A sampling of restaurants' responses to swine flu

Certainly everyone in the restaurant business is talking about swine flu. But is anyone doing something about it?

The situation in Mexico City would suggest that health experts view restaurants as a critical control point in the outbreak, to use the HACCP term. Eateries there at Ground Zero have been ordered to stop serving dine-in patrons, though takeout is still permitted.

 
Yet, amid the 24/7 gush of swine-flu coverage, there’s been astoundingly little reporting on what U.S. restaurants are doing to cope. Here are some of the few examples I’ve been able to find: 

 Robbie Singh of Nashville was visiting his fiancé in Morelia, outside of Mexico City, marveling at the number of mask-clad locals he encountered. Tennessean.com picks it up from there:

At the time, he was unaware that the swine flu had started to spread quickly until [he started] receiving text messages from his boss — Michael King, owner of Monell's family-style restaurant. 

"I was worried on several levels," King said. "I wanted him to be OK and didn't want him to bring it back either. Not in a restaurant. I told him to get checked the minute he got back. Then I was alarmed when the cases hit in New York. I had a customer eating with a facemask on, putting it down to put food in his mouth."

 
Singh reported to the local U.S. embassy in Morelia in case of quarantine and the shutting down of airports. He purchased masks and hand sanitizers. He was checked for the virus and cleared at a Nashville clinic Tuesday.

A unit of the Mellow Mushroom pizza chain in the Fort Worth area of Texas provided a preview of the nuts-and-bolts work that many restaurants in the U.S. might soon be undertaking. From the local paper, the Star-Telegram:

Less than a mile from McLean Middle School, where a student was diagnosed with swine flu, Mellow Mushroom was taking no chances. "We bleached down every surface people could touch — tabletops, chairs, booths and the handrails outside," said Mike Guinn, manager of the pizzeria on Bluebonnet Circle in southwest Fort Worth. "Then we went to Albertson’s and picked up about 10 hand sanitizer pump jars and put them on all the counters," he said. "Any one of those [McLean] kids or their parents could have been here." 

The manager said precautions include periodic Lysol spraying of the touch-screen cash registers. 

Disposable flu masks?

"I hope not," he said.

Having a name like Smithfield’s in the Carolinas might not be the ideal when many consumers are still mistakenly assuming that porl might be a source of the swine flu contamination. Unconfirmed speculation says the outbreak of Mexico may be linked to a hog farm that supplies Smithfield's, the giant U.S. meat processor.

The 45-year-old Smithfield’s Chicken chain, a Carolinas favorite, decided to deal with the the outbreak head-on. From QSR magazine:

"I didn't really want to put a sign on the window because that would give people the wrong idea," says Richard Averitte, marketing director for Smithfield's Chicken 'N Bar-B-Q, explaining his strategy for notify consumers about the outbreak.

 The company is taking a proactive approach, having already posted to its Web site, Facebook account, and Twitter feed to reassure consumers the Smithfield menu is safe. Averitte has also conducted several local interviews with radio and television outlets. 

"We just want to keep our customers informed," Averitte says. "I wanted to nip it in the bud right now. I wanted to make it crystal clear, get out all the confusion and questions, and state the facts."

Crisis-management experts may not cite the public respone of the Taco Shop in Palm Desert, Calif., as the consummate example of what do to in a media storm. But at least the manager indicated on the record that the joint is mindful of the situation and is taking action to protect patrons. Less-than-forceful reassurance strikes me as preferable than no reassurance at all—if not the shrug that most places seem to be giving the situation. Here’s the news report from the website of a local news station:

Restaurants across the Coachella Valley are taking some steps to keep their clients and employees safe. 

David Jimenez manages the Taco Shop in Palm Desert, and, with the recent flu alert around the world, he's on alert. 

"We got to follow the Health Department rules. The owner said to contact him if we feel sick, so he can take action."

Finally, kudos to the National Restaurant Association for setting up a website as a resource for restaurateurs who are wondering what to do about the situation. 

More important, the association hasn't responded to the opportunists who are using the crisis to push for paid sick leave, a mandate the industry steadfastly opposes. Pushing back would be as unsavory as the lobbying itself. 

Panera keeps a cooler head

Panera Bread Co. is betting it can make more lettuce by boosting the quality of the garden variety. 

 The fast-casual chain has adopted “much tighter quality and much tighter temperature controls over our lettuce, all the way from the field through distribution to the bakery-café,” CEO Ron Shaich explained to investors during the franchisor’s quarterly conference call today. “Our lettuce will be far superior to anything you’ll find in the marketplace.”

Tighter management of the supply chain is a common objective of restaurant chains these days, though usually with the intent of squeezing out cost or better protecting the food from contamination or spoilage.  Shaich did not mention either of those advantages.

The fresher lettuce, he said, will help Panera offer $12-caliber salads for $8. Included will be two new ones: a chopped Cobb, and a barbecue chicken chopped salad. 

A wrong time to push

Exploiting the swine flu outbreak is like asking the widow at a funeral if the deceased’s season tickets are up for grabs. Yet two camps of interest to restaurants aren’t hesitating to capitalize on the situation.  And that should make the industry feel a little queasy.  

Yesterday an advocacy group in Oregon used an update on the swine flu situation to push unabashedly on its website for paid sick leave within the state. It noted the recommendation of the Centers for Disease Control and Prevention that anyone who feels ill should stay home from work. Yet, it continued, fewer than half the state’s employers pay their workers for sick time. How can they afford to stay home?

“Will the Oregon legislature join San Francisco, Milwaukee and Washington, DC, in guaranteeing paid sick leave to all workers?” wrote Chuck Sheketoff, the leader of a public advocacy group in the state. “If not, why not?”

The plea was accompanied by what looked like a poster showing a young woman sneezing into a tissue. “She’ll be your server tonight,” it read, “and she’s pretty sure it’s contagious.”  

A similar message was issued Tuesday by a group called the Institute for Women’s Policy Research. It, too, asserted that some employees with swine flu may not be able to stay home because of the wages they’ll lose. That, it suggested, also poses a pronounced risk for school-age children. “Parents who cannot stay home with a sick child are more likely to send sick children to school or day care,” said the statement.

Those and other advocates for paid sick leave make a powerful argument. Indeed, I think the industry will eventually have to find a way to offer the benefit in some shape or form, as I’ve stressed before in this space. There are public health implications that the trade will have a tough time in countering. Public safety, after all, trumps economics.  

But, with so many restaurants struggling to survive even without a pandemic, is now really the time to push the measure? And aren’t these defenders of the average citizen being a little hypocritical in using the dire ailments of some to push a political agenda? It just doesn’t seem right. 

 Then again, at least they’re acting on a worthy principle. Not so the yahoos who are using the flu outbreak to justify their xenophobia. 

They’re pointing to the disease’s origination in Mexico as proof that the people of that nation are barely a step up from animals. It’s the ultimate argument, they smugly assert, as to why we shouldn’t let them immigrate here, and why we should ship back the ones who’ve slipped in. You know how Mexicans are, they say with a wink and a sneer. They’re constantly visiting people from the old country. Now they’re bringing killer germs with them.  

You wouldn’t wish swine flu on anyone. But I confess to feeling the temptation. 

5 questions about swine flu's effect on restaurants

1) Might this be a time when reason prevails?

The buzz on the internet could be characterized as cynicism rather than panic or fear. The consensus seems to be, “Isn’t this just the crisis du jour? And as long as it just gives me the flu, what’s the big deal?” If there’s fear, it’s not of eating pork or going to a restaurant. It seems to be prejudice-tinged worry about contamination from Mexicans. Which leads to….

2) What effect will this have on immigration reform?

From a Yahoo Answers message group:

“Most restaurants are saturated with Mexican workers, and I am sure many know someone that recently or constantly travel to/from Mexico; increasing the chance of contracting the Swine Flu. I personal believe we are at higher risk that we think if we often eat out at our local restaurants.”

Consider this snippet from a tirade on examiner.com, a new network of citizen-journalist reporters and commentators. It comes from Frosty Woodbridge, a popular spokesman for the faction that believes the best immigration policy would be to shoot on sight:

"The current Swine flu spreading across Mexico providesAmericans a glimpse of their future if mass immigration from third world countries continues into the United States.

"It stems from cultural habits that cannot be changed once they migrate over U.S. borders. Third world people lack personal hygiene, collective health habits and educational understandings of how their personal actions promote disease transmission."

Much of the installment deals with toilet-paper disposal norms. I kid you not.

3) Will it affect the turnout for the National Restaurant Association’s big convention next month in Chicago?

4) Does anyone doubt, at least right now, that tourism will be the big loser?

The European Union has already advised residents of member nations to forego all but essential travel to the United States. The U.S. travel industry is clearly worried. The head of its promotional group, the U.S. Travel Association, issued a statement this morning that urges the government to weigh carefully what it says and does about the situation. “We must address the situation with measured, pragmatic responses so as not to cause panic and negative consequences to the economy if health risks are not imminent,” said CEO Roger Dow.

5) Where’s the original reporting on what this means to restaurants?

Where’s the coverage of how the outbreak has affected the sales of places along the border, or in San Diego, or in concepts that might be particularly vulnerable because of its clientele, like Chuck E. Cheese? How about the impact on a chain like Pizza Patron, a brand targeted at the Latino community in the United States?

This is undoubtedly the story of the moment, and restaurants, as the modern-day town square, are in the thick of it. Yet the reshuffling of McDonald’s beverage line-up has generated more coverage so far in the business media. Why are they ceding this story to Twitter?

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.

Chipotle: 'Natural' may not be the hook it thought

Say it ain’t so, Steve. Chipotle’s use of natural ingredients was the example everyone cited to prove the consumer mainstream cared about more-wholesome foods. If a chain of more than 800 units could do it, and make a fortune in the process, couldn’t others? It was the reason chain execs across the spectrum were yelping out a “Yes I can!,” as if they were at a tent revival meeting.

But the spirit didn’t move customers as much as everyone might have thought, Chipotle co-CEO and founder Steve Ells admitted to financial analysts Wednesday evening. Consumers would hear the chain’s Food with Integrity marketing promise and fail to see the light.

“One of the things that we found in our research is that we have not been getting credit for the Food with Integrity initiative,” Ells explained. “People understand that Chipotle food tastes better. They don't necessarily associate higher quality ingredients, sustainably raised ingredients, with Food with Integrity…These kinds of things are important, we think, in how we source our food, but our customers tell us this is not the kinds of things that are important to them."

So, he said, the chain will downplay the integrity boast in a new campaign that breaks next month, themed “My Chipotle.” Ells explained that the campaign will tout variety, customization and flavor, with the latter attributed in part to “great quality raw ingredients.” He did not give any indication that the chain would actually downplay its use of natural foodstuffs, just the crowing about it.

The heart of the My Chipotle campaign, Ells said, will be a new website, MyChipotle.com, where patrons can testify about their love for the food. Customers will be invited to post pictures, videos and audio clips about their favorite items on the menu. Some of that material may then be used in television, radio or print ads, he said.

Among the other gems served up during the quarterly conference call was a quantification of culture’s impact on Chipotle’s finances. Co-CEO Monty Moran observed that a typical outlet of the chain employed a crew of 22 people in 2006, when unit sales average $1.5 million. Today, he said, the headcount is down to 19 staffers, but the per-store mean has jumped to $1.75 million.

The cause, he said, was a carefully cultivated culture that aims to put “our highest performers in the highest impact positions.” In the past year, Moran added, favorable customer comments have doubled, while complaints have fallen.

A thank-you to SeekingAlpha.com for posting a transcript of yesterday’s call.

Join me in some machete work?

Those of you who have a life may not be aware that pubic companies have to tag just about everything they say or do with legal mumbo-jumbo that typically begins, “This presentation may contain forward-looking statements.” The drama quickly falls off from there.

The boilerplate legalese is mashed into financial press releases and even executives’ oral presentations by lawyers who hope to shield their clients from lawsuits. Actually, I suspect they really just want to justify an income that keeps them in Armani and Porsches. It’s hard to imagine a tense courtroom scene where the defense attorney reveals the plaintiff was clearly warned in the qualification statement that investors’ uncertainties include, but are not limited to, failure by management to generate sufficient sales. As the crowd gasps, the judge bangs a gavel and dismisses the case. The lawyer grabs a Starbucks for the Porsche ride home, worried his client might discover that the next line in the qualifier reads, “The walrus was Paul.”

I bring up all of this excitement because we’re in the heat of Earnings Season, the equivalent of Ben & Jerry’s Free Cone Day for those of us who pour over restaurant companies’ quarterly earnings releases. The first two days have been a veritable all-rides pass to Six Flags, with company after company reporting improved results. It’s been an extremely newsworthy cycle.

But someone has to point out that the CYA language is getting out of hand. Is it really necessary to include eye-openers like this tip from Yum! Brands’ press release on how to spot a forward-looking statement? To wit: “These statements often include words such as ‘may,’ ‘will,’ ‘estimate,’ ‘intend,’ ‘seek,’ ‘expect,’ ‘project,’ ‘anticipate,’ ‘believe,’ ‘plan,’ ‘should,’ or other similar terminology.” A guy standing in the rainforest with a bone in his nose would shake his head over the need for that heads-up.

So the heck with company earnings. I’m focusing this Earnings Season on lawyer-ly bleatings. Here’s a ranking of the companies that released their financial results yesterday and today, arrayed by the length of their qualifying statements.

And the winner?

Yum! Brands, with a 395-word statement!! But the race was close. P.F. Chang’s legal explanation ran a mere 189 words. But it tacked on another 203 words about GAAP reporting standards. And that stuff makes forward-looking boilerplate read like porn.

Chipotle wasn’t far behind with 377 words.

There was no correlation between company size and statement length. Brinker, for instance, needed only 195 words, and that included a calendar of upcoming forward-looking statements, the financial equivalent of a hidden bonus track on a CD. And McDonald’s, the giant in the field, was able to air the necessary warnings (“Forward-looking statements involve a number of risks and uncertainties.”) in just 73 words.

Forward-looking statements

Statements in this blog entry may not be purely historical. Nor, unfortunately, hysterical. The accuracy of these statements are hit or miss at best. Risk factors include injuries from the writer’s past head trauma, a possible brush with rabies, and repeated admonitions from college girlfriends’ parents. Results may differ materially from what has been shoveled onto the screen.