Tuesday, January 31, 2006

A two-sake week

Consider the emotional seesawing this week has held for executives of P.F. Chang’s, a company whose signature brand is second only to The Cheesecake Factory in average restaurant volumes, at least among the big chains. Yesterday brings word that arch-rival Outback Steakhouse was bailing on its Asian dinnerhouse venture, Paul Lee’s Chinese Kitchen, a would-be competitor of Chang's. Outback announced that it would sell the four restaurants in existence to the Paul Lee referenced in the title, Paul Fleming, who, ironically, is also the P.F. in P.F. Chang’s.

Fleming will presumably still operate those outlets, and may even open more. But Outback’s resources will no longer be stoking the growth.

It must be particularly sweet for Chang’s since Fleming brought the concept to them first. But they didn’t like the notion of building a concept that sported a lower average ticket than Chang’s. It requires a plot that can be just as expensive as the setting for a Chang's, yet generates less per sale, making Cheesecake-like volume a necessity for success. In the prevailing mindset of the big casual-dining companies, that’s not the way to go. So Chang’s decided instead to develop a high-end Japanese concept.

The announcement must’ve been delicious indeed. But the conga line likely ground to a halt with today’s blockbuster announcement. Buckingham Research restaurant analyst Mark Kalinowski, a keen market-watcher, alerted clients today that he’d learned of the start-up of another Asian dinnerhouse chain. This time, by Cheesecake Factory. Although Mark couldn’t provide many details, he recounted that his source had said the venture would be an Asian version of Cheesecake Factory. And Cheesecake, in case you haven’t noticed, is successful. Very, very successful, with a good-sized ticket and stunning levels of traffic, particularly repeat business.

For Chang’s executives, it must have been similar to a cop letting you off with just a warning for speeding, then noticing as he’s walking away that you're not wearing your seat belt.

But don’t feel too bad for them. Their Chang's is lightyears in front of any challenger at this point, and they’ve done what Outback decided it couldn’t, or at least shouldn’t. Outback is no slouch, so perhaps Cheesecake Factory will find an Asian concept to be tougher to refine and launch than it anticipates. After all, Darden Restaurants, another casual titan, saw its China Coast concept lose its feng shui almost as soon as the first basket of Chinese breadrolls were served (I kid you not on that; the cheese-bun-like dough balls, presented as soon as you sat down, were supposed to make the Chinese experience less alien to Middle America. Ditto for the Asian-sounding-but-New-York-style cheesecake that was offered for dessert.)

And, of course, that’s if Cheesecake indeed intends to enter the field. Howard Gordon, the company’s senior vice president of business development and marketing, told Southern California editor Lisa Jennings this afternoon that no lease or letter of intent has been signed for a prototype of an Asian concept. Indeed, he balked at confirming the test of an Asian venture altogether.

Then again, nor did he deny it.

Saturday, January 28, 2006

Breaking casinos' bank

The restaurant industry has never wielded more lobbying clout than it flexes at present. Yet in the intensifying struggle over smoking bans, the trade looks like Woody Allen trying to body-slam Mike Tyson. The fight against smoking laws is no longer a head-on attempt to beat back the prohibitions; that doesn’t work anymore. The strategy today is to keep all leisure-dependent businesses subject to the same clean-air mandates, so none has an advantage in competing for smokers’ dollars. And in that contest, the industry is having its lunch eaten by the gaming business.

A number of areas that snuffed out smoking were unable to extend the bans to Native American-run casinos because the gaming parlors were technically on the ground of a separate sovereign nation, and hence exempt from state law. Okay. Not good, but at least there was a rationale to the exemptions.

Not so in New Jersey, where some Atlantic City casinos will be exempt from a statewide smoking ban when it takes effect April 15—fittingly, Tax Day. The stated reason is that gamblers smoke; indeed, lawmakers apparently decided, many of those game-of-chance fanatics would rather smoke than gamble, so if they can’t do the former, you can forget about the latter. The casinos’ revenues, now topping $5 billion a year, could be eroded.

And what about restaurant patrons who might scramble some eggs at home rather than have a breakfast and a cigarette at the local diner? Or the yuppie who spends so much time outside smoking that he orders a drink or two less at the bar? Or the party that hurries through dinner, foregoing dessert or a second bottle of wine, because some members want to light up on the drive home? Aren’t there financial implications to thwarting those smokers, too?

The real reason is the financial might of gaming. It delivers more state revenues—some $400 million annually—than Jersey could generate this side of a Soprano crew operation. And what’s left after the gaming taxes are channeled to the treasury—what the casino operators get to keep—funds an obviously effective lobbying effort for the bet-meisters. The pool of funds is large enough to have a horse dive into it on the Atlantic City pier.

And now the same thing is happening in Colorado. State representative Jim Sullivan, a Republican, has said he can’t support a proposal to ban smoking in all workplaces unless an exemption is granted to the state’s 19 casinos. His reasoning: “Gamblers are smokers," he was quoted in Denver’s Rocky Mountain News as saying.

Last time we checked, so are some restaurant patrons. If workplace smoking bans are going to fair, and effective, the field of coverage has to be leveled. Because this is one of the instances where the restaurant industry can easily be misspent, it has to tout its own numbers—the headcount of employees (translation: voters) who will be affected. The trade lost in Jersey, but it needs to regroup and keep the situation there an exception, not the rule.

Thursday, January 26, 2006

Need a worker? Hire a family.

McDonald’s has often trod down paths that peers overlooked in their quests for employees. It was the first major chain to reach out systematically for elderly recruits, for instance. Ditto for persons with mental disabilities.

But few of those efforts were as startling in their ambition as the recruitment technique Big Mac is trying right now in Great Britain. According to news reports from across the pond, McDonald’s units in six U.K. markets are offering workers a Family Contract, whereby immediate clan members rather than an individual is awarded a job. Members of a family can share a lone job, splitting the hours amongst themselves, or trade off days, without having to alert management. So that if Junior can’t work from 5 to 9 on Wednesday, perhaps Sis could. Or Mom could work from 5 to 6, Grandpa could pitch in from 6 to 8:30, and Elrod, Junior’s 16-year-old little brother, could handle the last half hour. Prior approval isn’t necessary, and McDonald’s is willing to pay each family member in accordance with the hours they log.

It’s a staggeringly bold idea, and the advantages are evident. Suddenly, a job at McDonald’s becomes a family’s side business. They participate as a group in generating additional funds for all. It’s in effect a mutual project, like having a home store, without all of the aggravations.

But the limitations are also obvious. Five potential recruits in effect become one. You also have to assume they can work the hour and day splits out themselves. And how do you handle differences in abilities or commitment? If Elrod’s a dream employee, but Junior’s a pebble in the manager’s shoe, does the youngster get a pay raise, while Junior’s put on probation? Can you fire one family member, but keep the rest of the crew employed?

McDonald’s, in its usual painstaking care on such matters, probably has scenarios already drafted to handle such matters. But it’ll be interesting to see how they fare in real-life tests.

Tuesday, January 24, 2006

'And now for tonight's title bout...'

Another day, another restaurant company pressed by shareholders to restructure.

Or so reveals the extraordinary statement that Cracker Barrel’s parent issued late today, after the market had closed. CBRL Group disclosed that it’s in the first stages of “reviewing potential capital structure initiatives,” a lawyer’s way of saying a For Sale sign could be hung on at least some part of the company, if not the whole store. That clunker of a term could cover almost anything. A sale to a private equity company. A stock tender deal to go private. A merger with another complementary restaurant concern. Perhaps doing nothing at all.

Or, given the clues any seasoned press-release decoder could spot, the possible sale of Cracker Barrel’s sister chain, 156-unit Logan’s Roadhouse.

That’s my bet, given the reason CBRL cited for the announcement. It explained that “a significant shareholder” had come forward with a “suggestion” that the company consider some share-price-boosting “initiatives.” In the statement, CBRL did not divulge what those nudges were, but it acknowledged that some of the ideas had also been put forth by companies hoping to land the job of advising the restaurant operator during its consideration of the aforementioned “potential capital structure initiatives.” In other words, the heavy-duty suits who could hold the For Sale sign while CBRL execs hammered it into part of their spread.

“Typically we do not comment on our strategic planning initiatives before they are implemented,” said CBRL CEO Michael Woodhouse, offering what any reporter covering Cracker Barrel would certify as a monumental understatement. “But we have seen other companies being distracted by opportunistic or impatient investors who publicly pressure those companies to change their strategic direction.”

Unless you’ve just thawed out from a late-November glacier-exploration mishap, you’ll know he’s referring to the activist shareholders who’ve been recently complicating the lives of McDonald’s and Wendy’s officials. One, Pershing Square Capital, has successfully lobbied Wendy’s to earmark a portion of its Tim Horton’s donut chain for an IPO. Similarly, McDonald’s is selling its Chipotle chain, though it’s drawing the line at a partial divestiture of its company-operated stores, as Pershing has also demanded.

“Rather than be subjected to the distraction of second-guessing in a public forum, we elected to disclose our process, which was already underway,” said Woodhouse. The company “will comment on which, If any, of those we plan to implement when the review is complete.”

A review of SEC documents filed to date did not disclose any mention of Pershing or the other restaurant-focused activist shareholder that’s been in the news, Nelson Peltz’s Trian Group. CBRL’s three largest institutional shareholders were listed as Wellington Management Capital LLP, Mellon Financial Corp. and Allianz Global Investors of America LP.

No CBRL sharedholder has yet said anything publicly about the company’s statement. But in this age when shareholder-management skirmishes are often waged in public, that might soon change.

Monday, January 23, 2006

No bullseye on this one

Gun advocates and libertarians are usually fellow travelers. So it was surprising to learn that the Tennessee Firearms Association, a group devoted to removing legal fetters, is trying to ramrod a new law through the statehouse. Even more surprising is the aim of the initiative, its source notwithstanding. The measure would permit someone packing a pistol to plop down on the barstool of a Chili’s or an Outback and swap opinions on sports, politics or other barroom flashpoints with any hard-drinking folks to the left or right

It’s a recipe for disaster, as the Tennessee Sheriffs’ Association has professed. Yet the TFA asserts that its measure would spare Tennesseans from the horrifying situation of being arrested for an innocent error. The law allows gun bearers with a valid permit to tote their Glocks into a restaurant. But they’re banned by law from having a gun in their possession if the place serves liquor. And, the group stresses, how are you going to know whether or not an establishment serves liquior until you're inside it?

Oh, yeah, you’d have to be a regular Carnak to make that call beforehand. Yet that’s the strongest argument the proposal’s advocates have mustered.

Nonetheless, a similar measure was approved last year by the Tennessee Senate in a 29-3 vote, according to the Chattanooga Times Free Press . The same story quotes a TFA official as saying the group has lined up 60 co-sponsors of this year’s measure in the House. In short, it apparently has a lot of support.

I hope they’ve miscounted. Advocates point out that the law would prevent gun bearers from drinking in such an establishment. So what's the danger?

Well, that's not exactly a foolproof safeguard; think of how many brawls you've witnessed, as patron or proprietor, when only one person was snockered. But that’s not enough of a safeguard. Alcohol and guns just don’t mix, as the industry learns every Friday and Saturday night. Tempers are often the flashpoint, not how many bourbons someone has downed.

If safety's really the goal of the pro-arms contingent, they should drop their support of this one.

Friday, January 20, 2006

Consolation price

With the recent wave of private-equity deals, another sort of financial gambit is going virtually unrecognized. Let’s call it “passive accretion.” Or, in non-financial-eze, “how to make millions without really buying.”

Case in point: How the fortunes of the investor groups Newcastle and Steel Partners have changed since they jointly tried to bag Fox & Hounds, the 84-unit pub operator. At the time, Fox & Hounds had already endorsed a stock-tender offer from Levine Leichtman for $14 a share. Newcastle and Steel, both shareholders in Fox & Hound, formed a company called F&H Acquisition and bid $14.75, then, inexplicably, lowered it to $14.50.

Levine countered with a higher offer. F&H, in a move that defied reason, merely matched it.

At the time, lots of onlookers scratched their heads in bewilderment. In an auction, why merely match what the other guy is offering? Then F&H raised its bid again, by 25 cents. An apparent lapse seemed to be nothing more than that.

Levine had to hike its offer yet again, to $16. And Fox & Hounds accepted the offer yet again. As of this moment, it appears that Levine will end up with the company. Of course, it’ll have to pick up the administrative, transactional and legal expenses involved in buying all of the chain’s stock. But it could build up the value of the company and divest it at a later date, for a big kill.

Contrast that with the immediate benefits afforded Newcastle and Steel. If they sold their collective holdings today to Levine, they’d take in some $20 million more for their 10 million shares than they would have if Levine’s initial bid had gone unchallenged.

And that’s if they sold today. If Levine wants to buy all of Fox & Hound’s shares outstanding, and Newcastle and Steel control 10 million shares, or roughly 8.3% of the stock, they presumably have some bargaining flex.

In hindsight, F&H Acquisition may have matched rather than topped one of Levine’s intermediary bids to send shareholders a signal: Stay tuned. Don’t sell out. Maybe we’ll be back with a better offer.

Even after Levine’s $16-a-share deal was accepted, shares were trading above that level, suggesting that some stockholders expect a sweetened offer from F&H. Maybe, maybe not. In any case, the more the price creeps, the more pressure Levine will feel to raise its bid, and the more Newcastle and Steel stand to make.

Perception or anticipation could similarly prove a boon to Pershing Square Capital Management, the hedge fund that wants McDonald’s to spin off a share of its company-run restaurants. On Wednesday, when managing partner Bill Ackman revealed a new plan for the restructuring, he projected that the proposal could boost McDonald’s share price to $50, a 51% pole-vault from the current level.

Pershing controls 4.5% of McDonald’s stock. Whether or not its plan is ever enacted or even accepted, the fund would benefit handsomely if a critical mass of investors merely believed it might be.

Unfortunately, that expectation hasn’t yet materialized; McDonald’s shares have increased by a few cents, not by double digits.

Wednesday, January 18, 2006

Spoiling the pork barrel

Regular followers of NRN's blogs will know we've created a rogue's gallery of sorts to commemorate politicians' extraordinary contribution to the business. Unfortunately, the extent of that financial support has emerged in various investigations and court trials, where restaurant meals were cited as a means for lobbyists or influence-buyers to pay off the pols.

Our Top Customer remains Duke Cunningham, the former U.S. Representative from California who confessed to taking bribes, including some $10,000 in restaurant meals and lodging, the latter clearly not of the Motel 6 sort. But a dark horse is posing a challenge. Earlier this week, prosecutors in the trial of former Illinois governor George Ryan cited the politician’s use of $7,500 in campaign contributions at a Florida restaurant called Renato’s. There are rules about the diversion of electioneering funds for personal expenses. But Ryan’s lawyers have argued that there was a legitimate political objective to $4,500 in outlays at the Loew’s Vistana Canyon Resort in Arizona, or spending $5,200 at the Fountainbleau in Miami. Illinois business, to be sure.

And the trial still has a long way to go.

Of course, there is a very serious business side to this, as well as the galling defiance of morals and ethics. The federal government and any number of states are now looking at curbs on lobbyists’ expenditures for meals, which could add up to a significant sum in state capitals from coast to coast. It’s a shame that restaurateurs are likely to be hurt twice by some politicians’ excess—-first as voters, then as business people.

Monday, January 16, 2006

Stretch suits

Ripley’s could be put out of business by the stories that surface online about lawsuits, especially the ones involving restaurants. Consider the past month’s developments:

In Camden, S.C., the survivors of a man who died from complications of salmonella poisoning sued the restaurant where he was believed to have consumed the pathogen. They also sued the manufacturer of the oven in which the contaminated food, a turkey, was roasted, alleging that it was responsible for the bird being undercooked. No word yet on any action being taken against a thermometer company.

In 2003, an employee fired by an Outback in Beaumont, TX, returned to the restaurant after it closed and shot two managers, one of whom was pregnant, and a co-owner who was taking inventory with them. All three died. Outback offered a $100,000 reward, which led to the arrest of the former employee and an accomplice, both of whom are facing extended prison terms. A few weeks ago, the managers’ families sued the restaurant, alleging it was responsible for the wrongful deaths.

But those situations are nothing compared with what the tabloids in London have dubbed the Flying Prawn Case. The Benihana teppanyaki steakhouse chain is being sued for $10 million for allegedly causing a man’s death with a flung shrimp. The 43-year-old deceased businessman had taken his son to the chain’s outlet in a suburb of New York City for the boy’s birthday. The chef at their grill-top table went into his bedazzling knife display as he cooked their meal. Part of that schtick, according to the plaintiffs, was throwing pieces of hot shrimp to the patrons, who are supposed to catch the morsels in their mouths. The knifesman-cum-shrimp-tosser was asked to cut it out, they alleged. Yet, they contend, the fish kept flying. The deceased seriously hurt his neck trying to dodge the flung food. He required surgery afterward, and ultimately died from an infection, which the family attributed to the operation.

Press reports quote Benihana officials as acknowledging that their chefs would indeed toss shrimp to patrons, a trick they alleged was forced on them by a Jackie Chan movie in which the martial-arts star does exactly that. Patrons begged Benihana’s chefs to do likewise, and they apparently obliged, though that bit of showmanship has since been discontinued, the chain executives were quoted as saying.

To the best of our knowledge, no lawsuits have been filed against Chan.

I don’t mean to make light of the very real suffering that was inflicted upon that or the other victims’ families. Each is indeed a tragedy, for which, in some instances, responsible parties should pay. I just wish the courts weren’t turned into some type of Lotto system, where the scope of who should pay is constantly being tested. There’s an common-sense element to responsibility that seems to get trampled under lawyers’ feet.

Wednesday, January 11, 2006

Outback's idea lab refines another

Any initiative from Outback is going to be scrutinized like a Playboy magazine in the hands of a teenager. But the company’s agreement to open an Italian market inside a Publix supermarket is in a we-interrupt-this-broadcast class.

It’s not the development per se that’s so intriguing, though it’s hardly news-as-usual. As Nation’s Restaurant News reported online yesterday, Outback is adapting its Carrabbba’s Italian Grill concept to a retail setting. The test facility slated for a Publix in Sarasota, FL, will feature a wood-burning pizza oven and grill. Shoppers can choose from an array of “hand-prepared recipes” that change daily, according to promotional materials. Presumably the choices will be marketed as ready-to-eat dinners that patrons can bring home to their families.

And that’s why the experiment will be watched as avidly as a Super Bowl. Today, with many of the casual chains offering near-seamless takeout services, we forget how difficult it was for the full-service sector to get to that point. During the late 1980s and early ‘90s, sit-down brands tried a variety of ways to tap the off-premise market, from third-party delivery systems, to offering takeout at their bars, to setting up sections inside their waiting areas specifically for pick-up. Yet the set-ups were typically clunky, inefficient, and an afterthought to what was happening in the dining room. The attempts just didn’t deliver.

Then Outback launched its Curbside Takeaway service. It spent big bucks to retrofit stores—really re-engineering a way to sell take-home meals, instead of merely trying to bolt that sales effort onto the core business. It worked, beautifully.

Pause the replay of the earlier failed efforts to focus on a concurrent trend, exemplified by the likes of Eatzi’s, Boston Market, Cracker Barrel’s Corner Market, and McDonald’s Hearth Express. There was a pronounced sense—an intuition still with us—that consumers would embrace a retail-foodservice hybrid that enabled them to carry home restaurant-quality fare for a reasonably priced dinner in front of the TV. The list of well-capitalized but unsuccessful attempts to fill that need is longer than the phone books of decent-sized cities. Home-meal replacement became the industry’s Edsel.

Now comes the attempt by Outback to crack the code. Will the company nail it again? Will the new endeavor be the winning execution that eluded so many hopefuls, the way Takeaway delivered on the promise of full-service takeout?

The Carrabba’s Italian Market opens in 2007.

Monday, January 9, 2006

Something suspicious at another Starbucks?

By now you’ve probably heard that a homemade bomb was found in a San Francisco Starbucks on Monday afternoon and defused by the police. What you’ve almost certainly not encountered was a report on a blog called chrisdeclerico.com, detailing how a package similarly deemed suspicious was found outside of a midtown-New York Starbucks in late October and detonated to render it harmless. The Oct. 25 entry recounts how the moderator, an employee in a midtown office not far from Nation’s Restaurant News’ headquarters, arrived at work to find an area near Grand Central Station cordoned off by the police. Later, Chris Declerico explained, he heard an explosion, and someone from his building’s staff acknowledged via intercom that something had been blown up by the authorities to avert any potential danger.

Other posters corroborated some elements of Declerico’s account.

The blogosphere has already given rise to unfounded speculation that the San Francisco bomb might have been an act of terrorism. We hardly want to encourage that kind of runaway fear-mongering. So I’ll cite what Declerico concluded about his bomb-at-Starbucks experience:

“I’ll assume, for now, that the explosives were that of the bomb squad and not the package itself. I do not believe ‘a bomb went off outside Starbucks’. I think ‘a package of probably nothing was blown up inside a giant metal container outside Starbucks’ is more accurate.”

San Francisco is believed to be the only major city in the nation with a partial ban on "formula" or "format" businesses, the new euphemism used by anti-chain zealots to hold the tide against the likes of McDonald's, Red Lobster and Starbucks. The police have yet to offer any information on possible motives.

Sunday, January 8, 2006

Truth stranger than fiction

If movie producers were looking for an incredible story propelled by characters who’ve not always stayed on this side of the law, they’d need look no further than Fog Cutter Capital Group, owner of the Fat Burger quickservice chain.

The company, despite its relative small size, generated plenty of ink last year when it revealed that it paid CEO Andrew Wiederhorn $6.6 million in compensation for 2004. Included, according to securities filings, were a seven-figure bonus and a $2 million payment termed a relocation fee. Wiederhorn was indeed out of the home office for 18 months, including five that year—serving a prison sentence. The federal government had convicted him of violating pension laws while working for a prior employer, an investment company that dealt with a figure of some renown in Russia’s “Sopranos”-like economy. Wiederhorn and Fog Cutter maintained that his transgressions were technical, not criminal in their intent—sort of like making an error on a tax return, but being held accountable because you’ve signed it.

Whatever the rights and wrongs might have been, the outlay to Wiederhorn left Fog Cutter $3.9 million in the red.

Nevertheless, Wiederhorn, who surrendered his CEO duties while serving out his year-and-a-half sentence, resumed the post last October after his societal debt had been paid. Fog Cutter unabashedly proclaimed his reinstatement and pledged to focus on development of Fat Burger, a chain with a near-cult following on the West Coast.

But the company was back in the news on Friday, in a development that sounds scripted by a Hollywood noir specialist. The concern disclosed that a lawsuit brought against Wiederhorn and his fellow directors by an outraged investor named Jeff Allan McCoon had been dismissed by a court, in essence because the plaintiff is a stinker. Court documents, as cited by Fog Cutter, dismissed McCoon’s charges because his "criminal record, probationary status, pending arraignment on new criminal charges, financial difficulties, and contempt of court disqualify him as a credible and trustworthy person."

Yet McCoon, who’s been party to a number of court cases in recent years, had the scruples to object to Wiederhorn’s $2 million relocation payment—which happened to be how much he was fined as part of his criminal penalties.

“This,” Wiederhorn said in a statement, “is a gratifying decision.”

To borrow from the great Dave Barry, folks, we couldn’t make this stuff up.

eBay 101

The restaurant industry could have passed as a five-bout fight card last week. We had franchisor squaring off with franchisee (Krispy Kreme yanking back licensing rights from its biggest operator, Great Circle), big chains continuing to parry the demands of big shareholders (Wendy’s defending its divestiture plan against the hurry-up insistence of hedge funds) and even a bare-knuckled family feud (the clan that owns In ‘N Out Burgers squabbling in court about who should run the cult favorite).

And then there was the War of the Suits, a real puzzler for the news room of Nation’s Restaurant News: A last-minute attempt to snatch control of Fox & Hounds Restaurant Group from the private equity firm that has twice agreed to buy it. That, in these fractious times, would not have been so extraordinary if it wasn’t for a single detail. After the equity company tendered the bid that was accepted by Fox & Hounds’ management, the rival suitor countered with another offer of its own. Yet it was a carbon copy of what the equity firm, Levine Leichtman, had already agreed to pay. The same per-share price, to be paid in a stock buy-up deal, with no advantages or sweeteners spelled out in the announcement. Which, by the way, came after Levine had commenced its open-market purchase of shares.

The party that placed the counter-bid, a consortium of Fox & Hound shareholders Newcastle Partners and Steel Partners, provided no explanation for trying to best Levine Leichtman with an identical offer. Our attempts to deduce the rationale arrived at no conclusions other than a strong conviction that Newcastle and Steel should stay away from eBay.

But there were some intriguing theories about why they proceeded as they did. Is this a way of serving notice to Levine Leichtman that they don’t intend to sell their 8-plus-percent stake in Fox & Hounds for $15.50 a share? Are they giving shareholders in effect a referendum on selling to an equity firm?

Admittedly, there could be financial details yet to emerge that provide the true motivation. But in any case, there could be more rounds to come in this title contest.

Thursday, January 5, 2006

Hear ye, hear ye

Not long ago, getting assigned to cover a restaurant lawsuit was akin to discovering Hertz had upgraded you from a Neon to a Crossfire, without providing a drop of gas. All you could do was circle and gawk, and pretend you were actually getting somewhere. In the pre-Internet days, if the case was being heard in Sacramento, or Dayton, or Tallahassee, or almost anywhere you didn’t happen to be, you were limited to following the glacially slow proceedings through local media, and going through the pretense of talking to the two sides’ lawyers. No matter what they said during an interview, the message was the same: “Tut-tut, mere plebian. We, being of lawyerly intelligence, know how laughable our opponent’s argument is. And you’d see it, too, if you had the cerebral spark of a daft mallard.”

Fast-forward to the case underway right now in Las Angeles, where 62-year-old Louise Turner, a customer of a Shanghai Red’s restaurant in Marina Del Rey, CA, is suing operator Specialty Restaurant Corp. for negligence. Turner burned herself seriously when, she alleges, she felt into an open-air fire pit maintained by the establishment. Her lawyers commenced their opening arguments at midday in the Superior Court.

I know all of this because the law firm representing her issued a detailed press release on today’s proceedings. The statement was broken down into Who, What, When and Where sections, just like the releases we routinely receive about ribbon cuttings at ice cream stores, or the presentation of an oversized check by a company to a local charity. It’s a cliché that we’ve become a more litigious society. What seems to have gone unnoticed is how those legal tussles are being so deftly pushed into the court of public opinion.

In this instance, the firm of Greene Broillet & Wheeler alerted us (and several hundred thousand other journalists) that the case was even moving to trail. Tomorrow we’ll likely get more highlights, as we would if we were covering a Presidential campaign.

It may be an extreme example of flag waving to grab publicity for a firm and perhaps garner sympathy for a plaintiff suing a restaurant. But it’s hardly rare. Law firms, forbidden to advertise until about two decades ago, are now wielding publicity like the pros.

And that’s not good for restaurant-plaintiffs. Specialty, perhaps best known for its heavily combat-themed restaurants near airports, has yet to counter in kind as best as we can tell. And what can it say? “We’re sorry that Turner fell into a pit and was horribly burned, but it was her own fault”? It doesn’t exactly play well from a PR standpoint.

But I’d better shut up, before I see something on the wire saying, “Opening arguments against Romeo begin tomorrow in the Superior Court of Mineola…”

Wednesday, January 4, 2006

Romano eyes vita-foods

Phil Romano presaged the fast-casual trend, the embrace of Italian restaurants by mainstream America, and the food infatuation that gave rise to high-end markets like Whole Foods and Fresh Fields. What does he envision as the next big thing? Vitamin-fortified restaurant foods, according to a story carried yesterday by Investor’s Business Daily .

The investors’ tip sheet quoted Romano as saying, “we’re investigating how to add vitamins to our food in ways that would not change the taste.”

So-called forti-foods—also known as pharma-foods or or nutri-ceuticals—have long been cited as an idea waiting to catch hold with health-conscious consumers. The issue has always been the trade-off in quality, taste or texture. The emphasis was on healthfulness, to the disregard of pleasure or enjoyment.

Romano’s comments suggest he’s exploring preparations that would be relished as is, but have the added benefit of being more healthful. But that’s been a tough balance to strike.

Romano’s brainchildren include Cozymel’s, Eatzi’s, Fuddruckers, and his namesake Romano’s Macaroni Grill.