If you doubt the Happy Hour is making a comeback, consider the sales elixirs two heavy-pouring restaurant chains are currently sucking down.
The pair acknowledged this month that they’d uncorked what’s again becoming the most common sales lubricant in casual dining. Brinker International was the more recent to join the likes of P.F. Chang’s and Cheesecake Factory, announcing Wednesday that its Chili’s chain was rolling a “full-blown Happy Hour program,” in the words of CEO Doug Brooks.
Speaking to investors, Brooks was sketchy on details. But he divulged that the lures for the post-work crowd would include sangria, an upgraded version of Chili’s signature margaritas, and new food offerings at the bar.
He described the push for evening guests as one of Chili’s “very big initiatives” for rebounding from the Great Recession, which walloped all of casual dining. The rollout is right up there in strategic importance with the redesign of the concept and the changeover to more efficient kitchens, he stressed.
The financial analysts listening to Brooks refused to let his tease pass without amplification. Pressed a bit, Brooks described the new program as a natural outgrowth of Chili’s re-imaging, which extends to such bar enhancements as the installation of better flat screen TVs. He also spoke cryptically about changes that put the bartender in a position to field more drink orders.
But Brooks rebuffed requests for any sales info from the program’s market tests, which he characterized as having just concluded.
Three weeks earlier, Ruby Tuesday provided a few details about its Happy Hour program, which is already in place at the diversified company’s namesake chain (Ruby Tuesday now has more brands in its portfolio than some of the bigger private-equity firms.) CEO Sandy Beall noted that the draws include half-price appetizers and $2 tacos and sliders.
“The investments we've made in our beverage lineup and bar program should help us reach our long-term goal of increasing alcohol sales to 12% of revenue,” Beall said in Ruby’s conference call with investors.
Looks as if Ruby Tuesday is going to have a lot more competition in getting there.
Friday, October 28, 2011
Tuesday, October 25, 2011
Only yawning over new products is coming from the R&D team
Here’s a link that restaurant chains might want to check out for the well being of their menu development staffs. It’s an eBay listing for army cots. Clearly R&D teams have little time to swap chef’s whites for PJs when they’re cooking up new customer draws at the current pace.
Oh, and don’t forget to visit this site, too. It’s an online pharmacy that extends a price break on big tranquilizer orders. The products coming from the big brands’ test kitchens have typically been make-or-break products. Did the team come up with a new menu milestone, or will their handiwork be remembered as the new New Coke?
Burger chains are changing their burgers, pizza chains are reformulating their pizza, coffee chains are re-percolating their core coffee line, Mexican chains are rethinking what they put in a tortilla.
Think about it: With McDonald’s about to add a new chicken finger food called McBites, and Burger King introducing the Chef’s Choice this week as its new premium burger, almost all of the major fast-food chains are fiddling with their menu signatures.
What’s more, the alterations are introduced with direct or implied criticisms of the versions they replaced. Domino’s has made the most noise on that front, all but asking customers, “How could you have eaten what we formerly sold you?”
But Wendy’s isn’t much more discrete in its push of new French fries and burgers. Ditto with KFC and Kentucky Grilled Chicken. The only one showing subtlety is Taco Bell, which is quietly taking some salt out of its signatures.
McDonald’s hasn’t revealed what sort of noise it’ll make about McBites, a chicken version of popcorn shrimp (essentially deep-fried pieces of chicken meat, like the popcorn selections that have long been on the menus of KFC and Popeyes.) You can bet it won’t knock Chicken McNuggets or Chicken Selects in the introduction, but you have to wonder if customers will nonetheless regard McBites as an obvious alternative to McNuggets.
We’ll find out when McDonald’s rolls the new product next year.
The remake of fast-food signatures won’t end there. As RestaurantRealityCheck noted last week, Burger King is trying a new, thicker fry. Its stated goal of appealing to more women and children portends even more changes in products.
Might there even be some riffs on the Whopper?
This isn't the first time that such a thing has happened. In the mid-1980s, BK indeed changed the specs on its holiest of signatures, revamping the size of the Whopper's patty.
McDonald's tried to rejigger its bigger burgers so they could be garnished with lettuce and a tomato slice that wouldn't be rendered unpleasant by the heat of the patty they topped. Later, KFC introduced a bone-in roasted chicken, and Taco Bell tried reduced-calorie versions of its main items.
They all joined the Edsel in the annals of product failures.
But there are different dynamics--and learnings from those misfires--in play this time. Technomic noted in releasing some research yesterday that the fast-casual sector is influencing restaurants of all stripes. No where is that impact more obvious than in the traditional quick-service market, which has the most to lose from fast-casual's rise. Is it really a surprise that former Wendy's CEO Roland Smith publicly compared the chain's new burger line to what's available at Five Guys?
Talk amongst yourselves about it. But try to keep the noise down. The R&D teams need to catch up on their sleep.
Oh, and don’t forget to visit this site, too. It’s an online pharmacy that extends a price break on big tranquilizer orders. The products coming from the big brands’ test kitchens have typically been make-or-break products. Did the team come up with a new menu milestone, or will their handiwork be remembered as the new New Coke?
Burger chains are changing their burgers, pizza chains are reformulating their pizza, coffee chains are re-percolating their core coffee line, Mexican chains are rethinking what they put in a tortilla.
Think about it: With McDonald’s about to add a new chicken finger food called McBites, and Burger King introducing the Chef’s Choice this week as its new premium burger, almost all of the major fast-food chains are fiddling with their menu signatures.
What’s more, the alterations are introduced with direct or implied criticisms of the versions they replaced. Domino’s has made the most noise on that front, all but asking customers, “How could you have eaten what we formerly sold you?”
But Wendy’s isn’t much more discrete in its push of new French fries and burgers. Ditto with KFC and Kentucky Grilled Chicken. The only one showing subtlety is Taco Bell, which is quietly taking some salt out of its signatures.
McDonald’s hasn’t revealed what sort of noise it’ll make about McBites, a chicken version of popcorn shrimp (essentially deep-fried pieces of chicken meat, like the popcorn selections that have long been on the menus of KFC and Popeyes.) You can bet it won’t knock Chicken McNuggets or Chicken Selects in the introduction, but you have to wonder if customers will nonetheless regard McBites as an obvious alternative to McNuggets.
We’ll find out when McDonald’s rolls the new product next year.
The remake of fast-food signatures won’t end there. As RestaurantRealityCheck noted last week, Burger King is trying a new, thicker fry. Its stated goal of appealing to more women and children portends even more changes in products.
Might there even be some riffs on the Whopper?
This isn't the first time that such a thing has happened. In the mid-1980s, BK indeed changed the specs on its holiest of signatures, revamping the size of the Whopper's patty.
McDonald's tried to rejigger its bigger burgers so they could be garnished with lettuce and a tomato slice that wouldn't be rendered unpleasant by the heat of the patty they topped. Later, KFC introduced a bone-in roasted chicken, and Taco Bell tried reduced-calorie versions of its main items.
They all joined the Edsel in the annals of product failures.
But there are different dynamics--and learnings from those misfires--in play this time. Technomic noted in releasing some research yesterday that the fast-casual sector is influencing restaurants of all stripes. No where is that impact more obvious than in the traditional quick-service market, which has the most to lose from fast-casual's rise. Is it really a surprise that former Wendy's CEO Roland Smith publicly compared the chain's new burger line to what's available at Five Guys?
Talk amongst yourselves about it. But try to keep the noise down. The R&D teams need to catch up on their sleep.
Friday, October 21, 2011
Forget Twitter. Chipotle scores big with foil.
Social media may be the new frontier in restaurant marketing, but Chipotle Mexican Grill said it did just fine this summer with nothing more than some gold foil.
The industry’s non-conformist chain decided to call attention to its push for better ingredients by wrapping the concept’s torpedo-sized burritos in gold instead of the usual silver foil, which has figured into billboard campaigns in the past. The notion was subtle, to say the least. The gold standard—get it?
Well, people did. Executives revealed to investors yesterday that 94 percent of customers who saw the gold foil understood the implication that Chipotle uses better ingredients, strongly reinforcing the chain’s Food with Integrity pledge. Research also indicates that the campaign boosted awareness of Chipotle by 19 percent, said Steve Ells.
Unconventional marketing is being used more frequently by the burrito maker. Ells noted that an animated short movie illustrating the comeback of small-scale farming is currently being shown in 10,000 theaters, where some 20 million people will view it. It was funded by Chipotle as a way of calling attention to better agricultural methods.
It’s already been viewed more than 1.7 million times on YouTube, Ells said.
He noted that a message about sustainable farming was delivered about 32 million times through coverage of Cultivate Chicago, a recent food and music festival sponsored by Chipotle in the Windy City. The event drew some 16,000, who came to sample the specialties of big name chefs, hear some big-name bands, and maybe learn about sustainable farming in the process.
“We've always believed that if people discover where their food comes from, the more they'll appreciate what we do at Chipotle,” Ells told investors during a conference call.
Ells said that a second Cultivate festival will be held next year, most likely in the chain’s headquarters city of Denver.
Not on the schedule, he noted, is the development of a second ShopHouse Southeast Asian Grill. The company plans to focus on fine-tuning the prototype, which opened a few weeks ago in Washington, D.C.
Ells disclosed that patrons of the first ShopHouse have complained about the spiciness of the food. Those were the same sort of comments that he heard when the first Chipotle opened, Ells said.
The industry’s non-conformist chain decided to call attention to its push for better ingredients by wrapping the concept’s torpedo-sized burritos in gold instead of the usual silver foil, which has figured into billboard campaigns in the past. The notion was subtle, to say the least. The gold standard—get it?
Well, people did. Executives revealed to investors yesterday that 94 percent of customers who saw the gold foil understood the implication that Chipotle uses better ingredients, strongly reinforcing the chain’s Food with Integrity pledge. Research also indicates that the campaign boosted awareness of Chipotle by 19 percent, said Steve Ells.
Unconventional marketing is being used more frequently by the burrito maker. Ells noted that an animated short movie illustrating the comeback of small-scale farming is currently being shown in 10,000 theaters, where some 20 million people will view it. It was funded by Chipotle as a way of calling attention to better agricultural methods.
It’s already been viewed more than 1.7 million times on YouTube, Ells said.
He noted that a message about sustainable farming was delivered about 32 million times through coverage of Cultivate Chicago, a recent food and music festival sponsored by Chipotle in the Windy City. The event drew some 16,000, who came to sample the specialties of big name chefs, hear some big-name bands, and maybe learn about sustainable farming in the process.
“We've always believed that if people discover where their food comes from, the more they'll appreciate what we do at Chipotle,” Ells told investors during a conference call.
Ells said that a second Cultivate festival will be held next year, most likely in the chain’s headquarters city of Denver.
Not on the schedule, he noted, is the development of a second ShopHouse Southeast Asian Grill. The company plans to focus on fine-tuning the prototype, which opened a few weeks ago in Washington, D.C.
Ells disclosed that patrons of the first ShopHouse have complained about the spiciness of the food. Those were the same sort of comments that he heard when the first Chipotle opened, Ells said.
Friday, October 14, 2011
With apologies to good publicists
Recent times have certainly scrambled the conventions that restaurants once knew as standard operating procedures. Most were adjustments to the grueling economic conditions. But if you have an explanation for the self-serving practices some public relations agencies have adopted to rep restaurant clients, please pass it along.
Consider this announcement from today: “Phoenix Marketing Associates restaurant client Tryst Café named one of Phoenix’s Best New Restaurant by Phoenix Magazine.” That was the headline of the press release, and in case you missed it, it was repeated in the first paragraph, or what we in communications know as the all-important lede.
I’ve always been the target of public relations, not the practitioner. But someone who’d just been thawed from a 50-year-long cryogenic nap would know the client’s achievement should get higher play than its affiliation with the agency hawking the news.
I shouldn’t pick on that one agency, because it’s hardly alone. It stuns me to see announcements on the news wires about a PR outfit picking up the 1-2-3 Café or the XYZ Burgers chain as a client. If that’s the best news hook an agency can find about a new customer, then the business might want to rethink its choice. The objective there is to draw journalists’ attention to the operation, and I for one am not going to pick up the phone for a story or online posting because someone new will be taking my call. Give me some substance.
It’s no better to use an attributed quote from an outside PR rep, no matter how prominent he or she might think they are, in press materials about a restaurant or chain. I’m not going to give your firm free publicity by using a quote like that. My readers are interested in the operation and its executives, not the information gatekeepers.
The fellow traveler of that puzzling phenomenon: Listing a PR or communications outfit as the agency of record for a chain. (Note that I didn’t say the advertising agency of record, which is a whole different matter.)
That’s growing more common as brands contract outside parties to handle their social media efforts. But unless the client is selling records as part of its business, I don’t care who its agency of record might be. I want substance, not whom I might refer to a restaurant acquaintance looking for media help.
A final word of advice to restaurateurs looking to get the best representation from their PR agency: If “exciting” is the most frequently used word in a hired PR gun’s press releases, buy him or her a Thesaurus. That sort of hyperbole went out with Ramblers.
The same holds true for “delicious,” if you’re talking about food, or “world famous” and “stunning,” regardless of what’s being hyped. Show, don’t tell. Those words translate for any journalist into “I don’t have a clue as to how to make my client’s products or services sound enticing enough for coverage, so I’m lapsing back to the safe and vapid.”
To the many, many friends who admirably handle public relations for restaurants, my apologies for raising a criticism about your profession. Your efforts in helping me get accurate information on a timely basis is appreciated. I could do without the attempts at spin-doctoring, but hey, I know who’s cutting the paycheck.
But your profession needs to keep its head in these tough times. Confusing your business interests with those of your clients is not going to help your cause in the long run.
Consider this announcement from today: “Phoenix Marketing Associates restaurant client Tryst Café named one of Phoenix’s Best New Restaurant by Phoenix Magazine.” That was the headline of the press release, and in case you missed it, it was repeated in the first paragraph, or what we in communications know as the all-important lede.
I’ve always been the target of public relations, not the practitioner. But someone who’d just been thawed from a 50-year-long cryogenic nap would know the client’s achievement should get higher play than its affiliation with the agency hawking the news.
I shouldn’t pick on that one agency, because it’s hardly alone. It stuns me to see announcements on the news wires about a PR outfit picking up the 1-2-3 Café or the XYZ Burgers chain as a client. If that’s the best news hook an agency can find about a new customer, then the business might want to rethink its choice. The objective there is to draw journalists’ attention to the operation, and I for one am not going to pick up the phone for a story or online posting because someone new will be taking my call. Give me some substance.
It’s no better to use an attributed quote from an outside PR rep, no matter how prominent he or she might think they are, in press materials about a restaurant or chain. I’m not going to give your firm free publicity by using a quote like that. My readers are interested in the operation and its executives, not the information gatekeepers.
The fellow traveler of that puzzling phenomenon: Listing a PR or communications outfit as the agency of record for a chain. (Note that I didn’t say the advertising agency of record, which is a whole different matter.)
That’s growing more common as brands contract outside parties to handle their social media efforts. But unless the client is selling records as part of its business, I don’t care who its agency of record might be. I want substance, not whom I might refer to a restaurant acquaintance looking for media help.
A final word of advice to restaurateurs looking to get the best representation from their PR agency: If “exciting” is the most frequently used word in a hired PR gun’s press releases, buy him or her a Thesaurus. That sort of hyperbole went out with Ramblers.
The same holds true for “delicious,” if you’re talking about food, or “world famous” and “stunning,” regardless of what’s being hyped. Show, don’t tell. Those words translate for any journalist into “I don’t have a clue as to how to make my client’s products or services sound enticing enough for coverage, so I’m lapsing back to the safe and vapid.”
To the many, many friends who admirably handle public relations for restaurants, my apologies for raising a criticism about your profession. Your efforts in helping me get accurate information on a timely basis is appreciated. I could do without the attempts at spin-doctoring, but hey, I know who’s cutting the paycheck.
But your profession needs to keep its head in these tough times. Confusing your business interests with those of your clients is not going to help your cause in the long run.
Wednesday, October 12, 2011
Bagging chain conformity
Once upon a time, the only matter left to the discretion of a restaurant franchisee was the route he or she drove to work. Exact conformity to a chain’s procedures, design and menu were enforced with a vigor that had Third World dictators muttering, “Whoa. Those dudes are serious.”
Contrast that with some recent chain-restaurant openings. At the new Burger King in Ionia, MI, you’ll be served a thicker French fry and coarser cut bacon. Further north, on the other side of the border, your options include two new poutines, or sauced fries.
At the new Johnny Rockets in Sunrise, FL, you can play arcade games or watch pro sports on TV in the bar. It’s also the only restaurant in the chain to offer pizza.
The newest franchised Johnny Rockets in Cincinnati lets patrons get wine and beer to go. Breakfast is also available.
The list goes on and on. Clearly iron-fisted conformity is out, and adaptation to the realities of a local market, even an individual block, is the smarter business mindset that’s replacing it.
That’s partly due to the growing militancy of franchisees. No longer can the home office dictate how their businesses will run. When the franchisor tries, it’s likely to end up in court, as Burger King, Wendy’s and KFC have learned.
But it’s also smarter business. Patrons in downtown Miami might not want the same choices as the snowbirds staying by the choice or the trendinistas roller-blading through South Beach.
One of the trends that’s subtly helped fast-food in recent years has been the embrace of market-by-market pricing, which is really a version of yield management. Chains still advertise a chainwide bargain to get the most from their ad budgets, but they do it more selectively.
Another other factor is the undeniably increase in importance of franchisees. Chains have mothballed the rule of thumb that one-third of the system should be franchisor-operated to keep the home office focused on day-to-day functions.
But perhaps the main impetus is the realization that franchisees are the best consumer sales force a chain can have. No one knows the business and customer preferences like the ones who are immersed in the field every day.
No wonder headquarters are loosening the reins. It one of the most positive after-effects to emerge from the Great Recession.
Contrast that with some recent chain-restaurant openings. At the new Burger King in Ionia, MI, you’ll be served a thicker French fry and coarser cut bacon. Further north, on the other side of the border, your options include two new poutines, or sauced fries.
At the new Johnny Rockets in Sunrise, FL, you can play arcade games or watch pro sports on TV in the bar. It’s also the only restaurant in the chain to offer pizza.
The newest franchised Johnny Rockets in Cincinnati lets patrons get wine and beer to go. Breakfast is also available.
The list goes on and on. Clearly iron-fisted conformity is out, and adaptation to the realities of a local market, even an individual block, is the smarter business mindset that’s replacing it.
That’s partly due to the growing militancy of franchisees. No longer can the home office dictate how their businesses will run. When the franchisor tries, it’s likely to end up in court, as Burger King, Wendy’s and KFC have learned.
But it’s also smarter business. Patrons in downtown Miami might not want the same choices as the snowbirds staying by the choice or the trendinistas roller-blading through South Beach.
One of the trends that’s subtly helped fast-food in recent years has been the embrace of market-by-market pricing, which is really a version of yield management. Chains still advertise a chainwide bargain to get the most from their ad budgets, but they do it more selectively.
Another other factor is the undeniably increase in importance of franchisees. Chains have mothballed the rule of thumb that one-third of the system should be franchisor-operated to keep the home office focused on day-to-day functions.
But perhaps the main impetus is the realization that franchisees are the best consumer sales force a chain can have. No one knows the business and customer preferences like the ones who are immersed in the field every day.
No wonder headquarters are loosening the reins. It one of the most positive after-effects to emerge from the Great Recession.
Monday, October 10, 2011
Do restaurants have a height bias?
Working in a restaurant kitchen is a tough calling. It's hot, laborious, high-paced, often involving big egos and hot tempers. But here's a challenge that was new to me. It's offered here in hopes of stimulating some dialogue on a challenge of restaurant kitchens that's been unaddressed, as far as the writer and I are concerned. It's an unsolicited note that I was e-mailed last week:
So I open it up for discussion: Any other chefs or cooks out there who've encountered the same situation? And what do the rest of you think?
First off I have been in and out of the food business for 20 years and the reason I had to get out of it was because the same problem exists where ever I would apply. I have a handicap which more and more cooks and chefs are experiencing and is an ever growing concern for doing what we love. I would have stayed in if there was reasonable compensation but there really isn't any that I know of. I am 6 foot 5 inches tall and the industry is based for people 5 foot 1 inch to 5 foot 11 inches.
We have to work in short spaces and deal with hitting our heads on hoods that don't have a standard height minimum of 7 feet.
I feel this needs to be addressed if you really want the industry to be fair. The longest I ever stayed was when I had my own restaurant and everything was built for my height.
If you need a spokesperson just call, but I feel you might have plenty of others you know who would be happy to start the ball rolling. I mean [everything] from equipment to tables and seating is based on the shorter individual. If you say one size fits all then please say that all recipes should taste like Betty Crocker. I even had to leave the Culinary Institute of America because my lower back couldn't take the low work surfaces and that was a dream I hated to give up on.
I love cooking so much it has never been employment to me. I'd cook for free if I knew the rest of my bills were covered.
Here is a chance to help thousands of us tall lovers of culinary arts to remain in the field we have devoted our selves to. If you have any questions please feel free to contact me.
--Steven Bodley
Warren, Ohio
So I open it up for discussion: Any other chefs or cooks out there who've encountered the same situation? And what do the rest of you think?
Friday, October 7, 2011
A-ha's that might've slipped past you
You can’t miss a wave that’s reshaping the restaurant business. Harder to spot are the ripples that could swell into powerful forces. Consider these recent developments, for instance:
‘Menu disclosure’ is redefined. The term was once synonymous with posting calorie counts and other nutritional metrics so consumers could make an informed choice. Now we’re seeing a secondary designation.
Amid all the hoopla over the opening of Chipotle’s ShopHouse Southeast Asian Kitchen was a little-noticed detail brought to light by the Washington Post: Not everything on the menu was what it purported to be. Two of the sauces for vegetarian were actually made with fish stock, a huge no-no to the more orthodox non-flesh-eaters.
As the Post subsequently reported, ShopHouse quickly rectified the situation by adding an asterisk to the menu listings, alerting customers that the sauces are non-vegetarian.
It must’ve been déjà vu all over again for the concept’s parent. About a week beforehand, a tweeter with a large following voiced 140 characters’ worth of indignation that Chipotle’s pinto beans were flavored with bacon. Co-CEO Steve Ells called the tweeter (he’s an editor of Maxim, the breasts-and-beer magazine), apologized, and explained that the menu description had been corrected.
Meanwhile, Wendy’s drew fire because of its switch to buttered hamburger buns for the new Dave’s Hot ‘n Juicy line. Websites pointed out that the butter could be a hazard to consumers who are allergic to dairy products, and faulted the chain for not flagging the newfound danger more clearly on its website.
Franchisors could be seriously ding’d by the tax man. It slipped past almost unnoticed, but KFC lost a landmark court decision this week that should worry every franchisor. The U.S. Supreme Court rebuffed an attempt by the Yum! Brans holding to keep Iowa from assessing it for state income taxes.
The franchisor pointed out that it doesn’t operate a single restaurant in the state; all the units there are franchise stores. It doesn’t even have a single employee.
But the Supreme Court rejected the appeal. KFC will have to pay the $250,000 that Iowa says it’s due in income taxes on the franchise royalties and fees that were channeled to chain headquarters in Kentucky.
Two days, two bankruptcies of Sun Capital holdings. Are economic realities catching up to the private-equity raiders?
No PE investor gobbled up as many restaurant brands before and during the Great Recession as Sun, whose portfolio extends from Captain D’s to Bar Louie. The acquisitions included stakes in Friendly’s and Real Mex, parent of the Chevys, El Torito and Acapulco chains, both of which are now being run under the scrutiny of a bankruptcy court. Sun is undoubtedly the owner of more concepts than any other entity in the business, and is likely one of the bigger operator-franchisors as well.
It’s become an industry parlor game to speculate about what Sun will do with those holdings. An IPO for a select chain? Or for several, packaged together? How about a sale to other PE companies? Or to a strategic buyer? Maybe some will be crunched up and sold piecemeal for their locations, the way an auto is sold for parts.
It’s safe to say that Sun didn’t buy anything with a hope of seeing it go bankrupt. What does that portend a company with that much vulnerability to a restaurant downturn on its books?
Looks as if the parlor game has just been updated.
‘Menu disclosure’ is redefined. The term was once synonymous with posting calorie counts and other nutritional metrics so consumers could make an informed choice. Now we’re seeing a secondary designation.
Amid all the hoopla over the opening of Chipotle’s ShopHouse Southeast Asian Kitchen was a little-noticed detail brought to light by the Washington Post: Not everything on the menu was what it purported to be. Two of the sauces for vegetarian were actually made with fish stock, a huge no-no to the more orthodox non-flesh-eaters.
As the Post subsequently reported, ShopHouse quickly rectified the situation by adding an asterisk to the menu listings, alerting customers that the sauces are non-vegetarian.
It must’ve been déjà vu all over again for the concept’s parent. About a week beforehand, a tweeter with a large following voiced 140 characters’ worth of indignation that Chipotle’s pinto beans were flavored with bacon. Co-CEO Steve Ells called the tweeter (he’s an editor of Maxim, the breasts-and-beer magazine), apologized, and explained that the menu description had been corrected.
Meanwhile, Wendy’s drew fire because of its switch to buttered hamburger buns for the new Dave’s Hot ‘n Juicy line. Websites pointed out that the butter could be a hazard to consumers who are allergic to dairy products, and faulted the chain for not flagging the newfound danger more clearly on its website.
Franchisors could be seriously ding’d by the tax man. It slipped past almost unnoticed, but KFC lost a landmark court decision this week that should worry every franchisor. The U.S. Supreme Court rebuffed an attempt by the Yum! Brans holding to keep Iowa from assessing it for state income taxes.
The franchisor pointed out that it doesn’t operate a single restaurant in the state; all the units there are franchise stores. It doesn’t even have a single employee.
But the Supreme Court rejected the appeal. KFC will have to pay the $250,000 that Iowa says it’s due in income taxes on the franchise royalties and fees that were channeled to chain headquarters in Kentucky.
Two days, two bankruptcies of Sun Capital holdings. Are economic realities catching up to the private-equity raiders?
No PE investor gobbled up as many restaurant brands before and during the Great Recession as Sun, whose portfolio extends from Captain D’s to Bar Louie. The acquisitions included stakes in Friendly’s and Real Mex, parent of the Chevys, El Torito and Acapulco chains, both of which are now being run under the scrutiny of a bankruptcy court. Sun is undoubtedly the owner of more concepts than any other entity in the business, and is likely one of the bigger operator-franchisors as well.
It’s become an industry parlor game to speculate about what Sun will do with those holdings. An IPO for a select chain? Or for several, packaged together? How about a sale to other PE companies? Or to a strategic buyer? Maybe some will be crunched up and sold piecemeal for their locations, the way an auto is sold for parts.
It’s safe to say that Sun didn’t buy anything with a hope of seeing it go bankrupt. What does that portend a company with that much vulnerability to a restaurant downturn on its books?
Looks as if the parlor game has just been updated.
Wednesday, October 5, 2011
Danny Meyer's 4-star break with convention
I’ve witnessed some amazing things in 27 years of covering restaurants. What Danny Meyer is doing with Eleven Madison Park is definitely on that list as of today—ironically, the very day Michelin awarded the midtown restaurant a third star.
Meyer will have a chance to relish the resulting upsweep in business, but not for long. As New York Times reporter Glenn Collins reported in a Times blog, Meyer is selling Eleven Madison to its manager and executive chef.
The reason? The pair admitted to the famed restaurateur that they hoped to build something of their own while still on the payroll. Meyer wasn’t comfortable with his employees doing double-time as competitors. But he didn’t like the idea of parting with the duo because they were critical to maintaining Eleven Madison’s quality and success. It has a four-star rating from the New York Times, which is harder to land than a rent-controlled two-bedroom apartment with a doorman. In Gramercy Park.
So, Meyer said, he decided to sell them the place. No bidding war, no pitting suitor against suitor. Just a deal hammered out between mentor and protégées.
One more extraordinary thing: The turn of events is spelled out not in Meyer’s blog, but on the galleys of a book that will be published next month. Meyer provided the account in the forward to “The Eleven Madison Park Cookbook.”
He stopped short of revealing the specifics of the deal, like the price. But Collins reported that the transaction is expected to close by Jan. 1.
Meyer will have a chance to relish the resulting upsweep in business, but not for long. As New York Times reporter Glenn Collins reported in a Times blog, Meyer is selling Eleven Madison to its manager and executive chef.
The reason? The pair admitted to the famed restaurateur that they hoped to build something of their own while still on the payroll. Meyer wasn’t comfortable with his employees doing double-time as competitors. But he didn’t like the idea of parting with the duo because they were critical to maintaining Eleven Madison’s quality and success. It has a four-star rating from the New York Times, which is harder to land than a rent-controlled two-bedroom apartment with a doorman. In Gramercy Park.
So, Meyer said, he decided to sell them the place. No bidding war, no pitting suitor against suitor. Just a deal hammered out between mentor and protégées.
One more extraordinary thing: The turn of events is spelled out not in Meyer’s blog, but on the galleys of a book that will be published next month. Meyer provided the account in the forward to “The Eleven Madison Park Cookbook.”
He stopped short of revealing the specifics of the deal, like the price. But Collins reported that the transaction is expected to close by Jan. 1.
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