Random thoughts I

Courtesy of some pinot noir, here are some random jottings about the restaurant industry as it laps the start of the ongoing economic meltdown.

Earlier this week I moderated an online brainstorming session, telecast as a webinar, on how restaurant chains can contend with the times. Among the nuggets of information:

• Some restaurant operators, perhaps for the first time in their careers, are contending with the frustration of putting their very blood into operations and still failing to goose sales. It’s demoralizing, observed Kat Cole, VP of HR for Hooters, but macro-economics can trump the best efforts. Indeed, she noted, many in the business are working harder than they ever have before. She encouraged our audience to focus on successes within their organization and their own four walls, and to keep employees motivated by providing plenty of recognition.


• The restaurant industry’s equivalent of hell is operating in Michigan, several speakers suggested. They cited that market as the epitome of an economy turned glacier-cold.


• Social media has arrived as a recruitment tool, a way of conversing with guests, and a means of communicating with employees and field-level managers.


• The times have ushered a collaborative, open management style into chain headquarters. Several speakers noted how essential it is to have all stakeholders apprised of what’s happening in the business and how it should adapt to conditions. Steve Grover, vice president of cost and product management for Steak n’ Shake, said he has regular meetings with the VPs of various departments to discuss what they’re doing and what results they’re getting. Hooter’s Cole says she confers with her counterpart in operations about every 10 minutes.

You’ll soon be able to hear the whole webinar—the Smart Business Decisions Roundtable—for yourself via the website of the presenter, Nation’s Restaurant News. It was sponsored by Kronos, which is also presenting two similar thinktanks in the near future. A panel discussion focusing on human resources will be held on Nov. 5. The spotlight turns to finance and IT on Dec. 3.

I'm moderating all three. In line with the FTC's new disclosure regulations, I'm obliged to let you know that I'm getting paid for shouldering that task. But I would've posted these observations even if I was just a civilian listener.

Random thoughts II

Two weeks ago I gave a presentation on restaurant concepts to a class at the Institute of Culinary Education in New York City. It was the second time I’ve guest-lectured at the facility, which is one of the under-appreciated gems of the New York culinary scene.

Like last time, the students seemed obsessed with Chipotle, particularly its distinction as a sizeable chain that didn’t make them cluck in disapproval.

Unlike last time, I was asked during this guest lecture for my opinion of what chains are leading the pack in their green efforts. I cited Starbucks, Burgerville and McDonald’s. Interestingly, the mention of McDonald’s drew nods of agreement, not dumbfounded surprise.

Random thoughts III

When everyone’s giving away food that’s remarkably similar in the first place, service becomes the real way of differentiating restaurant chains that compete at a given price level. That underappreciated fact was underscored today by coverage of how both Boston Market and Chili’s are trying to shake off their lethargy.

A USA Today story revealed that Boston Market is moving toward the classic fast-casual model by testing table delivery. Guests place their order, take their seat, and wait for the food to be brought to their table.

CEO Lane Cardwell also noted that the concept will strive to be more of a true market, vis-à-vis Eatzi’s and the gourmet food shops that inspired both it and Boston Market.

Meanwhile, the Wall Street Journal ran a super-premium story on how Chili’s is hoping to get its pizzazz back. Last week the chain started serving a different sort of burger, made from chuck and formed by hand to retain more of the meat’s juices, the article noted.

It also reported that the recipe for its Baby Back Ribs has been rewritten. The ribs are now smoked for a longer stretch, using pecan instead of mesquite to impart more flavor.

Service enhancements are also part of the revitalization effort. The story noted that restaurant-level employees were required to partake of a distance-learning program on service. Among the upshots is a requirement that servers now look all guests in the eye and cite new features of the menu.

The softer side of McD's marketing

McDonald’s makes so much noise with its mega-sized marketing budget that it’s sometimes difficult to detect its soft-sell promotional efforts. That’s a shame, since those programs are not only among the brand’s most creative, but a benefit to plenty of other players as well.

Consider, for instance, what the chain is reportedly doing at 400 units in North Carolina and Tennessee. Local teachers will be working as crew members in the stores tonight, drawing soft drinks, cleaning tables, filling drive-thru orders and the like. In exchange, the restaurants will contribute a portion of sales from the three-hour stint to short-funded programs in the teachers’ schools.

Imagine the draw for a student of knowing his or her teacher will be waiting on them if they can talk the folks into a McDonald’s run. It sounds like a very powerful traffic booster.

But the benefits extend beyond the top and bottom lines. Educators readily acknowledge that the restaurant industry has a major image problem among teachers, parents and guidance counselors. By getting teachers to experience what it’s like to work in a restaurant, to see firsthand such intangible benefits as working as a team and learning responsibility, McDonald's will no doubt give the industry’s image a vigorous buff. And it won’t exactly hurt the business’s recruitment efforts to have kids see their teachers working in a unit.

That’s only one of the things the chain is quietly doing to foster a bond with the community. Consider, for instance, the recent effort of a single unit in West Miami. The store opened up its doors last week to anyone who wanted to learn about the operation. The franchisee focused on the charitable efforts of the restaurant and the chain, while also noting the options that McDonald’s touts as being more healthful.

According to a news report, the invitation drew about 50 people, including an 8th grade journalism class.

Then there’s McDonald’s green stealth move. Since the start of football season, the chain has been offering pro-football fans a free ticket on public transportation to and from their teams’ stadiums. In exchange for foregoing their cars, the game-goers also get coupons for free sandwiches.

The environmentally minded offer has gotten plenty of publicity, but I’ve yet to see any ads. It’s a quiet program, beyond the reproach of the advocates who are quick to tar any green effort by the chain as greenwashing.

It’s just a shame the chain doesn’t get its due for what it’s doing right.

A new concept headed for Darden's menu?

Is Darden considering an addition to its restaurant empire?

The parent of Red Lobster is moving this Wednesday into new headquarters elsewhere in Orlando, its home turf for the last 40 years, according to an Orlando Sentinel story. Included in the facility, says the article, are six test kitchens and the space to house a seventh. Each will serve a different concept, the piece notes.

In addition to Red Lobster, Darden’s holdings include Olive Garden, Capital Grille, LongHorn Steakhouse, Bahama Breeze and Seasons 52. Their R&D facilities will be firing up their grills in a few days. But why reserve space for a seventh? Is Darden shopping for an acquisition, or perhaps starting the in-house development of something new?

Setting aside space for expansion is hardly proof an addition is a “go.” It’s more like a young family buying a house with a spare bedroom, just in case.

But the article also notes that Darden has to add 400 positions at the new building by 2014 to earn the full tax benefits of the relocation. That’s on a base of 1,260 jobs currently housed there.

That would be a tremendous amount of organic growth, even if Seasons 52, the company’s youngest concept, really zooms cross-country.

And there’s no shortage of acquisition candidates in this buyer’s market. The last expansion of Darden’s portfolio was the purchase of Rare Hospitality, the parent of Capital Grille and LongHorn.

Speculating on possible additions is tough with Darden. Although the company is very conservative, its new concepts have been downright bold. Few would have bet it’d try a healthful concept featuring fresh, seasonal produce, as it did—undoubtedly with great success—with Seasons 52. Ditto with Bahama Breeze, still one of the industry’s few chained Caribbean concepts.

But who can resist making their wild-haired predictions. If Darden were looking to add concepts, I wonder if a burger concept, an everyday grill sort of place, would be one of types on the list. Ditto for an upscale Mexican place, with bold flavors and simple, even healthful preparations.

So, if you live in Orlando, please give a shout if catch the aroma of chipotles wafting out of the new headquarters.

Opening eyes to a greener reality

A new survey reveals that 80% of the public doesn’t know of a fast-food chain that’s trying to be green. That’s astounding, given how often I’m writing about the ecological efforts of McDonald’s, Starbucks, Taco Bell, Burger King, Carl’s Jr. and Dunkin’ Donuts, to name just a few of the sector’s green activists.

The findings by M/A/R/C Research point to a public relations disaster for the segment. Consider that the data, based on an online poll of some 7,000 consumers, also reveal that 62% of the public would be drawn to a quick-service place that was eco-minded, and that 21% would increase their visits if fast-food restaurants were green.

There can really be only two explanations. The obvious one is that the chains are doing a lousy job of letting the public know how they’re striving to be more ecologically responsible. Maybe they’re afraid of being accused of not doing enough, or of being slammed for “greenwashing,” a serious crime among the eco-minded. That community is sensitive to over-hyped or false claims of helping the environment.

But the other possibility is more problematic for the industry. What if the public is refusing to see what the chains are doing? If that sounds crazy, consider this excerpt from a Letter to the Editor that recently ran in the Santa Barbara Independent:

We are shocked and dismayed that a McDonald's restaurant on State Street has been certified by the Green Business Program of Santa Barbara County.

What's next, giving an award to Monsanto for putting up a single solar panel?

While we are sure that the local owner of this McDonald's franchise was sincere in trying to reduce his or her carbon footprint (and save a few dollars) by putting in waterless urinals, an Energy Star ice machine, and an upgraded irrigation system, it is a bad joke to "certify" this as a green business. It makes a mockery of genuine efforts toward true sustainability.

In our opinion, this award is one of the most egregious cases of greenwashing we have ever seen. — Larry Saltzman and Linda Buzzell, founders, Santa Barbara Organic Garden Club

Like it or not, McDonald’s is taking substantive steps to be greener, from exploring alternative energy sources to testing ways an operation of its size could feasibly compost its food scraps.

And it’s just one of the fast-food concepts that are trying to act more responsibly. Undoubtedly, those steps are still small ones right now. They’re balanced against the impact on profits. And maybe there’s more that should be done. We can even concede that the impetus may be public pressure, from employees and eco-minded shareholders as much as patrons.

But there is a lot being done by the industry—right now, primarily by fast-food chains and independents. The trade has to focus on making the public see and appreciate that effort.

Trying to out-supermarket supermarkets

I’m typing this very quietly because Security could detect me at any moment. I’ve managed to sneak into the nation’s leading restaurant thinktank, The Gravy Institute, to learn more about the startling new marketing strategy that’s taking hold of casual-dining chains.

The Institute, of course, was the crucible for the industry’s previous promotional breakthrough: Giving away food. Indeed, the internet now abounds in sites where you can learn how to eat restaurant fare for free on any given day—a dicey proposition for a trade that's in the business of selling food.

But that’s a Mister Rogers prescription compared with the crazy new idea that’s being hammered out here by the Institute’s best minds, Dr. Runyon Wanker and his longtime collaborator, Sir Ernest Turnip. Let’s listen in:

Wanker: By jove, that’s brilliant! Restaurants are losing business to supermarkets, since the economically-stressed prefer the economies of cooking at home. So why not beat those cabbage head stackers at their own game?

Turnip: Precisely, Wanker. Here’s how it works: The restaurants continue to offer free food—and a true bellyful, like a free entrée. But they provide it in an eat-at-home form! That way, the very at-home meals that keep people parked in front of “Dancing with the Stars” becomes the hook for restaurants.

Wanker: I believe you’ve lost me there, my good man. Do illuminate.

Turnip, with a tsk-tsk: People are buying meals or their components from the local supermarket. Ergo, they make fewer visits to restaurants. To win them back, a few restaurant chains have started dangling supermarket-style meals or products, like uncooked spaghetti, as the lure to get guests back through their doors. Buy a restaurant-cooked meal and get a second to have at home. The served meal becomes a means to the patrons' real end, a dinner in front of the tube.

Wanker: Huh. An example?

Turnip: Well, take Buca di Beppo’s new offer. Buy one entrée, you get a plate of spaghetti for free—and a 16-ounce box of pasta you can take with you to cook at home!

Wanker: But surely one example does not make a trend, my tweedy colleague. Remember the restaurant media's Rule of Three: Three instances make a trend, four examples indicates a sea change, but even two spottings signal a fluke.

Turnip: There’s another example, old sod. The Maggiano’s chain began a promotion last month that offered an entrée to have at home the next day if you bought a $12.95 dinner to eat in the restaurant. The freebie was packed up for you and delivered with the check, all set to pop into the microwave on Day Two.

Wanker: Diabolical, Turnip. Diabolical. But those are only two examples. You need a third instance of a chain providing an eat-at-home meal for every one you buy in the restaurant. And you don’t have it.

Turnip: On the contrary, my dear doctor. There’s a chain that offers such a deal—“eat one with us, get a second to eat at home”—as a matter of course.

Wanker: What??

Turnip: Yes. It’s called Cheesecake Factory.

With that, I'll make my escape to plot how I can take advantage of Buca’s free pasta offer. After all, it only lasts one day.

Perhaps with good reason.

That's Oct. 26, or National Pasta Day, if you want to see how the promotion performs.