Enter the mid-tier burger

Faster than you can say “Forget 99 cents!,” two big fast-food chains are unwrapping burgers that could lure customers away from the low-priced choices that eased the brands through the Great Recession.

Call them mid-tier burgers, priced to fill the gap between each chain’s new premium choice and the smallest sandwiches on their respective menus.

Indeed, “mid-tier product” is the description Wendy’s uses for its W burger, which will be rolled out in December. “This is going out at a $2.99 price point,” new CEO Emil Brolick explained to investors yesterday. “One of the things we want to do is put a product out there that we think is going to encourage people to trade up. Perhaps those individuals that are purchasing [a] 99-cent item will trade up to this product.”

The lure, he said, is a strong flavor and a high-craft aspect to the burger, which has about “two, 2.5 ounces” of fresh beef.

That seems to be the same strategy Burger King is employing with its new BK Toppers line. The burgers are dressed with flavorings like Swiss cheese, mushrooms and barbecue sauce. They’re heftier than the W’s, with 3.2 ounces of beef, but will be priced at $1.99, according to franchisee Carrols Restaurant Group.

That puts it between BK’s regular and Mini burgers on the low-price end, and the new BK Chef’s Choice at the high end, with a price of $4.99.

The two giants aren’t alone in sandwiching mid-priced burgers between their bargains and their biggies. Carl’s Jr. recently added new Steakhouse burgers, arrayed on the menu between its Six Dollar Burger line (typically priced around $4) and its Famous Star singles.

Missing among the converts is the segment’s true king, McDonald’s. First in size as well as sales growth, it’s been relying with stunning success on its beverages and snack-type items, leaving its burger line-up largely untouched since the rollout of the Angus line.

Keeping up with BK's test kitchen

Burger King’s test kitchen has been such a hive of activity that it’s hard to recollect all the new or newly revised products that have recently moved beyond the test phase. Carrols Restaurant Group, the chain’s largest franchisee, provided a recap to its investors yesterday. Here are the highlights:

--A new, thicker cut French fry that’s being quietly rolled out. Quality Restaurants, another large franchisee, switched to the new sides a few weeks earlier. Carrols adopted the thicker cut in late October.

--Better bacon. The coarser-cut strips are delivered raw to stores and cooked on the premises so they’re a fresher garnish or breakfast side.

--The Chef’s Choice, a one-third-plus (5.5-ounce) premium burger with a price to match: $4.99. Although Carrols officials didn’t say it, the sandwich appears to be Burger King’s answer to McDonald’s one-third-pound Angus line.

--BK Toppers, a line of garnished, 3.2-ounce burgers priced as a middle option, at $1.99. The array fills the gap between the new BK Minis, the sliders that were introduced earlier this year, and the Chef’s Choice and Whopper.

--Soft-serve ice cream, introduced this summer as a loss leader (buy a meal, get one free; Carrols said it provided 100 free cones a day during the warmer weather.)

--Smoothies, which appear to be still in the refinement stage.

Carrols said it’s encouraged by the performance of the products it’s recently adopted. “We are optimistic and hopeful that as we move forward, Burger King will begin to regain market share, expand its customer base and experience sustainable traction in its performance,” said president/COO Dan Accordino, who’ll be taking over the burger operation when longtime CEO Alan Vituli retires at the end of the year.

Accordino didn’t acknowledge the menu change that made headlines this week, the rollout of new kids meals that bring back the chain’s giveaway crown, once a BK signature. The meals are available with apple slices instead of French fries, a counter to the health-oriented option that McDonald’s is currently adopting.

Blurring restaurant lines

You can make a strong argument that line-blurring has been the most successful restaurant strategy of the last 20 years. Without the daring to nudge a familiar type of restaurant into another category’s turf, we never would’ve had fast-casual, a blurring of the lines between fast-food and casual dining, or hybrids like burger joints run by celebrity chefs (think Daniel Boulud’s CBDB’s or Marcus Samuelsson’s Marc Burger).

Now two of the earliest and most successful proponents of line-blurring are smudging a different boundary.

By the industry’s standard definition, Mimi’s Café and Cracker Barrel fall into the category of family restaurants, or what were called coffee shops in the pre-Starbucks age. A key feature was serving breakfast, a rarity among full-service places. Indeed, a heavy morning clientele was one of their signatures. Ditto for selling more soft drinks than wine, beer or spirits. And their menus were as broad and mainstream as what we in the East would find at a classic diner.

But Mimi’s and Cracker Barrel never exactly fit the specs. Yeah, they do considerable breakfast business. But these aren’t your father’s Denny’s or Village Inn. Slip into a Mimi’s at lunch and you’ll find plenty of office workers, not families. And the menu is more ambitious than the roster for many upscale casual places.

Cracker Barrel also has that casual feel, and its reliance on a country-store schtick is reminiscent of the heavy-duty theming that’s common in casual dining (think Friday’s, Lone Star or Olive Garden).

Now those non-comformists are blurring the line again, this time by shifting into the pricing strata right below them. Both have just unveiled new lunch deals that rival the value and convenience afforded by fast-food outlets.

Cracker Barrel’s new offer is a line-up of daily specials that sell for $5.99 each. Consider for a moment that $5 is the going bargain rate for a sandwich at sub specialists like Subway. At Cracker Barrel you can pay just a buck more for meatloaf and mashed potatoes, a chicken pot pie, or a turkey platter with the usual trimmings.

Mimi’s is stressing speed of service along with the low prices of its midday options. It guarantees that its new Express Lunch service will take no more than 15 minutes. For $6.99, that gets the customer servings of soup and salad. For $1.50 more, they can get the soup or salad with half a sandwich. A soda adds just another $1 to the check.

Mimi’s may be venturing into fast-food territory, but it’s not dropping its competitive challenge to casual places. Also new on its menu is a takeout deal that might turn the heads of consumers who use casual restaurants’ curbside delivery services. Priced at $25 each, the meals are marketed as sufficient to feed a family of four. The options include such comfort favorites as pot roast, chicken parmigiana and turkey.

It’s also added a new Happy Hour deal: wine flights for $5.

Clearly the chalk marks between segments are still being smudged.

Sandy Beall's different drummer

Give one of those inaudible dog whistles a blast and see if Sandy Beall cocks an ear. The Ruby Tuesday CEO must be picking up signals other restaurant executives can’t detect. Why else would he be reading the marketplace so differently?

Almost every chain, from McDonald’s to Applebee’s, has cut back its company-run restaurants to free up capital and lower risk. Not Ruby, the operation that Beall founded while he was still in college. In the past year it’s purchased 109 stores from franchisees.

So how’s that working out? From April through June, Ruby’s net income was depressed by a 24.3% drop in franchise revenues, which typically have a profit margin just this side of legal. The offset was a 12.6% increase in revenues.

But Beall’s not budging. “No, no, no,” he told financial analysts during a conference call. “We run company-owned operations. We sure as hell wouldn't have bought them back, if we're going to refranchise them.”

That wasn’t the only time during the call that portfolio managers asked about Ruby’s recent tactics. Several wondered aloud about the direction of the chain’s menu. For direct competitors, the watch words have been value and nostalgia. Witness their reliance on burgers and their slider variants.

What’s new on Ruby’s bill of fare? Trout almondine and spaghetti squash,” which I personally find appealing,” said Jeff Omohundro, the restaurant analyst for Wells Fargo Securities. “But I just wonder if there might be some overreach relative to a broader Ruby Tuesday audience.”

Beall responded that the dishes are a choice for 3 or 4% of guests, and “it didn't hurt us to have it.”

But the analysts didn’t let the point drop. “There was a period in which you had kind of tweaked the business around, put some emphasis against appetizers and your burgers, and it seemed like the business really took off,” noted Morgan Keegan’s Robert Derrington. “Is there anything to be gained as we look back in time about that relative to your dinner house strategy?”

“We do not plan to turn back into a burger joint,” answered Beall.

Some of the moves seemed to have analysts doodling question marks as they listened to Beall and his team. For instance, EVP Kimberly Grant observed that most of Ruby’s recent sales decline has come during weekday dinnertimes.

Didn’t the chain run a Tuesday steak and lobster promotion to counter that trend? Is that tactic still being tried?

“No, we shifted that to being all-weekend promotion,” Beall said in response to the question.

2011: A year of less?

The new year is only a few days old, but a 2011 trend is already showing on restaurant menus. If the trajectory holds, this is going to be 12 months of subtraction, as in yanking out calories or additives—or, in the case of Panera Bread Co., both.

This week my local Panera mixed a new option into its rotation of soups: All-Natural Chicken Noodle, with a mere 130 calories per serving. I can attest that it was good. Darn good, in fact, though I acknowledge a bias toward anything that reduces guilt and the consumption of nasty chemicals.

But it wasn’t as good as the store’s previous addition, an all-natural steak chili made from brisket and served with cornbread cubes. It gets a higher grade despite having a higher calorie count.

I know about the calories because they’re now posted on the menu board, as they’ll soon be depicted in California because of mandates passed some time ago. You have to wonder if that’s a factor for this latest less-is-more movement.

Then again, I don’t think Culver’s operates in any areas with calorie-disclosure requirements. Yet the Midwestern burger and frozen custard specialist officially kicked off a promotion today of what it’s calling Mindful Choices, or meals containing fewer than 500 calories. The components were already offered. What’s new is spotlighting them as a packaged meal.

The other factor clearly coming into play is the propensity of consumers to include losing weight among their New Year’s resolutions. Indeed, Applebee’s is playing off that wave of pledges with its newest menu additions, which include two reduced-calorie cocktails. The mojito and Long Island Iced Tea join a 100-calorie margarita introduced last year to form a new SkinnyBee drink line.

The chain also extended its array of entrée selections with fewer than 550 calories.

All in all, 2011 is shaping up to be a year of shaping up.

A thaw in big-chain thinking?

Slowly but audaciously, big restaurant chains are starting to address the public’s interest in localized ingredients and preparations.

You can see it in two high-profile introductions of the past week: Cheesecake Factory’s relaunch of its burgers as regionalized “Glamburgers,” featuring ingredients associated with a particular place, and Applebee’s debut of what it describes as “neighborhood-inspired Realburgers,” with flavors ascribed to three local preferences.

No, these aren’t products made with West Virginia ramps or Jersey peaches. A cynic would say the burgers embody culinary clichés of certain regions—pulled pork as a topping on Cheesecake’s Memphis burger, for instance, or the hoagy roll used for Applebee’s Philly Burger, which is dressed with the standard cheesesteak fixings.

But at least the big systems are trying to get away from their One Bland Taste Fits All myopia, an orientation that’s clearly less feasible today. Cheesecake is actually using goat cheese and arugula on its Sonoma burger. By big-chain standards, this is bold stuff.

Connecting an ingredient or item to a region, or using components actually sourced locally, isn’t completely alien to the chain market. Small systems like Burgerville and Smashburger have been doing it for some time. As RestaurantRealityCheck noted last fall, New England’s D’Angelos and Papa Gino’s now use cheeses from Vermont for a number of their selections. Louisiana officials were delighted when local Outback Steakhouse units decided to stick with locally caught shrimp.

But those noble efforts were undertaken on a relatively small scale. Bigger chains just couldn’t overcome the logistical issues, much less the need to be one thing to all people. That coast-to-coast consistency is viewed as absolutely necessary when you’re spending millions of dollars to advertise via national media.

The new endeavors of Cheesecake and Applebee’s are hardly bungee jumps off that safe ledge. But they may signal a change in the hoary thinking that a chain should offer what works for its well-grooved systems, instead of serving what consumers want.

How long to revise a menu?

How much time should a chain need to develop new menu items? David Brandon, the outgoing CEO of Domino’s Pizza, disclosed this week how the pizza giant’s R&D expectations have changed dramatically as a result of a home-office reorientation.

When Brandon was recruited to remake the concept’s culture some 12 years ago, the lag time between idea and rollout typically ran 18 months. It was a prime example, he stressed, of the “analysis paralysis” that had cost the chain its alacrity during a time of significant change in the pizza market.

“By the time we had something ready, our competition had often beaten us to market,” he explained at the Restaurant Leadership Conference earlier this week in Scottsdale, Ariz.

Brandon, who recently vacated Domino’s corner office to become athletic director at the University of Michigan, took a pizza cutter to the bureaucracy and inertia. He also overhauled much of the management team, apparently to make the whole operation more responsive to shifts in consumer preferences.

Today, says Brandon, the chain’s R&D operations can have a product on the menu no longer than 90 days after the notion was floated.

Brandon just surrendered the CEO’s title to Patrick Doyle, his longtime lieutenant. He remains Domino’s chairman of the board.

BK's new breakfast items--and ongoing pricing mess

Any commandos looking for near-term work in the Miami area? Some of us are considering a raid on Burger King’s headquarters to rescue the chain’s menu-development team. Management must be working them 24/7 to get the sort of product output we’ve been seeing, and the volume is about to increase with the rollout of several new breakfast items.

Those additions will include a new muffin sandwich and a breakfast bowl, according to executives of Carrols Corp., the chain’s largest franchisee and a likely sympathizer with our mission. In talking with investors today, the officials indicated they’re not exactly overjoyed with the products pouring out of the franchisor’s test kitchens.

Indeed, analysts were advised during the conference call that Carrols can’t provide them with a general outlook for its Burger King restaurants because of “uncertainty regarding the impact of new product introductions,” in the words of CFO Paul Flanders.

He and his colleagues explained that next in the staging area for BK are a number of higher-priced items, including ribs and additions to the XT premium burger line. Although Carrols is “cautiously optimistic” about the sales prospects for those additions, the ka-ching may not be as loud as BK hopes because of tight consumer spending and widespread discounting by competitors, said president Dan Accordino.

Carrols noted that its BK units were selling only 24 Steak House XT burgers a day, though supporting advertising had yet to begin. Still, “I’m not certain that the units are going to be terribly significant,” said Flanders.

That’s not to say aggressive discounting has worked well for BK, either, Accordino remarked. He cited the chain’s controversial $1 double cheeseburger, a product other franchisees have slammed as a giveaway that costs them money.

The bargain-priced item isn’t delivering sustained sales, contrary to the chain’s hopes, Accordino explained. Orders have tapered off since the deal was introduced last fall, with comp sales at Carrols’ BK units falling about 8% year-over-year during the first six weeks of 2010, the stock analysts learned.

Even with that decline, the $1 double accounts for 10% of sales at Carrol’s BK units. However, “while we're selling a lot of sandwiches, our incidence of drink and fry add-ons is not that high, making the gross profit contribution less appealing than we had hoped,” Accordino said.

That’s on top of the margin damage fellow franchisees had feared, he indicated.

The assessment is damning for BK because Carrols was one of the franchisees that remained loyal to the home office after fellow licensees sued to kill the double deal. The franchisor eventually agreed to reformulate the sandwich, taking out a slice of cheese and holding the $1 price. The true double cheeseburger (two patties, two slices of cheese) is being repriced at $1.19.

That overhaul will bring the $1 sandwich’s food cost below 50%, said Carrols CEO Alan Vituli. More importantly, he suggested, the $1.19 double cheeseburger might wean customers off what BK has termed “extreme affordability.”

“What we’re experiencing is that extreme affordability is converting too many of our core customers to extreme bargain seekers with no interest in looking beyond the extreme market,” Vituli said.

New coffee to pop up at Jack in the Box

Burger King grabbed the headlines this week with its agreement to start serving Seattle’s Best Coffee, Starbucks’ secondary brand. But Jack in the Box hinted yesterday that more coffee news is percolating.

While the regional burger chain is experimenting with new flavors of shakes and smoothies, “We’re also looking at our coffee program,” CEO Linda Lang told stock analysts. “More news on that later.” She was responding to a query about how the burger brand might respond to initiatives like the one that had been disclosed by BK.

“Would you consider a branded product or do you need a branded product?” the questioner pressed.

“I don’t think you necessarily need a branded product,” responded Lang. But she wasn’t providing details. “we’ve looked at the different options and will be talking about that soon.”

During the conference call, Lang also acknowledged that Jack’s Southwest Chicken Bowl, introduced late in 2009, bowl wasn’t exactly a hit.

“That was not one [of] our stronger products,” she noted, according to a transcript of the call provided by SeekingAlpha.com.

Lang explained that the item, an extension of an older line of rice-based meals in a bowl, was priced at $4.29, and many franchisees charged “significantly” more than that. She suggested going above $4 in the current environment is not prudent, adding that Jack’s just-introduced grilled sandwiches have been much better received. The sandwiches are priced at $3.99.

That prompted more head scratching by Robert Derrington, the restaurant analyst who’d asked about coffee. “Given that your company generally is pretty sophisticated about testing products before you roll them out, did you know in advance that the Southwest Bowl wouldn’t do as well, and if so why did you proceed with it?” asked Derrington, who tracks restaurant stocks for Morgan, Keegan.

Lang countered that the bowl was a niche product, and noted that new products are always tested in “limited markets,” not in a full-blown dress rehearsal.

Other revelations concerned the relatively stronger performance of Qdoba, Jack in the Box’s secondary franchise chain. The smaller but more expensive brand posted a comp-store sales decline of 1.7% for the quarter ended Jan. 17, compared with an 11.1% freefall at company-operated Jack outlets.

“:We’ve seen reports of a boost in confidence among the more affluent segment of the population while consumer confidence among those with lower income levels have remained depressed,” said Lang. “We think this helps explain the divergence in sales trends at Qdoba verses Jack in the Box.” Qdoba has the better-heeled clientele, she suggested.

What's in Panera's oven, Grasshopper?

After Ron Schaich resigns this May as CEO of Panera Bread, maybe he’ll grow a long white beard and sit atop a mountain somewhere, dispensing wisdom to chain execs who make the climb. Consider the profundities he uttered after Panera posted the sort of fourth-quarter results that would’ve prompted whispers of steroid use if this were baseball.

On the sales impact of operations: “Though operations are never given credit for driving sales, I am convinced we would not be having the success we are without improved operations,” said the Wise One. (That success, by the way: comp sales increases of 8.4% for company stores and 9% for franchised units for the first six weeks of 2010, even with bad weather depressing intake by an estimated 4%.)

On the zen of catering: “In my view our weakness in catering [during the first half of 2009] was a good thing. It forced our team to determine what really mattered in building catering sales.” Shaich noted to investors that 2010 catering sales are running 17% year to date above the comparable period’s for 2009.

On the addition of dinner-type items, like the new Mac and Cheese and a salmon-topped salad: “People often make this mistake. They think of the evening business as dinner. We don’t. We think of the evening business as lunch in the evening. Panera is never going to be in the business of serving what would be considered classically casual dining fare for date night.”

Shaich also offered a few glimpses into Panera’s future, including the introduction of a new customer loyalty program in company-operated units in April, and the possibility of licensing its name to retail products. He noted that a Panera-brand soup is already being sold on an experimental basis by Costco, one of 30 to 50 tests currently underway for the chain.

Thanks to Seekingalpha.com for making available a transcript of Panera’s fourth-quarter conference call. It spared me from having to scale a mountain.

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Starbucks offers Brits a new coffee. Are we next?

Starbucks is trying a new sort of hot coffee drink across the pond, according to CEO Howard Schultz. He mentioned U.K. operations' new Flat White to U.S. investors recently, but didn't divulge details. A query to the chain's offices across the Atlantic brought this description:

Starbucks Flat White is a small strong coffee made with two shots of 100% Fairtrade certified espresso in an 8 fl oz cup topped with creamy, steamed whole-milk. The milk is given a velvety texture by being "stretched and spun", which allows the espresso shot to rise through the milk. Patterns or "foam art" can be made in the top of the cup with the contrasting colours of the coffee and milk. The Flat White has become increasingly popular in cities throughout the UK in recent times, although its origins are in Australia and New Zealand.

By "stretched and spun," Starbucks apparently means that steam is injected deep into a pot of milk and the bubbles that rise are mixed with a spoon back into the less-aerated portion of the liquid, judging from other sources. The bubbles rise again, "stretching" the creamer. The milk poured over the espresso is taken from the bottom of the pot, where you have no froth and the least aeration. Hence the "flat" descriptor.

Aficionados say the process gives the milk a silky quality. They note that whole milk has to be used, rather than the 2%-fat variety that's Starbucks' staple.

Starbucks U.K. noted that "this is the first major addition to our UK and Ireland espresso-based drinks line-up since we entered the UK market in 1998."

More thinking outside the bun

The news seeping out of Yum! Brands' annual financial conference in New York suggests 2010 could be a year of hyperactive menu development for Taco Bell, the franchise company's biggest brand.

Among the changes previewed was the Mexican chain's use of two proteins that have yet to appear on its regular menu: carnitas, or Mexico's version of pulled pork, and shrimp, which is scheduled to be used in a premium ($2.79/each) taco.

Among the other products already been greenlighted, according to Janney Mongtomery Scott analyst Mark Kalinowski, are a bargain priced (89-cent) 5-Layer Burrito, and Taco Bell's first soft taco, which will feature the new carnitas.

Every year Yum holds a meeting with restaurant analysts like Kalinowski to familiarize them with the strategies of the company's chains. For the benefit of those who've been caught in a pesky time warp for the last four decades, the other brands include Pizza Hut and KFC.

Outback's designs on another traffic builder

Studding the menu with lower-priced options hasn’t reversed a traffic fall-off at Outback Steakhouse, but another potential remedy is definitely putting more butts in seats, according to an executive of the chain’s parent company, OSI Restaurant Partners.

CFO Dirk Montgomery told financial analysts today that design tweaks at 50 test outlets are bringing “traffic lifts ranging from the low single digits to the mid single digits, say five, 6%.”

Those increases coincided with a 10.7% drop in Outback’s comps for the third quarter.

Montgomery explained that a variety of alterations to the outside and interior of the steakhouses is being tried. The packages range in cost from $100,000 to $400,000 per store, he added.

He stressed that the various features are still being tested, and that more elements will be tried in the field through 2009 and into next year.

Among the variables yet to be pinned down, he said, is the right level of spending, the correct balance of investment and payback.

The chain also isn’t certain about what features to combine into a renovation package.

“It’s still too early for us to form conclusions about what the ongoing renovations strategy will be in terms of what elements we pick,” he explained.

Montgomery did not cite any specific design features but commented, “consumer perceptions of overall atmosphere have improved significantly.”

Published reports indicate that at least some of the interior designs play down the concept’s Australian theme.

Chili's to run tacos through the shrink ray

The menu miniaturization craze will get a mainstream boost when the Chili’s casual-dining chain adds a line of tiny tacos in, well, a short time.

Executives say the array will include pulled pork, pecan-smoked chicken, spicy beef and shrimp versions. But they were mum about the price and how the minis will be packaged into a selection (all of one, a sampler, pick two, etc.).

The addition is part of the menu and prep re-do that Chili’s announced a few weeks ago. That effort that is already revamping the way two signature items, baby back ribs and burgers, are cooked. The former will now be smoked longer, over pecan wood, while the latter will be hand-formed from fresh ground chuck rather than pre-portioned into patties.

Changes have also been made in Chili’s kitchens to ensure that French fry orders are always fresh and hot, according to executives of the chain’s parent company, Brinker International. But, in a conference call with financial analysts yesterday, they didn’t divulge how the preparation was upgraded.

The mini tacos are being added to the menu despite an overall trim in Chili’s bill of fare. The Brinker officials declined to say how big of a cut the menu will get. They characterized the likely deletions as item that fail to differentiate Chili’s from its competitors.

The execs would also not divulge how much the menu and prep overhauls would cost. But they noted that at least some of the profits from the recent improvement in Chili’s margins would be used to pay for kitchen tweaks and additional training.

“Wee are talking about small costs there,” Brinker CFO Chuck Sonetsby told participants in the conference call. “We are not talking about anything that is that expensive. We have had some things that cost $175 apiece.”

All told, he said, the investment should trim earnings by a penny or two per share.

The addition of mini tacos would be the latest in an ongoing shift by the industry to more Lilliputian fare. Uno Chicago Grill, for instance, debuted a pulled pork slider just last week.

It's now possible to have a complete meal out of Munchkin Land. You can get in your Mini Cooper, dash a short distance to the smaller restaurants chains are now building, have a slider for your meal, wash it down with sampler-sized cocktails or beers, and follow it with the shot-glass desserts that are now ubiquitous. It's the check that may not be so tiny.

My thanks to Seeking Alpha for making available a transcript of Brinker's quarterly conference call.

Ruby Tuesday to roll 'best menu ever'

Ruby Tuesday is testing a new menu that “should lead to increased frequency,” marketing SVP Mark Young told investors Wednesday.

That, in turn, will help the chain attain its objective of raising guest tabs into the $12.50 to $14.50 range, from the current average of about $11.50, Young said during a conference call with financial analysts.

He did not disclose what selections will be featured on the new bill of far, but noted that they will include “several new items with bold flavors and more variety.” He also mentioned that the design spotlights an extended array of appetizers and “dinner-type items.”

The chain has been trying to boost sales in a two-pronged strategy of increasing guest counts, sometimes by offering deals, while also showcasing premium selections like a new lobster tail entree. Young said the concept will pare back its deal-making to facilitate a rise in the average check.

Beverage upgrades will also figure into that effort, he indicated.

Although Young said the new menu is still in a test phase, CEO Sandy Beall said the line-up is already set for a Nov. 3 rollout. He described it as “by far the best menu ever,” and said it was the result of “two or three years” of research and design.

Beall disclosed that the chain he founded 35-plus years ago now generates about 45% of sales with dinner-sized items, compared with a mix of 25% in past years. And that’s throughout the day—“we sell, gosh, probably 40% of all our dinners at lunchtime,” he said.

The chain’s objective, he added, is to raise that proportion to 65% of sales.

The new lobster entrée already accounts for 3% of sales, he commented. That compares with the 8% that comes from burgers, a signature of the chain, the executives indicated.

The chain’s officials noted that the recent rollout of Sunday brunch service to all but 100 stores has helped in drawing more visits from established customers.

Krispy Kreme to give bagels a try

Krispy Kreme may have to rework its neon sign to read, "Hot pastries now." The doughnut chain announced this morning that the ink has dried on a new baked-goods menu that includes bagels, Danishes, muffins, and pecan and cinnamon rolls. 

The bagels are particularly of note since they could be the chain's eventual means of adding sandwiches, breakfast or otherwise.

In disclosing that the baked-goods menu is ready to be tested later this year, Krispy also noted that it's new soft-serve ice cream, Kool Kreme, will soon be available in seven stores. 

Same-store sales for company-run units rose 2.1% during the three months ended May 3, the franchisor said. Profits for the quarter fell by more than half, to $1.9 million from $4 million.

At a time of menu makeovers, BJ's resets the bar

It looks as if restaurant chains have been pumping espresso into their menu development staffs again. A current project requires me to study recent changes in the bills of fare for several dozen major concepts, and the turnover is astounding. An OSHA crackdown may be in the offing, because some test-kitchen crews are clearly being worked 'round the clock.

Next month could bring a new standard to beat. Yesterday the CEO of BJ’s Restaurants ticked off the changes that’ll be evident in the casual chain’s May menu—as “many as 25 to 27,” said Jerry Deitchle.

Included, he said, will be “10 to 12 new bar drink recipes,” an effort that complements BJ’s ongoing efforts to add more craft beers, upgrade its wine selection, and adopt a “more contemporary” non-alcoholic beverage program.

Other changes include the addition of two new full-size pizzas, a flatbread appetizer pizza, an “absolutely terrific” Thai shrimp lettuce wrap, a new version of Texas-style chicken-fried steak, an updated pot roast, a revamped an renamed Italian chopped salad, and new presentations of its crispy potato skins and meatloaf.

The overhaul was based on a what officials described as a gap analysis of what competitors didn’t offer.

“We didn’t look and say, gee, we need to have a $5.95 lunch bowl or some $5.95 lunch item or a $9 item that we could bring in there,” CFO Greg Levin told analysts during the conference call. It's not "a value perspective that maybe you’re seeing from of [our] peers."

Meanwhile, a store in Austin is testing BJ’s gamble that it can become “the premiere retailer of craft beer in casual dining,” in Deitchle’s words. He explained that BJ’s proprietary brews are “surrounded” by 24 craft beers on tap. The set-up increased the likelihood that patrons would order beer, and boosted the overall average check, he disclosed.

The extended array has already been rolled into at least 20 more stores, Deitchle indicated. “We’re still learning a bit from it,” he said, but “every economic and consumer indication has been very, very positive.”

At the same time, just to keep corporate chef Ray Martin busy, BJ’s is working on a new kids’ menu.

Deitchle mentioned that Martin would be rewarded for his work with a free nine-month cruise around the world. Actually, he didn’t say that, but I figured I’d plant the idea. I feel for you, Ray.

A good Starbucks rant, completely wasted

I was set to unload on Starbucks for embracing tea as its next big thing when a Jimmy Stewart moment took hold. My inner O’Reilly wanted to fume, “A coffee company doing tea? C’mon, folks, this is the dumbest thing I’ve ever heard! Why not just roll a keg of Budweiser behind the counter?” But the more I considered how McDonald’s and Dunkin’ Donuts kicked Starbucks in the beans by adding comparable brews, the more I wanted to say with a charming stutter, “Now wait a gosh-darned minute here. I love tea! Everyone loves tea! And now you won’t be able to get the really good stuff anywhere but Starbucks. It’s a brilliant idea, I tell ya!”

Which, of course, leads to two surprising conclusions: Jimmy Steward could’ve stomped Bill O’Reilly’s any time, even if Sean Hannity joined in. And the next major point of differentiation for a chain synonymous with coffee may indeed be exotic tea-based drinks like infusions and tea lattes. The concoctions sound far too complex for quick-service places to whip out along with chicken nuggets and snack wraps.

Ah, you counter, wasn’t that once said about lattes and other coffee-based craft drinks? And doesn’t even the local bowling alley now offer cappuccinos?

Sure, anyone can prepare those drinks today. All you do is push the button on the automated dispenser. But would you want a Vanilla Rooibus Latte or a Berry Chai Infusion coming out of an idiot-proofed machine, three steps from a deep fryer? It’s like grabbing a martini in a plastic bottle from a C-store’s cooler. The experience is just different.

Vanilla Rooibus, for the record, is a hot combination of caffeine-free “botanicals,” including rooibus, an exotic red tea that’s only grown in a pocket of Africa. When the world’s ready for McRooibus, Starbucks would probably need to embrace the next drink line.

The Berry Chai Infusion consists of aronia berry and black currant juices blended with the now-familiar flavors of chai.

There’s also an Apple Chai Infusion, a Black Tea Latte, and a London Fog Latte, incorporating lavender and bergamot, a pear-shaped Asian citrus fruit.

Are drinks of that complexity and ambition really going to show up soon on the menu boards of Jack in the Box, 7-Eleven or McDonald’s?

Of course, it’s an assumption that Starbucks can cultivate a market for those beverages.

On a recent visit to my local unit, I was the fourth person in a row to order a chai latte. I’ll bet most people never heard of chai until they saw it listed on a Starbucks board. Now I can choose from four varieties in my neighborhood King Kullen (go for Good Earth or Stash, by the way).

So I’m betting that, yes, it can.