Wednesday, December 28, 2005

Dr. Ruth, Dr. Phil, Mr. Jared

I’m a bit worried that Jared Fogel is stalking me. He used to be that nice-seeming fella who lost a ton of weight—some 245 lbs., or more than one of me—by eating at Subway every day. For that reason alone, you had to love the guy. It was like finding someone who proved Jack Daniels and tira misu cured cancer and promoted world peace. Losing weight, by eating fast food? And who got the Nobel that year? Put him on a mountain, and we’d be there offering hit CDs and small crafts as gifts (sacrificing a goat is so wrong; consider the clean-up).

But the folks at Subway are an onion slice short of being creepy with their new promotion. Sign up on a special website and Jared will call you with a pre-recorded pep-talk about keeping your New Year’s weight-loss resolution. And, according to the Associated Press’ press-release-beating coverage of the new program, this is merely a test for possible further interactions with the guy.

Which, of course, gives rise to all sorts of possibilities:

“Hello, you’ve reached Subway’s corporate headquarters. Press one if you’re waivering in a moral dilemma. Press two if you’re in danger of cheating on your spouse. Press three if you’re thinking of taking the mortgage money and heading to Tijuana…”

I can see it now: Standing in some captain-of-industry’s office, awaiting the start of a hugely important, nerve-jangling interview, and my cellphone rings: “Hey, buddy, it’s Jared. Just be yourself. And try a six-inch turkey sub, hold the mayo. Only six grams of fat!”

The possibilities are endless: Jared’s Oscar picks. Jared on tax preparation. Jared on what exit to take off the expressway.

What happened to selling subs?

In fairness, we have to point out the brilliance of what Subway is doing. TV commercials are as yesterday as Nehru jackets (explanation for younger readers: Amazingly dorky coats that were in vogue for about 15 minutes during the ‘60s). The objective today is interactive marketing, where consumers are prompted to take an action, thereby fostering a bond with a brand. Subway has that part nailed, more admirably in my estimation than such ground-breaking prior efforts as Burger King’s iPod download program (fans were given cameras to make videos somehow involving Burger King, which were then posted online for downloading. One effort consisted of a customer going through a McDonald’s drive-thru while wearing a mask of Burger King’s royal mascot. It didn’t make the cut at either Cannes or Sundance.) Four stars to Subway for that effort.

But we were never fans of the logo’d shrimp de-veiner mindset, where you extend a marketing come-on or concept to every possible aspect of daily life to keep a brand top-of-mind and relevant. You risk a sort of pitch fatigue; the marketer making the incessant appeal becomes an annoyance that’s resented, not a relished brand choice. Overexposure is much more of a danger today because it can happen so much more readily.

There should be limits to how far Jared should be used to sell fast-food sandwiches. Is this new compaign over that line? Probably not. But what’s next?

I’d love to answer, but the phone is ringing. It might be Jared, with a heads-up about his Hollywood Squares appearance.

Friday, December 23, 2005

Consumers go head-over-heels for Wendy's deal

A restaurant promotion that merits its own message thread on (“Your Dumpster Diving and Curb Crawling Resource”) might sound like a bad thing. But Wendy’s has stated that it’s delighted with the fun consumers are having with the traffic builder it launched on Nov. 1 in collaboration with Airtran, the budget airline, and Coca-Cola. Indeed, the campaign has some people going head over heels. And we mean that literally.

The promotion encourages Wendy’s customers to buy a soft drink with the enticement of free air travel. On each drink cup is a coupon worth one-sixty-fourth of a roundtrip excursion on Airtran, a payback easily worth several hundred dollars. Some patrons have computed that they can buy 64 drinks for less than $80. According to news reports implicitly confirmed by Wendy’s, customers are walking up to the counter and ordering 64 medium drinks, without ice. Or soda.

The rules limit purchases to five drinks at a time, and presumably require that the cups actually be filled with fluid. But the chain has acknowledged to papers like The Atlanta Journal and Constitution that not all units are abiding by the restrictions.

Even cagier consumers are foregoing the purchases altogether. They discovered that some patrons could care less about amassing points for a free flight, and toss their couponed cups in the trash along with burger wrappers and uneaten French fries. That’s why, if you cruise by the Dumpsters outside Wendy’s units until Dec. 31, you may spot pairs of legs jutting into the air. Dumpster divers are not only reaping the refuse to enjoy a post-holiday getaway, but are sharing information via and other sites about what receptacles have been picked clean and which ones have proven particularly fruitful.

Those who don’t want to plunge into trash can keep their hands clean by working what may be the most robust promo aftermarket the trade has seen since McDonald’s offered mini Beanie Babies as Happy Meal premiums a few years ago. Sites like the uber-popular are reportedly packed with offers to buy the coupons for a quarter or 50 cents each. Meanwhile, eBay is bristling with offers from entrepreneurs willing to part with their cups, with bids on the auction site usually falling around that per-cup price range.

Wendy’s has yet to say what kind of impact the promotion has had on sales. Ditto on its garbage-carting costs.

Thursday, December 22, 2005

Canadians want more of Timmy's back

Wendy’s ownership of the Tim Horton’s donut chain has been a point of controversy among its shareholders for months. Now a pending partial divestiture is festering into an international incident.

Would-be stake-buyers from Horton’s native Canada are outraged because relatively few shares in the chain are expected to be offered north of the border, where “Timmy’s,” as it’s called, is as much of an institution as AM radio is here in the States.

“Those danged Americans have done us in again,” Keith Woolhouse wrote in today’s edition of the The Ottawa Citizen .

Wendy’s has said it would sell 15% to 18% of Horton’s in an initial public offering next year. According to Woolhouse’s story, only about a third of that stake will be available to investors in Canada, or less than 6% of the beloved brand.

The riled northerners point out that there are only 300 Horton’s outlets in the Lower 48, and they’re collectively not doing well, breaking even despite years of Wendy’s tutelage and retooling. The chain boasts more than 2,500 units in Canada, where people use it as they would the coffee station at work, stopping by several times a day for a refresher.

Relations between the U.S. and Canada are rocky enough already, given the nations’ widely disparate view of the war in Iraq. It be a shame to worsen relations over a Boston Creme.

New Yorkers make do

Overheard on the Long Island Rail Road, a commuter line still running amid New York City’s bus and subway strike:

“…And I couldn’t even have sushi for lunch. My favorite restaurant couldn’t get its fish,” said a businessman, hunkering down in his seat in apparent exhaustion.

“These are extraordinary times,” replied his companion, sounding like a battle-weary sargeant.

Wednesday, December 21, 2005

Politics is local. And lucrative.

With all due respect, the National Restaurant Association has it wrong. The association breaks down its 2006 sales forecast by state, region and industry segment. It really should do it by politician.

A few weeks ago, in The Marketplace thread of our blog, we reported how former U.S. Rep. Duke Cunningham had allowed favor-seekers to pick up $10,000 in restaurant and lodging charges before he was caught taking bribes. Now he’s heading to jail, depriving the industry of a prime customer.

But the California Republican looks like a value-menu maniac compared with Party god Tom Delay. Documents reviewed by the Associate Press show that the former House Majority Leader ate in restaurants at lobbyists’ expense some 500 times during the last six years, with an average ticket often topping $200, according to the wire service. That’s one freebie at least every five days, on average.

For the record, there was apparently nothing illegal about the free-loading; it’s as common in politics as kissing babies or cutting ribbons. Indeed, the AP cited similar indulgences by plenty of Delay’s competitors from the other side of the aisle, including Minority Leader Nancy Pelosi of California, and Senate Minority Leader Henry Reid of Las Vegas. Second only to Delay in his enthusiasm for resort and restaurant-meal giveaways, according to today’s widely carried AP story, was Speaker of the House Dennis Hastert.

The story noted Delay’s particular fondness for the Morton’s of Chicago steakhouse chain, and the famed “21” Club in New York.

The NRA has long encouraged restaurateurs to invite their elected officials into their dining rooms as a way of exposing lawmakers to the realities of the business. Turns out they may not have to bother.

Tuesday, December 20, 2005

Surviving the NYC strike

The New York City transit strike, some 22 hours old as I write this, is forecast to cost the Big Apple $400 million in lost business per day. The local restaurant industry has yet to estimate its portion of the loss, but the wallop was evident during the long-distance trek into work today. A Pret A Manger grab-and-go outlet across from Nation’s Restaurant News’ Manhattan headquarters was closed during what would normally be the morning rush, presumably because employees had no way of getting to work from the outer boroughs. Similarly, the local Hale & Hearty lunch chain had to forego salad sales this midday because it had only enough employees to man the concept’s signature soup station. A Dunkin’ Donuts outlet visited by a co-worker during her 90-minute hike to the office from Queens was being run, quite frantically, by a single employee.

In Penn Station, where traffic was unusually heavy because its trains were still running, a deli had to make due with the meager foodstuffs left by a distributor’s pre-strike delivery (commercial vehicles are prohibited from serving downtown customers except during strictly limited hours). Bus and subway commuters switched in droves to Penn’s Long Island Rail Road trains, but concessions were unable to exploit the situation. Some lacked supplies, while others were located along corridors whose access was limited by the police, for reasons that were never given.

Similarly, a unit of Chopped, the hot young made-to-order salad chain, had to close some of its salad stations. It was unclear if the outlet lacked employees, or the greens to keep them busy.

Then again, the places might have been staffed appropriately. In the middle of Manhattan, during the height of the holiday tourism season, when normally you have to fight your way across a street, the sidewalks were as sparsely trafficked as the fringe areas of Peoria. The drop-off is clearly going to hurt.

For those of you who aren’t in the city: A key issue of contention is the transit workers’ demand for three consecutive annual raises of 6%, which was a retreat from their original demand of 8%. And they don’t want to contribute anything to their healthcare coverage.

Friday, December 16, 2005

Gus Boulis is back in the news

The worsening scandal connected to lobbyist-turned-restaurateur Jack Abramoff has touched another notorious character from the industry, though he was murdered in 2001. Gus Boulis, the founder and longtime owner of Miami Subs, was shot gangland-style in his car after he'd sold a controlling interesting in his fleet of Florida-based casino boats for some $148 million. One of the buyers was Adam Kidan, who yesterday pleaded guilty to conspiracy and fraud charges related to the purchase. The other buyer: Jack Abramoff.

Kidan was accused of faking the wire transfer of some $23 million to meet a lender's requirement for what was in effect a down payment on the boating firm. He has said he knew two of the three individuals who were recently arrested in connection with Boulis' murder. News reports have speculated that Kidan's plea deal may include cooperating with authorities who are still trying to determine why Boulis was killed.

Boulis had a reputation as a brilliant entrepreneur, but someone who seemed comfortable with conducting business in the shadows. He retained a stake in the SunCruz line, but had reportedly feuded with partners Kidan and Abramoff.

Abramoff is under investigation for charges similar to those brought against Kidan. Meanwhile, investigators are also probing his high-level lobbying activities. The latter endeavors revealed that Abramoff owned a restaurant in Washington, D.C., Signatures, where he often entertained clients and lawmakers.

Thursday, December 15, 2005

'On your left: Total devastation...'

In an idea hatchery like the restaurant business, opposing an entrepreneurial endeavor is akin to disparaging Walter Cronkite. But a new venture arising from the wreckage of New Orleans is testing the boundaries of acceptability. Judgment may be particularly difficult for restaurants, given what they have at stake.

On first exposure, it’s easy to retch at the notion of busing tourists past totaled restaurants and homes too mold-infested to be inhabitable, at $35 a head ($28 for children, if the family wants to making an outing of it). The new hurricane-devastation tours include drive-by’s of the now-infamous Superdome and Convention Center. According to the Associated Press article that brought the new business to light, $3 of each ticket sale will be passed along to the charities serving Hurricane Katrina victims.

Better yet is the $32 of every adult ticket that will be injected into the local economy, which virtually lost its tourism underpinning when Katrina’s floodwaters burst through the levies. It may not be as high falutin as browsing through an art museum or restoring your soul with some jazz. But it’s tourism that leaves no one hurt, and plenty benefiting, from the hotels that house overnight tour guests, to the restaurants that feed them.

Besides, is it really that bad? Or any worse that touring the areas graveyards to take in the elaborate chambers that are built to keep bodies above the water table?

It may not be akin to the traveling King Tut exhibit, or a trek to the Louvres. But businesswise, it’s a masterpiece in its own right.

Tuesday, December 13, 2005

Boldface buyers

I’ll never sip a Dunkin’ Coolatta again without feeling a little star-struck. Not that long ago, the guy behind the purveying chain was supposedly the poor schlub who had to get up before daybreak to make the donuts. Now, with Dunkin’ Donuts about to be purchased in one of the largest foodservice deals ever, that flour-dusted character may soon be hobnobbing with powerbrokers and big-name politicos.

The $2.43 billion, all-cash deal involves more names than a phone book: Dunkin’ Donuts, Baskin-Robbins and Togo’s, sold by Pernod Ricard to The Carlyle Group, Thomas H. Lee Partners and Bain Capital, who collectively outbid Kohlberg, Kravis Roberts and Trimaran, among others. But the powers behind the players are the ones you’re likely to find in boldface within elitist newsletters like The Washington Post and The New York Times.

Consider the name plaques on the executive floor of The Carlyle Group. The chief executive: Lou Gerstner, former chairman and CEO of IBM Corp. and the guy brought in to tame RJR Nabisco after that Frankenstein of a conglomerate was formed. Assisting him are people like Thomas “Mack” McLarty, the business partner of Henry Kissinger and former chief of staff to President Bill Clinton. Then again, the White House seems to be a farm team for Carlyle. A past chairman was Frank Carlucci, former U.S. Secretary of Defense under President Ronald Reagan.

More political connections come from Bain Capital, a current co-owner of Burger King and one-time principal of Domino’s. The Boston-based firm was started in part by Mitt Romney, currently the Republican governor of Massachusetts and possibly a future President of the U.S.

And then there’s Thomas H. Lee Partners, a former big stakeholder in Morton’s and Smith & Wollensky, not to mention a little consumer-products company called Snapple. The company fosters fantasies of being at a family gathering and hearing old Aunt Martha blurt out something about that distant cousin Tom Lee who’s somehow involved in finance.

It’s no wonder that Dunkin’ Brands CEO Jon Luther described the trio of buyers as a near dream team. Of course, he was thinking of their business savvy, not their media-recognition quotient. Either way, the chain has come a long way from the days when founder Bill Rosenberg started peddling donuts from a lunch truck.

Monday, December 12, 2005

Open-air dining becomes less open

Patios, long a haven for restaurant libertarians, are sprouting strictures like café umbrellas. It’s happening in a relatively few markets right now. But red tape tends to spread like kudzu.

Already, the whole state of Washington has banished smoking within outdoor dining areas, unless they’re somehow set up as parking-lot islands (a law that went into effect Thursday prohibits smoking within 25 feet of doors, windows or air vents). Once the DMZ in the smoking fracas, patios could now be up for grabs. A major loophole in the bans could be drawn shut for restaurants.

Similarly, al fresco areas were once the place where restaurants could allow patrons to sip a latte with Fido without angering health authorities. But, in a skyrocketing number of places, that’s no longer kosher. Inspectors have been challenging the tradition of permitting dogs to sit with their masters in out-of-doors dining sections. They’re enforcing health codes more narrowly. A possibly example-setting attempt to change the rules was turned back in Orlando, FL, as was reported in this space a few weeks back.

Now comes news that Arizona’s Pima County might forbid restaurants to use misters, those oversized atomizer units, as a means of cooling guests while they dine al fresco. The measure is being eyed as a way to realize the water-conservation goals that were set in place for the county by a 2001 plan.

Smoking refuse-niks have boasted about flouting the law in sympathetic sneak-easies, which will allow them to light up as long as no one raises a ruckus. We foresee a rash of misters being toted to Arizona’s outdoor dining areas come summer. And may rainbows not give away any restaurant offenders.

Sunday, December 11, 2005

What's the real danger?

A difference in opinion seems to be widening within the ranks of Nation’s Restaurant News, just as it is in the industry at large. Not in our news and feature stories, where objectivity is the rule. But the writers behind the paper’s op-ed pages clearly don’t agree on the risks posed by avian flu and what the industry should be doing to protect itself.

My voice may admittedly be the shrillest, because, as I’ve asserted in my column, I fear the industry is pooh-poohing a potential catastrophe. I’m not sure the typical restaurant operator has even sized up the wildest threat, the chance that a pandemic could erupt, resulting in quarantined sections of the country, widespread infection and fatalities, food shortages, and generally a massive up-ending of life as usual. (Before you jump on me for offering that scenario, keep in mind that those are the possibilities put forth by the Bush Administration, not me personally.) The prevailing mindset seems to be, “Oh, yeah. It could really affect my chicken sales. I may have to switch to other proteins for awhile.”

While they’re living by that assessment, BusinessWeek is reporting that the impact “could be comparable to The Great Depression.” Last week, U.S. Senate majority leader Bill Frist disclosed that a soon-to-be released Congressional study will show the flu could cut national economic activity by 5%, or $675 billion. That’s a lot more than dampened chicken sales. According to Frist, who’s also a respected medical doctor, 90 million Americans could be affected, and 2 million of them will die. A pandemic won’t be a poultry sales problem. It’ll be a social and economic dislocation.

That’s why I believe more firmly than ever that the industry should at least be mindful of the worst-case possibilities, instead of shrugging them off as scaremongering.

But a lot of smart people have a different assessment, and they wield some persuasive reasons. One non-industry columnist quoted a federal official’s chilling warning that the country was in danger of being paralyzed by a nightmarish pandemic. Then the writer revealed he’d resurrected the dire quotes from news stories that ran in 1995, when the country was facing a similar flu threat. The most the nation actually suffered was a spike in sick days.

Many of the optimists maintain the biggest fear is fear itself—that the public will react negatively to what-if’s, making the dire forecasts a self-fulfilling prophecy. Focusing on the extreme possibilities does nothing more than stoke public hysteria, they argue. They emphasize the need for industry and government to allay fears.

A few weeks ago, Nation’s Restaurant News ran an editorial headlined, “Panic over flu threat for the birds, but operators should prepare safeguards” (retrievable, for a slight fee, from our archives at Citing a dearth of evidence that avian flu can be passed to humans via poultry consumption, the opinion piece recommended that “such information should be shared with all restaurant employees to improve the odds that nervous, uninformed guests might be set straight.” It also advised restaurateurs to take such additional steps as fortifying health programs for employees, and reviewing sick-worker policies. But all in all, it sounded a three-bell alarm, whereas I was at DefCom 5.

But both assessments looked like unbridled hysteria compared with the perception voiced by the Center for Consumer Freedom , the Washington, DC-based lobbying group headed by NRN columnist Rick Berman. In a press release, Berman’s group asserted, “A massive U.S. media focus on avian influenza, coupled with needless hysteria from animal rights activists who see bird flu as an opportunity to promote vegetarianism, has generated widespread fear that has no basis in reality.” As evidence, it noted that a poll it sponsored found 47% of consumers “mistakenly” believe they can contract bird flu by eating chicken, a “false statement.” It called on government to ally public fears on the matter.

I’m not going to blast either assessment that differs from mine. Indeed, I hope I’m wrong. But I do have to take issue on one major point. Both parties have suggested you couldn’t contract avian flu by eating contaminated poultry. In fact, live viruses have been found in various meats, even after they were frozen, according to experts who briefed the National Restaurant Association on the matter. And government officials have cited a need to cook the birds to at least 180 degrees, or above the 145 degrees specified by many food codes. Both of those authorities have said the flu could be a food-safety issue, and requires extra vigilance in food handling.

Will bird flu be a mega-business issue? We’ll have to see. Hopefully, it’ll be 1995 all over again.

Thursday, December 8, 2005

Patrons lose their indoor voices

The struggle to set a boundary for acceptable customer behavior has been shifting decidedly in restaurateurs’ favor as of late. Maybe the industry is still hopped up from its awesome showing in the Cell Phone Controversy, when operators were rewarded for their intolerance of the portable yak boxes with appreciation from guests who preferred conversations be conducted with people actually in the restaurant. Whatever the reason, the trade has lately been a veritable caped crusader in dealing with patrons who allow their children to disturb other customers.

The media have been filled with stories about restaurants that set reasonable ground rules for the sort of pint-sized patrons whom many places would do nearly anything to draw a few years back. The most-reported measure seems to be the sign that Dan McCauley posted in his Chicago bakery-café after seeing untended kids bounce off his display cases like outfielders hitting the wall at Wrigley: “Children of all ages have to behave and use their indoor voices at Taste of Heaven.”

His subtle suggestion that children behave for the good of all patrons touched off a firestorm. Parents took umbrage, while guests fed up with having their visits disrupted by unruly rug rats found the courage to hail McCauley as a brave knight. He received over 600 letters, according to an Associated Press story carried in a number of newspapers, some of which subsequently published a few letters of their own. Here’s one from The Chicago Tribune: “With all this clamor for smoke-free restaurants, child-free restaurants and cell phone-free restaurants, why not just go all the way and have only customer-free restaurants?”

But the proponents of shriek-free dining didn’t waiver, perhaps pushed onward by support from no less a power than Dear Abby. On Monday, her syndicated advice column carried a letter (from a party called Wish I’d Had Ear Plugs) asking for the Dear's opinion on unruly children in restaurants. Abby opined that there’s no need for tolerance in such a situation. She recounted being in a restaurant that evicted a family because the little ones were being annoying, and noted that the patrons who remained gave the manager a round of applause for the heave-ho.

It’ll be interesting to see how far the behave-or-else movement goes before it loses momentum or is walloped by the back swing of the pendulum. It’s just a shame my grammar-school nuns weren’t still alive. They'd have been the neutron bomb in the push for decorum.

Tuesday, December 6, 2005

Now you're causing car wrecks

Even if Brad and Tiffany Consumer cook every meal at home, that restaurant down the street could be a hazard to their health. Or so suggests a study released today by the party animals at Quality Planning Corp., a concern that helps insurance companies determine who’s going to live a long and healthy life and who’s an episode of “Six Feet Under” waiting to air.

The unsung heros who work behind the scenes in the Hollywood-like world of insurance, QPC’s researchers surveyed some 2 million claims to correlate injury with place of residence. They found that an average consumer is 30% more likely to crash the Camry if he or she lives within a mile radius of a restaurant. The next most dangerous situations: Living near a supermarket or a school, with 26% greater chances of having a wreck.

The safest place to live is in the shadow of a church, whose neighbors are 11% less likely to crunch a fender.

Researchers noted that the findings support what you’d think intuitively: The more traffic an area sees, the more likely the cars are to hit one another.

French bred

Our auto industry is tanking, and U.S. furniture makers are struggling to beat back a do-or-die challenge from Asia. But in the foodservice balance of trade, we’re Superman on steroids. For decades we’ve exported burger and fried-chicken concepts to the Continent without seeing much flowing back in return save a Jean-Georges Vongerichten here, a Daniel Boulud there. It must irk the French in particular that you can find a McDonald’s on the Champs Elysee, but not even Vie de France is truly Gallic anymore (it’s now Japanese-owned). We give them Jerry Lewis, they send us Champagne and foie gras. Sweet.

But wouldn’t you know our brethren from across the pond have been quietly infiltrating one of the U.S. trade’s most promising markets, bakery-cafes? While Panera was opening stores like Starbucks on Red Bull, three European entrants were quietly laying their berets in the ring.

The newest arrival is Brioche Doree, whose first U.S. unit, a franchise managed by HMS Host, opened during October in the Los Angeles International Airport. Apparently more HMS franchises will follow, given the statements of both parties. Brioche, which offers foccaccia and ciabatta sandwiches as well as arrays of salads and baked delectables, has 325 units in operation in Europe,

Paul Bakery and Cafe, the 115-year-old, 270-unit French chain, opened its first U.S. store this spring in North Miami. The place offers both tableservice, at about $10 a head, and takeaway. Miami-based Apety Group has secured development rights to another 100 stores in the U.S.

Very similar in approach is Le Pain Quotidien, a 60-unit chain with outlets in Los Angeles, New York and Europe. It hails from Belgium, but founder Alain Coumont amassed his burns and knife scars studying under French chefs. His specialties include café au lait served French-style, in bowls, as well as jams and other condiments available for retail sale.

Of course, European-born bakery cafes aren’t exactly new to the U.S. The Il Forniao chain was patterned after an Italian outlet. Cosi took its name and approach from a French place, and Le Madelaine has been around since pre-Freedom Fries days. Interestingly, with American ill will toward France running high because of differences over the Iraq invasion, the chain has tried to position itself as an American-owned operation with a French theme.