Thursday, February 28, 2008

Will there be another fajita?

Wendy’s touted its Frescata line as a major point of different—deli sandwiches made with bread baked in the restaurants. It was canned in December. Panera Bread said its Crispani pizza would rev up dinner sales and please patrons looking for all-natural options. The franchisor quietly yanked the item sometime after November. In 2006, Starbucks trumpeted its new premium-priced breakfast sandwiches as the long-sought way for the chain to grab more food sales. Instead, the array is on the way out. Is the blockbuster new product going the way of two-for-one happy hours and free matchbooks?

Well, there is the incredible success of sliders, the mini-sandwiches that everyone from Good Time Burgers to Cheesecake Factory is selling these days. They, in turn, are part of the miniaturization that has also led to the widespread availability of spoon-sized desserts, small plates and even small-pour glasses of wine. But, as your nearest White Castle or Krystal attests, that mini mania is nothing new.

Ditto for burgers, which are truly undergoing a second coming. Sure, they may be made now with Kobe or Angus beef, but it’s still the American classic, just gussied up with better ingredients and garnishes.

Indeed, with the exception of beverages (the mojito, cosmopolitans, Pisco sours) can you name a new chain menu addition since the middle-decade premium salad blitz that has really wowed consumers? Double points if it’s something other than McDonald’s Snack Wrap.

The dearth says something about the growing sophistication of consumers. They’re not as dazzled as they once might have been by sheer novelty. Instead, they’re looking for a true advance—better flavor, a meal more in keeping with their lifestyles or eating habits, a meaningful alternative to what they know. If that’s not in the set of options, then go with the best among the choices offered.

And, of course, now it will no longer extend to Frescattas, Crispanis or a microwaved Egg McMuffin a la Starbucks.

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Wednesday, February 27, 2008

The night Starbucks went cold

At 5:31, a manager escorted two customers to the door, apparently explaining why the Starbucks would be closing. As she was saying good-bye, two more people tried to squeeze past her into the café for their after-work caffeine fix. They, too, apparently hadn’t heard that all 7,100 Starbucks in the United States would be closing yesterday evening for what the media alternated between calling a massive teach-in and a chainwide coffee break.

But before the unit on 57th St. in New York could move to a refresher on how to make a killer cup of coffee, the staff had to fend off customers first. The manager had locked the door and taped a cardboard sign to the window, explaining that the store was closed. But every time employees would open the door to lug a back of trash to the curb, a few more patrons would blithely push through the door, oblivious to the sign and the historic shutdown of the whole chain. Each time they’d be shepherded out by the manager, who seemed as cheerful as a 7-year-old at her birthday party.

Of course, those patrons could have satisfied their caffeine craving for a mere 99 cents by trekking just a few blocks. In an absolutely brilliant stroke of guerilla marketing, Dunkin’ Donuts cut the price of its espresso-based drinks for the afternoon and night to under a buck. Sure, the doughnut specialist might’ve snagged a few Starbucks aficionados who presumably could switch allegiance. But the real benefit was the publicity. Starbucks’ three-hour closure drew a ton of coverage in every sort of media imaginable. By tying into that event in a sly way, Dunkin’ made sure that its name was in the second paragraph, if not higher. Starbucks took the sales hit and snagged its share of hoopla. But Dunkin’ was right there with it.

One more accolade to bestow on the matter: The Chicagoist website, for coming up with the headline, All Starbucks Closing Tonight for 3 Hours, Apocalypse Imminent.

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Monday, February 25, 2008

Crunch time?

The business week is only a few hours old, but it’s already yielded indications that restaurant chains are trying two new tacks in their product introductions: Tout texture, and crow about being better if you can’t brag about being first.

Both trends are evident in KFC’s new product, a knock-off of McDonald’s Snack Wrap called the Toasted Wrap. Like McDonald’s chicken snack, a home run by anyone’s standards, the new Toasted Wrap snack is priced at $1.29. It, too, consists of all-white chicken, lettuce and a flavored sauce, all wrapped in a flour tortilla. But the little bundle is then grilled, giving it a bit of a chewy texture. The chain is touting that difference in feel with consumer “touch” tests, presumably pitting the Toasted Wrap against the Snack Wrap in head-to-head comparisons where consumers indicate which feels preferable.

KFC makes no bones about following McD’s lead; the latter’s product is cited in the announcement of the Toasted Wrap’s introduction.

Meanwhile, Papa John’s, an arch-rival of KFC sibling Pizza Hut, is pursuing a similar strategy with its latest product promotion. The chain is touting the texture of its re-formulated pan pizza, the Papa’s Perfect Pan. “The product features a crust that’s irresistibly crunchy on the outside and soft and chewy on the inside,” explains the promotional materials. The literature also describes the pizza as tasting better than ever, without a word about the flavor.

The chain is offering a free perfect pan to anyone whose birthday falls on Feb. 29.

Interestingly, arch-rival Domino’s Pizza also launched a promo today tied to the current Leap Year, though you have to do more to cash in than merely have a Feb. 29 birthday. The delivery chain is offering to throw a pizza party for every family that has a child on Feb. 29 and names it “Brooklyn,” a tie-in with Domino’s Brooklyn-style pizza. The first to use the name gets a sweetener of $1,000. Which, no doubt, will go toward later therapy for a kid who was named after a pizza so his or her family could get a free party.

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Saturday, February 23, 2008

Where have you gone, Joe Lee?

Casual dining has never needed Joe Lee as much as it has in the last few weeks.

It’s not as if the former Darden Restaurants CEO has some superhero ability to yank the sector, a market he helped to create, out of its current blues jam. But his 40 years or so in the business gave him a perspective, a wise-man-on-the-mountain sagacity, that most of today’s standout executives have yet to cultivate. They stand in front of shareholders, analysts or employees and spout assurances the company’s recovery plan will work. After all, they somberly assert, we have the best concept, the best people, the best food, the best investors, the best corporate mission statement.

Yet they seem more than a little shaken themselves. You expect some to reach inside their suit-jacket pocket, take a quick nip from a flask, and resume with the platitudes.

Joe, as proper a man as ever worked in the industry, would stand up there and draw his share of arrows from financial analysts who wanted better returns for their institutional customers. Yet even during the most blistering times, he would calmly explain that the sector was in a downturn, that it’s been in downturns before, and that it’ll be in downturns again. He’d seen it two or three times in his career, and each time casual dining snapped back to be stronger than ever.

No one in the room could doubt it because most of them hadn’t lived as long as Joe had run the New York Yankees of casual dining. This was the guy who managed the first Red Lobster, back before there was a T.G.I. Friday’s, a Chili’s, an Applebee’s, an Outback or a Ruby Tuesday. And who could challenge a man who’d left the market only once since then, to work at the top of Red Lobster’s then-parent, a little multinational called General Mills.

The footnotes to his message were clear: There’s no need to cash out to a private equity firm, jump to a new market position, clean out your “C”-level officers, fire the ad agency, or even rewrite the mission statement. Instead, execute well, seize the opportunities that may be afforded by the players who fail to executive well, and ride it out.

No doubt the current freefall in casual dining is going to eliminate some weaker brands. But the sector as a whole?

Tell ‘em, Joe.

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Friday, February 22, 2008

Forget Botox. Have a brewski.

My wife is out of work, my profession is in a nosedive, and the industry I cover is limping through a financial quagmire. Yet today I’m a happy camper, albeit of the camping-on-a-barstool variety. A scientist in Japan has developed a beer that purportedly fights wrinkles. Now, through a discovery akin to inventing fire, you can catch a buzz and come away with the forehead of a 20-year-old.

Best of all, the active ingredients are fairly natural, so the beer doesn’t fall into the category of frankenfoods. It’s basically a matter of supercharging the production process with extra hops and polyphenols, the anti-oxidants that develop during fermentation.

The as-yet-unnamed beer is one of a growing number of alcoholic beverages that have been formulated to deliver health benefits along with a warm glow. VeeV, a new spirit made from the Latin fruit acai, promises a hangover-free head because of its anti-oxidant-rich core ingredient and the added minerals and vitamins of prickly pear. You can avoid colds, fend off vampires, aid your digestion and realize other purported health benefits by drinking a garlic-flavored vodka. Or slow the aging process by sipping a pomegranate liqueur, yet another quaff abounding in anti-oxidants. And if you need a pick-me-up, try a Four malt beverage energy drink.

If this continues, pretty soon you’ll be able to go on a three-day bender and come back looking as if you were munching celery sticks at Canyon Ranch.

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Tuesday, February 19, 2008

Your pink slip is showing

Today brought news that Lone Star Steakhouse had laid off 1,500 full and part-time workers as a result of closing 26 restaurants. About two weeks ago, Brinker International eliminated 125 corporate jobs. CEO Wally Doolin was among the 13 percent of Buca Inc.’s employees who lost their jobs through cutbacks that took full effect Feb. 1 (though Wally continues to serve as board chairman of the Buca di Beppo parent). In early December, Rock Bottom Breweries cut its support staff by 19 percent. Clearly manufacturing, media and financial services aren’t the only sectors of the economy to hack their payrolls in recent days. Their axes just whistled louder because of the scale.

The few foodservice economizers to snag headlines were the ones that made a public confession. No doubt plenty of other restaurant home-office staffers were quietly put out of work after their companies were acquired in the ongoing swap-a-rama. The euphemism for that scenario is “rationalization,” were the buyer eliminates redundancies in finance, marketing, administration, HR, even payroll management itself. Why bother to buy a company if you can’t wring some economies and redundancies out of the combined operations?

Others were likely let go with a dash of stealth because of the general economic malaise that’s hanging on like a mooching relative.

I wish I were starting a restaurant company, because the pool of available talent is richer than a Britney Spears blooper tape. It’ll almost certainly deepen as more deals are done, more expansion plans are scrapped, and tougher times keep bean counters scrambling to find new ways of making their numbers.

It’s a shame to see such brainpower squandered. It’s especially galling when you consider that the industry will likely whine about the dearth of middle and senior-level executive candidates when the trade pulls out of its malaise in a year or two. Instead of fire-hardening their skills and judgement, the would-be leaders will lose precious time—if the industry doesn’t lose them altogether.

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Monday, February 18, 2008

Do have a cow, man

Coincidence or calculation? On Sunday, the U.S. Department of Agriculture announces the biggest beef recall in the nation’s history, citing the failure of a southern California slaughterhouse to heed a particular protection against mad cow disease. Earlier, employees at the plant had been videotaped using prods to force “downer” cows—animals unable to stand, a possible symptom of mad cow disease—to stand and be slaughtered. On Monday, Chipotle Mexican Grill announces that its restaurants in Minnesota are switching to “natural” beef from animals that were “humanely raised” and fed a purely vegetarian diet. Mixing animal matter into cattle feed has been identified as a cause of mad cow disease and hence is no longer legal in the U.S.

“Our commitment to working with like-minded suppliers who share our belief that food should be raised with respect for the environment, the animals, and the people involved is helping us make superior quality food, including naturally raised meat, accessible and affordable so everyone can eat better,” Chipotle CEO and founder Steve Ells said in the announcement.

Chipotle has been gradually buying more and more hormone-free meats to supply its 700-plus restaurants. Ditto for organic beans. Insiders say the chain would hurry up the changeover if it could secure enough of a supply at a feasible price. So today’s announcement was probably in the works for some time.

If that’s the case—and I for one presume it is—then the sequence of events underscores what a compelling point of difference Chipotle is offering the public. Consumers read in their daily newspaper that 143 million pounds of beef have been recalled because of a slight food-safety concern. When they log into FaceBook, they learn from one of the dozens of Chipotle sites in that network that the chain is lessening the chances that its patrons would be exposed to a peril like that, no matter how slight. And it’s promoting the humane treatment of animals in the process.

Is it any wonder the company posted a 70 percent leap in profit last year?

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Friday, February 15, 2008

A Ruth's by any other name

Restaurants routinely name menu items after people, be it the Gene Simmons Sandwich (tongue with lots of dressing) or a Paris Hilton dessert (tart or cheesecake, take your pick). But it’s far less routine to dedicate a section of the dining area to someone, especially when that person is another restaurateur.

But if you book a private function at the Ruth’s Chris Steak House in Knoxville, Tenn., you’ll options will now include the Regas Room, a tribute in carpet, wood and wall coverings to a famed local clan of restaurateurs. Oldtimers still cite Bill Regas as one of those unsung giants of the business, an entrepreneur who put the same emphasis on people, training and service that persons of a younger vintage would associate with the likes of Danny Meyer. He was also active in industry affairs through his service to the National Restaurant Association. Hence the Ruth’s Chris connection. The chain is headed by Craig Miller, a former chairman of the NRA and still an active director.

Bill and his business partner/cousin, Gus, are the sons of the Regas brothers who opened the landmark local Regas Restaurant. The family sold a part of their business in the 1980s to Brinker International, which eventually sold it to Quality Dining, with the name changed along the way. Now the Regas name will enshrined inside the Ruth’s Chris, which itself pays tribute to legendary restaurateur Ruth Fertel.

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Thursday, February 14, 2008

Family's restaurant gripes become a business plan

An idea for a family-friendly café—think of a Panera Bread Co. crossed with a Playland-outfitted McDonald’s—drew enough votes from a website for entrepreneurs to bag $40,000 in start-up funding.

Alissa and Noah DeRouchie hatched the notion for their Sprout Soup concept after wincing through innumerable meals with their two toddlers. The taller of the four family members knew what they prized in the less-than-perfect options they’d prioritize when the whole household dined out: Healthful food, preferably in the form of sandwiches, served up in a comfortable, attractive setting at a reasonable price. But they wanted the place to entertain the kids while they ate, which means shifting the playgrounds typical of fast-food joints to the center rather than the back of the dining room. And the activities would extend beyond a run through the ball crawl, to events like sing-alongs or story readings.

The DeRouchies entered their idea in a contest run by the accounting software supplier Intuit. It was chosen from among 1,500 submissions for the prize of $50,000 in seed money—still not enough to get the operation off the ground, but still a major infusion of capital. According to news reports, the DeRouchies will supplement their prize with $60,000 from a credit line and $30,000 of cash. The funds were apparently generated in part from the couple’s website,, a virtual store featuring baby carriers.

According to their website, the DeRouchies plan to open a retail operation this spring, presumably in their hometown of Columbus, Ohio. They’ll start to remodel it into a restaurant by offering juice and coffee, and then presumably progress step by step into a full-fledged café.

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Sunday, February 10, 2008

In the name of research

Attorneys used to chase ambulances. Now they announce an “investigation” into a public company’s pending acquisition and wait for aggrieved shareholders to come forward. Consider the solicitations that have been posted on the internet just in regard to the proposed buyout of Landry’s.

Two days after chairman, CEO and founder Tilman J. Fertitta submitted an offer to buy the 61 percent of Landry’s he doesn’t already own, the Little Rock, Ark., firm of Cauley Bowman Carney & Williams PLC sent out a press release announcing its probe of the $1.3 billion proposal. The deal had been announced just a day earlier. The firm offered to provide advise to Landry’s investors on shareholder rights. Without soliciting stakeholders for a possible lawsuit, the statement noted that Cauley Bowman “is a national law firm that represents investors in securities fraud and corporate governmance class actions.”

Now the firm has competition in the emerging realm of Landry’s related research. On Friday, the Rosen Law Firm of New York City said it was commencing its own investigation. The announcement explained that media outlets had called Fertitta’s $23.50-per-share offer low.

“As a result of this and other information,” the statement explained, Rosen was investigating the fairness of the transaction to shareholders.

Purely coincidentally, shareholders who are dissatisfied with the price might be interested in suing Landry’s if it accepts Fertitta’s offer. Chances are they might need a law firm familiar with the specifics with the situation. One, perhaps, that may have done some research. Looks as if they might have a choice of at least two.

But that’s purely speculation, of course. More investigation would be needed to say something like that outright.

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Friday, February 8, 2008

What's a few billion here or there?

Covering Congress’ passage of the economic stimulus bill revealed an interesting but not surprising difficulty in valuing what comes out of Washington. The Washington Post reported that the bill would pump $152 billion into the economy. The New York Times set the value at $168 billion, a number used by several other media. And The Washington Times pegged it at $170 billion. Two weeks ago I attended a food-safety conference where attendees went slack-jawed at the bold proposal that the Food & Drug Administration’s budget be increased by a single billion. And here’s a measure where even those in the know are as much as $18 billion apart in their assessments of its benefit.

No doubt the stimulus package is a good one, for restaurants as much as other businesses. It was also heartening to see the White House and Congress, Democrats and Republicans, work together for a change. But we could use a little more collaboration between numbers geeks and non-geeks.

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Tuesday, February 5, 2008

Foreign notions

The balance of trade in restaurant ideas has long been out of whack for American chains, with U.S. brands exporting far more business know-how than they’ve received in return. But even savants here in the States can occasionally glean a lesson from their brethren afield. And so it is with two recent developments beyond our borders.

For the first, we transport to Britain, where McDonald’s has once again engineered an intriguing new HR practice. The United Kingdom is where the chain developed the ground-breaking policy of allowing families to sign up for a single unit-level position, so teenaged siblings can fill in for one another when school or social schedules conflict with work commitments. The idea is that the family can find a member to work the shift far more readily than the restaurant can find a stand-in. The set-up allows the family to handle the scheduling—in essence, shifting that authority from a unit manager to a household.

Now comes word that McDonald’s has secured government authority to bestow the equivalent of high school advance-placement credits on some employees. Management-level staffers who complete the training needed to run a unit will be awarded a “basic staff management” qualification, which some colleges or universities would recognize as proof of advanced high school study. The program, apparently a pet project of Prime Minister Gordon Brown, is intended to blaze a new, recognized path of higher education. In the process, it could elevate perceptions of restaurant work and hopefully bolster management retention for McD’s.

The chain has said it doesn’t intend to import the program to the U.S. But the burger giant has certainly shown an appreciation of education’s recruitment and retention benefits on this side of the pond. Several years ago, McDonald’s Corp. was given accreditation to grant college credits for courses taken at Hamburger U., the management training center on the grounds of the chain’s Oak Brook, Ill., headquarters.

A good case study for Hamburger U. enrollees would be what reportedly happened at a franchised Second Cup coffee outlet north of the border, in the heart of Tim Hortons country. For reasons that were not revealed, the men’s room of the restaurant was chosen by heroin addicts as a choice location to shoot up, as management surmised from the needles and syringes that were left behind. With the apparent blessing of the Montreal police department, the restaurant installed a fake security camera in the bathroom and trained its unseeing lens on the lone stall, hoping to discourage illicit behavior. The desperados using the place to shoot up would think they were being filmed.

Unfortunately, so did patrons who used the bathroom for more acceptable reasons. The well-intentioned effort to protect them from dirty needles or loitering unsavory sorts backfired into a public relations scandal, even though no customers were actually filmed.

Second Cup reportedly directed the franchisee to remove the camera.

The kerfuffle arose as restaurant cameras are becoming as prevalent in restaurants as spoons. Some operators use them as a way of letting the kitchen know if a table is ready for its next course. Others use it for security reasons. But the devices may not be the best equipment to install in the bathroom, even if they’re bogus.

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Saturday, February 2, 2008

Say 'swordfish'

A small panel in the door slid open. “Yeah?” barked a Paulie Walnuts sound-alike.

“We’re interested in some sangria,” I whispered.

A pause. “What’s the secret word?”


We could hear six or seven deadbolts being thrown open, an alarm code being punched in, and a pit bull being kicked out of the way.

“Sorry, but sangria’s still illegal" here in Virginia, some sort of Prohibition law that was never repealed,” explained our host as he swung open the door. “But you’ll find a lot of it here because it’s perfect for washing down everything else we offer.”

Soon we were chomping rare hamburgers, gorging on foie gras, indulging in some runny sunnyside-up eggs, even super-sizing our fries and cyclamates-sweetened soft drinks. “I even have some chicken fried in trans fats,” our host cooed with a wink.

“We used to do a big business in absinthe, but then they legalized it,” he continued. “But it looks as if grilled meats and fries might be added to the list soon, at least for our California clientele, so that should more than make up for it.”

“Why is there a bunch of judges sitting over there?,” I asked. Still in their robes, they were eating raw oysters and blue fin tuna sashimi. One was smoking.

“Well, they can put a crimp in business, but we can’t help being hospitable to them because lately they’ve been the voice of reason for restaurants,” he explained. “One of ‘em at least delayed the menu labeling law in New York City, another temporarily stopped San Francisco’s healthcare payroll taxes from being levied, and yet another threw out that damned no-match crackdown by the White House. It’s funny—the industry used to curse the courts, but now judges are emerging as the industry’s strongest allies.” I thought I saw him wipe a tear from his cheek.

“Why are they all wearing Wendy’s wigs?”

“Hell, we’ve got cases of them, now that Wendy’s dumped the ad campaign. I’ll send you each home with a box.”

With that, a horrific crash arose from the entrance, and in burst a bunch of people in white lab coats. “Put that forkful of local grouper down and step back from the tables,” shouted one. “This is a raid.”

But while we were converging on the foie gras table until they could cuff us, one of the the enforcers took a call on his cell. He snapped it shut. “Raid’s off,” he yelled to his colleagues. “Mississippi is trying to pass a law that would stop restaurants from selling meals to obese people. We’ve got to get down there and be ready to separate the big boned from the big booty’d. Let’s move.”

We consoled ourselves with a Hardee’s Thickburger and a Domino’s cheeseburger pie.

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