Dirt and dish from the RLC

Here’s some of the gossip from the RLC. It’s bad journalism (no attribution or verification of most points), but some interesting reading:

ITEM: The U.S. Department of Commerce is bringing representatives from 13 American restaurant chains to India to interest local operators there in developing the concepts.

ITEM: If Mayor-elect Rahm Emanuel makes good on his promise to legalize truck restaurants in Chicago, look for one of the city’s most respected operators to hit the streets with a bao or dumpling concept.

ITEM: Mark Levy of Levy Restaurants fame is expected to make a splash in Chicago’s already-crowded steakhouse market with his entry, Chicago. It’s going into the downtown space formerly occupied by Wolfgang Puck’s Spago. Michael Jordon’s namesake beef house is also returning to the Windy City. Game on.

ITEM: Among the upstarts snagging attention from concept scouts was Los Angeles’ Veggie Grill. Ditto for Texas’ Twin Peaks and Phoenix’s Wildflower Bread Co.

ITEM: Chain restaurateurs were griping incessantly a few months ago about not being able to calculate an ROI on social media. Now benchmarking research is pouring into the marketplace (including from Restaurant Business; see our Social Media 50 report on MonkeyDish.com starting tomorrow). I hope to do a roundup on the other sources in this space sometime next week.

B.Y.O.F.?

Among the new concepts just starting to appear is a new breed of bar that allows customers to bring their own food or have it delivered from elsewhere, Technomic’s Darren Tristano noted at the Restaurant Leadership Conference.

The places don’t have a kitchen, but they have the seats, he explained. Patrons will buy alcoholic beverages on-premise and enjoy whatever they want from the outside world. It’s the hang-out approach of Starbucks, with beer and drinks peddled instead of coffee.

Tristano noted that the phenomenon could create an opportunity for restaurants, providing them with another sort of outlet. Instead of having a truck or kiosk, a place could be the preferred food provider for a nearby bar.

Concept mini-roundup

Betting the bank on coffee
Did I miss the start-up of a restaurant chain by what may be the deepest-pocketed company ever to try foodservice?

I stumbled upon the proof Monday in midtown Manhattan, a newcomer as fresh-looking as a first grader on Day One of class: The ING Direct Café, a coffee shop with a bank and classroom inside.

It’s one of seven locations that ING Direct, the Delaware-based virtual bank, has opened as an unusual way of marketing its financial services.

“We believe saving money should be as simple as having a cup of coffee,” the bank explains on its website for the cafes. “So we invite you to come in and experience just how refreshing it is to sip a latte, surf the Internet for free and talk to us about how we can help you Save Your Money.”

The launch of the chain is part of ING’s strategy of serving customers without having traditional brick-and-mortar banks. Much of its business is conducted via the phone and internet.

In addition to serving as cafes and ersatz banks, the cafes do triple duty as classrooms. ING offers free seminars on various money-management issues.

Other locations of the cafes include Chicago, Philadelphia, St. Cloud, Minn., and Honolulu.

Sit. Eat. Use a napkin.
Restaurants, it seems, are going to the dogs.

As a dog owner, I knew it was just a matter of time. With the couch, recliner, bed and SUV back seat already surrendered to pooches, could restaurants be far behind?

The breach in human resistance has come in Rio de Janeiro, where Pet Delicia lets Rottweilers and Yorkies slurp up casserole-style dishes. The mini-tables are located on a “carpet” of artificial grass, just in case the clientele forget their manners.

Unlike the growing number of restaurants in the States that now permit dogs in their outdoor dining areas, Pet Delicia is for canines only; there’s nothing on the menu for humans.

Meanwhile, trend-conscious dogs will be relieved to hear they don’t have to sit out the restaurant-truck craze. Now feeding the poodles and Labradors of Los Angeles is Phydough, a truck featuring organic, ultra-high quality dog cookies and dog ice cream.

That’s right: Not just doggie delectables, but ones that are all-natural as well.

How did pets survive without them? I suspect there’s been considerable four-legged traffic at Pinkberry.

A game-changer named Abe Gustin

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

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

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

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

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

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

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

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

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

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

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

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

The industry shall miss him for sure.

Ruby Tuesday's new seafood concept

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

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

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

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

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

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

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

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

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

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

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

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

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

A marketplace ripple worth noting

When a concept creator says he’s launching a New Age deli concept to fill a void in the lunch market, you make a mental note to see if his read proves correct. After he points out that virtually no mainstream deli currently roasts its slicing meats on-premise, as virtually every one once did, you might even put “check back frequently” on the to-do list.

After all, isn’t the burger echo-boom merely a back-to-the-basics improvement on a common menu staple? Isn’t this in the same vein? Might this be a trend about to boom?

Then you hear the same sentiment voiced about two weeks later, by a second chef with concept-shaping experience. He notes that some of the restaurant rivals to arise during the Great Recession, like supermarkets, have an opportunity to out-class streetside places that lack the space, staff and time to roast meats onsite. Retailers, he notes, could be just a few ovens away from seizing an advantage that the current generation of delis, never mind fast-food sandwich outlets, would be hardpressed to counter.

Of course, both stressed that they’re in the early stages of fostering what might or might not prove a trend. What’s a trend-watching journalist to do in the meantime.

How about put it in a blog?

New York City, the new fast-food capital

Once upon a time, New York City set the fine-dining fashions for the rest of the country, if not much of the world. But someone swapped its toque for a baseball cap and replaced the starched linen napkins with paper disposables. Much of the city’s restaurant innovation these days is coming in fast food.

The city has been a hotbed of quick-service innovation, giving rise to such on-the-fringe concepts as Otarian, a health-oriented, all-natural start-up from an Australian billionaire. It may be the first grab-and-go operation in the country to provide the carbon footprint of each item offered.

A start-up in the same vein, 4Food, will begin serving all-natural doughnut-shaped burgers in September from a midtown location. The proprietor, who lists Bill Niman of natural-pork-supplier Niman Ranch as an investor, said the hole in the middle of the burger ring will be filled with mushroom, reducing a sandwich’s caloric content. Hence the signature’s name: The W(hole)burger.

Servers will use iPads to take orders, and customers can place their selections from their home computers and pick up the food. Patrons will be encouraged to invent new variations and tweet the names to friends. If those pals order the item, the inventor can amass points for rewards.

But those are only two in a torrent of new quick-service places sprouting in the Big Apple. As previously reported here, the city is the U.S. port of entry for a new pasta place, Nooi, as well as a European upstart with some American ties, called Hello Pasta!

But not all the innovation is coming in the form of new concepts. Burger King announced yesterday that it’ll try a new product called the NY Pizza Burger at its newest Manhattan outlet, a riff called the Whopper Bar. It’s apparently a bunch of Whoppers served together in the shape of a pizza, which is cut into slices for sharing.

This is pretty heady stuff for a city who’s earlier contributions to fast-food were largely limited to soup concepts, thanks to the Soup Nazi episode on “Seinfeld,” and the Cosi flatbread sandwich chain.

Of course we largely did relay to the world such quick-service staples as pizza, bagels, hot dogs and Chinese food. But how can those compare to a doughnut-shaped burger?

Educating Peter

Here’s what I learned so far today about the business of restaurants:

Slash time?
While the rest of fast food was slashing prices like a crazed TV pitchman, Carl’s Jr. continued to tout the heft and quality of its specialties. It’s an admirable high-road strategy, but today’s financial update from the chain’s parent suggests it’s time to hone the blade and get a-cuttin’.

The regional burger chain posted comp-store declines of 8.7% for the quarter and 9 percent for the month ended Jan. 25. In contrast, Hardee’s, a more value-oriented sister brand, reported slips of 2.5 and 2.8%, respectively. Both are part of CKE Restaurants, which also owns the Red Burrito and Green Burrito concepts.

Recently, Carl’s has put more of a spotlight on the heft of its products, an apparent effort to suggest value without sacrificing check size. It remains to be seen if that approach will help in halting a slide in traffic.

But don’t expect the brand to switch directions and slash prices the way competitors have. “We will continue to focus on the excellent value-for-the money of our premium products,” CKE CEO Andy Puzder said in announcing the financial results.

Levy clan must have ketchup for blood
The Levy family, one of Chicago’s more renowned restaurant dynasties, is Pollo Campero’s franchisee for Illinois and Florida. The clan is also still hatching new concepts. For instance, its Levy Campero operation has partnered with the chicken chain’s franchisor to create a new health-oriented concept for Downtown Disney, the nighttime entertainment complex near Walt Disney World in Orlando.

The place will feature Campero’s Latin-style chicken, salads and wraps made with fresh ingredients.

Restaurateurs to get some on Valentine's Day
Lovers may be skimping on presents this Valentine’s Day, but the quest for amour won’t curb their dining out.

So report the incurable romantics at Crain’s New York Business. The typical gift giver will spend $63.34 cents on flowers, candy or whatever this Feb. 14, as compared with an average of $67.22 last year, according to National Retail Federation data cited by Crain’s in this week’s edition.

Yet restaurants will do better this year than they did on lover’s day of last year, according to other sources in the article. Because Feb. 14 falls on a Sunday this year, right in the middle of a three-day weekend, people will be dining out with less reserve, asserted IBIS World, a research firm.

The hot restaurant concepts of 2010?

Last week I helped some culinary students flag the differences between John Schnatter and Mickey Rooney.

Unless your cable service was down last summer, chances are high you saw Schnatter trying to give a bundle of cash to the current owner of the Camaro he sold in the ‘80s to enter the restaurant business. Schnatter used the proceeds to convert a section of his father’s bar into a walk-up pizza counter. Literally a closet operation, the venture grew to become Papa John’s, with annual sales exceeding $2 billion. Because of Schnatter’s skill at hatching a concept, he could forget a Camaro and buy General Motors instead.

Mickey Rooney, for those of you who don’t recognize the name, was one of Hollywood’s biggest draws during the 1930s. Indeed, he was the George Clooney of his time, at least in terms of fame and screen appearances. But, astoundingly, his round-hotdog restaurant chain never quite caught on during the ‘70s, even though the product fit so neatly on a circular bun.

Efforts to start a restaurant concept have yielded more train wrecks than the film careers of Pauly Shore and Tom Green, combined. Need I mention the failed attempts of Muhammed Ali, Steven Spielberg, Alice Cooper, Johnny Carson, Arnold Schwarzenegger and Mike Piazza, to name just a few?

Yet the list of aspirants continues to grow, with names like Richard Branson, Rolling Stone magazine and boxer Julio Cesar Chavez added to the roster just in the last month or so.

Because I’ve witnessed so many crashes and triumphs, I was invited last Tuesday to address a class at New York’s Institute of Culinary Education, an often-overlooked contributor to the city’s phenomenal restaurant scene. My mission was to opine on what separates a Schnatter-ly restaurant venture from the Rooney-esque, something very important to the students because they’re all in the process of brainstorming a concept of their own.

Instead of talking in the abstract and risking a symphony of text-message alerts from the kids’ phones, I handicapped what I believe will be the Hot Restaurant Concepts of 2010.

My picks aren’t new to the scene at all. Rather, these are concepts likely to enter the mainstream next year, even if they no longer elicit oohs and aahs from the black-dressed sport diners on the coasts.

Here’s the list, along with a few thoughts.

Places specializing in street foods: This is a surer thing than Tiger Woods having his text messages screened for the next month. Indeed, I can’t understand why it wasn’t on all the forecasts that were pecked out of foodie keyboards in recent weeks.

Street food certainly fits the times. Peasant fare sold in bazaars or along busy thoroughfares is simple, and simplicity (or its fellow traveler, back to basics) was on virtually every list.

The ingredients tend to be fresh—another check mark on the trend inventory—and inexpensive, which holds the price to a level consistent with the current Age of Thrift.

Foods patterned after the street fare of Third World nations also tend to be grilled, roasted or boiled—relatively healthful prep methods that fit the sometimes contradictory goals of being flavorful and better for you.

Finally, we’ve already seen street foods snag interest from a few of the industry’s Mount Olympus set—gods and goddesses like Rick Bayless, Susan Feniger, David Chang, and Ming Tsai. The trend has even merited its own Flavors of the World conference, the foodie equivalent of the Burning Man Festival.

Confidence in this one is high.

Taquerias: A sub-set of the street-food craze, authentic tacos are drawing sufficient attention from big-name chefs and restaurateurs to merit their own Hot Trend designation. Celebrity proponents include Traci Des Jardins, Bayless, and Paul Kahan, to name just a few.

As I’ve noted in this space before, the interest from fine-dining chefs makes you wonder if taquerias will supplant burger joints as their low-end concept of choice.

Burger restaurants: It’s still on my list, but only because of bandwagon-jumping. The ranks of patty specialists will undoubtedly grow, but I bet we start to see some wheezing in this sector, or at least at its pricier end. There’s just not sufficient differentiation, and the novelty of a burger flipped by a Michelin-caliber chef is going to wear off.

This is my pick of Fade of the Year, largely because of the differentiation issues.

Gastro pubs: Indeed, why couldn’t these places co-opt whatever pent-up demand is left for high-end burgers?

But gastro pubs offer so much more, including comfort and casualness, two positives that aren’t going to lapse from fashion anytime soon. They’re also prime proponents of the high-caliber beer trend, which shows every appearance of having legs.

I know, I know: Gastro pubs have been around for years. But watch for a proliferation, particularly in areas inland from the current strongholds of Chicago, Los Angeles and Minneapolis. They’ll become the choice of indulgence.

Then again, maybe I’m prejudiced. Gastro pubs are the trend I’d most like to see catch fire in 2010, speaking as a consumer.

Restaurant trucks: We’ll undoubtedly see more chefs serving from a wheeled kitchen next year, though I’m far less certain of this trend’s staying power.

Right now, there’s considerable appeal to turning the key on a new truck concept. Consumers like the convenience and typically lower prices of a mobile operation. Operators appreciate the reduced overhead and start-up costs, which in turn allow them to keep their menu prices in check.

But I can’t help but wonder if novelty figures large in the appeal that was evident in 2009. Once you’ve tried the sardine truck, are you really going to build your night around it? And what about the yearning for a dining environment, even if it’s just a table and a chair?

Most of the trucks also specialize in a particular menu item, and history has shown us that a one-trick pony has a tough time in this business. Consider such flashes as soup, muffin, croissant and frozen yogurt concepts. Most were either co-opted or abandoned by a clientele that wanted more of a selection.

The jury’s still out here, though a proliferation of kitchens on wheels should prompt a verdict.

Authentic-food chains: This is a sleeper, an up-and-comer that’s not getting as much attention as, say, Spanish restaurants, or gourmet fried-chicken places.

Perhaps the potential trend is still going unnoticed, a reflection of its limited exposure to date. There are really two proponents of note: Seasons 52, Red Lobster’s high-end little sister, and True Food Kitchen, a one-off that P.F. Chang’s is carefully studying as a possible expansion vehicle.

Both feature seasonal, fresh fare with healthful overtones. Seasons 52, for instance, could boast that its entrees are under 500 calories.

But it downplays that plus to stress the integrity and freshness of its fare. Seasons 52 is the chain embodiment of the yearning for off-the-farm ingredients you don’t have to feel guilty about consuming.

True Food Kitchen, a brainchild of Phoenix restaurateur Sam Fox, goes one step further by featuring organic and natural ingredients. It professes to “nourish body, mind and spirit,” which is music to the yoga-and-couples-massage set.

The brakes on this one are the logistical challenges—finding enough seasonal fare of consistent quality, and doing it at a cost that translates into reasonable prices. But it’ll come, especially as medium-sized agriculture continues to make a comeback.

Whim restaurants: This is a forecast virtually peculiar to me, but I’m more convinced than ever there’s something here.

As I mentioned in an earlier posting, “whim restaurants” is my term for the ventures of high-end chefs who want to do something creative, small scale, and highly spur-of-the-moment. Such luminaries as Thomas Keller and Tom Colicchio are embracing these home-style niche places as a way of featuring the dishes they like to cook and eat themselves, with menus determined no farther in advance than their home dinner plans.

Since I last wrote about Keller’s Ad Hoc and Colicchio’s plan for an extension of his Tom: Tuesday Dinner into a full-scale restaurant, several other whim ventures have come to light. Michael Bauer of the San Francisco Chronicle devoted a blog installment to the phenomenon, though he didn’t use my label.

Leslie Brenner, in a blog for The Dallas Morning News’ website, described a whim sort of place, but used the term “guerilla restaurant.” She described a place envisioned by local restaurateurs that will be used to raise funds for charities. The hours and nights of service will be limited, and the chef will vary as readily as the menu does.

The concept may still sound alien to the U.S. market, but it’s already become established in the U.K., where the term “pop-up restaurant” is being stretched to cover places that chefs are opening to indulge their culinary whims of the moment.

MIA: Something new

Send out an A.P.B. and snap on the Bat Signal. Some scoundrel has run off with the restaurant industry’s love of innovation. And it looks as if it might be an inside job.

The authorities have their suspicions about the culprits. They’re looking for glassy-eyed numbers fiends who wield machete and scalpel with equal zeal, slashing costs the way hopped-up jungle guides would blaze a trail.

But the real scourges are the accomplices—the CEOs, marketers and ops specialists who know better than to stifle new ideas. Instead of nurturing green shoots, they’re standing by while the bean counters prune anything with an expense. It’d be like a dairy farmer trying to offset a dip in production by feeding the cows less silage.

You can only hope the cut-and-kill mindset will be arrested. Here’re the questions that should be put to the innovation throttlers during the interrogation:

Where are the new concepts? Except for a few upscale riffs on established brands—think The Whopper Bar, Baja Fresh’s new dinner-focused prototype, or Baskin-Robbins’ new cafes—we’ve seen virtually nothing in the way of new restaurant ideas from the chains. That’s an historic shift, especially for casual dining, where the big brands were always scouting the hinterlands for The Next Big Thing.

Everyone agrees that this is an unprecedented time that could forever change the business. Isn’t it foolhardy to think that yesterday’s concepts are going to meet tomorrow’s tastes?

Ironically, we did see a new entrant in the market in early July. Unfortunately, it’s something called Crazy Girls Café, a strip club that also serves food. There’s a novel notion.

Where are the aha! moments? Consider this obvious one: Craft condiments. Soft drinks, a staple of the business, are being reconsidered as the public shifts to options promising more uniqueness, character and quality. Smaller, highly crafted brands are gaining favor.

The same dynamic holds true in the beer business. Would any new restaurant not offer a craft brew today, if not a beer that can only be purchased there?

So why not ketchups and mustards? Why aren’t we seeing the proliferation of high-craft selections with different flavors and consistencies? There’s a burger boom underway. Why not a ketchup craze?

For a glimpse of what might have been, look at the barbecue-sauce and marinade sections of your local grocery. There are more options than what you’ll find in the salad dressing aisle.

The exception that underscores the non-trend is Ketchup, the multi-outlet concept of The Dolce Group in California. The restaurant features five house-made ketchups to accompany its heavily local menu of comfort foods with contemporary twists.

Where’s the urgency in casual dining to come up with something new? The innovations of the last two years could be summed up as sliders, $9.95 filets, micro-brews, mini-desserts and better full-sized burgers. Whoa.

Why isn’t the sector at least staying current with the trends? For instance, other than Seasons 52, is any concept addressing the fresh and local trend? Organics? Or even green? Name one chain that’s as active as the fast-feeders are in greening their facilities.

Clearly the economic climate is taking its toll, stifling creativity that could distinguish an operation. But the real lost opportunity may not be evident until conditions improve. By that time, many established brands are going to regret that they weren’t trying yesterday to come up with what’ll fly tomorrow.