.
In an early look at the concept, blogger James Norton touted the Sausage Sandwich as a must-try selection. It consists of a sausage made on premise, garnished with stracchino cheese and nestled atop a toasted bun with several stalks of asparagus. “Asparagus gives the sandwich a bit of vegetal balance and a pleasant textural snap,” writes Norton.
The picture he posted suggests the asparagus delivers considerable eye appeal as well.
Asparagus is being similarly wielded by Dogmatic Gourmet Sausage System, the upscale, organic hot dog concept that chain-restaurant veteran Brad Blum opened in 2008 in New York City.
The injection of color, flavor and a snappy texture could be a strong differentiator for fast-casual sandwich concepts—provided the high-volume users could buy sufficient supplies of acceptable quality at a reasonable cost.
Those are all big if’s, of course. But Mimi’s, the family chain that’s more of an upscale casual brand than a competitor of Denny’s, has featured asparagus as an ingredient for several years now.
Granted, it’s incorporated in the spring, when asparagus is in season. But if demand were high enough, areas whose growing seasons fall in the winter would presumably start cultivating the vegetable. If we can get strawberries all year long, why not asparagus?
Maybe with a funnel cake for dessert.
Tuesday, December 15, 2009
Shareholders as mystery shoppers
I recently moderated a webinar where the participants cited the need for new ways of gauging customers’ service experiences. The prevailing method, of inviting patrons to take an online or telephone survey in exchange for a freebie, has apparently lost its impact, though they did not explain why. Instead, they suggested there has to be a more effective way of soliciting input, using new technology or at least fresher techniques.
Sardar Biglari, the activist investor who took over Steak n Shake’s corner office last year, told investors yesterday of a feedback mechanism he’s put in place to short-circuit the process between guest experiences and a restaurant’s better financial performance.
The mechanism also fits his self-avowed cheapness. “We are demons on costs,” he proudly told stockholders in a letter posted on Steak n Shake’s corporate website. “Trimming them is
now embedded in our corporate DNA.”
The system he’s set up in effect turns Steak n Shake’s thousands of stockholders into mystery shoppers. As Biglari explained in his letter to those investors, the family restaurant chain set up an e-mail hotline a year ago, owner@steaknshake.com, so any stockholder could recount their experiences in a unit to the home office.
If they spotted something good or bad, executives will take note, Biglari stressed. You can be assured that each message is read, and when necessary the Steak n Shake team is dispatched quickly to remediate any problems,” he said.
In addition to fixing problems before they can fester, the arrangement demonstrates that headquarters will be accountable to the company’s owners, even over such things as the cleanliness of the silverware.
So far, Biglari indicated, the system has been a success: “The email, which goes to all members of the restaurant operation’s senior leadership team, has been both effective and cheap — in line with our motto.”
To keep the system from being commandeered by suppliers trying to flog a product, Biglari has set some stern ground rules: Do it once and you'll be assured of never doing business with Steak n Shake.
Any other non-stockholder who uses the e-mail address will be boiled in oil. Okay, I made that up. But I don't think the response from headquarters will have its i's dotted with little hearts or flowers.
Biglari recently surpassed Nelson Peltz as the gadfly most likely to be covered by Restaurant Reality Check. His prescriptions for reviving a restaurant company, and most definitely his means of putting them forward, are hardly cookbook, as his feedback mechanism and shareholder letter readily attest.
But it’s hard to argue with his approach, given the results. When Biglari assumed control of Steak n Shake, the company was losing money at the rate of $100,000 a day, he told shareholders. For its most recently completed quarter, the concern posted a net profit of $3.4 million, compared with a net loss a year ago of $9.2 million.
The bounce back was even more dramatic on an annual basis. Steak n Shake enjoyed a profit for the fiscal year of $6 million, compared with a loss the year beforehand of $23 million.
Granted, the most recent fiscal year encompassed 53 weeks instead of 52. Still, same-store sales during the fourth quarter leapt 10% on a 20% quantum leap in traffic.
Biglari might ruffle some feathers, but he’s delivering to Steak n Shake’s shareholders, employees and guests.
Sardar Biglari, the activist investor who took over Steak n Shake’s corner office last year, told investors yesterday of a feedback mechanism he’s put in place to short-circuit the process between guest experiences and a restaurant’s better financial performance.
The mechanism also fits his self-avowed cheapness. “We are demons on costs,” he proudly told stockholders in a letter posted on Steak n Shake’s corporate website. “Trimming them is
now embedded in our corporate DNA.”
The system he’s set up in effect turns Steak n Shake’s thousands of stockholders into mystery shoppers. As Biglari explained in his letter to those investors, the family restaurant chain set up an e-mail hotline a year ago, owner@steaknshake.com, so any stockholder could recount their experiences in a unit to the home office.
If they spotted something good or bad, executives will take note, Biglari stressed. You can be assured that each message is read, and when necessary the Steak n Shake team is dispatched quickly to remediate any problems,” he said.
In addition to fixing problems before they can fester, the arrangement demonstrates that headquarters will be accountable to the company’s owners, even over such things as the cleanliness of the silverware.
So far, Biglari indicated, the system has been a success: “The email, which goes to all members of the restaurant operation’s senior leadership team, has been both effective and cheap — in line with our motto.”
To keep the system from being commandeered by suppliers trying to flog a product, Biglari has set some stern ground rules: Do it once and you'll be assured of never doing business with Steak n Shake.
Any other non-stockholder who uses the e-mail address will be boiled in oil. Okay, I made that up. But I don't think the response from headquarters will have its i's dotted with little hearts or flowers.
Biglari recently surpassed Nelson Peltz as the gadfly most likely to be covered by Restaurant Reality Check. His prescriptions for reviving a restaurant company, and most definitely his means of putting them forward, are hardly cookbook, as his feedback mechanism and shareholder letter readily attest.
But it’s hard to argue with his approach, given the results. When Biglari assumed control of Steak n Shake, the company was losing money at the rate of $100,000 a day, he told shareholders. For its most recently completed quarter, the concern posted a net profit of $3.4 million, compared with a net loss a year ago of $9.2 million.
The bounce back was even more dramatic on an annual basis. Steak n Shake enjoyed a profit for the fiscal year of $6 million, compared with a loss the year beforehand of $23 million.
Granted, the most recent fiscal year encompassed 53 weeks instead of 52. Still, same-store sales during the fourth quarter leapt 10% on a 20% quantum leap in traffic.
Biglari might ruffle some feathers, but he’s delivering to Steak n Shake’s shareholders, employees and guests.
Monday, December 14, 2009
The hot restaurant concepts of 2010?
Last week I helped some culinary students flag the differences between John Schnatter and Mickey Rooney.
Unless your cable service was down last summer, chances are high you saw Schnatter trying to give a bundle of cash to the current owner of the Camaro he sold in the ‘80s to enter the restaurant business. Schnatter used the proceeds to convert a section of his father’s bar into a walk-up pizza counter. Literally a closet operation, the venture grew to become Papa John’s, with annual sales exceeding $2 billion. Because of Schnatter’s skill at hatching a concept, he could forget a Camaro and buy General Motors instead.
Mickey Rooney, for those of you who don’t recognize the name, was one of Hollywood’s biggest draws during the 1930s. Indeed, he was the George Clooney of his time, at least in terms of fame and screen appearances. But, astoundingly, his round-hotdog restaurant chain never quite caught on during the ‘70s, even though the product fit so neatly on a circular bun.
Efforts to start a restaurant concept have yielded more train wrecks than the film careers of Pauly Shore and Tom Green, combined. Need I mention the failed attempts of Muhammed Ali, Steven Spielberg, Alice Cooper, Johnny Carson, Arnold Schwarzenegger and Mike Piazza, to name just a few?
Yet the list of aspirants continues to grow, with names like Richard Branson, Rolling Stone magazine and boxer Julio Cesar Chavez added to the roster just in the last month or so.
Because I’ve witnessed so many crashes and triumphs, I was invited last Tuesday to address a class at New York’s Institute of Culinary Education, an often-overlooked contributor to the city’s phenomenal restaurant scene. My mission was to opine on what separates a Schnatter-ly restaurant venture from the Rooney-esque, something very important to the students because they’re all in the process of brainstorming a concept of their own.
Instead of talking in the abstract and risking a symphony of text-message alerts from the kids’ phones, I handicapped what I believe will be the Hot Restaurant Concepts of 2010.
My picks aren’t new to the scene at all. Rather, these are concepts likely to enter the mainstream next year, even if they no longer elicit oohs and aahs from the black-dressed sport diners on the coasts.
Here’s the list, along with a few thoughts.
Places specializing in street foods: This is a surer thing than Tiger Woods having his text messages screened for the next month. Indeed, I can’t understand why it wasn’t on all the forecasts that were pecked out of foodie keyboards in recent weeks.
Street food certainly fits the times. Peasant fare sold in bazaars or along busy thoroughfares is simple, and simplicity (or its fellow traveler, back to basics) was on virtually every list.
The ingredients tend to be fresh—another check mark on the trend inventory—and inexpensive, which holds the price to a level consistent with the current Age of Thrift.
Foods patterned after the street fare of Third World nations also tend to be grilled, roasted or boiled—relatively healthful prep methods that fit the sometimes contradictory goals of being flavorful and better for you.
Finally, we’ve already seen street foods snag interest from a few of the industry’s Mount Olympus set—gods and goddesses like Rick Bayless, Susan Feniger, David Chang, and Ming Tsai. The trend has even merited its own Flavors of the World conference, the foodie equivalent of the Burning Man Festival.
Confidence in this one is high.
Taquerias: A sub-set of the street-food craze, authentic tacos are drawing sufficient attention from big-name chefs and restaurateurs to merit their own Hot Trend designation. Celebrity proponents include Traci Des Jardins, Bayless, and Paul Kahan, to name just a few.
As I’ve noted in this space before, the interest from fine-dining chefs makes you wonder if taquerias will supplant burger joints as their low-end concept of choice.
Burger restaurants: It’s still on my list, but only because of bandwagon-jumping. The ranks of patty specialists will undoubtedly grow, but I bet we start to see some wheezing in this sector, or at least at its pricier end. There’s just not sufficient differentiation, and the novelty of a burger flipped by a Michelin-caliber chef is going to wear off.
This is my pick of Fade of the Year, largely because of the differentiation issues.
Gastro pubs: Indeed, why couldn’t these places co-opt whatever pent-up demand is left for high-end burgers?
But gastro pubs offer so much more, including comfort and casualness, two positives that aren’t going to lapse from fashion anytime soon. They’re also prime proponents of the high-caliber beer trend, which shows every appearance of having legs.
I know, I know: Gastro pubs have been around for years. But watch for a proliferation, particularly in areas inland from the current strongholds of Chicago, Los Angeles and Minneapolis. They’ll become the choice of indulgence.
Then again, maybe I’m prejudiced. Gastro pubs are the trend I’d most like to see catch fire in 2010, speaking as a consumer.
Restaurant trucks: We’ll undoubtedly see more chefs serving from a wheeled kitchen next year, though I’m far less certain of this trend’s staying power.
Right now, there’s considerable appeal to turning the key on a new truck concept. Consumers like the convenience and typically lower prices of a mobile operation. Operators appreciate the reduced overhead and start-up costs, which in turn allow them to keep their menu prices in check.
But I can’t help but wonder if novelty figures large in the appeal that was evident in 2009. Once you’ve tried the sardine truck, are you really going to build your night around it? And what about the yearning for a dining environment, even if it’s just a table and a chair?
Most of the trucks also specialize in a particular menu item, and history has shown us that a one-trick pony has a tough time in this business. Consider such flashes as soup, muffin, croissant and frozen yogurt concepts. Most were either co-opted or abandoned by a clientele that wanted more of a selection.
The jury’s still out here, though a proliferation of kitchens on wheels should prompt a verdict.
Authentic-food chains: This is a sleeper, an up-and-comer that’s not getting as much attention as, say, Spanish restaurants, or gourmet fried-chicken places.
Perhaps the potential trend is still going unnoticed, a reflection of its limited exposure to date. There are really two proponents of note: Seasons 52, Red Lobster’s high-end little sister, and True Food Kitchen, a one-off that P.F. Chang’s is carefully studying as a possible expansion vehicle.
Both feature seasonal, fresh fare with healthful overtones. Seasons 52, for instance, could boast that its entrees are under 500 calories.
But it downplays that plus to stress the integrity and freshness of its fare. Seasons 52 is the chain embodiment of the yearning for off-the-farm ingredients you don’t have to feel guilty about consuming.
True Food Kitchen, a brainchild of Phoenix restaurateur Sam Fox, goes one step further by featuring organic and natural ingredients. It professes to “nourish body, mind and spirit,” which is music to the yoga-and-couples-massage set.
The brakes on this one are the logistical challenges—finding enough seasonal fare of consistent quality, and doing it at a cost that translates into reasonable prices. But it’ll come, especially as medium-sized agriculture continues to make a comeback.
Whim restaurants: This is a forecast virtually peculiar to me, but I’m more convinced than ever there’s something here.
As I mentioned in an earlier posting, “whim restaurants” is my term for the ventures of high-end chefs who want to do something creative, small scale, and highly spur-of-the-moment. Such luminaries as Thomas Keller and Tom Colicchio are embracing these home-style niche places as a way of featuring the dishes they like to cook and eat themselves, with menus determined no farther in advance than their home dinner plans.
Since I last wrote about Keller’s Ad Hoc and Colicchio’s plan for an extension of his Tom: Tuesday Dinner into a full-scale restaurant, several other whim ventures have come to light. Michael Bauer of the San Francisco Chronicle devoted a blog installment to the phenomenon, though he didn’t use my label.
Leslie Brenner, in a blog for The Dallas Morning News’ website, described a whim sort of place, but used the term “guerilla restaurant.” She described a place envisioned by local restaurateurs that will be used to raise funds for charities. The hours and nights of service will be limited, and the chef will vary as readily as the menu does.
The concept may still sound alien to the U.S. market, but it’s already become established in the U.K., where the term “pop-up restaurant” is being stretched to cover places that chefs are opening to indulge their culinary whims of the moment.
Unless your cable service was down last summer, chances are high you saw Schnatter trying to give a bundle of cash to the current owner of the Camaro he sold in the ‘80s to enter the restaurant business. Schnatter used the proceeds to convert a section of his father’s bar into a walk-up pizza counter. Literally a closet operation, the venture grew to become Papa John’s, with annual sales exceeding $2 billion. Because of Schnatter’s skill at hatching a concept, he could forget a Camaro and buy General Motors instead.
Mickey Rooney, for those of you who don’t recognize the name, was one of Hollywood’s biggest draws during the 1930s. Indeed, he was the George Clooney of his time, at least in terms of fame and screen appearances. But, astoundingly, his round-hotdog restaurant chain never quite caught on during the ‘70s, even though the product fit so neatly on a circular bun.
Efforts to start a restaurant concept have yielded more train wrecks than the film careers of Pauly Shore and Tom Green, combined. Need I mention the failed attempts of Muhammed Ali, Steven Spielberg, Alice Cooper, Johnny Carson, Arnold Schwarzenegger and Mike Piazza, to name just a few?
Yet the list of aspirants continues to grow, with names like Richard Branson, Rolling Stone magazine and boxer Julio Cesar Chavez added to the roster just in the last month or so.
Because I’ve witnessed so many crashes and triumphs, I was invited last Tuesday to address a class at New York’s Institute of Culinary Education, an often-overlooked contributor to the city’s phenomenal restaurant scene. My mission was to opine on what separates a Schnatter-ly restaurant venture from the Rooney-esque, something very important to the students because they’re all in the process of brainstorming a concept of their own.
Instead of talking in the abstract and risking a symphony of text-message alerts from the kids’ phones, I handicapped what I believe will be the Hot Restaurant Concepts of 2010.
My picks aren’t new to the scene at all. Rather, these are concepts likely to enter the mainstream next year, even if they no longer elicit oohs and aahs from the black-dressed sport diners on the coasts.
Here’s the list, along with a few thoughts.
Places specializing in street foods: This is a surer thing than Tiger Woods having his text messages screened for the next month. Indeed, I can’t understand why it wasn’t on all the forecasts that were pecked out of foodie keyboards in recent weeks.
Street food certainly fits the times. Peasant fare sold in bazaars or along busy thoroughfares is simple, and simplicity (or its fellow traveler, back to basics) was on virtually every list.
The ingredients tend to be fresh—another check mark on the trend inventory—and inexpensive, which holds the price to a level consistent with the current Age of Thrift.
Foods patterned after the street fare of Third World nations also tend to be grilled, roasted or boiled—relatively healthful prep methods that fit the sometimes contradictory goals of being flavorful and better for you.
Finally, we’ve already seen street foods snag interest from a few of the industry’s Mount Olympus set—gods and goddesses like Rick Bayless, Susan Feniger, David Chang, and Ming Tsai. The trend has even merited its own Flavors of the World conference, the foodie equivalent of the Burning Man Festival.
Confidence in this one is high.
Taquerias: A sub-set of the street-food craze, authentic tacos are drawing sufficient attention from big-name chefs and restaurateurs to merit their own Hot Trend designation. Celebrity proponents include Traci Des Jardins, Bayless, and Paul Kahan, to name just a few.
As I’ve noted in this space before, the interest from fine-dining chefs makes you wonder if taquerias will supplant burger joints as their low-end concept of choice.
Burger restaurants: It’s still on my list, but only because of bandwagon-jumping. The ranks of patty specialists will undoubtedly grow, but I bet we start to see some wheezing in this sector, or at least at its pricier end. There’s just not sufficient differentiation, and the novelty of a burger flipped by a Michelin-caliber chef is going to wear off.
This is my pick of Fade of the Year, largely because of the differentiation issues.
Gastro pubs: Indeed, why couldn’t these places co-opt whatever pent-up demand is left for high-end burgers?
But gastro pubs offer so much more, including comfort and casualness, two positives that aren’t going to lapse from fashion anytime soon. They’re also prime proponents of the high-caliber beer trend, which shows every appearance of having legs.
I know, I know: Gastro pubs have been around for years. But watch for a proliferation, particularly in areas inland from the current strongholds of Chicago, Los Angeles and Minneapolis. They’ll become the choice of indulgence.
Then again, maybe I’m prejudiced. Gastro pubs are the trend I’d most like to see catch fire in 2010, speaking as a consumer.
Restaurant trucks: We’ll undoubtedly see more chefs serving from a wheeled kitchen next year, though I’m far less certain of this trend’s staying power.
Right now, there’s considerable appeal to turning the key on a new truck concept. Consumers like the convenience and typically lower prices of a mobile operation. Operators appreciate the reduced overhead and start-up costs, which in turn allow them to keep their menu prices in check.
But I can’t help but wonder if novelty figures large in the appeal that was evident in 2009. Once you’ve tried the sardine truck, are you really going to build your night around it? And what about the yearning for a dining environment, even if it’s just a table and a chair?
Most of the trucks also specialize in a particular menu item, and history has shown us that a one-trick pony has a tough time in this business. Consider such flashes as soup, muffin, croissant and frozen yogurt concepts. Most were either co-opted or abandoned by a clientele that wanted more of a selection.
The jury’s still out here, though a proliferation of kitchens on wheels should prompt a verdict.
Authentic-food chains: This is a sleeper, an up-and-comer that’s not getting as much attention as, say, Spanish restaurants, or gourmet fried-chicken places.
Perhaps the potential trend is still going unnoticed, a reflection of its limited exposure to date. There are really two proponents of note: Seasons 52, Red Lobster’s high-end little sister, and True Food Kitchen, a one-off that P.F. Chang’s is carefully studying as a possible expansion vehicle.
Both feature seasonal, fresh fare with healthful overtones. Seasons 52, for instance, could boast that its entrees are under 500 calories.
But it downplays that plus to stress the integrity and freshness of its fare. Seasons 52 is the chain embodiment of the yearning for off-the-farm ingredients you don’t have to feel guilty about consuming.
True Food Kitchen, a brainchild of Phoenix restaurateur Sam Fox, goes one step further by featuring organic and natural ingredients. It professes to “nourish body, mind and spirit,” which is music to the yoga-and-couples-massage set.
The brakes on this one are the logistical challenges—finding enough seasonal fare of consistent quality, and doing it at a cost that translates into reasonable prices. But it’ll come, especially as medium-sized agriculture continues to make a comeback.
Whim restaurants: This is a forecast virtually peculiar to me, but I’m more convinced than ever there’s something here.
As I mentioned in an earlier posting, “whim restaurants” is my term for the ventures of high-end chefs who want to do something creative, small scale, and highly spur-of-the-moment. Such luminaries as Thomas Keller and Tom Colicchio are embracing these home-style niche places as a way of featuring the dishes they like to cook and eat themselves, with menus determined no farther in advance than their home dinner plans.
Since I last wrote about Keller’s Ad Hoc and Colicchio’s plan for an extension of his Tom: Tuesday Dinner into a full-scale restaurant, several other whim ventures have come to light. Michael Bauer of the San Francisco Chronicle devoted a blog installment to the phenomenon, though he didn’t use my label.
Leslie Brenner, in a blog for The Dallas Morning News’ website, described a whim sort of place, but used the term “guerilla restaurant.” She described a place envisioned by local restaurateurs that will be used to raise funds for charities. The hours and nights of service will be limited, and the chef will vary as readily as the menu does.
The concept may still sound alien to the U.S. market, but it’s already become established in the U.K., where the term “pop-up restaurant” is being stretched to cover places that chefs are opening to indulge their culinary whims of the moment.
Friday, December 11, 2009
Being part of the train wreck
A butterfly flaps its wings in China and McDonald’s ends up cutting its breakfast prices. Okay, there’s the profound factor in there of consumers waving new pink slips, but you get the idea. Despite considerable efforts to counter a stinking economy, restaurants are still being skunked by cascading forces beyond their control, unemployment being the main one.
Yesterday’s development was resounding confirmation. When the economy slipped in ‘07, breakfast afforded a rare spot of opportunity for fast-food restaurants. A majority of consumers still consumed their first bite of the day at home, posing a gigantic potential market. Not surprisingly, the big chains mobilized for an a.m. market surge, often starting with an upgrade of their coffee.
Few charged as forcefully as McDonald’s, already the sector’s breakfast king. Breakfast, beverages and snacks would be its growth areas, executives assured investors and franchisees. And it looked as if they were dead-on; those markets fueled a sales increase for the chain, at a time of significant decreases for most of the major fast-food slingers.
But rising unemployment started taking its toll. With almost one in five Americans “under-employed,” according to the experts, fewer consumers were venturing beyond their front doors in the morning. Breakfast traffic eroded, and those who still were heading to an office or shop floor were far more stingy with their pennies, a reflection of declining pay and often fewer incomes within a household.
McDonald’s responded by posting a new cut-rate breakfast menu in some of its markets. Yesterday, amid indications of further sales erosion, headquarters confirmed that the new a.m. bargain array would become an across-the-chain feature. Consumers trying to tighten their budgets will be enticed with a Dollar Menu of five items priced under $1, beginning next month, officials told the business media.
The brand’s closest rival, Burger King, had adopted dollar breakfast deals some time beforehand.
And if those two bellwethers are doing it, the pack is sure to follow.
But breakfast isn’t the only meal where lines have been thinned by unemployment. Yesterday I moderated a webinar that included representatives of several quick-service chains. One pointed out that it’s far tougher to sell lunches when fewer people are away from home for the midday meal. Those who do work are brownbagging it more often, and spending as little as they can when they do have someone else prepare their meal, he said, echoing the grim assessments of other experts.
And then there’s the phenomenon of furloughing, or cutting employees’ work schedules. Many employers now require those still on the payroll to skip several Fridays a month, with their compensation trimmed accordingly. Others are being forced to take additional weeks of vacation, though without compensation.
In short, the lunch market is being cinched far tighter, and those still in it have less money to spend.
Of course, it’s not as if the dinner market is booming. One of my webinar panelists works for a high-end concept that figures about 80% of its checks are charged back to employers on expense accounts. And it’s not as if travel or entertainment budgets have escaped the machete.
Most restaurant chains have tried to counter the curtailed spending at all times of day by flashing some astounding bargains. Even if that worked as well as they might hope, it leads to all kinds of problems, not the least of them being how the public can be weaned off deals when unemployment falls back to conventional levels.
In the meantime, those of us who are unemployed are grateful to have our Sausage McMuffin for a mere buck, or what we once might’ve given as a tip to the guy at the deli who prepared out usual breakfast.
Yesterday’s development was resounding confirmation. When the economy slipped in ‘07, breakfast afforded a rare spot of opportunity for fast-food restaurants. A majority of consumers still consumed their first bite of the day at home, posing a gigantic potential market. Not surprisingly, the big chains mobilized for an a.m. market surge, often starting with an upgrade of their coffee.
Few charged as forcefully as McDonald’s, already the sector’s breakfast king. Breakfast, beverages and snacks would be its growth areas, executives assured investors and franchisees. And it looked as if they were dead-on; those markets fueled a sales increase for the chain, at a time of significant decreases for most of the major fast-food slingers.
But rising unemployment started taking its toll. With almost one in five Americans “under-employed,” according to the experts, fewer consumers were venturing beyond their front doors in the morning. Breakfast traffic eroded, and those who still were heading to an office or shop floor were far more stingy with their pennies, a reflection of declining pay and often fewer incomes within a household.
McDonald’s responded by posting a new cut-rate breakfast menu in some of its markets. Yesterday, amid indications of further sales erosion, headquarters confirmed that the new a.m. bargain array would become an across-the-chain feature. Consumers trying to tighten their budgets will be enticed with a Dollar Menu of five items priced under $1, beginning next month, officials told the business media.
The brand’s closest rival, Burger King, had adopted dollar breakfast deals some time beforehand.
And if those two bellwethers are doing it, the pack is sure to follow.
But breakfast isn’t the only meal where lines have been thinned by unemployment. Yesterday I moderated a webinar that included representatives of several quick-service chains. One pointed out that it’s far tougher to sell lunches when fewer people are away from home for the midday meal. Those who do work are brownbagging it more often, and spending as little as they can when they do have someone else prepare their meal, he said, echoing the grim assessments of other experts.
And then there’s the phenomenon of furloughing, or cutting employees’ work schedules. Many employers now require those still on the payroll to skip several Fridays a month, with their compensation trimmed accordingly. Others are being forced to take additional weeks of vacation, though without compensation.
In short, the lunch market is being cinched far tighter, and those still in it have less money to spend.
Of course, it’s not as if the dinner market is booming. One of my webinar panelists works for a high-end concept that figures about 80% of its checks are charged back to employers on expense accounts. And it’s not as if travel or entertainment budgets have escaped the machete.
Most restaurant chains have tried to counter the curtailed spending at all times of day by flashing some astounding bargains. Even if that worked as well as they might hope, it leads to all kinds of problems, not the least of them being how the public can be weaned off deals when unemployment falls back to conventional levels.
In the meantime, those of us who are unemployed are grateful to have our Sausage McMuffin for a mere buck, or what we once might’ve given as a tip to the guy at the deli who prepared out usual breakfast.
Wednesday, December 9, 2009
More thinking outside the bun
The news seeping out of Yum! Brands' annual financial conference in New York suggests 2010 could be a year of hyperactive menu development for Taco Bell, the franchise company's biggest brand.
Among the changes previewed was the Mexican chain's use of two proteins that have yet to appear on its regular menu: carnitas, or Mexico's version of pulled pork, and shrimp, which is scheduled to be used in a premium ($2.79/each) taco.
Among the other products already been greenlighted, according to Janney Mongtomery Scott analyst Mark Kalinowski, are a bargain priced (89-cent) 5-Layer Burrito, and Taco Bell's first soft taco, which will feature the new carnitas.
Every year Yum holds a meeting with restaurant analysts like Kalinowski to familiarize them with the strategies of the company's chains. For the benefit of those who've been caught in a pesky time warp for the last four decades, the other brands include Pizza Hut and KFC.
Among the changes previewed was the Mexican chain's use of two proteins that have yet to appear on its regular menu: carnitas, or Mexico's version of pulled pork, and shrimp, which is scheduled to be used in a premium ($2.79/each) taco.
Among the other products already been greenlighted, according to Janney Mongtomery Scott analyst Mark Kalinowski, are a bargain priced (89-cent) 5-Layer Burrito, and Taco Bell's first soft taco, which will feature the new carnitas.
Every year Yum holds a meeting with restaurant analysts like Kalinowski to familiarize them with the strategies of the company's chains. For the benefit of those who've been caught in a pesky time warp for the last four decades, the other brands include Pizza Hut and KFC.
Monday, December 7, 2009
A situation to watch, Part I
So many jaw-dropping situations, so little time.
During this extraordinary period for the restaurant industry, you can get a research-worthy case of whiplash from trying to watch all the dramas unfolding in the business. Instead of rubberizing your neck, consider a focus on this standout among the nail biters. Its only rival as a potential tell-all book is the other situation that's not to be missed, detailed in Part II below.
Steak 'n Shake 'n Biglari, or What Would Warren Do?
If Warren Buffett asked business bravehearts who should succeed him as Holding Company Guru, Sardar Biglari would be the guy jumping up and down with his hand in the air, yelling, “Me! Me! Pick me!!”
Instead, Biglari has set out to prove himself the de facto heir to the Bard of Omaha. Buffett became the second richest man in America in large part by spotting repairman’s specials that were undervalued. He gathered them into what’s now Berkshire Hathaway, a holding company he turned into a cash-flow machine by adding insurance companies to the portfolio.
Biglari, a thirtysomething business school grad who has cast a former professor as his Charlie Munger, is apparently trying to follow Buffett’s blueprint to a T-square. First he bought the wheezing Western Sizzlin buffet chain, then turned around and amassed a major stake in Steak 'n Shake, a burgers-and-fries chain with the distinction of offering table service. His investment allowed him to wrest control of Steak 'n Shake from a management team that was likely drawing death threats from investorsecs.
Amazingly, Biglari has been able to bring his two flagging operations together without being lynched by those investors, probably because they welcomed any change in leadership. Among the reasoned objections they might have posed was how a company could turn around both brands simultaneously, when reviving just one of the flatliners would be a Harvard Business case study.
Then again, hasn’t Buffett done that time and again?
Even more of a parallel was Biglari’s use of Steak 'n Shake Holdings to buy about a 10% interest in—surprise, surprise—an insurance company, Fremont Michigan InsuraCorp.
You can read all about Biglari’s efforts when he releases an extended and likely candid letter to investors next week. It’s exactly what Buffett does every year in his legendary reports to Berkshire’s shareholders.
The key question to keep in mind as you munch some popcorn and watch this CNBC saga unfold: Has Biglari actually duplicated Buffett’s magic formula, or is he merely reciting a spell without the mojo to make it work? Is he really going to conjure the money?
During this extraordinary period for the restaurant industry, you can get a research-worthy case of whiplash from trying to watch all the dramas unfolding in the business. Instead of rubberizing your neck, consider a focus on this standout among the nail biters. Its only rival as a potential tell-all book is the other situation that's not to be missed, detailed in Part II below.
Steak 'n Shake 'n Biglari, or What Would Warren Do?
If Warren Buffett asked business bravehearts who should succeed him as Holding Company Guru, Sardar Biglari would be the guy jumping up and down with his hand in the air, yelling, “Me! Me! Pick me!!”
Instead, Biglari has set out to prove himself the de facto heir to the Bard of Omaha. Buffett became the second richest man in America in large part by spotting repairman’s specials that were undervalued. He gathered them into what’s now Berkshire Hathaway, a holding company he turned into a cash-flow machine by adding insurance companies to the portfolio.
Biglari, a thirtysomething business school grad who has cast a former professor as his Charlie Munger, is apparently trying to follow Buffett’s blueprint to a T-square. First he bought the wheezing Western Sizzlin buffet chain, then turned around and amassed a major stake in Steak 'n Shake, a burgers-and-fries chain with the distinction of offering table service. His investment allowed him to wrest control of Steak 'n Shake from a management team that was likely drawing death threats from investorsecs.
Amazingly, Biglari has been able to bring his two flagging operations together without being lynched by those investors, probably because they welcomed any change in leadership. Among the reasoned objections they might have posed was how a company could turn around both brands simultaneously, when reviving just one of the flatliners would be a Harvard Business case study.
Then again, hasn’t Buffett done that time and again?
Even more of a parallel was Biglari’s use of Steak 'n Shake Holdings to buy about a 10% interest in—surprise, surprise—an insurance company, Fremont Michigan InsuraCorp.
You can read all about Biglari’s efforts when he releases an extended and likely candid letter to investors next week. It’s exactly what Buffett does every year in his legendary reports to Berkshire’s shareholders.
The key question to keep in mind as you munch some popcorn and watch this CNBC saga unfold: Has Biglari actually duplicated Buffett’s magic formula, or is he merely reciting a spell without the mojo to make it work? Is he really going to conjure the money?
A situation to watch, Part II
Kona Grill: Hail the brave newcomer
Not so long ago, fans of professional wrestling could get their oohs and aahs from the conference calls of Kona, a small casual dining chain known for its sushi. You couldn't stage the sort of hostility that crackled between investors and management.
Here’s a snippet that’ll probably make it to the Kona Grill: Grill This boxed set, which the home office should consider marketing as a gift option this season. It starts with the preamble to a question that portfolio manager Thomas Lynch really, really wanted Kona CEO Marcus Jundt to answer, and goes downhill from there:
Jundt, it immediately became apparent, was no Dale Carnegie disciple. “I’ll address the question in the manner in which I want to address it,” he shot back.
Lynch followed with questions about an agreement to sell a big chunk of stock to Jundt’s father at a price of just $1.19 per share.
Other investors joined in with questions about high turnover on Kona’s board, and what criteria was used to find directors.
The April call clearly did not go well for Jundt and his fellow execs.In the background, you can almost hear a mob forming, anoose in hand.
Stunningly, Jundt resigned a few months later, followed by his interim replacement several months after that.
And who’s ridden into the chain to revive its fortunes? One of the sector’s whitest hats, Mark Buehler. He was a standout marketer at Applebee’s, and was later hired to clean up Tony Roma’s and Lone Star. He’s earned his spurs and six-shooter.
Now he’ll be polishing up the badge and striving to right Kona as the new CEO and president.
There's no confirmation that shareholders bypassed a headhunter and actually summoned Buehler with the Bat Signal. But I’m betting Liam Neeson plays him in the movie.
Not so long ago, fans of professional wrestling could get their oohs and aahs from the conference calls of Kona, a small casual dining chain known for its sushi. You couldn't stage the sort of hostility that crackled between investors and management.
Here’s a snippet that’ll probably make it to the Kona Grill: Grill This boxed set, which the home office should consider marketing as a gift option this season. It starts with the preamble to a question that portfolio manager Thomas Lynch really, really wanted Kona CEO Marcus Jundt to answer, and goes downhill from there:
Marcus, I’ve noticed on previous calls and on this call that you’ve been a little bit reticent about answering questions. So as I go forward, I’d like to give you the opportunity to show shareholders that you’re accountable and you really know how to operate this business… What changes are you going to make? Who is personally accountable? And specifically in management, what changes will you make?...Can you address that?
Jundt, it immediately became apparent, was no Dale Carnegie disciple. “I’ll address the question in the manner in which I want to address it,” he shot back.
Lynch followed with questions about an agreement to sell a big chunk of stock to Jundt’s father at a price of just $1.19 per share.
Other investors joined in with questions about high turnover on Kona’s board, and what criteria was used to find directors.
The April call clearly did not go well for Jundt and his fellow execs.In the background, you can almost hear a mob forming, anoose in hand.
Stunningly, Jundt resigned a few months later, followed by his interim replacement several months after that.
And who’s ridden into the chain to revive its fortunes? One of the sector’s whitest hats, Mark Buehler. He was a standout marketer at Applebee’s, and was later hired to clean up Tony Roma’s and Lone Star. He’s earned his spurs and six-shooter.
Now he’ll be polishing up the badge and striving to right Kona as the new CEO and president.
There's no confirmation that shareholders bypassed a headhunter and actually summoned Buehler with the Bat Signal. But I’m betting Liam Neeson plays him in the movie.
Thursday, December 3, 2009
More flamebroiling tempers at BK?
A financial analyst may have inadvertently fanned the broiler flames at Burger King, where franchisees have squared off with the home office over the deeply discounted Double Cheeseburger.
The Wall Street Journal reported online this afternoon that Morgan Stanley had advised investors to reconsider their positions in McDonald’s because the burger giant is being sapped by competitors’ discounts. BK’s $1 Double Cheeseburger was specifically cited by the brokerage, where analyst John Glass handicaps the restaurant sector.
If investors pull their money out of McDonald’s because it’s being hurt by Burger King, is it such a leap to assume some will shift it over to Burger King Holdings, the keeper of BK’s castle?
In other words, the Double Cheeseburger appears to be helping the franchisor’s stock price. And that’s going to go down like three-week-old Onion Rings with franchisees.
They’ve argued that the quarter-pound Double Cheeseburger is boosting traffic and sales, the base for the home office’s revenues and profits, at the expense of unit-level profits. In filing a lawsuit a few weeks ago to halt the head-turning offer, an association of franchisees alleged they’re losing a dime on every Double they sell for a buck.
Now comes word that the deal is not only helping BK Holding’s revenues, but also boosting its stock valuation.
If you should see a torch-toting mob of BK franchisees outside the chain’s Miami headquarters, you’d best run for cover. It could get ugly.
The Wall Street Journal reported online this afternoon that Morgan Stanley had advised investors to reconsider their positions in McDonald’s because the burger giant is being sapped by competitors’ discounts. BK’s $1 Double Cheeseburger was specifically cited by the brokerage, where analyst John Glass handicaps the restaurant sector.
If investors pull their money out of McDonald’s because it’s being hurt by Burger King, is it such a leap to assume some will shift it over to Burger King Holdings, the keeper of BK’s castle?
In other words, the Double Cheeseburger appears to be helping the franchisor’s stock price. And that’s going to go down like three-week-old Onion Rings with franchisees.
They’ve argued that the quarter-pound Double Cheeseburger is boosting traffic and sales, the base for the home office’s revenues and profits, at the expense of unit-level profits. In filing a lawsuit a few weeks ago to halt the head-turning offer, an association of franchisees alleged they’re losing a dime on every Double they sell for a buck.
Now comes word that the deal is not only helping BK Holding’s revenues, but also boosting its stock valuation.
If you should see a torch-toting mob of BK franchisees outside the chain’s Miami headquarters, you’d best run for cover. It could get ugly.
Tuesday, December 1, 2009
My crystal ball has some static
Call me old-fashioned, but there’s something perverse about running Christmas commercials during World Series broadcasts. Marketers are so determined to get a jump on the all-important sales season that we can only hope they’re flogging gift ideas for this year’s holidays, not 2010’s.
It shouldn’t be a surprise, then, that the year-end prognosticators are breaking out the tea leaves and animal entrails a bit earlier this year. It’s only Dec. 1, but at least seven lists of next year’s restaurant trends have already been divined and released by wise seers.
They vary greatly, to a degree I intend to explore here when the forecast tally climbs to 10, or probably sometime tomorrow morning. But suffice it to say we’re heading into a year where restaurants will simplify their menus, use more animal innards, and hawk fried chicken the way they ballyhooed sliders in 2009. Yes, fried chicken is widely expected to be the next pork belly, or the new bacon, depending on which forecast you read.
What surprises me on first flush is how few noted the two trends that will certainly be on my predictions list, which is on the to-do list right after “Finish leftover cranberry sauce.” Perhaps that’s because they’re not really great leaps from what was happening in ’09.
Chefs and restaurants at all price levels will continue to showcase burgers, to be sure. But, as a colleague from Restuarants & Institutions noted in a recent Twitter posting, tacos are replacing burgers as the low cost/high flavor item that’s being taken up by fine-dining chefs. Rick Bayless is featuring them at Xoco, Paul Kahan is showcasing his riff at Big Star, and today brought news that Traci Des Jardins will extend her early lead in the taqueria wave by opening a second Mijita in San Francisco.
The other prediction is more of a stretch, though there is some evidence to support my supposition. I think we’re going to see the opening next year of what, for lack of a better term, I’m calling whim restaurants—places were chefs can forego a set menu and instead indulge their creativity with whatever’s seasonably available and they feel like cooking. It’s sort of like being invited over to their home for dinner.
It’s exactly what Thomas Keller is doing to great effect at his Ad Hoc in the Napa Valley, or close to what Tom Colicchio has attempted with Tom: Tuesday Dinner, one of the more creative responses we saw last year to the economic freefall. When private-room bookings tanked at Colicchio’s Craft in New York City, the chef turned one of his function spaces in a restaurant-within-a-restaurant twice a month that he called Tom: Tuesday Dinner. The hook was that he’d plan the dinner and cook it himself while you watched, just as you might at the home of a friend. Except in considerably posh surroundings, with a polished staff waiting on you.
Tom: Tuesday Dinner was only open on two non-successive Tuesdays per month. Today Colicchio told Eater NY that he plans to open a restaurant next year that will use the same approach as the limited-time Tom: Tuesday. He suggested that the menu might not change nightly, a result of what he learned with Tuesday Dinner. He explained to Eater that he and his staff needed some time to master each dinner roster. Yet it was all for naught because then the menu would change. So they decided to stay with a menu for at least two successive Tuesday sessions, he recounted.
It remains to be seen if other chefs follow those two kitchen gods in developing concepts where they can indulge their creativity as the spirit moves them.
Fortunately, with probably a few dozen more forecasts to go, we may get an indication as to whether it will happen in 2010.
It shouldn’t be a surprise, then, that the year-end prognosticators are breaking out the tea leaves and animal entrails a bit earlier this year. It’s only Dec. 1, but at least seven lists of next year’s restaurant trends have already been divined and released by wise seers.
They vary greatly, to a degree I intend to explore here when the forecast tally climbs to 10, or probably sometime tomorrow morning. But suffice it to say we’re heading into a year where restaurants will simplify their menus, use more animal innards, and hawk fried chicken the way they ballyhooed sliders in 2009. Yes, fried chicken is widely expected to be the next pork belly, or the new bacon, depending on which forecast you read.
What surprises me on first flush is how few noted the two trends that will certainly be on my predictions list, which is on the to-do list right after “Finish leftover cranberry sauce.” Perhaps that’s because they’re not really great leaps from what was happening in ’09.
Chefs and restaurants at all price levels will continue to showcase burgers, to be sure. But, as a colleague from Restuarants & Institutions noted in a recent Twitter posting, tacos are replacing burgers as the low cost/high flavor item that’s being taken up by fine-dining chefs. Rick Bayless is featuring them at Xoco, Paul Kahan is showcasing his riff at Big Star, and today brought news that Traci Des Jardins will extend her early lead in the taqueria wave by opening a second Mijita in San Francisco.
The other prediction is more of a stretch, though there is some evidence to support my supposition. I think we’re going to see the opening next year of what, for lack of a better term, I’m calling whim restaurants—places were chefs can forego a set menu and instead indulge their creativity with whatever’s seasonably available and they feel like cooking. It’s sort of like being invited over to their home for dinner.
It’s exactly what Thomas Keller is doing to great effect at his Ad Hoc in the Napa Valley, or close to what Tom Colicchio has attempted with Tom: Tuesday Dinner, one of the more creative responses we saw last year to the economic freefall. When private-room bookings tanked at Colicchio’s Craft in New York City, the chef turned one of his function spaces in a restaurant-within-a-restaurant twice a month that he called Tom: Tuesday Dinner. The hook was that he’d plan the dinner and cook it himself while you watched, just as you might at the home of a friend. Except in considerably posh surroundings, with a polished staff waiting on you.
Tom: Tuesday Dinner was only open on two non-successive Tuesdays per month. Today Colicchio told Eater NY that he plans to open a restaurant next year that will use the same approach as the limited-time Tom: Tuesday. He suggested that the menu might not change nightly, a result of what he learned with Tuesday Dinner. He explained to Eater that he and his staff needed some time to master each dinner roster. Yet it was all for naught because then the menu would change. So they decided to stay with a menu for at least two successive Tuesday sessions, he recounted.
It remains to be seen if other chefs follow those two kitchen gods in developing concepts where they can indulge their creativity as the spirit moves them.
Fortunately, with probably a few dozen more forecasts to go, we may get an indication as to whether it will happen in 2010.
When to stay home
There are times when a restaurant employee provides the sort of experience you’d only believe if Larry David were on the scene. Witness what happened yesterday to my wife when she stopped at a Moe’s Southwest Grill to grab a quick dinner for us:
Wife, joshingly: “Hey, you forgot to say ‘Welcome to Moe’s!’”
Counter employee: “My mother just died so I really don’t have it in me. So, (very sprightly) what’ll you have?”
Wife, joshingly: “Hey, you forgot to say ‘Welcome to Moe’s!’”
Counter employee: “My mother just died so I really don’t have it in me. So, (very sprightly) what’ll you have?”
Monday, November 30, 2009
Real solutions from a virtual thinktank?
Sorry to interrupt your Tetris game, but there’s a new capability to this internet thing that may be sweeter than setting High Score for the 24th time. It’s aimed at business people who have a strategic quandary but lack the resources to get the usual sort of outside help. Instead of hiring one brain, they can now dangle a relatively modest reward to a whole study hall of thinkers.
There’s also a groupthink aspect to the process. If you’re the one with the problem, you “sponsor” it by offering a reward of as little of $50 for every “insight” that’s provided by a rank-and-file member of Insight Community. The sponsor posts the question, and Community members offer their suggestions or comments. Any that’s deemed an insight nets its author the bounty, which can range as high as your budget allows (most seem to range from $100 to $500).
But that’s not all the intelligence you get for your reward money. The insight is posted, and Community members offer their comments on that would-be solution. The feedback is intended to hone the suggestion into a more workable or effective remedy for the sponsor. Some note that the insights will be re-posted on internal or customer-focused sites as blog entries to spur further discussion and elicit more feedback.
Some sponsors ask for ideas as specific as what webinars they should produce to promote their businesses. One even posted a video and asked for comments. Another asked for specific examples of small businesses that have improved their service by boosting staff morale.
Others sought opinions and insights on big-picture issues, like how to protect a spirit of innovation, or what to do now to prepare for better economic times.
The “problem” posters included such big names as American Express, Dell and H-P. But mixed in were a number of what appeared to be smaller, entrepreneurial ventures, as well as a few advocacy groups.
In essence, this new community is setting up a standing thinktank/focus group to help businesses tap other perspectives and outside ideas. To become part of that commenting group, you have to register, so there is some control on who’s posting. But the endeavor seems to be self-policing; who’s going to bother to read a post and draft a comment if the topic isn’t a familiar one, if not an area of interest or expertise?
Full disclosure: I am one of those who registered. I’ve not yet posted a possible insight or solution, though I do plan to participate.
But I’m bringing the site to the restaurant industry’s attention because it appears to be a low-cost tool that few have yet discovered.
I’ll let you know my experiences as I get more involved. And if you learn of any similar groupthink sites, please drop me a line and let me know about them. We may be seeing the unfolding of a new business dynamic for the web.
There’s also a groupthink aspect to the process. If you’re the one with the problem, you “sponsor” it by offering a reward of as little of $50 for every “insight” that’s provided by a rank-and-file member of Insight Community. The sponsor posts the question, and Community members offer their suggestions or comments. Any that’s deemed an insight nets its author the bounty, which can range as high as your budget allows (most seem to range from $100 to $500).
But that’s not all the intelligence you get for your reward money. The insight is posted, and Community members offer their comments on that would-be solution. The feedback is intended to hone the suggestion into a more workable or effective remedy for the sponsor. Some note that the insights will be re-posted on internal or customer-focused sites as blog entries to spur further discussion and elicit more feedback.
Some sponsors ask for ideas as specific as what webinars they should produce to promote their businesses. One even posted a video and asked for comments. Another asked for specific examples of small businesses that have improved their service by boosting staff morale.
Others sought opinions and insights on big-picture issues, like how to protect a spirit of innovation, or what to do now to prepare for better economic times.
The “problem” posters included such big names as American Express, Dell and H-P. But mixed in were a number of what appeared to be smaller, entrepreneurial ventures, as well as a few advocacy groups.
In essence, this new community is setting up a standing thinktank/focus group to help businesses tap other perspectives and outside ideas. To become part of that commenting group, you have to register, so there is some control on who’s posting. But the endeavor seems to be self-policing; who’s going to bother to read a post and draft a comment if the topic isn’t a familiar one, if not an area of interest or expertise?
Full disclosure: I am one of those who registered. I’ve not yet posted a possible insight or solution, though I do plan to participate.
But I’m bringing the site to the restaurant industry’s attention because it appears to be a low-cost tool that few have yet discovered.
I’ll let you know my experiences as I get more involved. And if you learn of any similar groupthink sites, please drop me a line and let me know about them. We may be seeing the unfolding of a new business dynamic for the web.
Tuesday, November 24, 2009
McDonald's update
Right before I left McDonald's new European-styled prototype (see below), I had a chance to see how closely the higher-ups are monitoring what amounts to a test of the new design. A manager came over with a corporate type (dressed in a suit, with a little stylized "M" pins on his lapel a la the ID for a Secret Service agent) to show him that the booth where I was sitting had a rip in the upholstery already. Sure enough, something had snagged the squared edge of what looked like Naugahyde.
Meanwhile, heading downstairs to look around the main floor some more, I managed to sneak a closer look at the computer terminal that's situated just beyond where the ordering lines form. I could now see that it's a terminal where job aspirants can apply. And as I noted in my earlier post, it was never unoccupied during my visit.
I did overhear some comments about the decor from customers. One didn't like the stick-figure-like drawings that designate which restroom is for males, which for females. The same sort of signage also indicates where to discard your trash. He thought it was too retro for such an upscale interior design.
Interestingly, the twentysomething man and the similarly aged woman accompanying him were very gently asked to leave when it became apparent they were doing nothing but using the bathroom and sitting on some stools, planning the rest of their day.
I was able to get closer to the flat screen TVs on the wall and confirmed that you can only see them, not hear them. So what's the point of offering broadcasts of shows? They'd be better off airing short pieces with purely visual appeal.
One of the other attractions of the restaurant was its free WiFi service. You're connected to a McDonald's-branded network that features links to the chain's corporate social responsibility report, among other pieces of information.
Meanwhile, heading downstairs to look around the main floor some more, I managed to sneak a closer look at the computer terminal that's situated just beyond where the ordering lines form. I could now see that it's a terminal where job aspirants can apply. And as I noted in my earlier post, it was never unoccupied during my visit.
I did overhear some comments about the decor from customers. One didn't like the stick-figure-like drawings that designate which restroom is for males, which for females. The same sort of signage also indicates where to discard your trash. He thought it was too retro for such an upscale interior design.
Interestingly, the twentysomething man and the similarly aged woman accompanying him were very gently asked to leave when it became apparent they were doing nothing but using the bathroom and sitting on some stools, planning the rest of their day.
I was able to get closer to the flat screen TVs on the wall and confirmed that you can only see them, not hear them. So what's the point of offering broadcasts of shows? They'd be better off airing short pieces with purely visual appeal.
One of the other attractions of the restaurant was its free WiFi service. You're connected to a McDonald's-branded network that features links to the chain's corporate social responsibility report, among other pieces of information.
Monday, November 23, 2009
Inside McDonald's new design
I'm sitting in McDonald's new prototype restaurant in the Chelsea section of New York City, watching the arriving guests do a double take. This is the first U.S. outlet of the chain to get the new look, which has apparently been greenlighted already in Europe.
It's so different that it's eliciting a lot of pointing and head nodding as patrons comprehend the changes. But the points of departure actually started outside, with a banner that could be the biggest sacrilege of all to hardcore Mickie D's fans. The flag sports--brace yourself--a new color scheme for the logo.
The Arch in the design is still golden. But it's on a black background, with a bar of red underneath. For traditionalists, this is jarring stuff.
Inside, the most noticeable switch from a conventional store has to be the seating. It's actually padded.
I'll let that sink in for a moment.
No more rock-hard molded plastic. Now the booths have upholstery both on the seat and the back uprights. Stools at the long common tables are also padded.
The lighting is far more muted, a pleasant break from the operating-room brightness of conventional units. And the colors are more Yuppie Modern than the brash, almost cartoonish colors of older stores. Lots of deep oranges, rich greens, and off-whites.
Much has been reported about the incorporation of flat screen monitors throughout the unit. There are at least two in the sizable dining room where I'm sitting, but no one seems to be watching, no doubt because you can't hear them. And one's a mere table away from me.
If the more-comfortable seats and more inviting color pattern are intended to foster more hanging out, the new look is an obvious success. A number of youngsters, apparently from a nearby high school, have parked themselves behind beverages of one sort of another (lots of lattes and sodas). There's a lot of conversation going on, as well as considerable munching and sipping.
There's a computer screen downstairs that I couldn't get near. I can't tell if it's a computer portal or some type of ordering device.
More on that in a follow up. Now it's time to finish my sugar-free latte and snoop some more.
It's so different that it's eliciting a lot of pointing and head nodding as patrons comprehend the changes. But the points of departure actually started outside, with a banner that could be the biggest sacrilege of all to hardcore Mickie D's fans. The flag sports--brace yourself--a new color scheme for the logo.
The Arch in the design is still golden. But it's on a black background, with a bar of red underneath. For traditionalists, this is jarring stuff.
Inside, the most noticeable switch from a conventional store has to be the seating. It's actually padded.
I'll let that sink in for a moment.
No more rock-hard molded plastic. Now the booths have upholstery both on the seat and the back uprights. Stools at the long common tables are also padded.
The lighting is far more muted, a pleasant break from the operating-room brightness of conventional units. And the colors are more Yuppie Modern than the brash, almost cartoonish colors of older stores. Lots of deep oranges, rich greens, and off-whites.
Much has been reported about the incorporation of flat screen monitors throughout the unit. There are at least two in the sizable dining room where I'm sitting, but no one seems to be watching, no doubt because you can't hear them. And one's a mere table away from me.
If the more-comfortable seats and more inviting color pattern are intended to foster more hanging out, the new look is an obvious success. A number of youngsters, apparently from a nearby high school, have parked themselves behind beverages of one sort of another (lots of lattes and sodas). There's a lot of conversation going on, as well as considerable munching and sipping.
There's a computer screen downstairs that I couldn't get near. I can't tell if it's a computer portal or some type of ordering device.
More on that in a follow up. Now it's time to finish my sugar-free latte and snoop some more.
Thursday, November 19, 2009
Raiding retailers for restaurants' new stars
If recent executive changes are a telltale sign, the restaurant industry is losing faith in its ability to revive sales. Companies determined to crack the formula have looked past the trade’s own talent bench in recent weeks to fill vacancies with code breakers from the world of retailing.
The new CEO of Outback and Carrabba’s parent company was previously focused on selling perfumes, cosmetics and holiday ornaments. Liz Smith, formerly president of Avon Products, seems an unlikely candidate to head OSI Restaurant Partners, a company long led by men who’d worked their way up from restaurant-level jobs. But OSI noted that Smith had experience in running a highly efficient company. They didn’t have to explain that Avon, almost purely a sales company, is light on payroll and structure, heavy on incentive-based performance.
Officials also mentioned that Smith had to keep Avon in touch with customer preferences if its product line was to stay relevant, a skill some say has languished inside OSI’s headquarters in recent years.
A talent for embellishing a brand was similarly one of the characteristics cited by Dunkin’ Brands in explaining why it’d reached outside the industry for its new “chief global customer and marketing officer.” John Costello, a veteran of Home Depot and Sears, “is one of the most talented marketers and brand builders in the retail industry in America," crowed Nigel Travis, CEO of the Dunkin’ Donuts and Baskin-Robbins parent. Indeed, Costello is a member of the Retail Advertising Hall of Fame.
The selection underscores that Dunkin’ is less a restaurant than a to-go bakery with extensive food and beverage options. It’s more of a retail storefront than a place where you’d go for dinner, or at least at present.
Even less of a disconnect is the promotion of supermarket vet Susan Shields to chief marketing officer of Jamba Juice, the smoothie chain. A key component of Jamba’s comeback plan is putting its name on more retail products through licensing deals. Those Jamba-branded items already range from a toy blender to a new line of trail mix that’s about to hit stores. Who better to blaze that new revenue channel than someone who worked at the Safeway grocer chain?
At the same time, dollars are dollars and finance is finance. So why not go outside the industry for your next chief financial officer, as McCormick & Schmick’s did in hiring Michelle Lantow? But it’s no coincidence, the upscale seafood chain said, that she came from a retail apparel manufacturer, Lucy Activewear.
Lantow was instrumental in revamping Lucy’s e-commerce operations and plotting its move into brick-and-mortar retail locations, the company noted in announcing her appointment. CEO Bill Freeman observed that those qualifications should serve M&S well as “we continue to focus on greater connectivity with our guests.”
One of those efforts, apparently, was the chain’s development of a group-sales program aimed at companies that are embarking on a road show to hawk their goods and services. M&S is pitching its banquet service as a one-stop shop that spares those road warriors the hassle of having to scout out a function room and banquet facilities at each stop of their dog-and-pony tours.
There’s no word yet if a retailing veteran was tapped to head it up. But if you hear someone greeting the guests with a “Welcome to McCormick & Schmick’s,” shoot me an e-mail, okay?
The new CEO of Outback and Carrabba’s parent company was previously focused on selling perfumes, cosmetics and holiday ornaments. Liz Smith, formerly president of Avon Products, seems an unlikely candidate to head OSI Restaurant Partners, a company long led by men who’d worked their way up from restaurant-level jobs. But OSI noted that Smith had experience in running a highly efficient company. They didn’t have to explain that Avon, almost purely a sales company, is light on payroll and structure, heavy on incentive-based performance.
Officials also mentioned that Smith had to keep Avon in touch with customer preferences if its product line was to stay relevant, a skill some say has languished inside OSI’s headquarters in recent years.
A talent for embellishing a brand was similarly one of the characteristics cited by Dunkin’ Brands in explaining why it’d reached outside the industry for its new “chief global customer and marketing officer.” John Costello, a veteran of Home Depot and Sears, “is one of the most talented marketers and brand builders in the retail industry in America," crowed Nigel Travis, CEO of the Dunkin’ Donuts and Baskin-Robbins parent. Indeed, Costello is a member of the Retail Advertising Hall of Fame.
The selection underscores that Dunkin’ is less a restaurant than a to-go bakery with extensive food and beverage options. It’s more of a retail storefront than a place where you’d go for dinner, or at least at present.
Even less of a disconnect is the promotion of supermarket vet Susan Shields to chief marketing officer of Jamba Juice, the smoothie chain. A key component of Jamba’s comeback plan is putting its name on more retail products through licensing deals. Those Jamba-branded items already range from a toy blender to a new line of trail mix that’s about to hit stores. Who better to blaze that new revenue channel than someone who worked at the Safeway grocer chain?
At the same time, dollars are dollars and finance is finance. So why not go outside the industry for your next chief financial officer, as McCormick & Schmick’s did in hiring Michelle Lantow? But it’s no coincidence, the upscale seafood chain said, that she came from a retail apparel manufacturer, Lucy Activewear.
Lantow was instrumental in revamping Lucy’s e-commerce operations and plotting its move into brick-and-mortar retail locations, the company noted in announcing her appointment. CEO Bill Freeman observed that those qualifications should serve M&S well as “we continue to focus on greater connectivity with our guests.”
One of those efforts, apparently, was the chain’s development of a group-sales program aimed at companies that are embarking on a road show to hawk their goods and services. M&S is pitching its banquet service as a one-stop shop that spares those road warriors the hassle of having to scout out a function room and banquet facilities at each stop of their dog-and-pony tours.
There’s no word yet if a retailing veteran was tapped to head it up. But if you hear someone greeting the guests with a “Welcome to McCormick & Schmick’s,” shoot me an e-mail, okay?
Wednesday, November 18, 2009
Off with The King's head?
There’s probably no truth to the rumor that Burger King headquarters is planning a new line of kids-meal action figures called Butthead Franchisees (“Collect all the dolts--and their lawyers, too!!”) But the home office clearly isn’t friending some of its licensees on Facebook these days, and vice-versa. Though that’s sort of like saying Batman and the Joker had their inter-relational challenges. We’re probably only a snipe away from seeing The King in combat fatigues and camouflage face paint.
The flashpoint is the $1 Double Cheeseburger that the chain decided to promote systemwide despite a forceful don’t-you-dare from franchisees. In a gambit that drew more media coverage than Michael Jackson’s funeral, a group claiming to represent three-fourths of BK’s licensees filed a lawsuit to halt the promotion, arguing that the franchisor was fixing prices. The National Franchise Association said at the time of the filing that a franchisee stands to lose a dime on every double that’s sold.
By franchising standards, that sort of gripe is the equivalent of asking Mike Tyson if he prefers women’s clothing. But the association took the further step of sending a letter to each director of Burger King’s parent company, asking that they intervene to reverse management’s decision and set the home office on a more intelligent strategy. The elevated middle finger was leaving CEO John Chidsey, the director who crafted the current plan, on the mailing list.
That’s when things started getting really ugly.
Yesterday, someone leaked an e-mail to the Associated Press that had been sent to Franchise Association members over the weekend by Chuck Fallon, the Chidsey direct report who oversees BK’s North American division. It cautioned the dissidents that they could be limiting their growth opportunities with all the public grumbling.
“Bankers, landlords, suppliers and potential new franchisees are watching and listening,” the A.P. quoted Fallon as warning. The upshot, he said, could be less lending and less attractive terms—or a lower price should the malcontents look to sell their businesses.
A return volley has yet to be fired by the franchisees, or at least it’s not yet come to the attention of the media. But give it time.
Not that they’re the only franchisees who are ready to string up their franchisors during these trying times. NPC, Pizza Hut’s largest franchisee, told its shareholders in an earnings statement last week that the pizza brand and its marketing need to be handled differently, a veiled criticism of franchisor Yum! Brands. Making that observation in a financial statement is like telling a soccer mom that her kid couldn’t hit a barn with three free kicks.
And Quiznos franchisees probably have a rule that you have to pay a dollar everytime you mention the franchisor or otherwise cuss.
Because of its sheer size, BK is going to be the fracas in the spotlight. It’s just a matter of time until the feud starts snagging covered on CNN.
The flashpoint is the $1 Double Cheeseburger that the chain decided to promote systemwide despite a forceful don’t-you-dare from franchisees. In a gambit that drew more media coverage than Michael Jackson’s funeral, a group claiming to represent three-fourths of BK’s licensees filed a lawsuit to halt the promotion, arguing that the franchisor was fixing prices. The National Franchise Association said at the time of the filing that a franchisee stands to lose a dime on every double that’s sold.
By franchising standards, that sort of gripe is the equivalent of asking Mike Tyson if he prefers women’s clothing. But the association took the further step of sending a letter to each director of Burger King’s parent company, asking that they intervene to reverse management’s decision and set the home office on a more intelligent strategy. The elevated middle finger was leaving CEO John Chidsey, the director who crafted the current plan, on the mailing list.
That’s when things started getting really ugly.
Yesterday, someone leaked an e-mail to the Associated Press that had been sent to Franchise Association members over the weekend by Chuck Fallon, the Chidsey direct report who oversees BK’s North American division. It cautioned the dissidents that they could be limiting their growth opportunities with all the public grumbling.
“Bankers, landlords, suppliers and potential new franchisees are watching and listening,” the A.P. quoted Fallon as warning. The upshot, he said, could be less lending and less attractive terms—or a lower price should the malcontents look to sell their businesses.
A return volley has yet to be fired by the franchisees, or at least it’s not yet come to the attention of the media. But give it time.
Not that they’re the only franchisees who are ready to string up their franchisors during these trying times. NPC, Pizza Hut’s largest franchisee, told its shareholders in an earnings statement last week that the pizza brand and its marketing need to be handled differently, a veiled criticism of franchisor Yum! Brands. Making that observation in a financial statement is like telling a soccer mom that her kid couldn’t hit a barn with three free kicks.
And Quiznos franchisees probably have a rule that you have to pay a dollar everytime you mention the franchisor or otherwise cuss.
Because of its sheer size, BK is going to be the fracas in the spotlight. It’s just a matter of time until the feud starts snagging covered on CNN.
Monday, November 16, 2009
Outback's designs on another traffic builder
Studding the menu with lower-priced options hasn’t reversed a traffic fall-off at Outback Steakhouse, but another potential remedy is definitely putting more butts in seats, according to an executive of the chain’s parent company, OSI Restaurant Partners.
CFO Dirk Montgomery told financial analysts today that design tweaks at 50 test outlets are bringing “traffic lifts ranging from the low single digits to the mid single digits, say five, 6%.”
Those increases coincided with a 10.7% drop in Outback’s comps for the third quarter.
Montgomery explained that a variety of alterations to the outside and interior of the steakhouses is being tried. The packages range in cost from $100,000 to $400,000 per store, he added.
He stressed that the various features are still being tested, and that more elements will be tried in the field through 2009 and into next year.
Among the variables yet to be pinned down, he said, is the right level of spending, the correct balance of investment and payback.
The chain also isn’t certain about what features to combine into a renovation package.
“It’s still too early for us to form conclusions about what the ongoing renovations strategy will be in terms of what elements we pick,” he explained.
Montgomery did not cite any specific design features but commented, “consumer perceptions of overall atmosphere have improved significantly.”
Published reports indicate that at least some of the interior designs play down the concept’s Australian theme.
CFO Dirk Montgomery told financial analysts today that design tweaks at 50 test outlets are bringing “traffic lifts ranging from the low single digits to the mid single digits, say five, 6%.”
Those increases coincided with a 10.7% drop in Outback’s comps for the third quarter.
Montgomery explained that a variety of alterations to the outside and interior of the steakhouses is being tried. The packages range in cost from $100,000 to $400,000 per store, he added.
He stressed that the various features are still being tested, and that more elements will be tried in the field through 2009 and into next year.
Among the variables yet to be pinned down, he said, is the right level of spending, the correct balance of investment and payback.
The chain also isn’t certain about what features to combine into a renovation package.
“It’s still too early for us to form conclusions about what the ongoing renovations strategy will be in terms of what elements we pick,” he explained.
Montgomery did not cite any specific design features but commented, “consumer perceptions of overall atmosphere have improved significantly.”
Published reports indicate that at least some of the interior designs play down the concept’s Australian theme.
Wednesday, November 11, 2009
What's that about actions and words?
Kudos to People Report for breaking the mold and starting its annual Best Practices conference with a giveback to the community. As a number of participants noted with obvious enthusiasm via Twitter, they packed more than 24,000 meals this morning at the North Texas Food Bank for the disadvantaged.
Everyone says the restaurant industry is a business that gives back. Joni Doolin and her crackerjack People Report team provided attendees with a chance to prove it. And I bet you didn’t hear a word about it via the industry or local media. This wasn’t a publicity stunt.
Indeed, I’d say it was more of a firsthand business lesson. The conference is themed “Mixing Money & Meaning” this year. If it’s anything like the past gatherings, it’ll be looking at the many, many things beyond money that matter to those of us who chose restaurants as our field.
And it starts off Day 1 by giving the high-level attendees a chance to feed those who are less fortunate. I believe that’s called walking the walk.
Joni, they should rename a constellation for you and your group.
Everyone says the restaurant industry is a business that gives back. Joni Doolin and her crackerjack People Report team provided attendees with a chance to prove it. And I bet you didn’t hear a word about it via the industry or local media. This wasn’t a publicity stunt.
Indeed, I’d say it was more of a firsthand business lesson. The conference is themed “Mixing Money & Meaning” this year. If it’s anything like the past gatherings, it’ll be looking at the many, many things beyond money that matter to those of us who chose restaurants as our field.
And it starts off Day 1 by giving the high-level attendees a chance to feed those who are less fortunate. I believe that’s called walking the walk.
Joni, they should rename a constellation for you and your group.
Restaurants fight panic along with the flu
The last thing restaurants need is a bad (and untrue) rap about being incubators for H1N1. Yet those assertions are out there. Traffic may be down dramatically for the business, but not enough to reassure the nervous sorts who see the lines at a fast-food place as a modern-day malarial swamp.
It’s bunk, of course. The experts have said again and again that the virus causing swine flu can’t be passed through the ingestion of food. That reduces the risk to airborne contact with the virus or touching a contaminated surface, or the same peril a person faces in any public place with a lot of people moving through.
Yes, restaurants collectively serve much of the population on any given day. But, if memory serves me correctly, the average adult stops at a supermarket more than three times per week. The worrywarts aren’t calling for masks and gloves on the checkout line.
Pleasantly, the coverage of restaurants’ reactions to the threat has been overwhelmingly positive. Yesterday, for instance, a spokesperson for the Florida Restaurant & Hospitality Association was given airtime on a Tampa TV station to reassure the public that staffers with symptoms of swine flu are being directed to stay home.
In the same report, the operator of a local independent mentioned that she’s now sanitizing everything from tabletops to salt shakers, and an official of Sweet Tomatoes noted that the serving utensils on the chain’s buffet tables are now changed hourly.
Last month a Texas TV station quoted the same sort of reassurances from a Cici’s franchisee who heads the Texas Restaurant Association. Bob Westbrook stressed that any employee with flu symptoms is sent home. He also noted how kitchen workers are randomly dispatched at five-minute intervals to go wash their hands.
The report added assurances from the local sanitation department that it will check to see if restaurants are wiping down tables between uses and that enough supplies are on-hand to cover the increased handwashing by the staff.
Of course, highlighting the actions of responsible operators makes the irresponsible ones seem all the more loutish. Good deal. Hopefully they'll be stigmatized as the public dangers they are. Sen. Christopher Dodd told a Senate subcommittee yesterday that an employee sick with swine flu could spread it to 10% of his or her co-workers, a statistic he attributed to the Centers for Disease Control and Prevention.
The Connecticut Democrat cited the factoid to bolster his argument that all businesses should be required to provide paid sick leave, something that’s virtually unknown in the restaurant business. It's something the industry will eventually have to adopt. But the trade isn't currently in a condition where it could absorb the cost. So, in the meantime, turn up the peer pressure.
Then again, it’d be difficult for many restaurants to match the efforts of some colleagues. For one thing, some of the steps could be illegal. A restaurant in Canada was reported to the authorities for allegedly turning away the husband of a local woman who was known to have contracted swine flu. The proprietor contended that she was just trying to protect the staff and other patrons.
And then there’s the germophobic effort of Silk and Soya, a new Thai restaurant in Madrid, Spain. To safeguard its guests and employees, the place reportedly takes each staffer’s temperature before a shift starts. News reports indicate that menus are wiped clean after every use, and that servers use cloth napkins to handle plates. Those safeguards are touted as points of distinction for the place--and the focus of its publicity efforts, judging from the coverage it's garnered.
An unrealistic reaction to a manageable risk is apparently not just an American thing.
It’s bunk, of course. The experts have said again and again that the virus causing swine flu can’t be passed through the ingestion of food. That reduces the risk to airborne contact with the virus or touching a contaminated surface, or the same peril a person faces in any public place with a lot of people moving through.
Yes, restaurants collectively serve much of the population on any given day. But, if memory serves me correctly, the average adult stops at a supermarket more than three times per week. The worrywarts aren’t calling for masks and gloves on the checkout line.
Pleasantly, the coverage of restaurants’ reactions to the threat has been overwhelmingly positive. Yesterday, for instance, a spokesperson for the Florida Restaurant & Hospitality Association was given airtime on a Tampa TV station to reassure the public that staffers with symptoms of swine flu are being directed to stay home.
In the same report, the operator of a local independent mentioned that she’s now sanitizing everything from tabletops to salt shakers, and an official of Sweet Tomatoes noted that the serving utensils on the chain’s buffet tables are now changed hourly.
Last month a Texas TV station quoted the same sort of reassurances from a Cici’s franchisee who heads the Texas Restaurant Association. Bob Westbrook stressed that any employee with flu symptoms is sent home. He also noted how kitchen workers are randomly dispatched at five-minute intervals to go wash their hands.
The report added assurances from the local sanitation department that it will check to see if restaurants are wiping down tables between uses and that enough supplies are on-hand to cover the increased handwashing by the staff.
Of course, highlighting the actions of responsible operators makes the irresponsible ones seem all the more loutish. Good deal. Hopefully they'll be stigmatized as the public dangers they are. Sen. Christopher Dodd told a Senate subcommittee yesterday that an employee sick with swine flu could spread it to 10% of his or her co-workers, a statistic he attributed to the Centers for Disease Control and Prevention.
The Connecticut Democrat cited the factoid to bolster his argument that all businesses should be required to provide paid sick leave, something that’s virtually unknown in the restaurant business. It's something the industry will eventually have to adopt. But the trade isn't currently in a condition where it could absorb the cost. So, in the meantime, turn up the peer pressure.
Then again, it’d be difficult for many restaurants to match the efforts of some colleagues. For one thing, some of the steps could be illegal. A restaurant in Canada was reported to the authorities for allegedly turning away the husband of a local woman who was known to have contracted swine flu. The proprietor contended that she was just trying to protect the staff and other patrons.
And then there’s the germophobic effort of Silk and Soya, a new Thai restaurant in Madrid, Spain. To safeguard its guests and employees, the place reportedly takes each staffer’s temperature before a shift starts. News reports indicate that menus are wiped clean after every use, and that servers use cloth napkins to handle plates. Those safeguards are touted as points of distinction for the place--and the focus of its publicity efforts, judging from the coverage it's garnered.
An unrealistic reaction to a manageable risk is apparently not just an American thing.
Tuesday, November 10, 2009
Is salmon the new twofer?
Forget sliders, bundled meals and mini desserts. The hook for restaurant bargain hunters is being re-baited these days with lobster, crab and salmon.
Those are among the lures Ruby Tuesday is flycasting with its much-publicized new menu (the bill of fare landed lengthy features from The New York Times and AOL). The dinnerhouse chain added a lobster tail in late summer. Now it’s mixed the pricey protein into several dishes, including a classic surf and turf platter. Two tails share the plate with a seven-ounce sirloin, vegetables and a potato. This isn’t your two-dinners-for-$20 draw.
Nor is the new lump-meat crab cake, or the just-added Salmon Florentine platter. The chain is betting that a special-occasion dinner priced at an everyday rate—relatively speaking—will still be taken as a deal by consumers obsessed with economy.
It’s the credo being followed with considerable success by Panera Bread Co. Not coincidentally, the bakery-café chain has also used lobster as a draw, albeit a regional one. This summer units in the New England area offered a half-pound lobster salad sandwich for about $17 (at least in my area). CEO Ron Shaich explained at the time that the chain was focusing on the 90% of consumers who were employed, not the 10% that lost or couldn’t find a job.
Now, Shaich told investors last month, the chain is adding salmon, both as a sandwich and salad ingredient. He noted that the addition will boost profits while presenting customers with another high-quality choice.
Salmon is already on the menu of Panera’s arch-competitor (and Shaich’s former charge), the Au Bon Pain bakery-café chain. It recently added a sandwich of smoked salmon, egg and guacamole. Already on the menu was a breakfast sandwich of smoked salmon and wasabi, served on an onion dill bagel.
Touting quality in a pitch for deal hunters is a risky strategy, as Cheesecake Factory can attest. It’s a casual-dining leader in quality and portion size, yet it had to re-engineer the tome it calls a menu to include more straightforward bargains. Virtually every other casual chain has done the same, to varying degrees.
But there are signs the approach can work. Ruby Tuesday’s lobster tails, for instant, were generating 3% of a typical restaurant’s sales at the end of August, according to CEO Sandy Beall. That’s at a price falling between $17 and $19, he noted to financial analysts a few weeks ago.
He noted at the time that the chain’s emphasis on quality was helping to boost check averages, the Holy Grail for an industry limping through a steep drop off in customers.
Panera told the Wall Street Journal for a mid-August feature that its hefty lobster sandwich was selling well, but balked at disclosing the specifics.
Will it work? Well, there’s a reason chains have to give away new menu items to get them tasted. A quality item for a reasonable price has its appeal. But the absolute dollars are still going to be a yellow light for those of us who no longer find ourselves in a position to dine out regularly.
Those are among the lures Ruby Tuesday is flycasting with its much-publicized new menu (the bill of fare landed lengthy features from The New York Times and AOL). The dinnerhouse chain added a lobster tail in late summer. Now it’s mixed the pricey protein into several dishes, including a classic surf and turf platter. Two tails share the plate with a seven-ounce sirloin, vegetables and a potato. This isn’t your two-dinners-for-$20 draw.
Nor is the new lump-meat crab cake, or the just-added Salmon Florentine platter. The chain is betting that a special-occasion dinner priced at an everyday rate—relatively speaking—will still be taken as a deal by consumers obsessed with economy.
It’s the credo being followed with considerable success by Panera Bread Co. Not coincidentally, the bakery-café chain has also used lobster as a draw, albeit a regional one. This summer units in the New England area offered a half-pound lobster salad sandwich for about $17 (at least in my area). CEO Ron Shaich explained at the time that the chain was focusing on the 90% of consumers who were employed, not the 10% that lost or couldn’t find a job.
Now, Shaich told investors last month, the chain is adding salmon, both as a sandwich and salad ingredient. He noted that the addition will boost profits while presenting customers with another high-quality choice.
Salmon is already on the menu of Panera’s arch-competitor (and Shaich’s former charge), the Au Bon Pain bakery-café chain. It recently added a sandwich of smoked salmon, egg and guacamole. Already on the menu was a breakfast sandwich of smoked salmon and wasabi, served on an onion dill bagel.
Touting quality in a pitch for deal hunters is a risky strategy, as Cheesecake Factory can attest. It’s a casual-dining leader in quality and portion size, yet it had to re-engineer the tome it calls a menu to include more straightforward bargains. Virtually every other casual chain has done the same, to varying degrees.
But there are signs the approach can work. Ruby Tuesday’s lobster tails, for instant, were generating 3% of a typical restaurant’s sales at the end of August, according to CEO Sandy Beall. That’s at a price falling between $17 and $19, he noted to financial analysts a few weeks ago.
He noted at the time that the chain’s emphasis on quality was helping to boost check averages, the Holy Grail for an industry limping through a steep drop off in customers.
Panera told the Wall Street Journal for a mid-August feature that its hefty lobster sandwich was selling well, but balked at disclosing the specifics.
Will it work? Well, there’s a reason chains have to give away new menu items to get them tasted. A quality item for a reasonable price has its appeal. But the absolute dollars are still going to be a yellow light for those of us who no longer find ourselves in a position to dine out regularly.
Thursday, November 5, 2009
No way this'll stay in Vegas
When the Hawaiian shirt of trend forecasting’s grey-suit world says he’s about to be “turned loose on Vegas restaurants for 24 hours with a camera following me—some real crazy stuff,” you realize the importance of having the mayor’s office on speed dial. Hearing Andy Ford warn of crazy stuff is like having Lady Gaga snipe that your get-up is freaky. The city might want to relocate the elderly and at least Siegfried, if not Roy, too.
Andy has a very adult job—chief insights officer for Noble, a Springfield, Mo., company that runs a foodservice trends-tracking business and a food-focused website, FoodChannel.com. His job is to detect anomalies in consumer preferences and discern a pattern before the incremental shifts harden into a mainstream trend.
He goes about it with the elan of an impish kid taking a road trip to Six Flags with a lax uncle. Who says you can’t take a bath in the motel pool if the sun is shining?
That tepid regard for the rules was evident when Andy told me about his mission to Sin City. For 24 hours, he’d be hitting some of the town’s offbeat eating places—not just restaurants, but any joint where the subcultures of a pulp novelist’s favorite town might grab a bite. Did I have any suggestions?
Well, yeah, but most of them are either closed to the public or likely to test the extent of an uninvited guest’s emergency-room health coverage. I wouldn’t just barge into some of the insider haunts in a town like that.
Great! Could I shoot him some suggestions ASAP?
That was a week ago. Tomorrow is D (V?) Day. Starting at 7 o’clock Vegas time, Andy will be on a blitz of eating places that only a city like Glitter Gulch might harbor. Along the way he’ll interview people on and off the Strip about the unusual places where they might eat. This probably won’t be a project that wins Chamber of Commerce approval.
But chances are high that it’ll be a jaw-dropper. I’m going to follow Andy via his Twitter feeds and blog posts. You can get the distillation via my own tweets, via twitter.com/peterromeo, or follow Andy directly via @aford. Or look for the hashtags #vegas and #iraves.
And if you know of any bail bondsmen in the area, drop me a note. Just in case.
Andy has a very adult job—chief insights officer for Noble, a Springfield, Mo., company that runs a foodservice trends-tracking business and a food-focused website, FoodChannel.com. His job is to detect anomalies in consumer preferences and discern a pattern before the incremental shifts harden into a mainstream trend.
He goes about it with the elan of an impish kid taking a road trip to Six Flags with a lax uncle. Who says you can’t take a bath in the motel pool if the sun is shining?
That tepid regard for the rules was evident when Andy told me about his mission to Sin City. For 24 hours, he’d be hitting some of the town’s offbeat eating places—not just restaurants, but any joint where the subcultures of a pulp novelist’s favorite town might grab a bite. Did I have any suggestions?
Well, yeah, but most of them are either closed to the public or likely to test the extent of an uninvited guest’s emergency-room health coverage. I wouldn’t just barge into some of the insider haunts in a town like that.
Great! Could I shoot him some suggestions ASAP?
That was a week ago. Tomorrow is D (V?) Day. Starting at 7 o’clock Vegas time, Andy will be on a blitz of eating places that only a city like Glitter Gulch might harbor. Along the way he’ll interview people on and off the Strip about the unusual places where they might eat. This probably won’t be a project that wins Chamber of Commerce approval.
But chances are high that it’ll be a jaw-dropper. I’m going to follow Andy via his Twitter feeds and blog posts. You can get the distillation via my own tweets, via twitter.com/peterromeo, or follow Andy directly via @aford. Or look for the hashtags #vegas and #iraves.
And if you know of any bail bondsmen in the area, drop me a note. Just in case.
Tuesday, November 3, 2009
News roundup for a Special Edition day
Today’s definitely a high point in the news cycle. The business day is only a few hours old, yet we’ve already seen…
The startling announcement that OSI Restaurant Partners, the troubled parent of Outback Steakhouse and four other casual-dining chains, has reached outside the business to tap the president of Avon as its new CEO. Yes, that’s Avon, as in “ding-dong, Avon calling.” The new hire, Liz Smith, has worked in the food business, but on the grocery side, serving as the president of Kraft Food’s U.S. operations.
Smith will succeed Bill Allen, who will continue as chairman after his retirement from the corner office on Nov. 15. Allen is one of the gems of the business, so its fortunate he’ll still be involved, albeit somewhat at arm’s length.
After nearly two years of trying, and showing how shrewd of a tactician he can be, Tilman Fertitta has succeeded in getting Landry’s Restaurans to let him take it private.
Fertitta, the company’s founder and CEO, already owned 55% of Landry’s stock, so you’d think it would have been a cakewalk. But he’s repeatedly run into complications, including a refusal by the board he chairs to disclose information it regarded as confidential. By that time, the board had accepted one of his offers. But rather than divulge inside stuff about the company’s dealings with lenders, the directors changed their mind in January 2009 and told Fertitta the deal was off.
Throughout the gyrations, the crafty suitor was buying shares on the open market. The combination of those purchases and the slide in restaurant stock prices have enabled him to trim his bid to $14.75 a share, compared with the $23.50 he’d originally offered back in January 2008.
Fertitta also bought a sizeable minority stake in McCormick & Schmick’s, a competitor to Landry’s namesake brand.
Today brought news that two of Chicago’s fine-dining pioneers will be firing down their stoves for the last time. Nick’s Fishmarket, a fixture of the Loop for more than 30 years, couldn’t survive the times. Owner Lee Suckow told the Chicago Sun-Times that business was off 30% from a year ago.
Even longer in the tooth was Don Roth’s Blackhawk, in the suburb of Wheeling. Don Roth, who opened the landmark in 1969, had been the Wolfgang Puck of his time, imbuing the place with a showmanship that made it the place to copy. Roth’s widow, Ann, is still involved in the business at age 90.
In announcing the restaurant’s closing, she noted that none of their children are interested in taking control of the business.
The restaurant will serve its last prime rib on New Year’s Eve.
Smith will succeed Bill Allen, who will continue as chairman after his retirement from the corner office on Nov. 15. Allen is one of the gems of the business, so its fortunate he’ll still be involved, albeit somewhat at arm’s length.
Fertitta, the company’s founder and CEO, already owned 55% of Landry’s stock, so you’d think it would have been a cakewalk. But he’s repeatedly run into complications, including a refusal by the board he chairs to disclose information it regarded as confidential. By that time, the board had accepted one of his offers. But rather than divulge inside stuff about the company’s dealings with lenders, the directors changed their mind in January 2009 and told Fertitta the deal was off.
Throughout the gyrations, the crafty suitor was buying shares on the open market. The combination of those purchases and the slide in restaurant stock prices have enabled him to trim his bid to $14.75 a share, compared with the $23.50 he’d originally offered back in January 2008.
Fertitta also bought a sizeable minority stake in McCormick & Schmick’s, a competitor to Landry’s namesake brand.
Even longer in the tooth was Don Roth’s Blackhawk, in the suburb of Wheeling. Don Roth, who opened the landmark in 1969, had been the Wolfgang Puck of his time, imbuing the place with a showmanship that made it the place to copy. Roth’s widow, Ann, is still involved in the business at age 90.
In announcing the restaurant’s closing, she noted that none of their children are interested in taking control of the business.
The restaurant will serve its last prime rib on New Year’s Eve.
Saturday, October 31, 2009
Ugh I
Ruth’s Chris ran a promotion through the summer called Ruth’s Classics, built on several of the steakhouse chain’s most familiar specialties. The signatures were offered in specially priced meals that were intended to turn the heads of bargain hunters, but the chain decided to cut costs by holding back on advertising for the deals. “By and large the promotion was not seen as new to our customers,” acknowledged CEO Mike O’Donnell. All they saw were staples of the menu grouped together.
To make matters worse, O’Donnell added, competitors stepped up their promotions during the same timeframe, dealing Ruth’s “a slight setback” in market share.
During a conference call with investors, officials of the chain disclosed that six units are testing a Bistro menu consisting of items priced from $9 to $19. The limited menu is being offered in the test stores’ bars.
To make matters worse, O’Donnell added, competitors stepped up their promotions during the same timeframe, dealing Ruth’s “a slight setback” in market share.
During a conference call with investors, officials of the chain disclosed that six units are testing a Bistro menu consisting of items priced from $9 to $19. The limited menu is being offered in the test stores’ bars.
Ugh II
Tim Hortons is an institution in Canada, but the donut and coffee chain has had a tough time cracking the U.S. market. And it doesn’t look as if a deal with Cold Stone Creamery is going to be the inbound ticket investors had envisioned.
Hortons and Cold Stone’s franchisor, Kahala Corp., struck a deal to put their concepts on the same sites in dozens of locations both north and south of the U.S.-Canada border. At present, about 63 Tims, mostly in Canada, have been outfitted with a Cold Stone station featuring the chain’s signature mix-in ice cream. But only two Cold Stones in the U.S. have bolted a Hortons section to their operations.
“We were supposed to have 50 Cold Stones with Tim Hortons in [them] by spring. We are now at two,” Jim Durran, the restaurant analyst for National Bank Financial, remarked to Horton execs during a conference call yesterday. “What's the problem with that side of the equation?”
It’s all a matter of location, location, location, explained Hortons CEO Don Schroeder.
Because Hortons stores typically generate higher sales than a Cold Stone shop, they can be developed in pricier locations with higher visibility and traffic, he said. The addition of ice cream is a ring of a bell.
Cold Stone’s locations are a different matter, he continued. Because concept’s sales per unit are lower, stores are often developed in “’B’ sites” that “are not as supportive of putting a Tim Hortons into that location,” Schroeder added.
In short, the ice cream shops don’t have the traffic to feed a secondary concept, which might even dilute the concept’s weaker per-store sales.
In contrast, Schroeder expressed satisfaction with the additional sales a Cold Stone component can deliver to a Hortons.
Under questioning, he also disclosed that Hortons has the exclusive rights to develop Cold Stone outlets in Canada. That extends to all types of stores, including freestanding branches that aren’t paired with a Tim Hortons, he acknowledged. But the donut chain has no plans to develop ice cream-only units, Schroeder stressed.
Hortons and Cold Stone’s franchisor, Kahala Corp., struck a deal to put their concepts on the same sites in dozens of locations both north and south of the U.S.-Canada border. At present, about 63 Tims, mostly in Canada, have been outfitted with a Cold Stone station featuring the chain’s signature mix-in ice cream. But only two Cold Stones in the U.S. have bolted a Hortons section to their operations.
“We were supposed to have 50 Cold Stones with Tim Hortons in [them] by spring. We are now at two,” Jim Durran, the restaurant analyst for National Bank Financial, remarked to Horton execs during a conference call yesterday. “What's the problem with that side of the equation?”
It’s all a matter of location, location, location, explained Hortons CEO Don Schroeder.
Because Hortons stores typically generate higher sales than a Cold Stone shop, they can be developed in pricier locations with higher visibility and traffic, he said. The addition of ice cream is a ring of a bell.
Cold Stone’s locations are a different matter, he continued. Because concept’s sales per unit are lower, stores are often developed in “’B’ sites” that “are not as supportive of putting a Tim Hortons into that location,” Schroeder added.
In short, the ice cream shops don’t have the traffic to feed a secondary concept, which might even dilute the concept’s weaker per-store sales.
In contrast, Schroeder expressed satisfaction with the additional sales a Cold Stone component can deliver to a Hortons.
Under questioning, he also disclosed that Hortons has the exclusive rights to develop Cold Stone outlets in Canada. That extends to all types of stores, including freestanding branches that aren’t paired with a Tim Hortons, he acknowledged. But the donut chain has no plans to develop ice cream-only units, Schroeder stressed.
Thursday, October 29, 2009
A candy dish of info treats
Panera Bread Co. is having a bang-up October, according to CEO Ron Shaich. He told investors yesterday that comp sales for company stores were running 6.9% above last year’s tally for the first 27 days of the month, and franchisees’ sales were tracking at a 6.3% rise.
Meanwhile, the bakery-café chain is busy plotting some significant menu changes. First on the list is the introduction of salmon, both as a sandwich ingredient and a salad component, said Shaich. That will be followed by the revamp of the concept’s panini sandwiches, which are currently pre-made, he said. New presses to be added around the middle of next year will enable units to make the grilled sandwiches to order because of their speed.
Nearer term, units will start merchandising holiday baked goods, from gingerbread men to Panatone to “holly cake,” at their registers.
Three days, three restaurant-chain bankrutpcy filings. Max & Erma’s efforts to secure Ch. 11 protection from creditors has been well-publicized. The bankruptcy of sister operation Damon’s International has been far less so. And largely unnoticed has been the Ch. 11 filing of Ham’s, operator-franchisor of a 20-unit namesake chain in North Carolina and Virginia.
More evidence that the Japanese fast-food market is whack-o: Authorities have reportedly concluded that the manager of a McDonald’s there worked herself to death by logging 20 hours a week of overtime. News reports say she’s one of about 150 people who work to the point of demise in Japan every year.
That news of course follows the introduction of a new Burger King Whopper that features seven beef patties, a tie-in with Microsoft’s new Windows 7 operating system. There are so many reasons for head-shaking over that one that it doesn’t pay to start.
Kerrii Anderson, the CEO of Wendy’s International during the chain’s final meltdown and subsequent sale, is being paid $175,000 a year to serve on the board of P.F. Chang’s. Anderson also serves on the board of Chiquita Brands International, the banana importer, where she’s paid at least $160,000 a year. And she was expected to make about $4.6 million from the company’s 2008 sale to Triarc, the parent of the once-rival Arby’s fast-food chain. In short, if you’re scheduled to have lunch with her in the near future, there’s no question of who’s paying.
Hotel unions have voted to strike at a handful of properties in both San Francisco and Chicago. It’s not clear whether its coincidental harrumphing or a concerted effort to prove that the union’s strength isn’t being undercut by the economy, as conventional wisdom holds.
Meanwhile, the bakery-café chain is busy plotting some significant menu changes. First on the list is the introduction of salmon, both as a sandwich ingredient and a salad component, said Shaich. That will be followed by the revamp of the concept’s panini sandwiches, which are currently pre-made, he said. New presses to be added around the middle of next year will enable units to make the grilled sandwiches to order because of their speed.
Nearer term, units will start merchandising holiday baked goods, from gingerbread men to Panatone to “holly cake,” at their registers.
Three days, three restaurant-chain bankrutpcy filings. Max & Erma’s efforts to secure Ch. 11 protection from creditors has been well-publicized. The bankruptcy of sister operation Damon’s International has been far less so. And largely unnoticed has been the Ch. 11 filing of Ham’s, operator-franchisor of a 20-unit namesake chain in North Carolina and Virginia.
More evidence that the Japanese fast-food market is whack-o: Authorities have reportedly concluded that the manager of a McDonald’s there worked herself to death by logging 20 hours a week of overtime. News reports say she’s one of about 150 people who work to the point of demise in Japan every year.
That news of course follows the introduction of a new Burger King Whopper that features seven beef patties, a tie-in with Microsoft’s new Windows 7 operating system. There are so many reasons for head-shaking over that one that it doesn’t pay to start.
Kerrii Anderson, the CEO of Wendy’s International during the chain’s final meltdown and subsequent sale, is being paid $175,000 a year to serve on the board of P.F. Chang’s. Anderson also serves on the board of Chiquita Brands International, the banana importer, where she’s paid at least $160,000 a year. And she was expected to make about $4.6 million from the company’s 2008 sale to Triarc, the parent of the once-rival Arby’s fast-food chain. In short, if you’re scheduled to have lunch with her in the near future, there’s no question of who’s paying.
Hotel unions have voted to strike at a handful of properties in both San Francisco and Chicago. It’s not clear whether its coincidental harrumphing or a concerted effort to prove that the union’s strength isn’t being undercut by the economy, as conventional wisdom holds.
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, October 21, 2009
Chili's to run tacos through the shrink ray
The menu miniaturization craze will get a mainstream boost when the Chili’s casual-dining chain adds a line of tiny tacos in, well, a short time.
Executives say the array will include pulled pork, pecan-smoked chicken, spicy beef and shrimp versions. But they were mum about the price and how the minis will be packaged into a selection (all of one, a sampler, pick two, etc.).
The addition is part of the menu and prep re-do that Chili’s announced a few weeks ago. That effort that is already revamping the way two signature items, baby back ribs and burgers, are cooked. The former will now be smoked longer, over pecan wood, while the latter will be hand-formed from fresh ground chuck rather than pre-portioned into patties.
Changes have also been made in Chili’s kitchens to ensure that French fry orders are always fresh and hot, according to executives of the chain’s parent company, Brinker International. But, in a conference call with financial analysts yesterday, they didn’t divulge how the preparation was upgraded.
The mini tacos are being added to the menu despite an overall trim in Chili’s bill of fare. The Brinker officials declined to say how big of a cut the menu will get. They characterized the likely deletions as item that fail to differentiate Chili’s from its competitors.
The execs would also not divulge how much the menu and prep overhauls would cost. But they noted that at least some of the profits from the recent improvement in Chili’s margins would be used to pay for kitchen tweaks and additional training.
“Wee are talking about small costs there,” Brinker CFO Chuck Sonetsby told participants in the conference call. “We are not talking about anything that is that expensive. We have had some things that cost $175 apiece.”
All told, he said, the investment should trim earnings by a penny or two per share.
The addition of mini tacos would be the latest in an ongoing shift by the industry to more Lilliputian fare. Uno Chicago Grill, for instance, debuted a pulled pork slider just last week.
It's now possible to have a complete meal out of Munchkin Land. You can get in your Mini Cooper, dash a short distance to the smaller restaurants chains are now building, have a slider for your meal, wash it down with sampler-sized cocktails or beers, and follow it with the shot-glass desserts that are now ubiquitous. It's the check that may not be so tiny.
My thanks to Seeking Alpha for making available a transcript of Brinker's quarterly conference call.
Executives say the array will include pulled pork, pecan-smoked chicken, spicy beef and shrimp versions. But they were mum about the price and how the minis will be packaged into a selection (all of one, a sampler, pick two, etc.).
The addition is part of the menu and prep re-do that Chili’s announced a few weeks ago. That effort that is already revamping the way two signature items, baby back ribs and burgers, are cooked. The former will now be smoked longer, over pecan wood, while the latter will be hand-formed from fresh ground chuck rather than pre-portioned into patties.
Changes have also been made in Chili’s kitchens to ensure that French fry orders are always fresh and hot, according to executives of the chain’s parent company, Brinker International. But, in a conference call with financial analysts yesterday, they didn’t divulge how the preparation was upgraded.
The mini tacos are being added to the menu despite an overall trim in Chili’s bill of fare. The Brinker officials declined to say how big of a cut the menu will get. They characterized the likely deletions as item that fail to differentiate Chili’s from its competitors.
The execs would also not divulge how much the menu and prep overhauls would cost. But they noted that at least some of the profits from the recent improvement in Chili’s margins would be used to pay for kitchen tweaks and additional training.
“Wee are talking about small costs there,” Brinker CFO Chuck Sonetsby told participants in the conference call. “We are not talking about anything that is that expensive. We have had some things that cost $175 apiece.”
All told, he said, the investment should trim earnings by a penny or two per share.
The addition of mini tacos would be the latest in an ongoing shift by the industry to more Lilliputian fare. Uno Chicago Grill, for instance, debuted a pulled pork slider just last week.
It's now possible to have a complete meal out of Munchkin Land. You can get in your Mini Cooper, dash a short distance to the smaller restaurants chains are now building, have a slider for your meal, wash it down with sampler-sized cocktails or beers, and follow it with the shot-glass desserts that are now ubiquitous. It's the check that may not be so tiny.
My thanks to Seeking Alpha for making available a transcript of Brinker's quarterly conference call.
Monday, October 19, 2009
India's Rx for food safety: Poisoning courts
Because death is even less popular than taxes, you’d think more politicians would rail against the perils of food contamination and make it their headline-snagging cause.
Then again, look at how that tactic’s working for Kirsten Gillibrand, the junior senator from my state. The upstate Democrat held a press conference on Sunday to awaken the populace to the dire threats lurking in supermarkets and restaurants. More than 900 food products have been yanked off the market since 2005 because they posed a danger, the result of disturbing safety violations, she stressed.
You probably didn’t know she’s calling for all ground beef to be tested for E.coli contamination, a major step toward neutralizing a safety scourge. But who can bother with matters like that when Balloon Boy’s father is being questioned by the police?
You have to feel sorry for the proponents of food-safety reform. The reaction they’re drawing just seems out of sync with the cause. Today, for instance, 16 people personally touched by a food-poisoning catastrophe visited the White House to push for more stringent safeguards. They were foisted off on the assistant White House chef, Sam Kass, who was described in statements as one of President Obama’s advisors on food policy. “I’d recommend the sweet potato fries today because they’re in season, Mr. President.”
Okay, the entourage also snagged ear time from David Lazarus, a senior-level official at the U.S. Department of Agriculture, and Mariano-Florentino Cuellar, the lead White House staffer on Obama’s Food Safety Working Group. But the Beer Summit was treated as more important.
Maybe the notion of regulatory or legislative reform just isn’t sexy enough. Perhaps we should consider using the judicial branch of government as a powerful agent of change.
That’s what India is considering. A proposal has reportedly been aired there to create a secondary court system exclusively for cases involving alleged instances of food contamination. The new ministry would be a place of recourse when food-safety authorities find a processor that isn’t adhering to standards.
Not that infractions are difficult to detect, apparently. The news coverage notes that 1 million cases of alleged safety infringements are currently waiting to be heard by conventional courts.
Then again, look at how that tactic’s working for Kirsten Gillibrand, the junior senator from my state. The upstate Democrat held a press conference on Sunday to awaken the populace to the dire threats lurking in supermarkets and restaurants. More than 900 food products have been yanked off the market since 2005 because they posed a danger, the result of disturbing safety violations, she stressed.
You probably didn’t know she’s calling for all ground beef to be tested for E.coli contamination, a major step toward neutralizing a safety scourge. But who can bother with matters like that when Balloon Boy’s father is being questioned by the police?
You have to feel sorry for the proponents of food-safety reform. The reaction they’re drawing just seems out of sync with the cause. Today, for instance, 16 people personally touched by a food-poisoning catastrophe visited the White House to push for more stringent safeguards. They were foisted off on the assistant White House chef, Sam Kass, who was described in statements as one of President Obama’s advisors on food policy. “I’d recommend the sweet potato fries today because they’re in season, Mr. President.”
Okay, the entourage also snagged ear time from David Lazarus, a senior-level official at the U.S. Department of Agriculture, and Mariano-Florentino Cuellar, the lead White House staffer on Obama’s Food Safety Working Group. But the Beer Summit was treated as more important.
Maybe the notion of regulatory or legislative reform just isn’t sexy enough. Perhaps we should consider using the judicial branch of government as a powerful agent of change.
That’s what India is considering. A proposal has reportedly been aired there to create a secondary court system exclusively for cases involving alleged instances of food contamination. The new ministry would be a place of recourse when food-safety authorities find a processor that isn’t adhering to standards.
Not that infractions are difficult to detect, apparently. The news coverage notes that 1 million cases of alleged safety infringements are currently waiting to be heard by conventional courts.
Sunday, October 18, 2009
Getting hives from all this buzz
Years ago, a foodie friend complained that chefs were hounding him for liquid nitrogen, the prep aid any kitchen wanting to be hip at the time just had to try. They figured a guy as haute as him would have plenty at his disposal, my bud explained, letting me know how plugged-in he was.
I wonder if he’s being pressed these days for clover blossoms or live honeysuckle vines. To be on the current culinary edge, you have to be thinking about high-craft fresh honey, preferably from bees working just for you.
Having your own hive is a new phenomenon, embraced at present by only a few truly avant-garde restaurants, hotels and other feeding establishments. Right now it's still riding the coattails of other trends. Some of the converts have incorporated hives into their rooftop garden, a more noticeable manifestation of urban farming. The Fairmont lodging chain, for instance, has buzzing boxes atop at least three properties.
Beekeeping is also catching on as a component of student gardening, a veritable trend unto itself on college campuses. The University of Connecticut, for instance, uses some of its campus-produced honey as a sweetener in foodservice operations, with the balance sold in the college bookstore to visiting parents.
But the movement is clearly picking up some velocity. In what’s shaping up as its ongoing coverage of the bee boom, Epicurious.com reported two weeks ago that a British company is now selling an urban hive kit that produces up to 50 jars of honey a year. It sells for about $760. The supplier, called Omlet, is already known to urban farmers as the seller of a self-contained chicken-coop kit.
Meanwhile, if you don’t want to get your hands all sticky (or stung), you can pay to have a hive managed for you in New Zealand, with the output going exclusively to you. If private reserve honey is still too much of a commitment, you can buy into a syndicate arrangement, where the hive is owned for a year by up to 10 parties.
As interest in “estate” honey moves in from the fringes, beekeeping is certain to generate considerable buzz (ugh) in the restaurant community. And that’s going to be a good thing, given how fascinated patrons will likely become with propriety hives.
The process is indeed intriguing. I grew up on a estate, owned by a millionaire and superintended by my father. That meant he took care of all the gardens, which were far more extensive than a single family could use, even with their extravagant dinners and parties.
Toward the end of my father’s tenure, back in the early 1980s, the family decided that it wanted to put some bee hives on the 200-acre property. My father had to learn about it, and passed on a little of what he absorbed to me.
Not that I ever touched the hives. A worker was designated to be the beekeeper, largely because he had to foster a relationship with the bees. They had to come to trust him, if you can believe it. He wore gloves and a pith helmet with netting, but expected to be able to go bare-skinned once some familiarity had been established.
When this whole beekeeping thing started to get some attention from chefs who were interested in sustainability, I started looking into buying myself a hive kit. I never got around to it, largely because of the cost, but it did give rise to a memorable laugh.
I told my wife that I wanted to get a beehive. She looked at me a long time, her eyes darting upward for a second, then back down to meet mine. “I don’t think you have enough hair to make that work,” she said.
I wonder if he’s being pressed these days for clover blossoms or live honeysuckle vines. To be on the current culinary edge, you have to be thinking about high-craft fresh honey, preferably from bees working just for you.
Having your own hive is a new phenomenon, embraced at present by only a few truly avant-garde restaurants, hotels and other feeding establishments. Right now it's still riding the coattails of other trends. Some of the converts have incorporated hives into their rooftop garden, a more noticeable manifestation of urban farming. The Fairmont lodging chain, for instance, has buzzing boxes atop at least three properties.
Beekeeping is also catching on as a component of student gardening, a veritable trend unto itself on college campuses. The University of Connecticut, for instance, uses some of its campus-produced honey as a sweetener in foodservice operations, with the balance sold in the college bookstore to visiting parents.
But the movement is clearly picking up some velocity. In what’s shaping up as its ongoing coverage of the bee boom, Epicurious.com reported two weeks ago that a British company is now selling an urban hive kit that produces up to 50 jars of honey a year. It sells for about $760. The supplier, called Omlet, is already known to urban farmers as the seller of a self-contained chicken-coop kit.
Meanwhile, if you don’t want to get your hands all sticky (or stung), you can pay to have a hive managed for you in New Zealand, with the output going exclusively to you. If private reserve honey is still too much of a commitment, you can buy into a syndicate arrangement, where the hive is owned for a year by up to 10 parties.
As interest in “estate” honey moves in from the fringes, beekeeping is certain to generate considerable buzz (ugh) in the restaurant community. And that’s going to be a good thing, given how fascinated patrons will likely become with propriety hives.
The process is indeed intriguing. I grew up on a estate, owned by a millionaire and superintended by my father. That meant he took care of all the gardens, which were far more extensive than a single family could use, even with their extravagant dinners and parties.
Toward the end of my father’s tenure, back in the early 1980s, the family decided that it wanted to put some bee hives on the 200-acre property. My father had to learn about it, and passed on a little of what he absorbed to me.
Not that I ever touched the hives. A worker was designated to be the beekeeper, largely because he had to foster a relationship with the bees. They had to come to trust him, if you can believe it. He wore gloves and a pith helmet with netting, but expected to be able to go bare-skinned once some familiarity had been established.
When this whole beekeeping thing started to get some attention from chefs who were interested in sustainability, I started looking into buying myself a hive kit. I never got around to it, largely because of the cost, but it did give rise to a memorable laugh.
I told my wife that I wanted to get a beehive. She looked at me a long time, her eyes darting upward for a second, then back down to meet mine. “I don’t think you have enough hair to make that work,” she said.
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