Biggest story of 2010 will be the standout of '11, too

The Editorial Police kicked in my door last night to nab me for serious violations of the columnist’s code. Here it is, Dec. 29, and I still haven’t aired my picks of the past year’s biggest stories, nor my list of predictions for the year ahead. In some metro markets they make you dance on “Glee”—to an ABBA song—for far less.

Inspired by the current comeback tour of PeeWee Herman, I’m going to buck convention and skip the recap of restaurant developments that changed the business’ trajectory in 2010. To me, there’s only one that’s really worth noting, and that’s the trend that should top every prognosticator’s read of what’s ahead.

The industry, and our culture for that matter, are seeing a new mob mindset take hold. The highly processed, mass-produced, nutritionally suspect foods that somehow became our norm are being rejected faster than telemarketers who interrupt date night.

The public is demanding more integrity and wholesomeness in its food—not just the all-in-black hipsters in New York, Seattle and Los Angeles, but persons from all social strata. With schools planting student gardens and thought leaders preaching the virtues of sustainably produced foods, Tang and Tab (which, accordingly to lore, stands for Totally Artificial Beverage) may be doomed.

Consider for a moment that Frito-Lay has pledged to offer all-natural versions of Lay’s Potato Chips and Tostitos toritilla chips by the end of 2011.

Chain restaurants are lagging behind the trend. With the exception of Chipotle and the its little-noted fellow travelers, the Jason’s Deli chain, very few brands are shifting to less processed, more local, more natural options.

Non-believers say there’s no need—their patrons don’t want it. I suspect they also think the internet is a fad that’ll pass.

A greater number profess they’d adopt to the trend if they could, but the cost, limited availability and inconsistency of more natural foods make the task unfeasible. They haven’t found a way to do it while maintaining their margins.

They’d better try harder. The current is not going to abate, in 2011 or the years thereafter.

Isn't this supposed to be a slow news time?

We’re about to ring in the new, but a number of restaurant greybeards aren’t ready to sound the gong on their careers quite yet.

Veterans of McDonald’s in particular have been making considerable news with fresh endeavors. Today brought word that Robert Doran, a one-time operations EVP, was taking the helm of the Granite City brewpub chain. He’ll be joined on Granite’s reconstituted board by Mike Rawlings, a former president of Pizza Hut.

They’ll oversee a company that’s just been injected with a $9-billion equity infusion by Doran’s company, Concept Development Corp.

Doran might be able to get a discount if he eats at Tom & Eddie’s, a new burger joint in Geneva, Ill. The just-opened eatery is a collaboration between Ed Rensi, a supposedly retired president of McDonald’s USA, and Tom Dentice, once EVP of operations and training for fast-food’s Lebron James.

But they’re not the only ones who can’t seem to get enough of the restaurant business. Catterton Partners, a co-owner of such chains as Outback, Carrabba’s, Cheddar’s and First Watch, today announced that has acquired Noodles & Co., once the poster-concept for the fast-casual sector.

Catterton has yet to announce who’ll be assisting Noodles president Kevin Reddy as he leads the chain into a new chapter. But my bet’s on some industry veterans.

'And the winner is...'

Here's the winner in McDonald's Legends of McRib contest, in which fans of the perennial limited-time product were asked to make their own videos celebrating the sandwich's carefully planned scarcity. It won the submitter, Sawyer Frye of Carthage, N.C., $10,000 and a trip to Germany, where he'll be able to have his fill of McRibs.

His selection will officially be announced later today.

Here's the gold-earning submission:

Is the restaurant industry really at risk?

One of the first conferences I attended after 9/11 was a convention on food safety. The meeting had been planned in the pre-September days when viruses and other micro-pathogens were regarded as the main threats. But the terrorist attacks in New York and Washington hijacked the focus, shifting it to food security. Instead of discussing accidental restaurant poisonings from E. coli and other bugs, speakers spoke of the supply chain’s vulnerability to purposeful contaminations by fanatics looking for a stealth weapon of mass destruction.

In one memorable breakout session, two renowned safety experts worked with the audience to identify the greatest risks. They noted that common ingredients like spices and coffee lent themselves to tampering, and were often harvested in areas known to be at odds with the United States.

Sugar was cited as a particular vulnerability because it wasn’t very regulated and was used in so many processed foods. Poisoning that ingredient sounded so easy that I used a made-up name for the sweetener in a column covering the conference. As crazy as it sounds today, I didn’t want to give terrorists any ideas.

We were all worried about monsters under the bed back then. After awhile, that level of suspicion seemed almost hysterical. Life for the food business remained more normal than the conference might’ve suggested, and bacteria and viruses again emerged as the main threats.

Then came the CBS News report earlier this week that terrorists were planning to poison the salad bars of restaurants and hotels in a coordinated weekend attack. It said an anonymous intelligence official had confirmed the threat as “credible,” and noted that the U.S. Department of Homeland Security had gathered safety officials from the restaurant and lodging industries to brief them on the potential danger.

The report was exclusive to CBS. In the news business, that makes you suspicious. If the account was true, why couldn’t any other medium independently verify it? Certainly they would’ve tried with a story that big.

Nor have other authorities come forward to confirm it.

But they haven’t denied it, either.

Joe McInerney, the straight shooter who heads the American Hotel & Lodging Association, told USA Today that his group wasn’t invited to any security briefing by Homeland Security.

But he did shed some light on the matter. There was what he described as a standing meeting between Homeland and hospitality officials on the Friday before the CBS report. He also noted that the hotel industry has long been considered a “soft target” for terrorists.

And he said the lodging trade is taking precautions. The AH&LA is putting together a webinar for hotel employees on averting an attack on buffets, McInerney explained to USA Today.

It will also provide properties with info cards that can be inserted in employees’ paycheck envelopes, alerting them to say something if they see something suspicious.

The restaurant industry has so far been mute. But it’s just a matter of time until the issue gets a finer, more prodding point. What happens at a salad bar or buffet concept with employees who are believed to be Muslims? Will management try to hide them? Or just dismiss them? It's not a stretch to think buffet places could take a hit, regardless of who's working for them.

Similarly, how will employees and other customers react when they see a possibly Muslim patron head to the buffet?

Clearly there are two issues the industry has to address.

First, there’s the report itself. Is it true?

Second, and perhaps regardless of the answer to that first question, how is the industry going to deal with the suspicions? At the very least, the report poses a very real threat to places with salad bars and buffets, whether the story is accurate or not. Consumers may not be willing to undertake what they see as a risk.

Time extinguished a lot of fears after 9/11. But the restaurant industry shouldn’t count on that remedy this time around.

Terrorists plan to poison salad bars, CBS reports

Security experts from the U.S. restaurant and hotel industries have been warned by the U.S. Department of Homeland Security that terrorists plan to poison a large number of salad bars in a coordinated attack on an upcoming weekend, CBS reported this evening.

The network said it had confirmation from an unidentified intelligence report that the threat is credible.

Homeland Security declined to comment, CBS reported, but it quoted a spokesman as observing that terrorists have said they'd pursue unconventional attacks.

As of this writing, CBS appears to be the only news medium to be carrying the story.

Overlooked news of the day

Here are some stories you might’ve missed on what’s proving to be a big news day:

NOW, NOW: Hooters can't say it's adult entertainment and then feed kids
The National Organization of Women reportedly petitioned authorities in the San Francisco area to shut down local Hooters restaurants because they were licensed as hootchie-koochie places but actually fed kids along with the drooling lechers in raincoats. Actually, the lawyers might’ve used different language, but that was the essential contention of the legal action. Hooters doesn’t deny that it’s become more of a family place, acknowledging that 10 percent of its parties are families.

KFC lightening up?
KFC units in the United Kingdom will switch to a healthier frying oil next year, according to a report yesterday from Marketing Week. The online story didn’t say if the change would be chainwide or just an undertaking by British stores. A switch like that for KFC would be like Burger King tinkering with its ground beef mix or McDonald’s fiddling with its fries.

But the Colonel didn't like mood lighting!
The same story reported that KFC is testing a new and surprisingly upscale design across the pond. It sounds like KFC’s take on the trend of quick-service giants making their dining rooms more comfortable and inviting for young people, with amenities like entertainment and more bar-like features. In KFC’s instance, that means a room with red glass walls and red lighting. There again, Marketing Week didn’t say if the new prototype would be peculiar to the U.K. or something that could appear here in the United States.

The King's demand were a royal pain, bankrupt zee says
One of Burger King’s larger franchisees filed for bankruptcy protection, contending that it was bled dry by the capital outlays required by the brand’s former owner. Duke and King reportedly operated 92 stores in the Midwest. It also hissed at the franchisor for blocking the purchase of 66 stores in 2007, arguing that those units were healthier and could’ve provided the cash flow to rejuvenate units elsewhere. The situation underscores that one of the bigger challenges for BK’s new owner is winning the support of the franchise community.

Luby's nickel and dime ops
The most surprising tidbit in Luby’s quarterly financial report is the $153,000 in revenues ascribed to vending operations. Who knew it had any? They must’ve been picked up in the Fuddruckers and KooKooRoo acquisition because there’s no vending revenue listed for the first quarter of the prior year.

Buyer's remorse?
The revelation followed the little-noticed news that a court has directed Luby’s to buy nine Fuddruckers franchises, as the cafeteria operator agreed when it bought Fudd’s parent, Magic Brand, back in June. Luby’s had balked at that part of the deal, contending that it hadn’t been given an accurate account of the franchises’ financial health.

Restaurant rage

Some ugly exchanges have erupted at restaurants this holiday season, in a few instances while patrons were still in their cars. Regardless of whether guests or employees were at fault, the spate of horror stories is sure to be bad news for an industry that’s been striving for decades to burnish its reputation.

Consider the developments of just the last week or so:

A 20-year-old employee of a Burger King in Detroit is facing murder charges because he allegedly punched an elderly man who’d tried to slug him during what was reported as a "disturbance." The deceased, a 67-year-old homeless person, fell to the ground and apparently struck his head. He died of blunt trauma.

A 21-year-old employee of a Wendy’s in Fort Myers, Fla., was reportedly arrested for attacking a customer whom she couldn’t hear through the drive-thru intercom. According to the local coverage, the staffer felt dissed because the patron didn’t speak up.

Simultaneously, a Wendy’s guest was being arrested in Jefferson, N.J., after throwing a Frosty at the employee who was working the drive-thru window. The nature of their friction was not reported. But stories noted that the customer parked her car and went into the restaurant to attack the employee after hurling the frozen drink. She wasn’t arrested for assault, but rather for being under the influence of marijuana.

You almost hope the kids who burned a Boston Market employee in Riverside, Calif., had been smoking something. Otherwise, they were just doorknob-dumb criminals, though no one’s been arrested, and it doesn’t seem as if a warrant’s been issued. The Einsteins pulled up to the restaurant’s drive-thru window and ordered a dish of sautéed spinach. They then flung it back at the employee who handed it to them, yelling, “Fire in the hole!,” a gag that’s been waging for years. The 21-year-old employee had to be treated at a hospital for second-degree burns.

Meanwhile, a woman filed a lawsuit against McDonald’s because an employee in Chicago allegedly spat at her a year ago because she’d ordered a cheeseburger while the breakfast menu was being offered.

The only ones who’ll benefit from any of this: Lawyers. Otherwise, you have victim and victim—a dead man, but a 20-year-old whose life has just taken a catastrophic turn.

And let’s not forget the owners of the restaurants, and the industry in general. It’s not exactly a jolly image to pin to the trade.

They really want to direct

It’s surprising that restaurant leaders have any time left to manage after fulfilling all their reality-TV gigs.

Chefs started it. They moved in fast-forward from cooking demos to cooking on TV to competing in televised cooking competitions to demonstrating for at-home audiences that tyranny thrives in restaurant kitchens. They can become celebrities without feeding a single consumer.

Now we have chain executives trailing the culinarians’ apron strings. Enough headquarters biggies have appeared on “Undercover Boss” to merit one of the annual rankings that the industry loves so much (“Top 100 ‘Undercover’ Chains”).

An episode featuring a disguised Don Fertman, the chief development officer for Subway, aired Nov. 21. Three weeks later, the show focused on Johnny Rockets CEO John Fuller.

Aren’t there other industries with photogenic officials?

Now other programs are following suit. This morning brought word of a new TV reality show, “The Mentor,” a program on the 24-hour Bloomberg business channel that matches the leaders of upstart companies with seasoned vets. The notion is to foster a meeting between Grasshopper and the Kung Fu master, all while the cameras roll.

An episode to air later this year will feature James White, the CEO of Jamba Juice, serving as a mentor to Michael Laundau, the leader of a franchised hair-drying business called Drybar. And, yes, there is a chain whose core service is using blowers on consumers’ hair.

With all this screen time, chains should forget about sales boosters like catering or takeout and focus more intently on negotiating contracts for residuals and syndication.

So long to a legend

One of the establishments that shaped the U.S. restaurant industry—the trade’s own Chuck Berry—will shut its doors for good on Dec. 31. After 91 years, Regas Restaurant will no longer show the business how important service can and should be.

You might not have heard of it, but the chances are extremely high that you’ve felt its influence. If you dined at a P.F. Chang’s, for instance. The company is co-led by Rick Federico, one of the many, many industry standouts who learned the business from paterfamilias Bill Regas, a true legend.

When I was the editor of Restaurant Business magazine, we ran an annual feature called the Undercover Service Report, where the editors and our freelancers acted as finicky customers to test the service mettle of various restaurant chains. Bill wrote me a letter, saying that the story would be a yawner if places could just remember to put the customer first. By all accounts, his family’s Knoxville institution never forgot that imperative.

Dave Thomas, the founder of Wendy’s, would remember his education at Regas decades later. Thomas started working there at age 12. According to the legend, he was fired in short order because he didn’t agree with management. He supposedly vowed never to repeat his mistake and lose another job. Working with management became a hallmark of his time at KFC, where he first became a multi-millionaire, and then Wendy’s.

Despite the trajectory of Thomas’ career, the Regas’ influence was felt mainly in casual dining, not quick service. Indeed, Brinker International, the parent of Chili’s, bought rights to build a chain of Regas-inspired restaurants. The name was changed to Grady’s, and the concept was watered down, starting with the ice cream, then moving to other aspects.

It proved to be a bomb for Chili’s, which sold the rights to Quality Dining, a Burger King and Chili’s franchisee,
which completely re-engineered the DNA.

The times apparently caught up with the Regas, however. Business by all accounts has been down, so the current owners decided to shut down with the close of the year.

But fans should take heart: The restaurant closed once before, in 2000, only to reopen in ’02.

It’s been navigating the changes in consumer tastes and its local market place ever since. That process may end, but the restaurant’s influence lives on.

Restaurants' use of social media by the #'s

How much is social media worth to restaurant chains? A new study has pegged the values for the nation’s largest fast-food brands, proving in the process that Twitter and Facebook can be great levelers.

Jamba Juice, for instance, wracked up the equivalent of $2.1 million in marketing exposure through social media mentions—its own, plus consumers’—during September, October and November. That provided more online exposure than what bigger players like Dairy Queen fostered, and roughly as much attention as Subway snagged, according to the study, which was prepared by a company called General Sentiment. You can see the study here.

The report is part of a recent wave of statistics on restaurants’ use of social media. A San Francisco-based company called Freshendo, for instance, recently benchmarked Twitter use by the local restaurant community. Only 10% of local places use the micro-blogging service, the upstart found. Yet some of the users generate as much as 20% of their business through that medium, with the number of followers averaging 900.

The concern intends to help more restaurants hit and exceed that number by using Twitter as a real-time promotional tool.

The unexploited potential of social media is also underscored by the survey that was recently conducted by MustHaveMenus.com and covered by Technorati. The research revealed that only 42% of restaurant operators and managers use social media to promote their establishments, and 23% see no value in starting.

The figures taken together suggest that the opportunities afforded by social media are still largely neglected because restaurateurs lack the time to tweet, post or blog themselves, and are short on the funds to hire a keyboard jockey.

Yet the ones that have embraced the new media are clearly reaping dividends. The supply of social-media-susceptible consumers is clearly outstripping demand, at least at the present.

Restaurant news you might've missed

BK has sweet treats for Brits, pink slips for Yanks
First there was the Whopper Bar, a more adult riff on the conventional Home of the Whopper. It focused on Whoppers, Whoppers and more Whoppers—sometimes combined into one dish (the “pizza” consists of three Whopper patties arrayed in a single layer, like pepperoni slices, on an oversized bun).

Now Burger King has unveiled another potential addition to its fold, hold the pickles, hold the lettuce. The freestanding Dessert Bar will feature BK-brand ice cream and mini-pancakes, according to the first report in the U.S. media.

The prototype is in London, which could keep it a European phenomenon. But Whopper Bars are already sprouting overseas.

The chain’s home office should have probably crowed louder about the venture. The ballyhoo might’ve drawn attention away from the news that BK’s new owner, Brazil-based 3G, is canning more than 400 people, just in time for the holidays. Reports of The King sharing a limo with Scrooge at the Dessert Bar opening have yet to be confirmed.

Friendly’s tries new menu & look
The venerable New England chain is reportedly spending $2 million to give its 17 restaurants in Albany, NY, a facelift and new food options. Details weren’t provided in the slew of local coverage, but one report did describe the new menu as “lighter.” That could be a good thing, judging from TV news coverage like this. Virtually every customer (and many of the servers) appears to be considerably overweight.

Among the items being tested are chicken wings, a turkey platter, a grilled chipotle-flavored chicken, and several new sandwiches, including a Caprese grilled-chicken option that packs just 400 calories. Otherwise, the least fattening of the trial choices is the smaller wings order, at 740 calories for six. But the menu does note that a grilled-chicken or vegetarian patty can replace the beef in any burger.

‘WARNING: Unroll at your own risk’
A Michigan courtroom may soon be turning a spotlight on a little-noticed restaurant danger: The toilet paper dispensers in the restrooms. A state court has cleared the way for a woman to pursue a lawsuit against a Texas Roadhouse in Detroit some three years after she suffered alleged injuries from a dispenser that had been left open. The woman says the lid of the device fell on her hand, breaking it.

‘Good gig, eh?’
A recent survey found that more than one in five Canadians found their first job at a restaurant. Apparently our neighbors to the North have a warmer picture of the business than we do. Seventy percent reportedly said the nation’s eateries are an important part of the economy, and 75% of the respondents who worked in restaurants characterized the experience as helpful in developing life skills. The study was sponsored by Kraft’s Canadian operation, so we doubt there were any questions about the loyalty that Starbucks has personified.

The importance of exorcising
We all know the locations: No matter what type of restaurant you put there, it bombs, usually quickly. Clearly the setting is cursed.

Rather than tempt the fates by meekly following four failures into a site in New York’s Chelsea area, the latest outlet of New York Burger Co. sought some divine help. It brought in a priest, a rabbi and a Buddhist spiritualist to bless the operation and stave off the demons of empty tables. Linda Blair has yet to put in an appearance, but plenty of reporters have, providing the newcomer with tremendous free publicity.

Promotional events catch restaurants' malaise

Restaurants’ financial struggles are spreading to dining-out promotional events.

News emerged yesterday of an involuntary bankruptcy filing for Taste of Minnesota, an annual food fair where restaurants set up booths to provide paying attendees with samples of menu specialties. More than 40 restaurants reportedly participated in the most recent festival, which was held over the July 4th weekend in Minneapolis.

Now comes word that the presenter of Texas’ Austin Restaurant Week is having financial problems as well. The local branch of the Business Journal newspaper chain said the fate of the weeklong promotion of local restaurants is now “uncertain.”

Those developments are in sharp contrast with the recent disclosure that California will hold a Restaurant Month next year as a complement to local week-long promotions.

Attention, Webster: Hyper-local's the word

Pencil a new term into the restaurant glossary: Hyper-local, which has nothing to do with a customer who lives really, really close.

That’s the label the National Restaurant Association has given the newest wrinkle in local and sustainable sourcing. The group explained that the phrase covers ingredients that don’t have to be trucked to the restaurant, even from nearby farms.

Rather, these are items that originated on the premises—produce grown in a rooftop or chef’s garden (or the new manifestation, interior “green walls” of living plants), or meats that were trimmed from whole carcasses on site.

Presumably it’d also cover fish grown in the restaurant’s aquarium, or, more probably, beverages that are made right there.

If the phenomenon sounds like something reserved for New Yorkers who dress only in black, consider that a shift to hyper-locals is expected to be one of the most noticeable trends in restaurants next year. Indeed, it was projected in an NRA-backed survey of chefs to be the fifth most powerful influence on menus in 2011.

Among the few forces scored higher by the 1,500 respondents in whites were locally sourced meats and seafood, which topped the list, and locally grown produce, at Number Two. Sustainability considerations was Number Three.

The annual survey is the third in a row to put the local/sustainable movement at the top of the trend rankings.

In short, local sourcing and its fellow traveler, sustainably grown foods, are not going away. They’re less a trend than a shift that will be with us for some time.

Remember the days when “imported” was the mega-trend?

Sbarros quietly build another Italian chain

The Sbarro family must have tomato sauce running through its veins. Seven years after selling its namesake pizzerias to a private-equity firm, the clan is chain-building again.

Its new Italian growth vehicle is Matteo’s, a small full-service chain in the family’s backyard of Long Island, NY. Full disclosure: As a Long Islander myself, I’ve frequented the Matteo’s outlets for years. It’s good, solid Italian fare, with a menu devoted to the classics. The Sbarros apparently bought a controlling interest in the family-style concept a few years ago from New York’s Sorrentino family.

Now the collaboration has 10 Matteo’s restaurants in operation, including three in Florida. A fourth is under development in Orlando, according to a report today on the website of The Orlando Business Journal.

That story notes that Matteo’s isn’t the Sbarro family’s lone restaurant venture. Years ago the second and third generations diversified into the steakhouse business as co-owners of Rothman’s, Long Island’s version of the Morton’s brand (which, curiously, was headquartered on Long Island at the time—a few blocks from an original Matteo’s), and as operator of the far more casual Boulder Creek Steakhouses. They eventually sold the Boulder Creeks but continued to build Rothman’s outlets.

The first outside of New York will be built in Orlando near the Matteo’s, according to the Business Journal report.

Meanwhile, the largely mall-based Sbarro pizza chain finished 2009 with about 785 units, after shuttering more than 100 because of the downturn in shopping and airport traffic, according to QSR magazine.

News roundup from the long weekend

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

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

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

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

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

Beans spilled in BK deal?

Financial columnist Dan Dorfman reported yesterday that the $3.4 billion purchase of Burger King is being investigated by the Securities and Exchange Commission and another Wall Street watchdog for possible insider trading.

In a Huffington Post column, the longtime deal-watcher reported that the SEC and the Financial Industry Regulatory Authority have asked brokerages for information about clients’ purchase of BK Holdings stock prior to the announcement of 3G's intention to buy the fast-food brand.

Dorfman did not suggest that 3G, a Brazilian private equity firm, is suspected of any wrong-doing.

Another rough patch for restaurants?

The job to have these days is supplying restaurants with “For sale or rent” signs. The last two months alone would’ve made your year.

The bankruptcy of CB Holdings, parent of the Charlie Brown’s, Office and Bugaboo Creek steakhouse chains, snagged the headlines. But it was hardly the only operator to shutter restaurants (about 32 of its 80 outlets).

A Sonic franchisee in Florida benched the carhops at its 11 stores. Ted’s Montana Grill put nine of its 55 restaurants out to pasture. Jack in the Box shut 40 restaurants.

Recent times have been particularly lethal for landmark one-offs, like 91-year-old Lahiere’s in Princeton, N.J.; 53-year-old Terri’s in Portsmouth, Va.; nearly-40-years-old Stratton’s Dairy Dip in Ashland, City, Tenn.; and Elisha’s in Milford, N.H., a youngster with just three-and-a-half decades of operation.

Add in the bankruptcy of The Glazier Group, operator of the Michael Jordon’s and Strip House steakhouses, and it’s difficult to deny that the shakeout has intensified again.

The question is, how long will that rev-up continue? Is this just a year-end blip, a result of places assessing where they stand for the year and realizing they’re too far in the red?

Or is this an indication the recession could be a double-dipper for many restaurants? Did too many places bet they could ride out the downturn without adjustments, only to learn this is more of a new reality than a temporary departure from the business they knew?

Come January and February, we’ll know for sure.

Reports of Jared's death--well, you know

Mark Twain once quipped that a lie will spread halfway around the world before the truth can get its boots on. With the internet, that’s obviously a gross under-estimation, especially with a hot area of interest like restaurants.

We’ve already heard about the young man who supposedly left a McDonald’s burger in his coat pocket in 1989 and forgot about it. When he discovered it years later, according to the urban legend, the sandwich looked and smelled the same. Intrigued, he bought a bunch of burgers and stored them in his basement, where they failed to decompose during the next 12 years and counting. The assertion: There are more preservative than ground meat in those patties.

I know this because the burger preserver caught his experiences on videotape, including the purchase of the original sandwich back in 1989. You can see it here, in a YouTube posting called The First Bionic Burger.

But that whopper is nothing compared to the myth that one prankster put forth this morning, much to the presumed chagrin of the Subway sandwich chain. According to that carefully cultivated rumor, Jared Fogle, the volunteer spokesman who lost a ton of weight on Subway’s fare, has munched his last footlong, dying last week precisely at 4:43 EST, just a few days short of his 33rd birthday.

The cause: Complications from a gastric bypass in 1998. In other words, he lost weight through a surgical fix, not a diet built on Subway turkey heros.

A website has already been set up to support the fib: http://jaredremembered.com. Visitors can leave their memories, not only in the form of reminiscences, but even poems.

Better check it out before the authorities shut it down. It’s a hoax of superb craftsmanship.

Another leap

A fiftysomething friend confessed yesterday that social media is where he’s watched the rocket pull away. My acquaintance has spent decades in the restaurant industry. But web capabilities are advancing faster than his ability to grasp the implications for the business. “It’s just happening too fast,” he lamented.

Mercifully, he didn’t know the trade was taking another quantum leap while we were munching our fiber-rich breakfasts.

You likely missed it, too, though a significant portion of the consuming public probably is probably aware by now of McDonald’s social-media scavenger hunt, the event it’s staging to introduce a seasonal caramel-mocha coffee. Clues to the whereabouts of 27 oversized McCafe coffee cups—three in each of nine U.S. markets—are delivered to Twitter followers of the brand. The first ones to find the cups win the contests.

A promotion built on social media is still rare in the restaurant business. One taking the form of a scavenger hunt is decidedly novel. But what makes the program revolutionary is the structure on which it’s based.

The restaurant industry is by its nature a local phenomenon. Brands may be national, but consumers interact with branches in their area. They deal with neighborhood businesses.

The chain sector has had a hard time addressing that reality in its use of social media. The chains typically entrust tweets about a brand to a corporate staffer in headquarters, often thousands of miles from some units. How does that tweeter foster a relationship between a far-removed unit and its local customers?

The obvious solution is letting the units do the tweeting. But the possibilities have been too daunting for all but a few foodservice companies. How do you keep thousands of voices singing the same song? And what about franchisees who might have different ideas about products, services or promotions? How do you make sure they’ll even tweet anything?

McDonald’s broke new ground with the scavenger hunt by letting the nine participating regions tweet individually, each with its own Twitter ID. Their messages are tailored to the region.

It’s the bold move that few chains have been willing to take—a national program executed on a regional, almost local basis. It’s the chain equivalent of letting a teenaged son take the car on a Friday night for the first time.

Barring disaster, the move will no doubt convince other systems that they can take the risk. Eventually that risk will be re-evaluated, and a major, more effective use of social media will become part of the marketing mix.

If so, I’ll need to break it to my friend gently. I may have to use sock puppets.

Discounting = heresy?

A week later, the mob has yet to form. But it’s just a matter of time until torch-wielding restaurateurs chase down Walker Smith, the eminent trend reader, for challenging their conviction that the earth is flat.

Indeed, the heretic sledge-hammered a foundation of the industry’s belief system right before the trade’s eyes, at the People Report Best Practices Conference. Frugality is not the default mode of today’s consumers, he thundered. Cheap isn’t the fix they’re craving.

You could almost hear the gasps of everyone in the room with a dollar menu or a you-pick-three deal. I half expected them to bar the doors and shout, “We can’t let this get out. The board will have our hides.”

Yet Smith, a mesmerizing speaker, had the evidence to keep nooses from being tied. This is not a recession where consumer spending was eroded, he asserted. Rather, confidence ebbed as the risk of losing a job or a home grew exponentially.

But marketers would be foolhardy to equate that fear with stinginess, he continued. Look at sales of smart phones and high-tech entertainment equipment. Indeed, Smith predicted that the iPad, the gizmo of the moment, “will quickly replace the PC.”

“The major lesson from this recession,” he told the 250 restaurateurs in attendance, is “risk translates into prioritization. Your job is to get back on their priority list.”

The Number One way to do it, Smith contended, is through innovation. Left unsaid: “…not a price you can’t refuse.”

Second, surprisingly, in the Gospel of Smith: “Do something that helps people control their health.”

And third: Make it something that the buyer enjoys.

I’m sure it was just a coincidence that Smith left the conference as soon as his speech concluded, ostensibly to head out for another engagement.

I swear I could hear a posse being formed.

Playing with an anti-restaurant message

Health advocates blast restaurant chains for using toys to influence kids’ thinking. But it looks as if the industry is being victimized by the same dynamic.

Snap on the TV during Saturday morning cartoons and you’ll likely see a commercial for what promises to be a popular toy this holiday season. It’s called Pop the Pig, and it features a sizeable plastic pig sitting on its haunches, mouth agape. It’s the centerpiece of a game where the players take turns feeding fast-food-style hamburgers into the pig until the belt around its balloon-like belly pops open.

The indirect message is clear: Keep wolfing down those burgers and you’ll burst like an overstuffed pig.

Menu-labeling information is apparently not included.

Another edge to social media

Using Twitter to promote the McRib seemed like a no-brainer for McDonald’s. Before the pork sandwich was reintroduced nationally this week, diehard fans were already relying on the social network as an instant notification system. If one spotted the product on the menu of a local store, tweets and retweets would soon be flying from parties like McRibWatch, McRibSandwich, McRibNews or CatchTheMcRib.

McDonald’s decided to stoke the buzz by using Twitter’s new paid-promotions function. For a fee, the system’s operator will put the payer’s tweets atop the search results for a certain word or phrase, or on the list of the network’s hot topics for the day. Each is marked “Promoted” so Twitter peeps know there’s a commercial aspect to the situation.

McDonald’s is using the function to promote tweets that begin "McRib Is Back." So, when I looked at what topics are showing up most often today in my area’s Twitter traffic, I saw "McRib Is Back" topped the list. So far so good, at least from the chain’s standpoint.

Then I clicked on the link to see what had been tweeted about the topic. Sure, there was a notice from McDonald’s about the roll-out, with a link to learn more about the sandwich's first national availability since 1994.

But that’s about as good as it got for the brand.

“McRib is Voldemort's nickname because Creepy Unicorn Blood Fed Cauldron Baby is too long to say,” asserted a party called RABTweets.

“Now with 23% less rat meat,” declared LMalfoy, as in Lucius Malfoy, one of the villains in the Harry Potter books. For reasons that weren’t clear to me, many of the McRib bashers used the popular wizard tale as a point of reference.

There was a second mention of the sandwich being made with unicorn meat, too.

Worst of all for McDonald’s was the entry from a poster who used the ID Jesus_M_Christ, who likened the sandwich to herpes: “Just when you forget about that mofo....BAM! It's back again.”

On two screens of posts, 17 of the 41 tweets were decidedly negative. Many of the others were a marketers dream, but it’s amazing how a bad shout-out can grab your eyeballs.

Granted, the product could have been slagged with or without McDonald’s use of the Promoted function. But you have to wonder if the "Promoted by McDonald’s" notification put more of an edge on the bashers’ comments.

Those of us in the business would probably laud McDonald’s for trying a new promotional medium. But clearly social media is a whole new ballgame, without any of the guarantees and control that usually come with paying for exposure.

A health check on franchising

The economy may still be a tough slog for restaurateurs, but franchise specialists are betting the recovery is far enough along to nudge veteran operators and newcomers into opening places again.

“It’s starting to ease, yes,” says Russ Umphenour, the quick-service industry who currently serves as CEO and president of Focus Brands. “People are starting to take their heads out of the sand, to look around and say, ‘What’s out there for me to try?’”

Focus, the franchisor of Moe’s Southwest Grill, Schlotzsky’s, Cinnabon and Carvel, has noticed stepped-up interest in particular from professionals who were forced by the times to switch livelihoods.

“A lot of people who have been laid off or who walked away with packages, they’re looking at what they want to do with themselves,” explains Umphenour. After being burned by the corporate world, they’re interested in going into business for themselves. “We’ve gotten our share of those people,” he says.

At the same time, according to Umphenhour, seasoned franchisees have started sniffing around for expansion opportunities after a near-hibernation. “Like everyone else, they were hunkered down and not looking for growth.”

Focus recently armed itself with a new option for both parties: the Auntie Anne’s pretzel concept. It bought rights to the bakery chain a few weeks ago.

About six months earlier, the private-equity firm that owns Focus, Roark Capital, added the WingStop chicken-wings chain to its portfolio. (WingStop operates independently of Focus, as does McAlister’s Deli, another franchisor in Roark’s fold. Indeed, all of the parent company’s holdings are franchisors.)

Roark and its affiliate are hardly alone in expanding their stables of franchise concepts. As Focus was grabbing Auntie Anne’s, the Wayne Gretzky of franchising, Subway CEO Fred DeLuca, was buying rights to the bankrupt Taco Del Mar chain through his little-known second company, Franchise Brands, licensor of Mama DeLuca’s Pizza Now.

Clearly franchisors are betting the classic foodservice development model is about to be refueled. It’s a vote of confidence in the business.

We interrupt this broadcast...

I’ll be straying from Restaurant Reality Check tonight to live-blog the election results for Nation’s Restaurant News. Follow the results and learn what they mean for the restaurant industry by surfing over to www.nrn.com/policy.

And if there’s a race you’d like me to follow for you, just e-mail me at peterjromeo@aol.com.

There's an app for that--or will be soon

A technological revolution is sneaking up on the restaurant industry, and it promises to be a pleasant though dizzying one. Not long ago, the most advanced human resources tools were training materials printed in Spanish as well as English. Tonight at the kick-off cocktail party for People Report’s Best Practices Conference, I learned about products that could truly up-end the way restaurants recruit, train, reward, schedule and even observe their employees. Much of it can be done via smart phone or texting.

That includes a new capability to train a camera on employees, analyze the footage through a sophisticated algorithm, and then send a text alert to the manager if the system detects a situation—a food handler who’s casual about wearing gloves, for instance—that needs to be addressed through training. The set-up apparently recommends what that training should be.

That’s just on the personnel front. I also heard about a sales aid, about to be deployed by a major chain, that enables restaurants to pitch their empty seats to consumers virtually in real time—“come in at 9:30 and the drinks are on us.” That promise has been raised a gazillion times as a blue-sky possibility for the industry. As of tomorrow, it’ll be a real option, actually in place, as it widely is in Europe.

Then there’s the new sales benchmarking service that shows subscriber restaurants how their volumes compare with the intake of their peer group. That’s hardly revolutionary. But this one adds the why’s, based on other collected data, and delivers the information and an analysis quickly to a computer dashboard. The demos are even being given on cell phones, so apparently that capability is either there or in the near future.

Then there’s the start-up that intends to give employees what they’ve earned before payday. If hourly staffers clock shifts on Saturday, Sunday and Tuesday, they wouldn’t have to wait until Friday’s payday to get the money. Technically it’s loaned to them, secured against the wages they’ve already earned. This new supplier handles the process with minimal involvement by the employer.

All of that came from conversations with perhaps a half-dozen people. There were probably other examples to be encountered, but, hey, there was an open bar.

But I heard enough to realize the industry is entering a new technology era, where far more intelligence can be gleaned, far more control can be exercised, and far greater capabilities will be put in the hands of restaurant managers and corporate supervisors, quite literally. It’s heady when you think that some places are still regarding their VHS training tapes as Buck Rogers stuff.

No cake in the face

Being written into the script of a hit network show is the sort of luck that usually involves an ancient bottle and three wishes. But when the show is the edgy “30 Rock,” your genie can turn out to be a member of the “Jackass 3D” cast.

Indeed, things could’ve been a lot worse for Carvel, the revered soft ice cream concept that figured large in last week’s episode of the NBC sitcom.

Yes, the chain’s frozen cakes were used for a flimflam. A key character in the show is given a card entitling her to free Carvel ice cream for life, a reward for dancing (albeit suggestively) on the chain’s Thanksgiving Day Parade float.

She and another character hit on the idea of using the card for a free cake that they asked a store’s two crewmembers to decorate with a purposefully misspelled word. Then they’d bring it back to another worker in the store, complaining about the error and demanding their money back. The other employee, never suspecting that an ice-cream-for-life card had been used, handed over the cash each and every time.

Okay, not the greatest association for you product. But Carvel was introduced into the plot as a treat for the staff. That’s at worst a left-handed compliment.

And the product always appeared attractive—clean pink boxes, a signature of the chain, and cakes that could’ve been food-styled for a photo shoot. The show might’ve stirred some yearnings for those of us who grew up with Carvel.

Then again, when the scam is finally discovered, the worker at fault blurts in a huff that she’s resuming her position as a cut-rate streetwalker.

But what’s a brand to do? It’s free publicity, albeit with a few associations you probably wouldn’t choose for your name. Do you object? Take steps to counter any potential negatives that might or might not be remembered a day later? Or do you do nothing?

Kudos to Focus Brands, Carvel’s franchisor, for turning the situation decidedly in the brand’s favor. It sent a Carvel cake to the “30 Rock” staff as a thank you, with a heartfelt and absolutely perfect inscription on the frosting.

See it for yourself here at Ashley Swann’s blog.

Post-Ice Age green

I've spent much of the past week getting reacquainted with that one-time staple of a restaurant writer's life, the announcement of a chain's newest addition. Once the gnats of my in-box, those media alerts all but disappeared during the credit freeze, following conventions like fully staffed restaurants into cryogenic suspension.

They've just recently come back in a flurry, signaling that the glacial ice is finally cracking. It’s no coincidence that the industry had its first IPO in ages during the same week, or that the expanding brands include such woolly mammoths as Arthur Treacher's and Houlihan’s. Money is being invested in restaurants again, and not just the fetching young darlings.

Strangely, most of the announcements could have begun with “Here ye! Hear ye!,” because they read like antiquities in one key respect. I’ve scouted them thoroughly, and rare was the release that cited green touches to the newly opened stores.

I’d taken that as a huge positive at first. Eco-friendly features had become so common that publicists no longer bothered to point them out! Yeah, that must be it! It’d be like bragging that the new place used forks.

But, sadly, that’s not the case. Rather, restaurants had been so hard-pressed for expansion funds that many were loath to expend precious dollars on green features.

You can’t blame them. A starving person isn’t going to ensure that his first relief meal is heart-healthy.

Sadly, they’re going to learn how shortsighted that approach is. Conserving energy and water can have an appreciable impact on profits, while efforts like using recycled construction materials, or recycling and composting garbage, can profoundly raise the top line. We’re fast approaching the point where customers and staff are going to demand a commitment to the environment as the price of their entry.

The operator of Houlihan’s newest store certainly appreciates how the world has changed. The unit features a full composting program, as well as a geothermal HVAC system.

Ditto for the latest Carl’s Jr./Green Burrito combo store, in Anaheim, Calif. It sports an extensive array of energy and water-saving features and equipment.

Certainly not all new restaurants can afford those sorts of green enhancements. But there are plenty of steps that require neither loaned dollars, time or adjustments to a design—actions like using low-flow pre-rinse valves, or posting a local bus schedule in the employee break room, so staffers have the option of taking public transportation instead of relying on a car.

No doubt a new unit has an easier time of being green than one dating back to less eco-conscious times. Opportunities will soon abound for the industry to exercise its commitment to the environment. But first it has to melt its Ice Age attitudes.

Kudos to the natty queen Cole

One of the best presentations I saw in 30 year of attending industry conferences was an amusing account by Claire Babrowski of her climb through the ranks of McDonalds. She did a wonderful job at the podium of conveying both the warmth and the challenges of that career path, which brought her just one level away from the presidency of McDonald’s USA.

If I had a recording of her speech to the Women’s Foodservice Forum, I’d run off a copy and overnight it to Kat Cole, who yesterday was named chief operating officer of the Cinnabon bakery chain. If you don’t know who Kat is, you haven’t seen any of the restaurant trade magazines in the last five years, or attended any of the major industry conferences, or served on an association board. She even appeared on the reality TV show, Undercover Boss.

As head of Hooter’s human resources efforts, she achieved a notoriety that’s exceptionally rare for someone on the personnel side of the business. With the exception of Roz Mallet, a former Caribou Coffee CEO who now heads a franchise operating company, there’s no else I can recall who moved from the HR department to the big C-suite offices.

Cole is no doubt rounding out her executive experience, a bit of prep work that will ease her ascent one day to a chain president or CEO post.

Hence my regret that I don’t have a copy of Babrowki’s speech to share. The longtime McDonald’s official recounted such experiences as worrying she’d trigger a worldwide sesame-seed shortage by minutely altering the specs for McDonald’s hamburger buns. Or the over-her-head sensation of hearing Carolina franchisees literally cry because the first Iraqi war had yanked their customer base overseas, leaving the mom-and-pop operators fretful about surviving.

Best of all was her thumbnail recount of gaining operational experience: No more manicured nails, no more choosing footwear for style rather than comfort, and no more days without aching legs and feet.

It was a striking travelogue of the journey Cole is about to take. Granted, 800-store Cinnabon isn’t McDonald’s. No doubt like Babrowski, she’s destined for great things. I for one wish her well.

I’m also eager to cross paths with her soon because she’s in a position now to answer the question many of us have harbored about her career to date. Cole is a zealous defender of the employment opportunities afforded by Hooters, a chain known for its wings and waitresses in revealing T-shirts. Indeed, she started as what the chain calls a Hooters Girl.

She’s also extremely active in the Women’s Foodservice Forum, a group devoted to fostering executive opportunities for women. Some of us have had trouble reconciling that extra-career activity with what Cole did for the bulk of her week.

Now of course, it’s academic. She’s on her way to becoming even more of a star in the business.

Babrowski eventually left the industry because she didn’t get the top domestic job at McDonald’s. We’re fortunate that Cole is still in the business, making her mark.

Domino's spotlights a farm connection

Who’d have thought Domino’s would jump ahead of the big-chain pack in embracing the local-agriculture aspect of sustainability?

Cheese from Wisconsin is hardly local when it tops a pizza sold by a Domino’s in Alabama, California or Massachusetts. Still, the delivery giant is breaking new ground with the just-introduced Wisconsin 6 Cheese pie and the commercial supporting it.

At the very least, the Michigan-based chain is specifying where a main ingredient was sourced. That’s a marked departure from the usual chain pronouncement that Ingredient X is wholesome, fresh and delicious. In this day and age, those bromides are taken to mean the item is factory-produced, unnaturally consistent and perfect-looking, and muted sufficiently in taste to displease no one.

Domino’s is promising that the cheese on the new pie actually comes from farms, and it’ll even tell you where they are. There’s an implied direct connection between the multinational chain and the mom-and-pop dairy producers of farmland America.

Indeed, the commercial suggests that Domino’s isn’t ashamed of anything it puts on the pies, and is willing to specify where each component was produced.

Perhaps more important, the franchisor has pledged to start a website, “Behind the Pizza,” where consumers can meet the farmers who produce 10 of the ingredients that go into Domino’s products. Visitors will learn about the trip from farm row to delivery box.

Sure, there’s some hype to the promotion. The Associated Press has reported that not all the cheese used on the new Wisconsin pie is actually from that state. And a buyer from Domino’s isn’t toodling down a dirt road in his dirt-caked pick-up, buying a block of cheddar or mozzarella from a guy in overalls named Clem.

Truth be told, the buy-local/sustainability movement is a multi-layered phenomenon. Ideally it’s serving what was produced a turnip’s throw away from the restaurant and picked that morning. If that’s not feasible, the next best thing is serving something seasonal and fresh, regardless of where it’s from. And if that’s not do-able, it’s providing food with a narrative of where it came from and how it got there.

At least Domino’s is addressing the mega-trend of the moment.
We’re in the midst of a cultural revolution that’s reshaping the way America eats—and lives. The shift to local foods holds profound implications for parties ranging from the local café to grade schools, parents, banquet managers, community planners, even residential developers.

It’s nice to see that chain restaurants aren’t sitting apart, idly watching truckloads of farm-fresh produce roll past.

A game-changer named Abe Gustin

The restaurant industry lost one of its revolutionaries last week, though it’s strange to apply that label to an arch capitalist like Abe Gustin.

He’ll be remembered as the person who founded Applebee’s, even though the concept was actually the brainchild of Bill Palmer, now of Up The Creek Without a Paddle. What Gustin truly founded was a simpler, far more effective approach to franchising, with the principle of partnership elevated to an art form.

Plenty of franchisors pledged to make their relationship with franchisees a symbiotic one, but Gustin had learned how empty those words could be. As he would candidly recount in interviews, being a franchisee of Taco Bell in the mid-1980s had taught him how subordinate the licensee could be. He felt the home office was dictating the terms and controlling franchisees’ growth, instead of working in tandem.

Gustin said he tried to set up Applebee’s franchisee programs to be just the opposite. For one thing, he limited the number of franchisees to a few dozen, so the field-level operators wouldn’t be competing with one another for turf, sales or employees.

And they were given a firm say in what they served, and not only through the advisory council that virtually all chains set up to give franchisees a voice in shaping menus. Long before local specialties were given the spotlight they get today, Applebee’s franchisees were invited to fill out their menus with regional specialties. The home office set about 80% of the listing, and the field operators chose the rest.

More important, franchisees attested that the home office heard what they said—maybe not all the time, but enough to make them feel they had a strong influence on the brand’s direction.

When franchisees felt their territories were running out of room for more Applebee’s restaurants, the home office went out and bought a second franchise concept, Rio Bravo. Since it, too, was developed in part by Palmer, headquarters figured it was the right means for franchisees to keep opening outlets.

It was wrong, as franchisees and investors soon let management know. Rio Bravo didn’t work for the system, so the brand was divested. Everyone went back to expanding the Applebee’s chain again, using smaller prototypes and smarter siting strategies.

The proof of Gustin’s approach to franchising was Applebee’s phenomenal growth. Before he controlled the brand, it was owned by W.R. Grace, which treated it like a glorified lemonade stand. It grew to 42 stores, if memory serves me correctly, which made it a miniscule part of the chemical giant’s portfolio. Its other restaurant holdings, just to put it in perspective, were Del Taco and Houlihan’s.

When Grace decided to exit the restaurant business and sell those brands, no one seemed to even notice Applebee’s. Houlihan’s was the plum. With barely any notice taken, Gustin was able to secure what would become casual dining’s longest string of restaurants.

It would grow to far more than 1,000 restaurants, a size more befitting a fast-food chain than a group of full-service places. But Gustin and his lieutenants—some might say disciples—made it happen.

The fuel was franchisees’ capital. Gustin kept the fire stoked.

The industry shall miss him for sure.

Ruby Tuesday's new seafood concept

As if Ruby Tuesday didn’t have enough choices on its menu of development options, the casual-dining giant is prepping one more type of restaurant it can use to replace weak namesake stores. The company alerted investors earlier this week that it will open a “seafood health concept” later this year.

Management didn’t divulge the name or many particulars about the venture, saying only that it would be one more option for salvaging underperforming Ruby Tuesday sites. Executives lumped it together with the two replacement concepts that were identified earlier, Jim ‘n Nicks and Truffles.

Like those, they explained, the seafood restaurant could replace a played-out Ruby Tuesday at a cost of under $500,000, and generate annual revenues of more than $1 million.

CEO Sandy Beall explained that 23% of a Ruby Tuesday’s guests, or roughly one in four, already order seafood. “It’ll just be a more seafood-oriented Ruby Tuesday, really,” he said during the conference call with analysts. “And it’s very relevant based on what people are eating and their health and so forth.”

The big benefit, he said, would be differentiation from all the other so-called grill-and-bar concepts, like Chili’s, T.G.I. Friday’s and Applebee’s

An analyst voiced his concern that Ruby Tuesday would be entering a sector where even long-established brands are facing considerable challenges. “We can all think of the biggest fish in the sea who is struggling with difficult trends,” said Robert Derrington, the restaurant analyst for Morgan, Keegan. He didn’t name that brand, Red Lobster, by name.

He noted, however, that Ruby Tuesday had experience with seafood restaurants.

Yes, said Beall. The company ran the L&N Seafood Grill chain when both casual-dining brands were part of Morrison, a large contract-feeding company.

Investors also heard the Ruby’s plan to use several young concepts as its expansion vehicles. It recently secured rights to develop units of Lime Fresh Mexican Grill, a fast-casual chain that currently has six stores open.

“As far as the economics go, it's really very, very similar to Chipotle,” said chief marketing officer Mark Young.

Wok Hay, a fast-casual brand that Ruby’s acquired several years ago and subsequently upgraded into a full-service operation, wasn’t mentioned. Ruby had cited it several months ago as a possible replacement concept for tired Ruby Tuesday outlets. It also cited it at that time as a restaurant that could be built on new sites.

Meanwhile, management noted that the first Jim ‘n Nicks is open and generating sales that should top $1.5 million on an annual basis.

They said Ruby’s first Truffles, an upscale casual format, would open next month.

The food industry's future, in high def

In the course of covering the restaurant business, I routinely hear savants proclaim what sorts of places and foods will catch the industry’s fancy in the months and years ahead. The future they’re sketching bears little resemblance to the one young kitchen talents are already setting out to build.

I say that after listening for three days to the business plans of 21 would-be graduates from the Institute of Culinary Education in New York City. As a final exam of sorts, the students develop an idea for a business and pitch it to the class. Invited to attend are three industry veterans who act as if they’re prospective investors, asking questions, providing feedback and generally helping the students sharpen their presentations. I was one of the industry elders tapped to play constructive critic.

The students had spent the six-month semester developing their business concepts, and it showed. The lot were brilliant—creative, finely detailed to demonstrate their viability, and decidedly real world, reflecting what the students had learned in the field as well as the classroom.

I won’t divulge any of the ideas because this is an industry of thieves. Then again, most of the restaurateurs I know would have trouble copycatting concepts that pivot on marshmallow, faro, free shots, egg creams, cowgirls, German sailors, and broke hipsters. (If you want an explanation of those elements, contact me and I’ll either pass you along to the student or shed as much light as I can without giving away the idea.)

Indeed, if restaurateurs were looking for ideas to pinch, they’d have found few suitable for their world. The presentations left little doubt that tomorrow’s chefs are choosing food shops, not restaurants, as the galleries for their arts.

More than a third of the pitches I heard dealt with retailing in some way. Several of the concepts were out-and-out storefronts, selling everything from flasks and coffee to Romanian vintages for wine virgins.

Other students aired their intention to sell a retail product via food or specialty shops. One already had an operation lined up to carry her product. Another brought in a gift basket of her wares.

The class’ instructor, the former restaurateur Alan Someck, explained to me that the students had witnessed the rigors of running a restaurant or a high-volume kitchen during their internships and work in the industry. That lifestyle might not hold the appeal it once did for youngsters aspiring to earn lots of green in whites. They were clearly more open to alternative paths, like the food and restaurant-focused web site that one student planned to open.

But the students also seemed to lack the black-and-white attitude of yesterday’s restaurant industry, which saw itself as a world apart from food retailing. The ones who planned to open a restaurant after graduation almost to a person included a retail component in their brainchild. Those stations would sell everything from meat to customized gifts.

Along the same lines, a goodly number of the plans broke out sales projections for catering, even when their signature product wasn’t something you’d associate with that sort of service—drink flights, for example.

And quite a few presenters said they intended to use trucks, carts and stands to offer their products where would-be customers are likely to be, a further departure from the dining-room mindset of past generations.

I have absolutely no doubt that many of the students whose plans I evaluated will be extremely successful in their ventures. They’re going to be tomorrow’s stars, albeit in a much different industry than the one we see today.

What Wendy's has learned about salads

Wendy’s held a virtual press conference last week to underscore the health benefits of its new mix-and-match menu program, Pick 2. As far as I know it was the first time a restaurant giant has held a communications event expressly for bloggers.

The resurging burger chain clearly hoped we’d pass along information about the new $4.99 deal to prospective customers. But in explaining the offer, executives divulged information that should be of interest to any restaurateur who wants to appease salad-hunting patrons.

When Wendy’s decided to revamp its salads, it discussed the prospects with consumers, explained communications director Kitty Munger. They told the chain that there are a few things that bug them about a bowl of greens.

For instance, they don’t like the lettuce in their salads to be wet. As a result, said Munger, Wendy’s has outfitted every unit with a salad spinner.

Patrons also stressed they don’t like gnawing on big hunks of lettuce or ingredients. They want the components of a salad to be cut into smaller, bite-sized pieces. Wendy’s is obliging them, Munger said, by providing everything in its new salad line in fork-able pieces.

The feedback revealed that Wendy’s targeted customers want additional textures in their salad, particularly croutons and pieces of tortilla. Wendy’s has obliged them.

Finally, Munger recounted, Wendy’s learned that consumers want what she termed “flavor excitement.” She explained that Wendy’s tried to be a little adventurous with the new salad line by using ingredients like cayenne pepper and pecans kicked up with sea salt.

As I’ve noted in an earlier post, I’ve tried the new salads. They’re a true advance for fast food. Little did I know how much research had gone into the line.

What they're saying about Eataly

A snippets of conversations overheard at lunchtime today in Eataly, the new Italian food complex opened in New York City by Mario Batali, Lidia Bastianich, Joe Bastianich and several other big-name kitchen stars:

Thirtysomething man in casual business attire, about to hurt his neck as his head snaps around to take it all in--the restaurants, the food stalls, the displays of cheese and salumi: This place is sick.

Thirtysomething female companion, apparently a co-worker, after nodding vigorishly: I could live here.

Local movement hits a turnip in the road

Wanted: Enough locally grown hemp to weave a few nooses. Locavores are ready to string some beans after being conned by an opportunist or two with field mud on their boots.

It’s not uncommon for the growers who populate farmers markets to use natural fertilizers on their crops. A few, it seems, have been slinging BS of a different sort. Products they’ve been hawking as locally grown were actually harvested hundreds of miles away and warehoused, as several investigative reports have revealed.

The Pulitzer Prize-worthy piece was last week’s report by the NBC affiliate in Los Angeles. Reporters for the station bought produce at local farmers markets, then paid surprise visits to the farms where the items were purportedly being grown. Instead of planted fields, they found weed-covered lots.

Presented with the evidence, some of the lying growers ‘fessed up. Hence the hemp request. Locavores regard farmers markets as sacred grounds. These slicksters in overalls were desecrating the virtual birthplaces of the buy-local movement.

Refuting claims of a food being locally sourced has become downright popular in the United Kingdom. The London Mail focused on restaurants’ deceptions, noting that lambs supposedly from the countryside had actually been raised and butchered in New Zealand, on the other side of the globe. A locally made pie of locally grown apples actually came from a supermarket aisle, the story noted. And half the local cheeses it investigated were actually imported from other nations.

Don’t mash my turnips for saying this, but it’s not surprising that such a thing could happen. Sales of locally sourced foods are skyrocketing, in part because of the prices they can command.. The poor schlub who grows nothing but peanuts for a big multinational food processor doesn’t want to miss the opportunity.

Clearly safeguards will have to be implemented to verify the origins of what markets and restaurants sell as locally grown. That, unfortunately, flies in the face of the movement’s informality and almost bohemian sense.

But doing nothing will open the produce stalls to more charlatans, and that would certainly hamper the sea-salt change that’s taking place in America’s eating habits.

Better fare to be the bomb this fall

Who knew foodies were lurking beneath the beer-can hats and face paint? There’s no denying that today’s football fan, and the tailgating variety in particular, have been splicing some Rachel Ray episodes into the ESPN highlight reels.

Consider the findings of the Weber grill company’s annual survey of NFL ticket holders: Half of tailgaters, the fanatics who host a pre-game cookout outside the stadium, regard themselves as gourmets.

Half those parking-lot culinarians prefer to grill seafood instead of the usual burgers and brats. Perhaps not surprisingly, they tend to draw 20 fellow fans to sample their fare, compared with a mean of 14 for the pedestrian grillers.

Even more telling are stadium feeders’ announcements of the new restaurants they’re showcasing at pro arenas this season. The localization trend hasn’t taken a time-out during gridiron season. Contract management companies like Centerplate and Delaware North have added feeding stations that specialize in home-city favorites, from crab cakes at the Baltimore’s Raven’s home roost to a fried pork tenderloin sandwich at the Indianapolis Colts’ ballpark.

A competitor, Delaware North’s Sportservcie, said it searched for menu ideas in the New Jersey towns surrounding the concessionaire’s newest charge, the Meadowlands home of the Jets and the Giants. The rookie stadium is featuring such “Jersey Shore”-authentic fare as pepper and egg sandwiches and Nonna Fusco’s Meatballs, made from the recipe of Sportservice executive chef Eric Borgia.

Still, the management companies aren’t neglecting fans with more traditional stadium tastes. Centerplate-managed facilities will feature a 2 Point Conversion deal, or two hot dogs available at a combo price, and a refillable peanut cup for anyone who buys a drink to accompany the snack.

Sportservice said it will have 91 portable beer carts at the new Meadowland stadium.

A chef decides it's better to be all a-Twitter

Many of my colleagues in the general media have been ga-ga over 4Food, the quickservice upstart that says it’ll reward customers who create a new menu item. Patrons can create their own burger order, give it a name, and promote it via social media. The more times it’s ordered, the more rewards they’ll garner from the place.

That’s an interesting application of Twitter and its ilk. But more impressive is the virtually overlooked new venture of Brett McGee, the Charleston, S.C. chef who recently packed in a conventional culinary career to bet on something social-media based. Indeed, it may be the more reliant on viral communication networks than any foodservice venture we’ve seen to date, including Roy Choi’s Kogi BBQ truck.

McKee recently turned in is toque at the Charleston institutions where he mans the kitchens, the acclaimed Oak Steakhouse and O-Ku. He says he’d rather devote his energies to building a fleet of mobile restaurants bearing the brandname Roadside Kitchens. Like many truck ventures, the first two Kitchens rely heavily on social media. That’s how they tell customers where to buy the concept’s comfort foods.

But in a marked twist, Roadside Kitchens will use social media to determine what items to put on the menu. As it moves into new areas, McKee has indicated to local media, Kitchens will ask consumers to post what items they’d like to find on the menu. Roadside Kitchens plans to put those requests on the menu, McKee indicated.

We’re just starting to see the power of social media. But in quick order, we’ve seen how it’s likely to remake menus in the near-term.

Real-life perspective on guns in restaurants

Jim Balloch, a veteran reporter for the Knoxville News Sentinel, was eating in a local S&S Cafeteria last week when he heard a commotion from the cashier’s booth a few feet away. What happened next is a nightmare familiar to many of you who operate restaurants, a damnable side effect of keeping the doors open to everyone. No one could have prevented what happened, but some contend there’d be greater safety in what the industry blasts as a pronounced danger. Clarification on that in a moment.

First, I’ll let Jim describe what happened, as he did in this first-person account for the paper:

I stood up and started to walk to the booth to see if I could help when I heard the shot. It was a dull, flat pop, not as loud as would be expected of a shot fired inside a room.

From my angle, I could see a semiautomatic pistol, angled slightly downward. I could barely see the hand that was holding it. At that precise second, all sights, sounds and senses of time and motion were compressed into a queasy netherworld.

Balloch dove under a table, as did many of the other customers. They came out when someone yelled that the cashier, a 60-year-old retired accountant six weeks into the job, had been shot during the robbery. Dan Giles couldn’t be saved.

The Sentinel reported this week that authorities suspect the robber was a former S&S employee who killed Giles to avoid being identified. When the police went to arrest the suspect, 54-year-old Michael Chesney, he fired at them, hitting one officer. The others shot back and killed Chesney.

Balloch wrote the story.

If that had happened outside of Tennessee, I probably wouldn’t be writing this. But the state is a flashpoint in the debate over expanded gun-possession laws. The statutes were recently amended to permit consumers with a concealed-gun permit to visit alcohol-serving establishments while armed, a move that strikes many of us as increasing the chances of a shooting, not averting situations like the S&S murder.

Proponents counter that residents should be able to defend themselves in all situations, and stress that the new law doesn’t permit the gun bearer to drink.

The state’s restaurant industry, like the trade of virtually every other state that allows hidden guns in bars, has argued vehemently that the temptation might be too great. They also fret that arguments involving only one combatant stoked by drink could still lead to nose-to-barrel confrontations. The combination of alcohol and guns is just too potentially dangerous, they assert.

A restaurant server who agrees recently filed a complaint with the Tennessee Occupational Safety and Health Administration. He asserted that the law is putting him at considerable risk on the job. The safety watchdogs have yet to rule on the matter.

S&S Cafeterias typically don’t serve alcohol. In an e-mail to me, Balloch noted that an armed patron wouldn’t have been able to protect Giles because the cashier’s booth is tucked out of diners’ sight lines. “So in this situation, especially since it happened so quickly, there would not have even been time for a permit holder to act to even save Mr. Giles' life,” he wrote.

But if the shooter had gone on a rampage, a la what happened in Killeen, Texas, years ago, “then I would wager that everyone in the cafeteria would hope that at least someone among them had a means to resist,” Balloch said.

Gun enthusiasts would seize on that sentiment as validation for permitting weapons everywhere, from parent teacher meetings to picnics in the park. But I still don’t see how packing guns in restaurants, especially ones that serve alcohol, averts rather than fosters danger. For every Luby’s shooting, which we’re still discussing some 20 years later because of its rarity, there might be X accidental shootings, or rash gun play sparked by anger, machismo, or a few Jack Daniels downed in defiance of the law.

Those concerns should be part of the discussion, just as the potential safety might. Which is why I’ve tried to air both sides here.

The future checks in

In the not-too-distant future, restaurant employees will try to land a new job by showing the would-be hirer how many service compliments they’ve garnered on Foursquare. The applicants might hear of the opening from an alert their cell phones deliver as they drive past the understaffed place.

That’s not what-if stuff, but capabilities being refined right now, says Nate DaPore, a software veteran who’s about to launch a new suite of HR products for the restaurant business. He thinks the industry is poised for a quantum leap in its ability to find, train and retain the best personnel, or what HR professionals call “talent management.” The springboard, he says, will be technology based on the sort of devices the restaurant labor pool increasingly uses, like smart phones and iPads.

That’s not exactly a new world view. The a-ha to DaPore’s expectations—near-term ones, he stresses—is what personnel information those devices will generate, collect and provide on demand for employer and employee alike.

For instance, the portable databases will soon serve up detailed records of what training a job applicant has undergone, including ServSafe certification, he says. That’s in addition to a detailed work history, a resume-in-bytes, so to speak.

Some of that banked information will come from customers, he says. Through an application already being written, DaPore explains, Foursquare users will be able to rate the performance of employees at restaurants where they’ve checked in. Those “merit badges” will go into the staffer’s file, which will travel with the staffers as their foodservice career progresses. “They’ll take their merit badges and job history with them as they move from job to job,” says DaPore.

He wouldn’t say precisely when those capabilities would be introduced, which isn’t what restaurateurs like to hear. After years of hearing technology promises, many are skeptical until they see the new tools in use.

But DaPore suggests that HR technology has leapt farther than many restaurateurs realize. He notes that his company, People Matters, is about to introduce a system that determines if new hires are eligible for tax credits, which the program then automatically secures and processes.

He’s not alone in that regard. Technology suppliers stress that foodservice employers have a host of new capabilities available to them. Decisions that were once made on a purely gut level—a go or no-go on a frontline hire, for instance—are being simplified by new screening or evaluation tools. They suggest that operators were so focused on surviving, understandably, that they haven’t noticed significant advances in the HR technology available to them.
Better times, of course, could be the eye-opener.

Finally, an aside to regular readers: You’d be hard-pressed to find a mention of many other vendors in this space. Indeed, I’ve avoided it out of habit. Business writers have to avert readers’ suspicions that a company is being named because of some quid pro quo. The safest course is not to mention advertisers, potential advertisers, non-advertisers or just about any brand name you can possibly avoid. If there’s not so much as a reference, how can there be some financial agenda?

But because I don’t accept advertising here, and don’t make a dime off this blog, I’m suspending that policy. I’m in the enviable position of being able to write what I want without any taint of a financial connection. I can’t be called a whore if there’s no money on the pillow.

It’s freeing because many suppliers have a wealth of information and insight on the problems hamstringing restaurateurs. That potential assistance doesn’t get an airing because it’s suspected of being a sales pitch, if not an empty come-on.

If something worth telling should arise from the supplier community, I’m no longer going to dismiss it per se.
But you operators have to ensure I’m not misled or duped. If I fall for some supplier’s BS, please yell. Loudly.

These dogs can hunt

The wags have it wrong about old dogs and new tricks. A few stalwarts of the restaurant business are pulling off fresh feats as if they were mere pups.

For Andrew Cherng, maybe “panda cub” would be more appropriate. He and his wife, Peggy, founded and built Panda Restaurant Group, a collection of more than 1,200 quick-service and casual Asian restaurants. With the company reporting annual sales of more than $1 billion, it may be the quietest giant in foodservice. Little has been written about it, and in almost 30 years of covering the restaurant business I don’t think I’ve met more than two people who worked for the Cherngs and moved on. It’s been a black box of information.

That’s why yesterday’s news flash was such a head-turner. Cherng has secured rights to open 150 branches of the new Tide Dry Cleaning chain being developed by Proctor & Gamble, according to the Bloomberg Business Week report. He likened the opportunity to being part of McDonald’s during its start-up mode, which suggests the venture will be getting a great deal of his attention. Panda’s website still lists him as splitting chairman duties with his wife.

The Business Week story noted that the Tide chain is one of several franchising businesses P&G is exploring with the guidance of another longtime chain-restaurant veteran, Bill Van Epps.

Perhaps it's not a coincidence that one of Tide's point of differentiation is a drive-thru lane so patrons don't have to exit their cars.

Cherng and Van Epps aren't the only long-timers taking new paths. Nation’s Restaurant News reported a few days ago that White Castle, one of the business’ oldest chain operations, is testing three start-up concepts that could be shoehorned into its iconic burger outlets.

Not long ago, White Castle’s resistance to change made In-N-Out look downright reckless. It featured its signature sliders with cheese, but that was about as much variation as the all-company-operated chain could tolerate.

More recently it moved into products like pulled-pork and chicken sliders, but it still wasn’t exactly rivaling Jack in the Box or Burger King as a product innovator.

Now, according to my former colleagues at NRN, the familiar castle-themed brand is experimenting with three retrofit-able stations, each with its own name and identity. The ventures would diversify White Castle’s into pressed sandwiches, noodles and barbecue specialties of various global regions.

I don’t know why we should be surprised to see the old guard embrace change. In-N-Out did add a new diet soda a few years ago.

Good work, Dr. Freud

Sanity seems to be making a comeback.

Oh, sure, there’s still the potent counterargument of Sarah Palin’s popularity. But consider the recent developments where reason clearly prevailed, rescuing restaurants and other service businesses from a Twilight Zone episode.

Take today's news from Tennessee, for instance. An employee of a restaurant there has reportedly petitioned the state’s Occupational Health and Safety Administration to do its job of protecting workers. In his case, the danger isn’t an ungrounded piece of electrical equipment or a slippery floor, but guns. The state is one of several that recently bowed to the gun lobby by agreeing to let licensed patrons carry concealed weapons inside alcohol-serving establishments.

Think of how many bar fights you’ve witnessed, or perhaps been pulled into. Now consider how the outcome might’ve been different if one or several of the combatants had been armed.

According to news reports, a server at a bar and grill in Hillsboro Village can anticipate the danger—not only to the persons waging the dispute, but to himself. Bullets aren’t that discriminatory.

He's reportedly filed a complaint with the state OSHA because he believes the presence of guns in a drinking establishment poses an on-the-job hazard.

Attention, those of you who are about to brand me a tool of the liberal conspiracy: Yes, the news reports quoted co-workers of the complainant as saying they feel safer knowing patrons may be carrying. Many many people in the state do like guns, and see no reason why you can't be packing when softball team heads out after the game for some adult rehydration.

But the logic eludes a lot of restaurateurs. Sanity would suggest you keep guns and alcohol separate, even if the bearer is technically forbidden to imbibe. Why mix flame and dynamite?

That’s not the only hopeful development of recent days. Consider the wholesale shift of public companies to private-owners status, a movement that could soon claim Burger King, if the Wall Street Journal’s bombshell report is accurate.

Public ownership has morphed into insanity, with analysts and shareholders squawking like third-world dictators when a company tempers its financial predictions for three or nine months out. They start tying a noose if the management team is so foolhardy as to miss the projections.

It’s ridiculous to think that multi-billion-dollar companies should be managed for three-month returns, when far greater paybacks could be engineered if a longer timeframe was allowed by investors. “Longer” being eons of, say, a year or more. A shift away from a public-ownership model makes sense.

Of course, certain pockets of insanity are proving immune to reason. Consider, for instance, the situation in Brookfield, Mass., where civic leaders decided that the center of town would be marred by the development of drive-thru restaurants. They ramrodded through a ban on the eateries—only to discover they’d inadvertently outlawed drive-thru banks and pharmacies as well. Getting out of your car for a Big Mac might be okay, but for a refill of Viagra? Pffft.

The town amended the law to permit the development of all drive-thrus except restaurants.

Set your TiVos for this one

A dandy takeover skirmish has slipped past almost unnoticed, despite the eleventh-hour victory of a restaurant veteran whose last turn in the spotlight still has observers telling war stories. They paint Bill Foley as a wheeler-dealer with the guile of a car salesman and the won’t-take-no tenacity of an insurance peddler.

Indeed, insurance was how Foley made his first fortune. Then he used the money and a sixth sense for opportunity to become the controlling investor in the parent of Carl’s Jr.—after he was brought in to keep the brand from being wrested away from its iconic founder, Carl Karcher. Karcher kept his job as the brand’s front man but lost financial control to Foley. Yet by all outward appearances, Karcher appeared grateful, not resentful.

Now Foley’s American Blue Ribbon Holdings has emerged as the winning bidder for Max & Erma’s, the Midwestern string of bar-and-grills that slipped into bankruptcy late last year. Blue Ribbon and its investment partners aren’t expected to close on the roughly $28 million purchase until Tuesday, but Foley is already sketching out his plans for the casual chain.

“We’re not in there to do anything crazy,” he told Business First of Columbus, a newspaper serving Max & Erma’s hometown. But Foley indicated that up to 10 of the chain’s 77-or-so restaurants will be shut to stem the chain’s bleeding before it starts growing again.

It’s hardly standard for a restaurant buyer to announce closings before the staffs of the doomed restaurants have been given the bitter news. At the very least, the places usually know their plug will be pulled. Otherwise employees will worry their units are in the crosshairs.

He also disclosed that Max & Erma’s will likely start selling pies from his two other sizeable restaurant chains, Village Inn and Bakers Square.

Foley, an attorney by training, definitely follows his own playbook. Some questioned his reasoning when a company he controls bought Village and Bakers, two of the earliest casualties of the economic downturn. The family dining greybeards hadn’t exactly kicked up their heels for ages. Why would Foley bother to turn around two stalwarts of a segment that’s been shrinking for eons? No one else seemed to want it.

Max & Erma’s, on the other hand, could’ve been a rock star fending off groupies. Two other suitors had declared they’d bagged the brand before Blue Ribbon slipped in with the actual winning bid.

Among them was a consortium that included investors in the Red Mango and Furr’s chains.That shopper, Dallas-based Concept Development Partners, had been identified as the buyer of Max & Erma’s as early as mid-July. But its reported bid of $26.4 million was topped, apparently afterward and with no fanfare, by Foley’s group.

Max & Erma’s, then operating or holding the franchise rights to 107 stores, was sold for about $10.2 million to Pittsburgh restaurateur Gary Reinert in early 2008. It was under his tutelage that the company filed for bankruptcy.

Reinert generated recent headlines by asserting he and Cantor Fitzgerald, the New York financial giant, were teaming up to buy Max & Erma’s for $32 million. But Nation’s Restaurant News reported the offer was never actually tendered to the bankruptcy court.

Reinert had apparently opened his mouth but not his checkbook.