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.
Showing posts with label economic downturn. Show all posts
Showing posts with label economic downturn. Show all posts
Friday, November 26, 2010
Friday, April 10, 2009
The battle's turning, but so is the body count
Heard the good news? The worst is over for restaurants, or at least that’s what several research and news reports indicated this week. There’s just one problem: A lot of places won’t be there to enjoy it. They’re part of what’s starting to look like a tsunami of restaurant bankruptcies and forced closings.
Two subsidiaries of the Fatburger fast-casual chain filed for protection from creditors yesterday. A day earlier, Crain’s New York Business reported that Town, the highly rated New York outpost of chef Geoffrey Zakarian, was being pressured by two vendors to file for bankruptcy because the place hadn’t paid their bills.
The Pink Taco, an unqualified smash when it opened in Scottsdale to controversy over its name, has closed its legs for good. Also gone is another one-time hotspot in the area, the Fox Sports Grill.
The franchisor of the 37-unit Tumbleweed dinnerhouse chain threw in the napkin last week. Outback shuttered all nine of its steakhouses in Ontario. The lone Bob’s Big Boy in Glendale, Calif., the chain’s birthplace, is changing into something else.
The casualty list goes on and on, of places famous (Fior d’Italia, the San Francisco outlet that bills itself as America’s first Italian restaurant) or only locally known (the two Risotto’s MedRim Bistros in south Texas).
Yet the surging shakeout is hardly a contradiction of the positive outlook some are now airing for the business. It’s much more of a necessary correction, a painful symptom that has to be weathered while the trade’s overall health improves. Just as economists are predicting more job losses as the nation’s financial well-being starts to turn for the better, the industry is going to lose a lot of outlets, and not an insignificant number of brands. It’s part of the healing.
Two subsidiaries of the Fatburger fast-casual chain filed for protection from creditors yesterday. A day earlier, Crain’s New York Business reported that Town, the highly rated New York outpost of chef Geoffrey Zakarian, was being pressured by two vendors to file for bankruptcy because the place hadn’t paid their bills.
The Pink Taco, an unqualified smash when it opened in Scottsdale to controversy over its name, has closed its legs for good. Also gone is another one-time hotspot in the area, the Fox Sports Grill.
The franchisor of the 37-unit Tumbleweed dinnerhouse chain threw in the napkin last week. Outback shuttered all nine of its steakhouses in Ontario. The lone Bob’s Big Boy in Glendale, Calif., the chain’s birthplace, is changing into something else.
The casualty list goes on and on, of places famous (Fior d’Italia, the San Francisco outlet that bills itself as America’s first Italian restaurant) or only locally known (the two Risotto’s MedRim Bistros in south Texas).
Yet the surging shakeout is hardly a contradiction of the positive outlook some are now airing for the business. It’s much more of a necessary correction, a painful symptom that has to be weathered while the trade’s overall health improves. Just as economists are predicting more job losses as the nation’s financial well-being starts to turn for the better, the industry is going to lose a lot of outlets, and not an insignificant number of brands. It’s part of the healing.
Tuesday, March 17, 2009
Memo to Domino's: Think AIG, dammit
Domino’s has been hooking its marketing efforts to high-profile developments in Washington, like Obama’s appointment of a cabinet (the pizza chain now has a Secretary of Taste) or the bank bailout (today it launched the Big Taste Bailout, a promotion of $5 pizzas and sandwiches). But it’s squandering an opportunity by not jumping on the obvious take-off: The AIG Bonus Package.
“A deal so good they’ll try to overturn it,” the voice-over would explain. “No matter how badly you’ve screwed up, you deserve a payout for the ages. Now, at Domino’s, a soda’s only $1.65 for the first million served—or until the government stops us.”
Think I’ll send it off to Domino’s CEO David Brandon. There could be a free pizza in this for me.
“A deal so good they’ll try to overturn it,” the voice-over would explain. “No matter how badly you’ve screwed up, you deserve a payout for the ages. Now, at Domino’s, a soda’s only $1.65 for the first million served—or until the government stops us.”
Think I’ll send it off to Domino’s CEO David Brandon. There could be a free pizza in this for me.
Monday, March 16, 2009
Blue Sage gives patrons final say in pricing
Coming from a restaurant family, Chris Dussin presumably knows all the tricks for pulling first-time customers into a place. But the one he started using last week at The Dussin Group’s two Blue Sage Cafes in Portland, Ore., is probably a first for the son of Old Spaghetti Factory founder Gus Dussin. Indeed, the ploy is novel enough to snag headlines in several local media outlets, helping to achieve the desired end without a separate outlay for marketing or public relations.
Not that the technique is unkonwn. At least one restaurant in the United States has similarly let patrons set the price of what they’re served. The approach has more recently snagged publicity for restaurants in Toronto and the United Kingdom. It may be a matter of time until places embrace the name-your-price tactic as a standard promotional device for the Great Recession, similar to product giveaways in fast-food or the bundling that’s now widely evident in casual dining.
Dussin’s approach has a little more structure than some of the early pay-what-you-want incarnations. In at least a few of those pioneering efforts, patrons were asked after eating to fork over whatever they felt the meal was worth.
Dussin provides guests with what amounts to a manufacturer’s suggested retail price for food items. Customers are presented after the meal with a tab listing the prices of what they ordered. They in effect decide whether that price was worth it. If not, they counter with their final offer. Dussin told OregonLive.com that some guests had indeed penciled in a zero for their charge, but that others had volunteered to pay more than the listed price.
The Your Price is Right promo is scheduled to run at the two casual restaurants until early next month.
The Dussin Group also operates the Old Spaghetti Warehouse chain and another full-service concept called Fenouil.
Not that the technique is unkonwn. At least one restaurant in the United States has similarly let patrons set the price of what they’re served. The approach has more recently snagged publicity for restaurants in Toronto and the United Kingdom. It may be a matter of time until places embrace the name-your-price tactic as a standard promotional device for the Great Recession, similar to product giveaways in fast-food or the bundling that’s now widely evident in casual dining.
Dussin’s approach has a little more structure than some of the early pay-what-you-want incarnations. In at least a few of those pioneering efforts, patrons were asked after eating to fork over whatever they felt the meal was worth.
Dussin provides guests with what amounts to a manufacturer’s suggested retail price for food items. Customers are presented after the meal with a tab listing the prices of what they ordered. They in effect decide whether that price was worth it. If not, they counter with their final offer. Dussin told OregonLive.com that some guests had indeed penciled in a zero for their charge, but that others had volunteered to pay more than the listed price.
The Your Price is Right promo is scheduled to run at the two casual restaurants until early next month.
The Dussin Group also operates the Old Spaghetti Warehouse chain and another full-service concept called Fenouil.
Sunday, March 1, 2009
Caffeine capers on the rise?
It’s a weekday morning and you’re waiting for your chai latte with the other sleepy Starbucks customers crowding around the pick-up counter. Finally, the barista shouts, “John, chai latte.” A fellow a few yards over utters a “Right here!” and picks up the drink. A coincidence, sure, but not exactly one for Ripley’s.
So you wait and wait. Finally, you approach someone behind the counter. The drink was served up long ago, they explain. Someone else took it. And there’s not another chai latte for John on order.
That sequence of events has been happening frequently enough to prompt Starbucks outlets at the University of Tennessee to start checking a customer's receipt before handing over a drink, according to a website run by the school’s journalism program.
Given the economy, does anyone doubt it’s a mild scam that’ll soon be on the rise?
So you wait and wait. Finally, you approach someone behind the counter. The drink was served up long ago, they explain. Someone else took it. And there’s not another chai latte for John on order.
That sequence of events has been happening frequently enough to prompt Starbucks outlets at the University of Tennessee to start checking a customer's receipt before handing over a drink, according to a website run by the school’s journalism program.
Given the economy, does anyone doubt it’s a mild scam that’ll soon be on the rise?
Encouraging signs from the NY restaurant show
Today I’m attending the International Restaurant & Foodservice Show of New York, a regional gathering that has managed to draw bodies despite a dramatic drop-off in traffic at most industry meetings of recent years. Especially hard-hit have been the big national conferences, with local events like this one picking up some of the fall-out.
This year doesn’t appear to be an exception, despite the economic climate. The first educational session I attended, on the menu preferences of the so-called Millenial Generation, had a turnout that would be good in the best of times. We’re talking 11:30 on a cold, snowy Sunday. Yet there had to be at least 40 people there.
The same pleasant surprise was served up on the show floor. There was actually a back-up at the entry points as attendees tried to thread their way into the exhibit area. At midday, I couldn’t get down some aisles.
But that didn’t mean all booths were busy. Indeed, there were glimmers of a pattern. Artisan products like cheeses or desserts seemed to be drawing interest, whereas the booths of some well-known industry brands seemed to have far less traffic. New products, like micro-greens, had a throng. Not so some of the old familiar sorts of products.
Interestingly, the first session this morning was on the eating habits of Gen Y-ers. The hottest trend within that crop of tomorrow’s customers, according to presenter-slash-Princeton Executive chef Robert Harbison, is authentic Indian cuisine.
I wasn’t exactly tripping over booths hawking those sorts of products on the show floor.
This year doesn’t appear to be an exception, despite the economic climate. The first educational session I attended, on the menu preferences of the so-called Millenial Generation, had a turnout that would be good in the best of times. We’re talking 11:30 on a cold, snowy Sunday. Yet there had to be at least 40 people there.
The same pleasant surprise was served up on the show floor. There was actually a back-up at the entry points as attendees tried to thread their way into the exhibit area. At midday, I couldn’t get down some aisles.
But that didn’t mean all booths were busy. Indeed, there were glimmers of a pattern. Artisan products like cheeses or desserts seemed to be drawing interest, whereas the booths of some well-known industry brands seemed to have far less traffic. New products, like micro-greens, had a throng. Not so some of the old familiar sorts of products.
Interestingly, the first session this morning was on the eating habits of Gen Y-ers. The hottest trend within that crop of tomorrow’s customers, according to presenter-slash-Princeton Executive chef Robert Harbison, is authentic Indian cuisine.
I wasn’t exactly tripping over booths hawking those sorts of products on the show floor.
Friday, February 27, 2009
Survival tactics 2.0
Restaurant chains agree the economy stinks. But their ways of contending vary more than Sen. Burris’ recounts of his Blago dealings. Here’s a rundown of what several brands have recently identified as their updated coping strategies:
Applebee’s: The near-term emphasis, executives said during their conference call, will be on restaurant operations, both to bolster unit-level profit margins and to provide a better experience for the guest. One of the butt magnets to be used near-term is an updated menu sporting new types of foods and beverages, according to Julia Stewart, CEO of franchisor DineEquity Inc. The introduction is slated for mid-April, with more products to be introduced and promoted throughout the year, she said.
Cracker Barrel: Management spoke less during its conference call about speeding service, the focus of past confabs, and far more about delivering value. The chain is about to roll out a line of lunch and dinner skillet meals that will be priced from $7.99 to $8.99, including salad and bread. Executives acknowledged that their Best of the Barrel initiative, an effort to streamline the menu by loping off less-popular selections, proved a mistake. “Customers were disappointed to see their favorite food items no longer available,” said CEO Michael Woodhouse. It was a lesson, he said, “we learned the hard way.” No mention was made of an initiative to speed service by using holding equipment for items like bacon and sausage.
Domino’s: “We’re working very hard to be a bigger player in the late night business, particularly with some of our new products,” said CEO David Brandon. He asserted that the pizza chain’s initiative for stretching its sales day the other way, into lunch, has been successful. All stores are now open for the meal, which Domino’s is pursuing with its new line of delivered oven-baked sandwiches.
Famous Dave’s: The emphasis appears to be on helping franchisees survive the downturn. The assistance includes a switch to shorter-term purchasing contracts and the development of more secondary suppliers, to increase competition. Meanwhile, development requirements for franchisees have been suspended through 2010. Licensees that open a store get a cut in royalties for the first year of operation. Advertising royalties have been halved, to .5% of sales.
Texas Roadhouse: Management stressed this week that traffic and guest spending levels are the big problems confronting the bargain-priced chain. Longer term, said CEO G.J. Hart, the company is focusing on the cost of new restaurants. Hart said the home office hopes to bring down the current outlay of $4.1 million, or roughly what the unit will do in annual sales, in part by locating stores in strip malls. “We’re also evaluating conversions,” he said.
Applebee’s: The near-term emphasis, executives said during their conference call, will be on restaurant operations, both to bolster unit-level profit margins and to provide a better experience for the guest. One of the butt magnets to be used near-term is an updated menu sporting new types of foods and beverages, according to Julia Stewart, CEO of franchisor DineEquity Inc. The introduction is slated for mid-April, with more products to be introduced and promoted throughout the year, she said.
Cracker Barrel: Management spoke less during its conference call about speeding service, the focus of past confabs, and far more about delivering value. The chain is about to roll out a line of lunch and dinner skillet meals that will be priced from $7.99 to $8.99, including salad and bread. Executives acknowledged that their Best of the Barrel initiative, an effort to streamline the menu by loping off less-popular selections, proved a mistake. “Customers were disappointed to see their favorite food items no longer available,” said CEO Michael Woodhouse. It was a lesson, he said, “we learned the hard way.” No mention was made of an initiative to speed service by using holding equipment for items like bacon and sausage.
Domino’s: “We’re working very hard to be a bigger player in the late night business, particularly with some of our new products,” said CEO David Brandon. He asserted that the pizza chain’s initiative for stretching its sales day the other way, into lunch, has been successful. All stores are now open for the meal, which Domino’s is pursuing with its new line of delivered oven-baked sandwiches.
Famous Dave’s: The emphasis appears to be on helping franchisees survive the downturn. The assistance includes a switch to shorter-term purchasing contracts and the development of more secondary suppliers, to increase competition. Meanwhile, development requirements for franchisees have been suspended through 2010. Licensees that open a store get a cut in royalties for the first year of operation. Advertising royalties have been halved, to .5% of sales.
Texas Roadhouse: Management stressed this week that traffic and guest spending levels are the big problems confronting the bargain-priced chain. Longer term, said CEO G.J. Hart, the company is focusing on the cost of new restaurants. Hart said the home office hopes to bring down the current outlay of $4.1 million, or roughly what the unit will do in annual sales, in part by locating stores in strip malls. “We’re also evaluating conversions,” he said.
Thursday, February 26, 2009
IHOP reviews Denny's free breakfast
Julia Stewart, CEO of IHOP’s parent company, has something to say to Denny’s about its loudly trumpeted breakfast giveaway in early February.
“If you’ll indulge me for a moment,” she said yesterday during a conference call with financial analysts, “we want to thank them.”
On the Tuesday Denny’s offered a free Grand Slam platter to anyone who came in, “IHOP sales were significantly up,” and “continued strong for the remainder of that week,” explained Stewart.
She called the arch-competitor’s promotion “a terrific example of the fact no who talks about breakfast, whether it’s a direct competitor, whether it’s the quick-service placers, it nearly always is a great thing for IHOP.”
Stewart spoke the day after IHOP offered its own giveaway, a free short stack of its signature pancakes to anyone who came in on Feb. 24—National Pancake Day, of course—between 7 a.m. and 10 p.m.
“If you’ll indulge me for a moment,” she said yesterday during a conference call with financial analysts, “we want to thank them.”
On the Tuesday Denny’s offered a free Grand Slam platter to anyone who came in, “IHOP sales were significantly up,” and “continued strong for the remainder of that week,” explained Stewart.
She called the arch-competitor’s promotion “a terrific example of the fact no who talks about breakfast, whether it’s a direct competitor, whether it’s the quick-service placers, it nearly always is a great thing for IHOP.”
Stewart spoke the day after IHOP offered its own giveaway, a free short stack of its signature pancakes to anyone who came in on Feb. 24—National Pancake Day, of course—between 7 a.m. and 10 p.m.
Monday, February 23, 2009
No need to break a five to burst a belt
If I took advantage of the bargains restaurant chains have flycast into the market just since Saturday, i could have two fish sandwiches, aa Chipotle burrito, a Quiznos sub, and a slice of cake afterward at Caribou Coffee, all for $4.
No doubt I'd be tremendously thirsty. Which means I'd have to decide whether to pop for a 42-oz. soft drink at Carl's Jr., served in a limited-edition skateboarding cup, or wait for my free sample of VIA, Starbucks' new instant coffee, to arrive in the mail.
Some might characterize the situation as discounting run amuck. I prefer to see it as a challenge.
No doubt I'd be tremendously thirsty. Which means I'd have to decide whether to pop for a 42-oz. soft drink at Carl's Jr., served in a limited-edition skateboarding cup, or wait for my free sample of VIA, Starbucks' new instant coffee, to arrive in the mail.
Some might characterize the situation as discounting run amuck. I prefer to see it as a challenge.
A news round-up
The start of the business week brought the usual flood of news reports from the restaurant industry. Most are merely in-box cloggers, but here are a few worth noting:
A huge I.O.U. for the business: The restaurant industry has a serious debt problem, according to a story posted today by USA Today. The article notes that 20 restaurant and retail companies are on S&P’s list of concerns that are struggling to keep up with their debt-service payments. And it quotes Thomas Reuters as saying that public restaurant companies on average owe 83 cents for every $1 of shareholders’ equity.
Simpler permitting for Gotham: New York City willstreamline the processes that typically delay the opening of a local restaurant or other small business, City Council speaker Christine Quinn promised yesterday. She specifically cited such time-saving steps as having necessary pre-opening inspections conducted on the same day, rather than arranging separate appointments with each agency.
There's no better price: The Quiznos sandwich chain announced it will give away 1 million sub sandwiches “as part of its effort to offer better prices for a better world.” The offer is in addition to the franchised chain’s promotional contest to award free subs for a year to a “hometown hero” nominated by visitors to a new website, www.millionsubs.com.
Even Chipotle's giving it away: Subscribers to the Arizona Republic found a collapsed brown paper bag slipped into yesterday's edition. It entitles them to a free burrito at Chipotle, a chain you wouldn't expect to be in need of that sort of traffic help these days.
Alabama restaurants to go dry: Restaurants in Alabama’s Shelby and Houston Counties will likely have to cease selling alcohol on Sundays because of a change in policy by state regulators and the apparent unwillingness of lawmakers to address the situation. Liquor licenses for the two jurisdictions allow establishments to sell alcohol only Monday through Saturday. But most got around that stipulation by also obtaining a permit to operate as a supper club on Sunday. Now state authorities say they’ll not honor the club license, and county lawmakers aren’t rallying to the industry’s defense.
Hey, Elliott Ness is dead: Meanwhile, Pennsylvania’s Cumberland and Perry Counties are reconsidering Prohibition. Some 25 towns there reportedly forbid or severely limit alcohol sales. Apparently there’s still some bad blood about permitting the direct election of senators and giving women the vote.
Size does matter: Carl’s Jr. is offering a 42-oz. soda in a Rob Dyrdek-themed “collector’s cup” as part of its tie-in with the pro skateboarder and reality TV star. The bucket-sized, reusable cup is free with the purchase of a large (?) drink or a combo meal.
Size does matter II: Concept sibling Hardee’s is making a pitch for big eaters with the rollout of new breakfast sandwiches made with Texas toast. The oversized bread holds egg, cheese and breakfast meats, and sells for about $1.69 a la carte or $3.69 in a combo.
A huge I.O.U. for the business: The restaurant industry has a serious debt problem, according to a story posted today by USA Today. The article notes that 20 restaurant and retail companies are on S&P’s list of concerns that are struggling to keep up with their debt-service payments. And it quotes Thomas Reuters as saying that public restaurant companies on average owe 83 cents for every $1 of shareholders’ equity.
Simpler permitting for Gotham: New York City willstreamline the processes that typically delay the opening of a local restaurant or other small business, City Council speaker Christine Quinn promised yesterday. She specifically cited such time-saving steps as having necessary pre-opening inspections conducted on the same day, rather than arranging separate appointments with each agency.
There's no better price: The Quiznos sandwich chain announced it will give away 1 million sub sandwiches “as part of its effort to offer better prices for a better world.” The offer is in addition to the franchised chain’s promotional contest to award free subs for a year to a “hometown hero” nominated by visitors to a new website, www.millionsubs.com.
Even Chipotle's giving it away: Subscribers to the Arizona Republic found a collapsed brown paper bag slipped into yesterday's edition. It entitles them to a free burrito at Chipotle, a chain you wouldn't expect to be in need of that sort of traffic help these days.
Alabama restaurants to go dry: Restaurants in Alabama’s Shelby and Houston Counties will likely have to cease selling alcohol on Sundays because of a change in policy by state regulators and the apparent unwillingness of lawmakers to address the situation. Liquor licenses for the two jurisdictions allow establishments to sell alcohol only Monday through Saturday. But most got around that stipulation by also obtaining a permit to operate as a supper club on Sunday. Now state authorities say they’ll not honor the club license, and county lawmakers aren’t rallying to the industry’s defense.
Hey, Elliott Ness is dead: Meanwhile, Pennsylvania’s Cumberland and Perry Counties are reconsidering Prohibition. Some 25 towns there reportedly forbid or severely limit alcohol sales. Apparently there’s still some bad blood about permitting the direct election of senators and giving women the vote.
Size does matter: Carl’s Jr. is offering a 42-oz. soda in a Rob Dyrdek-themed “collector’s cup” as part of its tie-in with the pro skateboarder and reality TV star. The bucket-sized, reusable cup is free with the purchase of a large (?) drink or a combo meal.
Size does matter II: Concept sibling Hardee’s is making a pitch for big eaters with the rollout of new breakfast sandwiches made with Texas toast. The oversized bread holds egg, cheese and breakfast meats, and sells for about $1.69 a la carte or $3.69 in a combo.
Sunday, February 22, 2009
Who said a week had to be seven days--or even 14?
The latest casualty of the Great Recession appears to be the calendar, or at least the one used for restaurant promotions. A week once meant seven days, no exceptions. Now that timeframe can extend to more than a month if we’re talking about Restaurant Weeks, the campaigns where a location’s fine-dining places simultaneously offer multi-course meals for the same bargain price.
In New York City, birthplace of the promotion, “week” was first redefined this winter as two partial weeks—six days in mid-January, followed by a regular Saturday night, then reinstituted for the next five days. It’s a model that’s been widely copied.
But with conditions being what they are, restaurants in New York decided to extend the cooperative promotion—for four more weeks.
The city’s restaurant trade was hardly alone in trying to squeeze a few more bookings out of the promotion. Philadelphia, Baltimore, Denver, San Diego and Los Angeles all extended their timeframes, to name just a few of the places that offer a Restaurant Week.
And I really, really mean those are just a small sampling. Another cultural side effect of the financial meltdown is the spread of the Restaurant Week concept to every nook and cranny where you’ll find a fork and a menu. Ohio’s Miami Valley has a Restaurant Week. So does Norfolk, VA, and Bethesday, MD. They, by the way, all extended their Restaurant Week by at least a…well, a week. As it used to be defined.
Floral Park hasn’t yet lengthened its Restaurant Week. This year marks the first time the promotion has been adopted by the little-known town in New York’s borough of Queens. Floral Park Restaurant Week is in addition to the Queens Restaurant Week that was held late last year.
This year also marks the first Restaurant Week for Orange County, Calif., the restaurant-rich expanse south of Los Angeles.
It’s not as if the proliferation of Restaurant Weeks is watering down their appeal. Denver’s roster of participating places reportedly swelled this year to a record 225 establishments, from 174 in 2008. The Chicago Tribune reported that 130 restaurants are participating in the Windy City’s Restaurant Week, compared with 35 places last year.
Skeptics say a Restaurant Week is nothing more than dressed-up discounting. I’m not sure why that bothers them. By all accounts, the tactic appears to work.
Value menus, varied portion sizes, bundled meals and out-and-out price chopping have become the standard marketing tools for casual-dining and fast-food chains in the current environment. Upper-scale restaurants seem to have found their Vise-Grip in the form of Restaurant Week.
In New York City, birthplace of the promotion, “week” was first redefined this winter as two partial weeks—six days in mid-January, followed by a regular Saturday night, then reinstituted for the next five days. It’s a model that’s been widely copied.
But with conditions being what they are, restaurants in New York decided to extend the cooperative promotion—for four more weeks.
The city’s restaurant trade was hardly alone in trying to squeeze a few more bookings out of the promotion. Philadelphia, Baltimore, Denver, San Diego and Los Angeles all extended their timeframes, to name just a few of the places that offer a Restaurant Week.
And I really, really mean those are just a small sampling. Another cultural side effect of the financial meltdown is the spread of the Restaurant Week concept to every nook and cranny where you’ll find a fork and a menu. Ohio’s Miami Valley has a Restaurant Week. So does Norfolk, VA, and Bethesday, MD. They, by the way, all extended their Restaurant Week by at least a…well, a week. As it used to be defined.
Floral Park hasn’t yet lengthened its Restaurant Week. This year marks the first time the promotion has been adopted by the little-known town in New York’s borough of Queens. Floral Park Restaurant Week is in addition to the Queens Restaurant Week that was held late last year.
This year also marks the first Restaurant Week for Orange County, Calif., the restaurant-rich expanse south of Los Angeles.
It’s not as if the proliferation of Restaurant Weeks is watering down their appeal. Denver’s roster of participating places reportedly swelled this year to a record 225 establishments, from 174 in 2008. The Chicago Tribune reported that 130 restaurants are participating in the Windy City’s Restaurant Week, compared with 35 places last year.
Skeptics say a Restaurant Week is nothing more than dressed-up discounting. I’m not sure why that bothers them. By all accounts, the tactic appears to work.
Value menus, varied portion sizes, bundled meals and out-and-out price chopping have become the standard marketing tools for casual-dining and fast-food chains in the current environment. Upper-scale restaurants seem to have found their Vise-Grip in the form of Restaurant Week.
Friday, February 20, 2009
And he didn't even land a plane in the Hudson
I’m studying the news photos of Howard Schultz to see if all that limelight has singed the hair around his ears. In a mere week, the Starbucks CEO has sparked an international incident, figured into an ad for private jets, been hailed as a Braveheart by a god of business journalism, fostered more internet flaming than a virtual Zippo, and been outted for pulling a Folgers Crystals switch on friends. I half-expect to see him looming Zelig-like behind the podium at a Yankees press conference, whispering in A-Rod’s ear.
The one-time resident of subsidized housing was set on the path to hosting “Saturday Night Live” by his chain’s introduction of a new product. Whoa. How often does a restaurant brand make a move like that?
But Via, Starbucks’ controversial new instant coffee, is no ordinary addition, and its introduction didn’t exactly follow the industry operations manual.
News of the rollout (supposedly) leaked out beforehand via the internet and the current Jonas Brothers of that medium, social media. Once the word was out, Starbucks clearly harried it along. An internal memo purportedly sent to alert employees of the introduction was easier to find than the creepy picture of the octuplets mom while she was pregnant.
I got my confirmation of the instant coffee rumors from Starbucks’ Twitter poster, who added that he/she had tried and liked Via. Later, twitter.com/starbucks offered me and 54,200 other tweeters a link we could use to request a free sample (“Just did some math and figured out that we gave away almost 4 sticks of VIA per sec,” a later post noted). Non-stop tweets also spotlighted favorable reviews of the product, from the staff of Ad Age to store managers to individual consumers.
Meanhile, Schultz was making news on a global scale, straining international relations in the process. In an interview with CNBC, he remarked that business conditions for the chain were particularly trying in the United Kingdom because the economy there is in a spiral of decline.
That was enough to set off Britain’s equivalent of our Secretary of Commerce, the stiff-lipped Lord Peter Mandelson. Later, at a diplomatic function in the United States, he reportedly used an unprintable expletive to characterize Schultz and his comment. "Why should I have that guy running down the country?" he was widely quoted as remarking.
A Starbucks spokesman later issued a retraction and reportedly apologized to Mandelson, even though a poll on CNBC.com shows 83% of respondents believe Schultz did nothing wrong.
But controversy has been working in Starbucks’ favor, even when it’s stirred up by someone else. The CEOs of the Big Three auto makers sparked a furor when they flew in private jets to ask Congress for billions in aid. Schultz’s team subsequently announced that Starbucks, which is in the process of cutting 6,700 jobs, would sell its private craft.
Hawker Beechcraft, a private jet manufacturer, is publicizing that fit of frugality in the print ad it just got aloft. “Dear Starbucks,” the copy begins, “You still need to fly. We’re here to help.” The take-away is that Starbucks is being too strident in cutting expenses, an assertion that will likely be sweet music to investors’ ears.
Then again, with the way things have been going, they may have some additional tunes to mix into their iPod playlists. It’s only a matter of time until Schultz is asked to cut an album of duets with Tony Bennett. Maybe after he escorts Jennifer Anniston to the Oscars, and right before his appearance on The Tonight Show.
The one-time resident of subsidized housing was set on the path to hosting “Saturday Night Live” by his chain’s introduction of a new product. Whoa. How often does a restaurant brand make a move like that?
But Via, Starbucks’ controversial new instant coffee, is no ordinary addition, and its introduction didn’t exactly follow the industry operations manual.
News of the rollout (supposedly) leaked out beforehand via the internet and the current Jonas Brothers of that medium, social media. Once the word was out, Starbucks clearly harried it along. An internal memo purportedly sent to alert employees of the introduction was easier to find than the creepy picture of the octuplets mom while she was pregnant.
I got my confirmation of the instant coffee rumors from Starbucks’ Twitter poster, who added that he/she had tried and liked Via. Later, twitter.com/starbucks offered me and 54,200 other tweeters a link we could use to request a free sample (“Just did some math and figured out that we gave away almost 4 sticks of VIA per sec,” a later post noted). Non-stop tweets also spotlighted favorable reviews of the product, from the staff of Ad Age to store managers to individual consumers.
Meanhile, Schultz was making news on a global scale, straining international relations in the process. In an interview with CNBC, he remarked that business conditions for the chain were particularly trying in the United Kingdom because the economy there is in a spiral of decline.
That was enough to set off Britain’s equivalent of our Secretary of Commerce, the stiff-lipped Lord Peter Mandelson. Later, at a diplomatic function in the United States, he reportedly used an unprintable expletive to characterize Schultz and his comment. "Why should I have that guy running down the country?" he was widely quoted as remarking.
A Starbucks spokesman later issued a retraction and reportedly apologized to Mandelson, even though a poll on CNBC.com shows 83% of respondents believe Schultz did nothing wrong.
But controversy has been working in Starbucks’ favor, even when it’s stirred up by someone else. The CEOs of the Big Three auto makers sparked a furor when they flew in private jets to ask Congress for billions in aid. Schultz’s team subsequently announced that Starbucks, which is in the process of cutting 6,700 jobs, would sell its private craft.
Hawker Beechcraft, a private jet manufacturer, is publicizing that fit of frugality in the print ad it just got aloft. “Dear Starbucks,” the copy begins, “You still need to fly. We’re here to help.” The take-away is that Starbucks is being too strident in cutting expenses, an assertion that will likely be sweet music to investors’ ears.
Then again, with the way things have been going, they may have some additional tunes to mix into their iPod playlists. It’s only a matter of time until Schultz is asked to cut an album of duets with Tony Bennett. Maybe after he escorts Jennifer Anniston to the Oscars, and right before his appearance on The Tonight Show.
Thursday, February 19, 2009
Get real, unions
Restaurant employees’ union to Burger King: You’re cheating taxpayers.
Romeo to union: Oh, shut up.
Sorry, but I’m really tired of watching the Service Employees International Union and its fellow the traveler, Restaurant Opportunties Center of New York (and now Maine), try to manipulate public sympathy with their preposterous Grassy Knoll take on reality. They twist the facts to turn restaurant employers into the sort of mustachioed villains who once tied matrons to railroad tracks.
This time around, for instance, SEIU is hoping to convince the public that Burger King Holdings is siphoning off some of the federal bail-out funds that were channeled to banks. Follow closely, because this has more twists and turns than a day in Illinois politics.
One of the big stakeholders in BK, the union notes in a statement issued yesterday, is Goldman Sachs. And the one-time broker, now reclassified as a bank, was a recipient of some $10 billion from the TARP (Troubled Asset Relief Program) kitty.
Up to this point, we’re still reality-based. But now the acid kicks in.
The Obama Administration and Congress want more accountability for how TARP dollars are used, notes SEIU. But an additional $273 million of taxpayers’ money is being siphoned off by BK. The Bernie Maddoff-like scheme: Not providing healthcare benefits and paying “sub-poverty wage levels.”
Let me review: BK doesn’t provide health care, which means employees have to find other ways of affording medical attention. A significant stake in the company is held by Goldman Sachs, which was given $10 billion in TARP funds. Ergo, Goldman and BK are cheating the American public.
Follow?
But it gets worse, SEIU says. BK CEO John Chidsey collected $5.4 million in 2008 compensation, including bonuses. Goldman Sachs paid out $6.5 billion in bonuses, the union says. If just the Goldman Sachs performance-based pay had been given instead to BK’s workers, SEIU says, all 360,000 of them would have collected $18,000.
Never mind that BK is a publicly owned company in which Sachs merely holds a stake, albeit a big one. And that BK’s employees aren’t paid by Sachs. Indeed, there’s no flow of money from Sachs to BK, never mind to Chidsey.
I’m not saying that Sachs should have paid big-buck bonuses when it’s collecting government bailout funds. But I’m not sure what that has to do with BK. Might it be because SEIU would like to enlist its employees as members?
Similarly, whether or not BK should provide some type of health-insurance support is a legitimate topic of discussion. If SEIU wanted to start a reality-based conversation on the responsibility of minimum-wage employers, we’d be in a whole different realm. But, here again, it’s just trying to look like the white-hatted cowboy who unties Snidely Whiplash’s knots and frees the maiden from the oncoming locomotive. It’s trying to curry favor by manipulating the facts to make it look like a bravo fighter for right.
Instead, it’s accusing BK and Sachs of “opposing efforts to stop rebuilding the economy” while “taking billions of dollars through taxpayers.”
Why not just accuse the pair of kicking puppies and trying to outlaw American flags?
Romeo to union: Oh, shut up.
Sorry, but I’m really tired of watching the Service Employees International Union and its fellow the traveler, Restaurant Opportunties Center of New York (and now Maine), try to manipulate public sympathy with their preposterous Grassy Knoll take on reality. They twist the facts to turn restaurant employers into the sort of mustachioed villains who once tied matrons to railroad tracks.
This time around, for instance, SEIU is hoping to convince the public that Burger King Holdings is siphoning off some of the federal bail-out funds that were channeled to banks. Follow closely, because this has more twists and turns than a day in Illinois politics.
One of the big stakeholders in BK, the union notes in a statement issued yesterday, is Goldman Sachs. And the one-time broker, now reclassified as a bank, was a recipient of some $10 billion from the TARP (Troubled Asset Relief Program) kitty.
Up to this point, we’re still reality-based. But now the acid kicks in.
The Obama Administration and Congress want more accountability for how TARP dollars are used, notes SEIU. But an additional $273 million of taxpayers’ money is being siphoned off by BK. The Bernie Maddoff-like scheme: Not providing healthcare benefits and paying “sub-poverty wage levels.”
Let me review: BK doesn’t provide health care, which means employees have to find other ways of affording medical attention. A significant stake in the company is held by Goldman Sachs, which was given $10 billion in TARP funds. Ergo, Goldman and BK are cheating the American public.
Follow?
But it gets worse, SEIU says. BK CEO John Chidsey collected $5.4 million in 2008 compensation, including bonuses. Goldman Sachs paid out $6.5 billion in bonuses, the union says. If just the Goldman Sachs performance-based pay had been given instead to BK’s workers, SEIU says, all 360,000 of them would have collected $18,000.
Never mind that BK is a publicly owned company in which Sachs merely holds a stake, albeit a big one. And that BK’s employees aren’t paid by Sachs. Indeed, there’s no flow of money from Sachs to BK, never mind to Chidsey.
I’m not saying that Sachs should have paid big-buck bonuses when it’s collecting government bailout funds. But I’m not sure what that has to do with BK. Might it be because SEIU would like to enlist its employees as members?
Similarly, whether or not BK should provide some type of health-insurance support is a legitimate topic of discussion. If SEIU wanted to start a reality-based conversation on the responsibility of minimum-wage employers, we’d be in a whole different realm. But, here again, it’s just trying to look like the white-hatted cowboy who unties Snidely Whiplash’s knots and frees the maiden from the oncoming locomotive. It’s trying to curry favor by manipulating the facts to make it look like a bravo fighter for right.
Instead, it’s accusing BK and Sachs of “opposing efforts to stop rebuilding the economy” while “taking billions of dollars through taxpayers.”
Why not just accuse the pair of kicking puppies and trying to outlaw American flags?
Wednesday, February 18, 2009
CPAs' PSA: Avoid restaurants
If the restaurant industry was irate over Suze Orman’s recommendation that consumers avoid dining out for a month, it may have to be searched for weapons after it hears about the public service campaign being waged by a national accountants’ group. The program, FeedThePig.org, is intended to help the public save money through easy, simple actions. Like foregoing trips to restaurants, or bringing your lunch to work instead of buying it.
The message is being delivered not only through the website, but also in a series of ads produced by The Advertising Council, a trade group, in collaboration with the American Institute of Certified Public Accountants. All attempt to help consumers improve their financial situation by cutting expenditures and putting the savings in safe interest-bearing investments.
One of the program’s more intriguing elements is showing consumers how much they can make by changing their spendthrift ways. For instance, a calculator featured on the website allows visitors to compute what they spend on restaurants in a typical month. Using that figure, it then calculates what the money would earn if it was banked. The example cited shows a restaurant patron having squirreled away $22,000 over five years just from skipping restaurant visits.
One of the criticisms leveled at Orman, the popular personal-finance guru, was her singling out of restaurants as the luxury that should be skipped. FeedThePig.org (the name is a reference to feeding a piggybank) is not nearly so selective. It recommends a reconsideration of everything from buying gadgets to splurging for makeup.
“Which spending habit are we gonna smash first?” asks Benjamin, the piggybank icon that narrates the web site.
But five of the broad advice categories squarely hit restaurants: Dining Out (“Instead of going out, cook at home with friends.”), Lunch Buying, Latte-a-Day, Takeout (“Buy instant meals at the grocery store, they are cheaper and efficient.”) and Bottled Beverages (“Get a counter-top carbonator and make your own, healthy soft drinks.”)
The website is aimed at adults, but links to a site for “tweens,” where a game teaches children how to save. The AICPA and the Ad Council have also set up a password-protected site as a resource for teachers.
The knee-jerk reaction would be to turn Benjamin into bacon. But the sort of anger shown by the business over Orman’s recommendation needs to be put aside. FeedThePig.org is well intentioned, and helping consumers cut their expenses, including their outlays for restaurant food, is no more diabolical than restaurateurs trimming their light bills, labor expenses or supply charges. The industry has to bear in mind that everyone is struggling in this environment. The effort by the AICPA and the Ad Council is merely striving to help the public in that effort.
But, of course, restaurants are part of the public, too. Still, if the foodservice industry wants to counter efforts like FeedThePig.org, it has to focus on what marketers dub the value proposition—why it’s still worthwhile for consumers to dine out. Maybe restaurateurs need to remind hard-pressed patrons that restaurant meals are still a relatively inexpensive indulgence, all the more appreciable in these trying times. Or a great way to save time. Or an opportunity for the family to share quality time, instead of having Mom or Dad frantically slapping together a meal while everyone else snorks down their meal.
But finding a noose and a stout branch? Nah. That’s just not the way to go. The industry has to start fending off the dining-out naysayers with a counterargument, not an how-dare-you attack.
The message is being delivered not only through the website, but also in a series of ads produced by The Advertising Council, a trade group, in collaboration with the American Institute of Certified Public Accountants. All attempt to help consumers improve their financial situation by cutting expenditures and putting the savings in safe interest-bearing investments.
One of the program’s more intriguing elements is showing consumers how much they can make by changing their spendthrift ways. For instance, a calculator featured on the website allows visitors to compute what they spend on restaurants in a typical month. Using that figure, it then calculates what the money would earn if it was banked. The example cited shows a restaurant patron having squirreled away $22,000 over five years just from skipping restaurant visits.
One of the criticisms leveled at Orman, the popular personal-finance guru, was her singling out of restaurants as the luxury that should be skipped. FeedThePig.org (the name is a reference to feeding a piggybank) is not nearly so selective. It recommends a reconsideration of everything from buying gadgets to splurging for makeup.
“Which spending habit are we gonna smash first?” asks Benjamin, the piggybank icon that narrates the web site.
But five of the broad advice categories squarely hit restaurants: Dining Out (“Instead of going out, cook at home with friends.”), Lunch Buying, Latte-a-Day, Takeout (“Buy instant meals at the grocery store, they are cheaper and efficient.”) and Bottled Beverages (“Get a counter-top carbonator and make your own, healthy soft drinks.”)
The website is aimed at adults, but links to a site for “tweens,” where a game teaches children how to save. The AICPA and the Ad Council have also set up a password-protected site as a resource for teachers.
The knee-jerk reaction would be to turn Benjamin into bacon. But the sort of anger shown by the business over Orman’s recommendation needs to be put aside. FeedThePig.org is well intentioned, and helping consumers cut their expenses, including their outlays for restaurant food, is no more diabolical than restaurateurs trimming their light bills, labor expenses or supply charges. The industry has to bear in mind that everyone is struggling in this environment. The effort by the AICPA and the Ad Council is merely striving to help the public in that effort.
But, of course, restaurants are part of the public, too. Still, if the foodservice industry wants to counter efforts like FeedThePig.org, it has to focus on what marketers dub the value proposition—why it’s still worthwhile for consumers to dine out. Maybe restaurateurs need to remind hard-pressed patrons that restaurant meals are still a relatively inexpensive indulgence, all the more appreciable in these trying times. Or a great way to save time. Or an opportunity for the family to share quality time, instead of having Mom or Dad frantically slapping together a meal while everyone else snorks down their meal.
But finding a noose and a stout branch? Nah. That’s just not the way to go. The industry has to start fending off the dining-out naysayers with a counterargument, not an how-dare-you attack.
Sunday, February 15, 2009
Tip laws draw new scrutiny
Raise a glass in sympathy to the industry’s public affairs officers. It’s bad enough they’ll be rooting for days through Congress’ stimulus package, looking for possible boons to their companies or the business overall. Now there’s the Whack-a-Mole marathon that statehouses commenced last week, with new tip bills popping up faster than peanut product recalls. And if their chain has any restaurants in the U.K., they might as well start pounding the Red Bull right away. Cut with a little vodka, perhaps.
Most of the proposals deal with the tip credit, a provision of wage-and-hour laws that assumes servers earn most of their income in gratuities. In states where a credit is on the books, employers have to pay only a portion of the mandated minimum wage, with the rest coming from what customers leave on the table as tips. Many of the jurisdictions follow federal law, which requires employers to pay tipped staffers only $2.13 an hour, compared with the full minimum of $6.55.
The waiter, waitress or bartender makes no less than he or she would if they collected the full minimum wage—and, indeed, they often make considerably more. Rather, the credit merely allows some of that pay to come directly from patrons.
But movements afoot in states like Maine, Kansas and Missouri aim to change that situation, which has been the norm in all but eight states since the 1980s. Labor proponents say it’s unfair for servers to collect only a small fraction of what their non-tipped colleagues are paid under state wage requirements. Whatever they get in tips, the advocates argue, is icing on the cake, a gift they should be entitled to keep in addition to their hourly pay.
Restaurants, of course, argue that they can’t afford to pay more in wages right now. Some also point out that the traditional tip is 15%, whereas the profit margin for most restaurants is in the single digits, and often under 5%.
Indeed, the trade cited its dire economic conditions in trying, unsuccessfully, to institute a tip credit in Montana. The proposal was just defeated in the state Senate by a 29-21 bipartisan vote.
The industry was more successful earlier this month in Wyoming, beating back a proposal to adjust the tip credit there. The measure would have raised the hourly minimum wage for servers by $3 an hour.
Yet to be decided is a proposal in Maine, where a new union-like group patterned after one in New York City, the innocuous-sounding Restaurant Opportunities Center, is pushing to raise the minimum wage of servers to 60% of the mandated rate for other workers. The current floor for servers is 50% of the full hourly wage.
A measure under consideration in Kansas would raise servers’ minimum to $4.35, from the current $2.13.
In Hawaii, restaurateurs are leading the charge to change the state’s tip credit, which allows them to lower servers’ minimum pay by just a quarter an hour, to $7. They’re arguing that the island state’s laws shouldn’t be out of sync with the pay scale of the mainland, and cite the long and growing list of restaurants that have been shuttered there by the economic freefall.
If you ask me, both sides have compelling arguments, given the state of the economy. There just aren’t enough dollars going into restaurants, so employers and employees are trying to adjust the split in whatever way is most favorable to them. It’s understandable, just not easily resolved.
So let’s hope those public affairs officers find plenty of hopeful indications within the stimulus package. In the meantime, send ‘em a whole bottle of the good stuff. Charge it to the bankruptcy lawyers, whose industry seems to be the only one doing better in this environment.
Most of the proposals deal with the tip credit, a provision of wage-and-hour laws that assumes servers earn most of their income in gratuities. In states where a credit is on the books, employers have to pay only a portion of the mandated minimum wage, with the rest coming from what customers leave on the table as tips. Many of the jurisdictions follow federal law, which requires employers to pay tipped staffers only $2.13 an hour, compared with the full minimum of $6.55.
The waiter, waitress or bartender makes no less than he or she would if they collected the full minimum wage—and, indeed, they often make considerably more. Rather, the credit merely allows some of that pay to come directly from patrons.
But movements afoot in states like Maine, Kansas and Missouri aim to change that situation, which has been the norm in all but eight states since the 1980s. Labor proponents say it’s unfair for servers to collect only a small fraction of what their non-tipped colleagues are paid under state wage requirements. Whatever they get in tips, the advocates argue, is icing on the cake, a gift they should be entitled to keep in addition to their hourly pay.
Restaurants, of course, argue that they can’t afford to pay more in wages right now. Some also point out that the traditional tip is 15%, whereas the profit margin for most restaurants is in the single digits, and often under 5%.
Indeed, the trade cited its dire economic conditions in trying, unsuccessfully, to institute a tip credit in Montana. The proposal was just defeated in the state Senate by a 29-21 bipartisan vote.
The industry was more successful earlier this month in Wyoming, beating back a proposal to adjust the tip credit there. The measure would have raised the hourly minimum wage for servers by $3 an hour.
Yet to be decided is a proposal in Maine, where a new union-like group patterned after one in New York City, the innocuous-sounding Restaurant Opportunities Center, is pushing to raise the minimum wage of servers to 60% of the mandated rate for other workers. The current floor for servers is 50% of the full hourly wage.
A measure under consideration in Kansas would raise servers’ minimum to $4.35, from the current $2.13.
In Hawaii, restaurateurs are leading the charge to change the state’s tip credit, which allows them to lower servers’ minimum pay by just a quarter an hour, to $7. They’re arguing that the island state’s laws shouldn’t be out of sync with the pay scale of the mainland, and cite the long and growing list of restaurants that have been shuttered there by the economic freefall.
If you ask me, both sides have compelling arguments, given the state of the economy. There just aren’t enough dollars going into restaurants, so employers and employees are trying to adjust the split in whatever way is most favorable to them. It’s understandable, just not easily resolved.
So let’s hope those public affairs officers find plenty of hopeful indications within the stimulus package. In the meantime, send ‘em a whole bottle of the good stuff. Charge it to the bankruptcy lawyers, whose industry seems to be the only one doing better in this environment.
Friday, February 13, 2009
Cheesecake tries snacks
Fast feeders aren't the only chains trying to lure more customers with snacks. Executives of The Cheesecake Factory say the new winter menu now in 36 of its stores features an array of snacks and small plates.
"They are very, very well priced," CEO David Overton commented during yesterday's conference call with financial analysts. "You can order two or three of them as you would one."
He indicated that the menu would be rolled to all stores within the next month.
The value appeal of the snacks and small plates is apparently meant to complement the bargains offered on what the chain calls its "special menu," an array of toothsome entrees priced at $11.95 to $12.95. Those selections are currently in "most of our restaurants, [but] not 100%," Overton said.
"They are very, very well priced," CEO David Overton commented during yesterday's conference call with financial analysts. "You can order two or three of them as you would one."
He indicated that the menu would be rolled to all stores within the next month.
The value appeal of the snacks and small plates is apparently meant to complement the bargains offered on what the chain calls its "special menu," an array of toothsome entrees priced at $11.95 to $12.95. Those selections are currently in "most of our restaurants, [but] not 100%," Overton said.
Wednesday, February 11, 2009
More dark clouds, but is that a glimmer of sun?
The financial results released this morning by P.F. Chang's, once one of the industry's over-achievers, are less interesting than the company's projections for 2009: "a significant reduction in average weekly sales" of about 6 percent for both if its concepts. And, actually, that might be good news.
The figures are consistent with the comps posted for P.F. Chang's and Pei Wei Asian Diner for the last three months of 2008. Since the numbers reflect year-over-year comparisons, they suggest the downturn is leveling off. Might the industry be finding the bottom?
The announcement follows several promising additional developments, including yesterday's disclosure by beleagured GE Capital that it has lent $5.8 million to the eight-unit Boston Blackie's casual chain for expansion. Any loan extended to a restaurant company in the current environment is an encouraging sign, given how scarce capital has been. It's especially noteworthy because GE Capital has been the poster company for lenders that have been hurt by the banks' liquidity crisis.
This morning also brought the news that Tremblant Capital, a New York hedge fund, has increased its stake in Chipotle to 5.7%. Clearly the well-known, multi-billion-dollar fund believes shares are under-valued, or soon may be.
Similarly, fund manager John Hussman has greatly increased his stakes in Panera Bread Co. and Starbucks, and purchased shares of Darden for the first time.
A brightening view of restaurant stocks could only help the industry.
Still, the trade has a long way to go before it can claim the recovery is underway. P.F. Chang's profits for the last quarter of 2008 fell about 23%, to just $5.4 million.
The figures are consistent with the comps posted for P.F. Chang's and Pei Wei Asian Diner for the last three months of 2008. Since the numbers reflect year-over-year comparisons, they suggest the downturn is leveling off. Might the industry be finding the bottom?
The announcement follows several promising additional developments, including yesterday's disclosure by beleagured GE Capital that it has lent $5.8 million to the eight-unit Boston Blackie's casual chain for expansion. Any loan extended to a restaurant company in the current environment is an encouraging sign, given how scarce capital has been. It's especially noteworthy because GE Capital has been the poster company for lenders that have been hurt by the banks' liquidity crisis.
This morning also brought the news that Tremblant Capital, a New York hedge fund, has increased its stake in Chipotle to 5.7%. Clearly the well-known, multi-billion-dollar fund believes shares are under-valued, or soon may be.
Similarly, fund manager John Hussman has greatly increased his stakes in Panera Bread Co. and Starbucks, and purchased shares of Darden for the first time.
A brightening view of restaurant stocks could only help the industry.
Still, the trade has a long way to go before it can claim the recovery is underway. P.F. Chang's profits for the last quarter of 2008 fell about 23%, to just $5.4 million.
Saturday, February 7, 2009
Ah-nold, what are you doing?
You have to question the wisdom of furloughing employees of California's Department of Public Health during the ongoing four-alarm salmonella outbreak. Yet the staffers were among the thousands who were forced to skip work on Friday.
At least schools and other foodservice facilities could look for assistance on the department's website.
The Division of Workers' Compensation, another agency known to many California restaurateurs, was also shut for the day.
Governor Schwarzenegger ordered the two-days-a-month furloughs as a way of contending with the state's gaping financial deficit. The next furlough day is set for the second Friday from now.
At least schools and other foodservice facilities could look for assistance on the department's website.
The Division of Workers' Compensation, another agency known to many California restaurateurs, was also shut for the day.
Governor Schwarzenegger ordered the two-days-a-month furloughs as a way of contending with the state's gaping financial deficit. The next furlough day is set for the second Friday from now.
Wednesday, February 4, 2009
What did Denny's get for its giveaway?
Denny's ended one of the more extraordinary giveaways in the history of the restaurant business--a free Grand Slam breakfast to anyone who showed up at any store, albeit within a set timeframe--by divulging enough stats to choke a fantasy football league.
The cost: $5 million, including the outlay for the Super Bowl spot trumpeting the freebie. The traffic: 130 free breakfasts an hour per store for the eight hours of the offer. Average wait time for a table during that window: An hour, with tables turned every 20 minutes. Every store was filled to capacity, according to the home office.
All in all, Denny's said, about 2 million of the breakfasts were given away today (though other numbers suggest it might've been closer to 1.5 million, or 130 meals per hour X 8 hours X 1500 stores).
And the lasting effects? Two of my esteemed former colleagues at Nation's Restaurant News spoke with customers about the giveaway's impression on theme. It's food for thought.
The cost: $5 million, including the outlay for the Super Bowl spot trumpeting the freebie. The traffic: 130 free breakfasts an hour per store for the eight hours of the offer. Average wait time for a table during that window: An hour, with tables turned every 20 minutes. Every store was filled to capacity, according to the home office.
All in all, Denny's said, about 2 million of the breakfasts were given away today (though other numbers suggest it might've been closer to 1.5 million, or 130 meals per hour X 8 hours X 1500 stores).
And the lasting effects? Two of my esteemed former colleagues at Nation's Restaurant News spoke with customers about the giveaway's impression on theme. It's food for thought.
Tuesday, February 3, 2009
Misted-over news from Starbucks--and some's good
We’ve all heard Starbucks’ latest tactics for surviving the economic downturn: Cut more staff, close more stores, generally retreat and retrench. But the plan goes much further than that, particularly in regard to its secondary brand, Seattle’s Best Coffee.
An admittedly late reading of the transcript from last week’s investor conference call indicates the 300 stores slated for closing may not actually end their Starbucks affiliation. CEO/godfather Howard Schultz revealed plans to find franchisees willing to keep those stores open under the Seattle’s Best banner.
That effort, he said, is part of an overall ramp-up of franchising for the brand, which is also extending its reach through supply deals with other chains. This month marks the introduction of Seattle’s Best coffee in 2,800 Subway units, Schultz noted.
He also disclosed plans, albeit cryptic ones, to launch a bargain-priced, bundled breakfast. Starting in March, “we will offer several breakfast pairings in company-operated stores at attractive price points,” he revealed. Schultz noted that the pricing of the packaged deals will be uniform nationwide. That standardization would facilitate a full-scale ad blitz.
Investors also learned of a plan to press all of Starbucks’ landlords for a rollback in rent.
There was also some good news obscured behind the reports of 700 more people being laid off—or “separated from the company,” in Schultz’s euphemism. For instance, the Steve Jobs of coffee said, Starbucks’ gift card sales increased during the holiday sales by 8%, with $560 million loaded on electronic wallets usable only at one of the chain’s outlets.
He quantified the savings from defrocking 300 Starbucks stores and laying off 700 people at $100 million
An admittedly late reading of the transcript from last week’s investor conference call indicates the 300 stores slated for closing may not actually end their Starbucks affiliation. CEO/godfather Howard Schultz revealed plans to find franchisees willing to keep those stores open under the Seattle’s Best banner.
That effort, he said, is part of an overall ramp-up of franchising for the brand, which is also extending its reach through supply deals with other chains. This month marks the introduction of Seattle’s Best coffee in 2,800 Subway units, Schultz noted.
He also disclosed plans, albeit cryptic ones, to launch a bargain-priced, bundled breakfast. Starting in March, “we will offer several breakfast pairings in company-operated stores at attractive price points,” he revealed. Schultz noted that the pricing of the packaged deals will be uniform nationwide. That standardization would facilitate a full-scale ad blitz.
Investors also learned of a plan to press all of Starbucks’ landlords for a rollback in rent.
There was also some good news obscured behind the reports of 700 more people being laid off—or “separated from the company,” in Schultz’s euphemism. For instance, the Steve Jobs of coffee said, Starbucks’ gift card sales increased during the holiday sales by 8%, with $560 million loaded on electronic wallets usable only at one of the chain’s outlets.
He quantified the savings from defrocking 300 Starbucks stores and laying off 700 people at $100 million
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