Thursday, January 24, 2008

Not even a weigh-in?

Common sense stepped between Pennsylvania restaurateur Jim Mitchell and Allegheny County executive Dan Onorato before they could settle the fate of Pittsburgh’s 10-percent drink tax in an old fashioned. As mentioned in an earlier posting, Mitchell had challenged Onorato to step into a boxing ring and slug out their differences over the levy, which has infuriated local restaurateurs since the county chief adopted it as a cause last year. Mitchell proposed that the tax would be scrapped (it went into effect Jan. 1despite a court challenge) if he won the bout. If Onorato prevailed, Mitchell would drop a lawsuit challenging the county’s plan to ban smoking. And the fisticuffs would be staged as part of a fundraiser, so their blood would be spilled for a greater good.

It’s the type of thing you’d expect to see in a Jimmy Stewart movie. But the black-and-white flashback was not to be. After meeting for cigars and a few beers at Mitchell’s namesake establishment, Onorato reportedly countered with an offer to work at the place for few hours, with his wages and tips going to charity, and they’d forget about all that dodging, weaving and punching.

Onorato also offered to meet with Mitchell and representatives of the Pennsylvania Restaurant Association to talk about the drink tax, the Pittsburgh Tribune-Review reported.

The story didn’t indicate if beer or cigars would be involved in that next sit-down. But it did paraphrase Mitchell as saying he hoped the give-and-take would foster a sense of cooperation between the warring parties. And that he’s planning to fight Ted Kennedy over the next minimum-wage hike. Okay, I made that part up. But wait until menu labeling is proposed for Pennsylvania. All the restaurateurs will fancy themselves the next Rocky.

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Tuesday, January 22, 2008

Deja vu for Cocotas?

After making a name for himself in the pet-hotel business, Charlie Cocotas is running a restaurant chain again. The former Church’s and TCBY chief, who made millions when onetime-charge Boston Chicken was sold to the public, is serving as president and chief operating officer of UFood Grill, the fast-casual health food start-up led by George Naddaff.

Both are hoping it’s déjà vu all over again. Naddaff brought Cocotas into Boston Chicken when the take-out chain was expanding beyond its Boston base, where it had a cult following. Naddaff would later engineer a sale of the company to some former Blockbuster Video execs, who subsequently led what was then the most successful IPO that Wall Street had ever seen. The New York Times covered it on page one—of the main news section.

Cocotas cashed in his equity. In a later interview, he wouldn’t tell me how much he made, but he acknowledged that it was considerable.

He left the trade at one point to start a franchise chain of high-end pet boarding facilities. The uniqueness of the endeavor drew coverage in the Wall Street Journal.

Strangely, particularly for a publicity hound like Naddaff, Cocotas’ involvement with UFood franchisor UFood Restaurant Group Inc. was revealed with nary a drum roll. Boston-based UFood mentioned it in a press release touting the addition of Burger King veteran Mark Giresi to the company’s board. Giresi’s other charges have included Victoria Secret.

He and Cocotas are the latest in a long, long, long string of restaurant-industry executives who have proven you only take a break from the restaurant industry, not a leave.

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A boxed solution to taxes

He-men, take a celebratory body-slam. Settling business disputes with your fists may not be as outmoded as you thought. Restaurateur Jim Mitchell, for instance, wants to free Pittsburgh’s restaurants of a much-loathed 10-percent local drink tax by going mano a mano with Allegheny County executive Dan Onorato while the community cheers them on.

According to an Associated Press report, Mitchell is willing to climb into the ring with Onorato at a charity boxing event. If Mitchell wins, Onorato drops the drink tax, which was levied Jan. 1 to fund transportation initiatives. If Onorato has his gloved hand raised by officials at the end of the match, Mitchell will drop his opposition to a countywide smoking ban, which he challenged last May in a lawsuit.

The AP reported that Onorato plans to stop by Mitchell’s Restaurant, Bar & Banquet Center on Friday for a cigar, a beer and a sit-down. If they added a poker game, men everywhere would feel a surge in The Force.

So far, there’ve been no sightings of Don King.

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Thursday, January 17, 2008

Howard Schultz's cup of tea

Now that the steam has cleared from Starbucks’ recent changes, a few conclusions can be drawn about Howard Schultz: The Second Cupping. For one thing, memo writing may be entering its heyday. The Brooklyn native’s reliance on the TO:/FROM: format is the stuff of “Dilbert.” Within hours of replacing Jim Donald as top bean, Schultz was posting notes to customers, employees and investors via Starbucks’ website. The messages echoed the themes he’d sounded in the Jerry Maguire-esque memo that was sent to management last February, urging the chain’s handlers to re-find their souls and save the specialness of Starbucks. The minute it was leaked to the world via, Donald should’ve started punching up his resume.

If Donald is smart, he’ll appreciate what Schultz was demonstrating with that fit of keyboard pounding last week. Schultz promised each constituency a basket of changes that amounted to reconnecting with each. The adjustments he previewed—in essence, paying less attention to bean counters to focus more on the beans—were reassurances that Starbucks hears their gripes. His high-communication style put some steel in the promise of re-forging a strong relationship, the foundation of what Schultz reverently calls the Starbucks Experience.

Contrast that stance with Donald’s approach. If his public appearances and interaction with journalists were accurate lenses, he absorbed his candor and interactive skills from Richard Nixon. A fellow veteran of the media said her interview with Donald was the most boring one in her considerably long career. The time I saw him address an industry group, he came across as a suit in casual clothing, carefully following a Communications Department script to profess his daring New Age convictions.

I’ve also had the privilege of hearing Schultz speak, some 10 or 12 years ago by now. A side effect of being a business journalist is attending conferences where the celebrity draw could be anyone from Gerald Ford to Dennis Miller to Dolly Parton. None of them came close to Schultz in inspirational quality. Because keynoters of that wattage seldom deliver news fodder, their speeches are usually the times when you check phone messages or raid the break tables outside the lecture hall. Indeed, I’m not sure I would have hung around to hear Schultz if it hadn’t been for the draw of Starbucks coffee being available while he spoke.

But once he started explaining how his father’s miserable experiences as a diaper-service driver had shaped his strategy for Starbucks, there was no leaving the ballroom, by me or anyone else. He spoke passionately about the need to balance business needs against doing the right thing for employees and cultivating a culture of which you can be proud—the same themes he’d thump in the February memo.

If it was an act, as contrived as any performance on the high-ticket speakers’ circuit, it was of Daniel Day Lewis quality. And any skepticism was completely dashed when I saw Schultz’s handlers lead him down the stage and straight toward the doorway next to which I was standing. I stepped out, stuck out my hand, and blurted, “That was great.” Then I noticed he was sweating a bit, and seemed a little quivery. He stopped dead.

“Do you really think it was alright? I sounded okay? I was kind of nervous,” he rattled.

I gaped at him, wondering for a second, Is this really him? Did I stop the wrong guy, maybe a speaker from an earlier session? Nope, definitely Howard Schultz.

“Yeah, you were great. I really mean it,” I assured him.

He broke into a huge smile, vigorously shook my hand, said, “Thanks. Thanks a lot,” and was yanked away by his handlers.

I went from there to a book store to look for a copy of his autobiography.

Persons who have worked for him have since advised me to remember that he started as a salesman and is a businessman before all else. Take him and his change-the-world manifesto with a dash of skepticism, they advised.

But, as they readily acknowledged, demythification doesn’t detract from his unique approach to running a business, nor from the specialness of Starbucks’ culture during his first go-round as CEO. Even his handling of last week’s coup was a marked departure from the usual deposing of a big-company chief. With the blandness fostered by Sarbanes-Oxley and the threat of shareholder lawsuits, you can only hope he indeed proves to be the Harry Potter of the restaurant business.

But just to make sure, I think I may head back to that book store. Maybe I can buy him an inspirational book about Steve Jobs.

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Wednesday, January 16, 2008

Farewell to a Famous Star

Last week the world lost an historic figure, a man whose celebrated achievement awed both those within his field and the millions who preferred to leave moon shots of that sort to the brave hearts who push on despite chilling risk. The heights he scaled would forever command wonder and respect, and, though thousands would follow in his footsteps, he would forever stand out for being at the forefront. Oh, and by the way: Edmund Hillary died.

I was speaking of Carl Karcher, the legendary entrepreneur who gave his name to the Carl’s Jr. regional burger chain. Those within the business know him as a character right out of Horatio Algier, a John Wayne-sized self-starter who borrowed $311 against his Plymouth to buy a hotdog cart and parlayed it into a fast-food empire. Those who’ve been in the trade for awhile would remember him as the basis for a cartoon Carl who appeared in his namesake chain’s commercials, holding the hand of the brand’s star-shaped mascot. It didn’t seem like such a whimsical take-off to those who’d see him at industry conferences, warmly responding to anyone who wanted to meet this industry legend, then slipping each of them—be it a CEO or a server working the banquet—a coupon for a free Famous Star burger.

But those who’ve only been on the customer’s side of a quick-service counter may not realize that Karcher was an American pioneer, on par with such business giants and restaurant-industry founding fathers as J. Willard Marriott, Ray Kroc, Col. Sanders, Norman Brinker or Bob Wian, a.k.a. the Bob of Bob’s Big Boy. His death late last week, just six days shy of his 91st birthday, was like the loss of Walt Disney or Babe Ruth—something far more than just the ending of an extraordinary life. He embodied a time and a dynamic that still seem to amaze and inspire us.

He was a giant of a man, literally and figuratively. Fortunately, his legacy is in proportion.

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Tuesday, January 8, 2008

'You have to be this old to eat here'

I’m trying to get through to Barack Obama’s people because clearly there’s a mistake in his biographical info. It says he’s 46 years old. If that were true, a presidential candidate would be younger than I am, and that can’t be. I haven’t been so outraged since AARP sent me a Yes, You’re Eligible! notice. In large type, no less.

Of course, being young isn’t what it once was. Sure, those of a tender age can now download all the porn they want via the internet. But it’s not all Guitar Hero and skateboarding, dude. How about having to get up in the morning? Or being forced to share the Wii with siblings—and sometimes even Mom or Dad?

Then there’s the situation that came to light last week in Florida’s House of Mouse. Disney, a company that generates billions of dollars from kids, reportedly decided that could no longer tolerate them in one of its fine-dining restaurants, Victoria & Albert’s at the Grand Floridian Resort & Spa. Persons under age 10 will no longer be served. It makes you wonder if the place borrowed a convention from its sister theme park and put a big sign and yardstick outside: “You must be at least this tall to go into this restaurant.”

The ban has drawn a mixed reaction from parents, if recent reports on the blogosphere aren’t completely goofy. Some posting parents said they welcome the option of enjoying a meal where they don’t have to cut up someone’s meat or pretend the plane is entering the hangar. But others wondered what parents are supposed to do with the mini-people while Mom and Dad enjoy the only Disney restaurant to earn a five-diamond rating from Triple A.

According to an Associated Press story, it may not be that much of an issue. With prices starting at $125 per person, it reported, Victoria & Albert’s only hosted about three families per month prior to the ban.

Whatever. I know I’m going to kick a cat and gnaw a cheese wedge tomorrow just to show my solidarity with mice everywhere. One of their own, and perhaps the most famous of all, is working for a company with the smarts and courage to make a bold call, even if the decision prompts some harrumphing from the sort of parents who never turn off the Baby Mozart CD.

Oh, well. Too bad I’m still on hold with Obama headquarters. I should’ve called John McCain or Hillary Clinton instead, so we could’ve sung the Mickey Mouse Club theme together.

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Friday, January 4, 2008

A 96-hour preview of 2008

Four days into 2008, Taco Bell and Starbucks are pushing healthful menu choices, California restaurateurs are calling for a sales-tax hike, PETA is yelping about Chipotle’s ingredient standards, smoking has been outlawed in French cafes, and the Red Sox are planning to open eating establishments. Something biblical is happening here, people. And that’s disregarding what the Tarot cards forecast for the months ahead. The year could prove wilder than a Spears family counseling session.

If you straight-line the emerging trends of 2007, we’re likely to see phenomena like these during the new year:

Virtual crime prevention: Restaurants will become as diligent in protecting customers from identity theft as they’ve long been in shielding guests from food-borne health risks. They’ll have no choice. “60 Minutes” has already run segments on the vulnerability of retail credit card information, with Leslie Stahl demonstrating how she could capture data while sitting in a mall parking lot, using nothing more high-tech than a laptop and accessible software. The risk will undoubtedly draw more attention as the problem worsens. All that’s needed for a sudden public obsession is one high-profile swipe of information from a major restaurant chain. The paranoia will rival what the industry sees after a fatal food-contamination incident, or what the nation as a whole observed after the Tylenol poisonings. Fortunately, the industry will get some effective assistance from credit card companies. But a willingness to adopt the right practices and protections, or the awareness of the importance at a unit level, is another manner. What’s really needed is the equivalent of ServSafe, a curriculum to train restaurant and regional-level chain operations on the rudiments of data protection. ChargeSafe, perhaps?

Paid sick leave: The restaurant industry is caught in a bind. Research shows that employees infected with the virus that causes stomach flu can be infectious far longer than was originally thought. Exponentially longer, in fact. Typically, a restaurant asks an employee recovering from a norovirus infection to stay home for two or three days. To be truly safe, the carrier-employee should be out of the kitchen for weeks. Yet how do you ask a staffer to forego that much pay? And if the cost of admitting their ailment is a significant loss of wages, are staffers really going to volunteer that they’ve been vomiting or suffering from diarrhea?

Unions have exploited that situation to press for paid sick leave. In some places, that added pressure isn’t even necessary. San Francisco mandated paid leave via a 2006 ballot referendum. The measure went into effect in February. District of Columbia lawmakers are scheduled to vote on a paid-leave initiative next week. Eight states are eying legislation mandating the benefit, and federal bills have been floated on Capital Hill.

Those efforts seem driven more by concern for low-wage employees than by public health concerns. But paid-leave advocates will likely yell more shrilly about the threat of flu contamination in the months ahead.

Emphasis on concept development: With economic conditions proving disastrous for many of the major casual-dining brands, several of the segment’s powerhouses will rev up new brands to keep revenues and profits growing. You could see glimmers of that in ’07 with Ruby Tuesday buying an Asian fast-casual concept called Wok Hay, Cheesecake Factory disclosing plans to launch a new Asian dinnerhouse called Rock Sugar, P.F. Chang’s continued tinkering with Taneko Japanese Tavern, Ruth’s Chris purchase of Cameron’s Mitchell’s seafood chain, and California Pizza Kitchen’s expansion of its L.A. Food Show venture.

The upstarts will require some tweaking and market adjustments. For instance, P.F. Chang’s discovered that California wine sells better than Japanese beer at Taneko. In an earnings statement issued by the company yesterday, Chang’s stressed the concept’s use of “natural, organic and seasonal ingredients” rather than the attributes it underscored immediately after the prototype’s opening.

Not coincidentally…

The lending crisis will put the brakes on casual-restaurant development: And that could ultimately prove a good thing for the sector. The curb on store openings will give demand some time to catch up with supply, enabling the market to pull out of what is now a multi-year slump.

Recruiters will position jobs as an extension of prospects’ non-work life: In HR-ese, the job will be where you are, not what you do. The challenge is erasing the differences between work and non-work life in dozens of small ways that add up to a meaningful change from Baby Boomers’ restaurant-job experiences. It could mean using YouTube-like training videos, or providing time and a place for staffers to socialize during down times, or offering incentives like paid downtime instead of conventional prizes like CDs. The objective is de-stigmatizing restaurant jobs by making them more consistent with the rest of youngsters’ lives.

The Yankees will win the World Series andthe Super Bowl: Hey, it’s my list of predictions. And stranger things are likely to happen.

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Wednesday, January 2, 2008

Fueling a frustration

News tidbits can often provide a truer account of the day’s issues than full-blown stories. So it was with three nuggets of recent days. All three dealt with restaurants and politics, but that’s about the extent of the connection—until you consider what might connect the dots.

The first point is a paragraph in a Jan. 1 New York Times story about the efforts of groups with a political agenda to influence the presidential campaign in not-so-subtle yet completely legal ways. In what could be called soft lobbying, the organizations fund their own advertising campaigns for a favored candidate, a practice protected by the courts’ current interpretation of free-speech rights. For instance, the Service Employees International Union, a new-age group hoping to organize the restaurant business, spent more than $1.5 million to run radio spots in Iowa for John Edwards, a candidate who boasts that he refuses contributions from political action committees.

The second development was a page-one story in this morning’s Times about the unfairness of Iowa’s quirky caucus system. Because the archaic set-up leaves no room for the equivalent of an absentee ballot, you have to attend one of the evening caucuses to influence the statewide results. Yet how many restaurants are going to let their staff run off for a political forum during the dinner rush? The story cited several specific examples of foodservice employees being thwarted in their desires to participate. Presumably the same timing problems keep restaurant owners and operators out of the caucuses as well. The system clearly seems to discriminate against places with a vibrant dinner business.

And the last tidbit of the three: A restaurateur in Edmond, Okla., is so frustrated with the political process in his home town that he’s refusing to serve certain officials, as he proudly declares in a sign posted out front, the Associated Press reported today. The two members of the Edmond Planning Commission, along with the board’s attorney, are cited by name as being unwelcome at Falcone’s Pizzeria and Deli. Actually, the language is a little stronger than that: The trio is instructed to stay off the property, according to the report.

The three reportedly led opposition to the red, green and white awning that proprietor Danny Falcone wanted to erect above his new restaurant to trumpet its Italian orientation. The Planning Commission reportedly refused to permit the awning, and the city council apparently followed its lead.

Restaurateurs often voice frustration with the political process, which many describe as an alien world where common sense seems to be suspended. With an adversarial union spending $1.5 million in just one state to push a candidate, despite lobbying limits and the beneficiary’s declaration he’d refuse tainted financing, and the system in that very state working against restaurateurs, is it any wonder the industry may feel a little desperate?

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Tuesday, January 1, 2008

Wringing out 2007

Let the swallows flock to Capistrano. We ink-stained wretches have our own compulsion to indulge. The minute they roll Dick Clark out of the home and start the chondroitin drip, every journalist feels the irresistible drive to recap the outgoing year’s memorable moments. Who am I to fight Mother Nature? Here’s my rundown of developments the restaurant industry should remember about 2007.

Most worrisome trend to emerge: Menu labeling The industry’s arch concern, a monster it’s beaten back time and again, arrived with a cancelled one-way ticket last year. New York City and King County, Wash., have already decided that local chain restaurants will have to post calorie information on menus and menu boards. California’s Silicon Valley and the Washington, D.C., suburb of Montgomery County will likely follow with similar labeling requirements. And from there, the dominos will fall. It’s only a matter of time until a state mandates nutritional displays. Then we’ll watch a repeat of smoking bans’ spread.

Runner up: Paid sick leave, already mandated in San Francisco, with Washington, D.C. expected to vote on a measure next week.

Biggest yawn of a trend: Trans-fat bans. Sure, availability of alternative oils is still a problem. Witness the decision by Carl’s Jr. and Hardee’s to delay their switch because of supply issues. But New York’s changeover, the nation’s first, went relatively smoothly. Regulators say the biggest problem to date has involved the use of margarine, a potential motherlode of trans fats, without a heads-up to patrons.

The bigger challenge, restaurateurs say, will be the requirement that trans fats be eliminated from baking, a process that benefits greatly from that type of shortening. It may prove to be more of a painful changeover for the true baked-good artists.

Biggest trend that failed to materialize: The mainstreaming of organics. The supply just isn’t there, and the consumer appeal seems secondary to matters like source labeling--saying where each element in a menu item came from, a mega-trend even evident within the mass-market chains.

Unforeseen trend fallout of the year: Smoking bans’ literal way of chilling sales in northern states. Lighting up outside may not have been a problem during spring and summer. But this is the first winter of outside-smoking-only for Anchorage, Alaska, and Illinois, among other areas with frigid weather. Operators in some of those regions are attempting to hold onto patrons by erecting smoking huts, complete with heat. But many of the new rules also prohibit smoking 15 feet from a door, window or other potential vent into a restaurant, meaning you may not have the space in a downtown setting. The industry may want to consider subsidizing sales of The Patch.

Menu trend of the year: Miniaturization. You can now buy a mini-sized burger from an abundance of restaurants, chain or independent, thanks to the Lilliputian Effect. Restaurateurs are smartly betting that consumers will pay a premium for variety (with sampler packs) or the chance to have a few bites of something their doctors tell them they should eat more rarely. A few even savvier players have taken the same approach with desserts, and you can even find some mini-cocktails out there, too.

Menu-item comeback of the year: Burgers. Back in vogue for the umpteenth time, thanks to interest from high-end chefs along the coasts and higher quality offerings from the maintstream chains.

Best product trend from a consumer standpoint:
Premium coffee and coffee-based blended drinks. Even office coffee-break stations are being revamped to feature better grades.

Best product trend from a business standpoint: See above. How can you beat the margins on products consisting mainly of water?

Most intriguing new concepts: The wave of all-natural grab-and-go places, like Fresh & Easy, the U.S. beachhead of European retailing giant Tesco, or the Michael Milken-backed Eaturna, which is growing in partnership with concessionaire HMSHost. The places are actually riding three trends that clearly gained strength in '07: Stepped up demand for meals that could be eaten off-premise, increased interest in natural foods, and heightened desire for quality food that can be purchased in a snap, a la grab-and-go formats.

The places are part of a larger trend that has yet to fully flower: With Whole Foods and Trader Joe's proving it can be done, food retailers are finally offering the caliber of ready-to-eat foods that could steal business from restaurants. Supermarkets have always posed a threat to restaurants because consumers are inside them several times a week, but the quality was never there. That's changing. The missing piece is marketing that effectively lets the public know they have a new, viable dining option.

Most encouraging development for foodservice: A clamor for greater collaboration in promoting food safety, both within an organization (i.e., food safety working with marketing as well as ops to guarantee that new menu items are safe) and between groups, including competing chains. The theme was stressed both at Nation’s Restaurant News’ Food Safety Symposium and Cooperating for Food Safety, a conference held in Washington specifically to bring traditional adversaries together for the promotion of safe practices.

Most discouraging development for foodservice: The charlatanism evident in the green movement, with opportunists suddenly declaring themselves eco-friendly as a result of marketing considerations, not true environmental merit. There’s an old southern expression: “Puttin’ a hat on a mule don’t make it the Pope.” Ditto for slapping a green-sounding slogan on a product or service.

In my next installment, I'll complete the annual rite of journalism and offer my predictions for '08.

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