8 restaurant cos. put on Moody's 'death watch'

Eight restaurant companies, including the parents of Outback Steakhouse and Arby’s, have been included on a list of companies rated by Moody's as the most likely to default on their debts.

In addition to OSI Restaurant Partners and Arby’s Restaurant Group, presumably a predecessor of what’s now Wendy’s/Arby’s Restaurant Group, the 283-company list includes El Pollo Loco Inc.; Perkins & Marie Callender’s Inc.; Chevys and El Torito parent Real Mex Restaurants; and Sagittarius Retaurants Inc., apparently an affiliate of Del Taco and Captain D’s parent Sagittarius Brands.

The roster also lists a company called Rare Restaurant Group LLC, identified as being in the fast-food business, which suggests it is not connected with Rare Hospitality, the steakhouse operator that’s now part of Darden Restaurants.

The list has been posted in its entirety by the financial website SeekingAlpha.com.

Moody’s calls the list The Bottom Rung, but media reports have opted for more colorful slugs, including "company dead pool"; "dead companies walking"; and "the death watch."

Most also note the credibility of Moody’s Investors Service has been called into question by its failure to anticipate the meltdown in mortgage-backed investments. The catastrophic collapse was not foreshadowed by the risk ratings of Moody’s or the two other major financial rating services.

Moody’s is quoted as saying about 45% of the Bottom Rung concerns will default on their debts during the next year. One list-ee, Eastman Kodak, has already blasted the report as “irresponsible” and inaccurate.

Utah looks to liberalize serving laws. To a point.

Some of us discovered yesterday that we’d failed to set our clocks ahead over the weekend, leaving us an hour behind everyone else. In Utah, lawmakers must’ve looked at their calendars and realized their gap was more like a century. They agreed to catch up, more or less, by updating liquor-serving laws that had stigmatized their restaurants as the Amish of foodservice.

Under an accord that was hammered out as a way to boost tourism, no longer will someone in the state have to join a “club,” with minimum annual dues of $12, if they wanted a drink with dinner. Nor will restaurants be required anymore to separate patrons from the bartender by a screens, known as Zion curtains, or a 10-foot wall, as one lawmaker had urged. A bartender could pour a drink and hand it to the patron, a quantum leap from where the heavily Mormon state had been in its attitude toward drink sales.

But reason didn’t totally prevail, not by a long shot. Patrons are to be carded until age 35. The proof of age is not only checked, but scanned or otherwise captured by the serving establishment and kept for a week, a probable spoiler for anyone concerned about identity theft.

And the 10-foot-wall requirement wasn’t scuttled, just narrowed in its focus. New restaurants will have to include the partition, so children can’t see drinks being mixed or poured, and existing places would be required to add one if they renovate.

The compromise measure has yet to be put to a vote, but proponents and opponents agree that it will likely be passed, and quickly. If passed, the new law would go into effect in mid-May.

YouTube may be more their tube after all

Online videos are supposed to be a great leveler, allowing any pulse-bearer with a camera to become a star. Think of YouTube celebrities like “unsexy newsman” Philip DeFranco, “dance historian” Judson Laipply, or even the skateboarding bulldog.

Yet the big and supposedly un-cool restaurant chains are clearly making more of a splash in that grassroots medium than independents or regional brands. Yesterday proved the point, with the internet buzzing about this goof on KFC from Mel Gibson and Jimmy Kimmel Live!...



…and this response from KFC’s mega-sized parent, Yum! Brands:



And let’s not forget the latest from Jack in the Box, which has been on a video binge with its recent focus on the near-death experiences of mascot Jack Box:



Contrast that with this YouTube video from Pal’s Sudden Service, a regional quick-service chain with a cult following:



…Or this spot from an independent in Utah:



Clearly the big brands are digging into their deeper pockets to come up with better conceived and executed spots. Money, it appears, can indeed buy edginess.

More blurring of retail/restaurant line

The resilience of the fast-food market during these perilous times hasn’t gone unnoticed by BJ’s, the regional club store chain. Executives told investors the warehouse membership chain expects revenues to rise by 4 to 6% during 2009, driven by increased sales at in-store food courts. And that’s after a 4% rise in revenues during the last three months of ’08, which they attributed to only two factors: food courts and propane sales.

Understandably, the retailer cited food courts as a primary strategic focus for 2009, along with product demos, a signature of arch-rival Costco.

Costco, meanwhile, says its food court business is also going strong, though officials did not divulge figures during their conference call with investors. They did note, however, that sales of take-home items like pizza have soared "dramatically." Costco's signature deal is a quarter-pound hot dog and a 24-oz. soda, sold as a meal for $1.50.

BJ's execs attributed the improved performance of that chain’s food courts to an emphasis on quality and the addition of such brands as Uno’s, Ben & Jerry’s and Green Mountain Coffee. BJ’s currently has 180 stores in 15 states.

The officials noted that sales of prepared meals were strong during the fourth quarter of 2008, but did not break out figures.

Meanwhile, they said, stores’ frozen-food departments saw “very strong sales” of products affiliated with restaurant chains, including The Cheesecake Factory, the Fresh City fast-casual chain, Panera Bread Co., Legal Sea Foods and Boston Market. The retailer also now stocks products licensed by Todd English, the famed chef.

Another point likely of interest to restaurateurs: BJ’s sales of organic and natural foods soared 20%.

Why YOU need a Romeo Decoder Ring

Orders for my patented Restaurant Industry Decoder Ring have fallen sharply since the economy tanked. Perhaps a live demonstration would reverse the trend. And what better opportunity than this evening’s announcement from Brinker International?

The statement hails the “organizational changes” that were undertaken by the parent of Chili’s and Maggiano’s to “maximize leadership talent and create additional synergies.”

Wow!! I'm not sure of what that means, but it sounds big. A groundbreaking new business model, perhaps? With an org chart that looks like the playbook diagram for a triple quarterback sneak?

Nope. Indeed, all the statement could’ve been de-hyped into what is now the fifth paragraph, with two follow-up sentences. Dave Orenstein, president of Brinker’s On The Border brand, is parting with the company. His duties are being assumed by Todd Diener, who’ll continue to lead Chili’s, as he has for 10 years. I know that because Brinker felt obliged to tout his 27 years of leadership with more spin than a rinse cycle.

Less clear is why Wyman Robert, president of the Maggiano’s chain, is also assuming the duties of chief marketing officer. Two for the price of one, maybe?

Sorry. Let me put that in corporate-ese: To optimize payroll expenditures with synergistic governance and minimized potential for miscommunication within the leadership ranks, two positions were synergized into a lone assignment.

I don’t understand why Corporate America still believes anyone would be fooled by language straight out of a script for “The Office.”

Okay, back to perfecting my next invention, the Summer Snuggie. With the right catalog photography, no one's going to think, "hospital gown."

Jack in the Box avoids that kind of box

Jack is back. Sorry that I wanted to kill you, Big Fella. That kooky campaign was just getting to me. Sort of the way a car alarm gets to you when it keeps blaring for three or four hours.

Turns out I wasn't alone, either. Forty-five percent of the readers who expressed a preference on your fate said they favored pulling the plug. But we did feel your memory should be kept alive through a nose transplant, even if the schnoz would've looked ridiculous on anyone but Frosty the Snowman.

Anyways, I'm making it up to you by showcasing the new logo, which appears to be one of the prime reasons for your hit-by-a-bus campaign. Next time, just go for the press conference and maybe a YouTube video.

Restaurant bars: The devil's YouTube?

I don’t know why the nation is preoccupied with fluff like the economy or wars when our very future is being threatened—-by Chili’s, no less. Our youths are probably imperiled by the likes of Applebee’s, T.G.I. Friday’s and Ruby Tuesday, too, but they weren’t singled out by the president of Utah’s senate, who wants walls built between restaurants’ bars and the areas used by the public. Otherwise, fears Republican Michael Waddoups, youngsters can see drinks being made! Why not just sit ‘em down and slide a cosmo their way?

In any other state, such a suggestion would be dismissed as outlandish showboating for the fundamentalist right. But not in Utah, where headlines announced yesterday that full-strength beer can now be sold. Because of the Mormon population, drinking can be as contentious there as abortion is elsewhere.

Places that serve liquor already have to isolate drink prep areas with a partition, known locally as a Zion curtain. But it can be a short partition made of glass, which still exposes young people to the glamour of alcohol, in the view of abundant pro-temperance forcese.

Waddoups learned that firsthand when he visited a Chili’s in January, according to The Salt Lake Tribune. The paper reported that a bill introduced this week would require the construction of a wall at least 10 feet high between bartenders' work areas and where patrons mill about. It was introduced not by Waddoups but by a fellow Republican, state Sen. John Valentine.

The initiative does provide for an alternative: Mix and pour the drinks away from public view in a back room. Which, in at least some instances, might have to be constructed.

The measure has already been approved by the Senate Business and Labor Committee, according to the Trib.

The proposal to halt public drink preparation was filed as Utah pols were considering a measure that would eliminate the need for even the Zion curtain. Proponents like the governor argue that Utah has to catch up with the times if it wants to foster tourism, and that means loosening up the state’s serving laws. For instance, restaurants’ bars would be acknowledged for what they are, not private clubs nestled check-to-jowl with dining rooms, as the law currently regards them. Visitors wanting a beer would not have to go through the charade of joining a “club.”

The Senate is debating the perils of drinks being mixed in full view after passing a measure Tuesday that permits employees to bring guns into the parking lots of the places where they work.

Seems to me they may want to rethink priorities.