The long shadow cast by Boston

With the conference convening a week after the Boston terrorist attacks, attendees and speakers touched on the crisis with obvious emotion during casual talk and formal presentations.

Marketing consultant Linda Duke, for instance, used the recent events as a touchstone in her presentation on crisis management. She explained that she’d studied the situation to bring the audience “some tips from the front line.”

Restaurateurs worry about crises like food-borne illnesses, robberies or shootings, but now “unfortunately we have to add terrorism to the list,” she said.

For instance, in media footage of the scene on Boylston Street where the bombs detonated, a Firehouse Subs sign could be spied on the ground. A franchised store near the finish line evidently suffered damage, though the unit was spared the glare of media attention in the non-stop coverage that followed the blasts.

One of the questions posed to President George W. Bush also referred to the bombings.

In a roundtable discussion convened by the International Franchise Association to address immigration reform, chain and association executives acknowledged that the bombings could figure into negotiations on a bill pending in Congress. The association favors the proposal, but would like to raise the caps on how many job candidates would be allowed into the nation per year.

“It would be a real shame if a single event like that would ruin the wishes and dreams of so many people,” commented Don Fox, the CEO of Firehouse Subs.

What you didn't know was happening at RLC

While 1,700 restaurant leaders quietly listened to this morning’s line-up of speakers at the Restaurant Leadership Conference, we at the press table were frantic. A tweet from AP delivered the breaking news that two bombs had detonated at the White House, injuring President Obama.

You probably know by now that the report was bogus; someone had hacked the AP’s twitter account and pushed out the fake attention-getter. The clarification came quickly, but not fast enough for those of us in the back. Could this development be true? If so, we owed everyone in attendance a heads-up on news of that import. So we scrambled to see what we could find, scouring news sites and looking at other media’s tweets.

While we were jumping around the internet, AP regained control of its Twitter account and gave the stand-down alert. But by that time, tweets were starting to appear about the Wall Street crash that was triggered by the fake report. Was that development true?

Fortunately, the media were abuzz over both developments by then. But it was a drama that most attendees of RLC missed entirely. Not us at the press table in the back.

Small plates from Day One of the Restaurant Leadership Conference

It’s a little-known rule of physics: Put a group of restaurant leaders in a room and you’ll get an unvarnished picture of the business. Pull almost 1,800 of them together, as we did at the Restaurant Leadership Conference, and you quickly learn what they see as the opportunities and challenges, the hype and the real successes.

Consider these tidbits, for instance: 

--When attendees talk about the areas where they hope to get an education, the topics constantly mentioned are catering and gluten-free menu options.

--Discussions about the gluten-free phenomenon sometimes take a surprising turn: Do you crow about your wheat-free choices, or do you make that a given across your menu? For instance, if you’re a sandwich chain, do you switch all your breads to gluten-free variations? Does that make a more powerful statement about your commitment to health? 

(To read the rest of this entry and sample more small plates from the RLC, click here.)

Wolves and sheep's clothing

Sometimes a scorecard is the absolute worst way to know the players. Take, for instance, the new restaurant association that announced its formation last week in Washington, D.C.

It’s not a coincidence the organization was trumpeted into existence a matter of blocks from where the National Restaurant Association was holding its annual restaurateurs’ conference on government affairs. The new group, RAISE, is positioning itself as the alternative to the NRA, the industry’s most influential and active lobbying force. In RAISE’s birth announcement, the alliance professes to speak for “small sustainable restaurant owners,” a contrast in its eyes to what it characterizes as the large chains that constitute the NRA’s rank and file.

What could be wrong with that? Ditto for the mission embodied in its name: Restaurants Advancing Industry Standards in Employment. With organized labor targeting the restaurant industry, what’s wrong with some pre-emptive, progressive and voluntary reform of the practices that rile one of the private sector’s largest employers?

But check out who formed RAISE. It’s the latest initiative of the Restaurant Opportunities Center, a New York-based group that stresses that it’s not a union, even though it certainly looks and sounds like one. Where it differs is in its methods.

Instead of focusing on organizating, as old-line labor groups do, ROC conducts what it attests is unbiased research about the plight of restaurant employees. Seldom are the findings a bouquet of roses for the trade of the whole.  Indeed, they tend to be sharp indictments, but presented as research rather than union propaganda.

Now, with the launch of RAISE, ROC is claiming to represent a new breed of restaurant owners and operators as well. That’s what it’s saying on its scorecard. And it stresses that it already has 100 restaurants enrolled as members.

But whose interests is a non-union union really going to serve?

Why restaurants should be afraid. Very afraid.

At a staff meeting last summer, a Restaurant Business colleague suggested the editorial staff be institutionalized for running astory about the threat posed to restaurants by c-stores.  “Yeah, I’m really going to take my wife to a c-store instead of a restaurant,” he sniffed.

He’s since been eviscerated and pickled, after being forced to watch a “Love Boat” marathon until he cracked. But, sitting here at the National Association of Convenience Stores’ annual State of the Industry Summit, I’m wondering if we can kick drag him out for a few more kicks and insults.

 

There’s no doubt that c-stores are looking for a profit generator to compensate for the declining contribution from cigarette sales.  Foods that consumers might’ve otherwise purchased from a restaurant are looking pretty good as that substitute.

Already, foodservice is the second highest contributor to a c-store’s gross profits, at 27.5%, surpassed only by tobacco.  But it’s growth vector for ready-to-eat foods that should have restaurateurs visiting the beer and wine sections of their local c-stores. Foodservice sales on a per-c-store basis jumped 8.7% in 2012, to 15.8% of total intake, or just over $24,000 per week.

Glenn Plumby, vice president of operations for the Speedway c-store chain, put that growth in perspective by showing the 2012 same-store sales gains for the major quick-service restaurant chains. “No one in that category is up as much as we are,” he noted.

I, as presumably the lone representative of restaurants at the conference, tried to choke back the sobs when Plumby sketched out the near-term opportunity for retailers. If you divided the c-store business into 10 performance brackets, from leaders to laggards, the discrepancy in foodservice sales is a slap to the forehead. C-stores in the top decile take in an average of $46,142 in foodservice sales per month. That’s about four times the sales of the players at the bottom of the ranking.

Plumby’s message: Anyone outside the industry’s leadership has a great opportunity to raise their foodservice sales—presumably by just doing a better job.

If those players can convince cigarette or lottery-ticket buyers to pop for a hot dog or taco, “we have significant growth,” said Plumby. “We need to keep growing foodservice at a fast pace.”

That message was echoed by Kevin Smartt, CEO of Kwik Chek Food Stores: “If you sell pizza, benchmark against Pizza Hut. If you sell a burger, benchmark yourself against the best burger franchise out there. That’s how we’re going to raise foodservice revenues.”

Other State of the Industry tidbits that should interest restaurateurs:

--The heightened competition from c-stores may spread to supermarkets and other retailers you might not associate with ready-to-eat food. Todd Hale, SVP of consumer and shopper insights for Nielsen, warned that mainstream brick-and-mortar stores are going to lose a significantly share of sales to Amazon. To replace that lost business, they’ll likely turn to foodservice, Hale predicted.

--Quick-service restaurants grudgingly acknowledge c-stores’ leadership in selling cups of coffee. But NACS’ data showed that frozen and chilled fountain drinks are where c-stores are seeing their growth. You have to wonder, are QSRs being left behind in that emerging market?

--Sales of “alternative beverages” are galloping. Proceeds jumped nearly 30% in the last three years, according to the NACS figures.

--The turnover rate for non-managerial personnel in the fourth quartile of c-stores is 81.7%. Most QSR chains can only dream of having a turnover that low for hourly employees.

--

A bone to pick with KFC's newest

Gather ‘round, youngsters, and learn about the long-ago day when restaurant chains would all but hold a parade and declare a national holiday when they added a menu item. There was none of this special-for-a-weekend stuff. The unveiling of an item like Chicken McNuggets or the McDLT was a blockbuster event. Ditto for the extension into a new style of pizza, or the addition of a new variety of taco.

Imagine the hoopla that was mustered when a big brand changed its core product. No wonder some of the most-talked about introductions of the last two decades came from a player that had to change its name to accommodate a major rollout. KFC (nee Kentucky Fried Chicken) clearly ruled the roost on shoot-the-moon changes.

We forget today about products like the Colonel’s Rotisserie Gold (a 1990s non-fried chicken), Oven Roasted Twister (more recent non-fried chicken), Tender Roast (still more non-fried), Kentucky Grilled Chicken (ditto), Hot Wings (freezer-to-fryer wings that showed blood marks because of being frozen), Skinless, and Chicken Little chicken sliders, to name just a few.

Now comes considerable hoopla for yet another alternative to the chain’s mainstay product: Boneless fried chicken, or what sounds like supersized chicken fingers or nuggets. This from a chain that prompted the industry to coin a clumsy bit of jargon—bone-in chicken—to label the sector that KFC largely cultivated and long dominated (the fried chicken sector is now dominated, by of all concepts, McDonald’s, courtesy of its various nuggets and bites.)

KFC’s publicity machine is chugging at full bore for the Friday introduction, which, like so many earlier rollouts, is being hailed as a turning point for a chain that’s clearly had its challenges.

Maybe this will be indeed be a game-changer. KFC’s parent, Yum! Brands, has hit gold with recent products for its other restaurant holdings. Consider the new Doritos tacos added at Taco Bell. Or think back to the pasta dishes that Pizza Hut added a few years ago. Management thought the pasta line would eventually generate an additional billion dollars in sales, and I for one believed them. The promised value and convenience seemed perfectly attuned to the times.

But management soon spoke with far more reserve about the pastas, just as KFC toned down the bluster about Kentucky Grilled Chicken (which, by the way, was roasted, not grilled. But, hey, that’s marketing.)

Will boneless chicken be the long awaited silver bullet? Maybe. But until time proves if market evaluations were on the money, I’d counsel the brand not to think of changing its name to KBC.

Fire when ready. Please.

If you don’t prohibit employees from using cell phones on the job, please, for the good of all humanity, impose the ban today. Better yet, threaten the death penalty for anyone who dares to mar the experiences of customers (or, for that matter, other employees) by waging a side conversation as if no one else was present.

I speak from experience, people. Last week I was relishing a terrific meal in a casual-dining concept that most chain operators wish they owned—it’s that well attuned to the tastes and dining habits of Baby Boomers. Then, all of a sudden, there’s a waitress screaming into her phone at the pick-up area of the bar (“I am not going to give you any pictures!”—you can only imagine what was being said at the other end.)

The call continued for a good four minutes. Customers eating at or at tables near the bar kept their heads down, definitely disturbed by not about to draw the employee’s evident anger by asking her to keep her voice down. I was just grateful that she wasn’t my server. Any pretense of a hospitable attitude had been smashed irreparably.

This concept is a model of hospitality, and the GM was on the floor, dashing here and there to pick up menus, check with guests, and perform all the other small actions that provide the extra seasoning to a pleasant experience. But he missed this escapade.

I’m sure the place has such a ban. So maybe you should reconsider Option 2, the death penalty. There’s not a court in the country that’d convict you of anything.