Monday, June 30, 2008

July fireworks

Can I pour you another cup of coffee? How about another plate of carbs, or maybe something sugary to keep you going? You’ll definitely need more than the usual oomph and sustenance to get through July, which should have been specially named for restaurateurs. National Eye Poke Appreciation Month, perhaps.

This, after all, is a stretch when the industry will experience more firsts than the freshman class at Party U. If only it were to be as much fun. Or even in the same range as a wolverine attack. Instead, the industry can look forward to unprecedented bans, mandates, cost hikes and marketing experiments.

Start with the first-ever ban of trans fats in restaurant baked goods, which takes effect as of 12:01 a.m. tomorrow in New York City, or, as the local board of health is determined to rechristen it, San Francisco-East. Folks in that famous West Coast pit of activism now look at the Big Apple and mutter, “Whoa, those folks are crazy. Where’d they come up with these laws?”

New York actually banned trans fat some time ago, but provided a grace period for baked goods because of the logistical problems. Some chefs say it’s hard to deliver the light, flakey quality you want in pie crusts or pastries without using trans-fat-rich shortening. If they haven’t figured out how to do it by now, they’ll hear about it from the health department starting tomorrow, though fines won’t be levied until October. It’s the city’s version of double-secret probation.

By that time, getting fined could have lost its novelty for New York’s chain restaurants. About 2,000 of them will be subject to financial penalties as of July 19 for failing to comply with the city’s calorie-disclosure requirement, another first-in-the-nation distinction. Early assessments of compliance levels suggest a lot of restaurants will be writing checks.

Of course, restaurants everywhere will be punching up the checks they cut on payday. On July 24, the federal minimum wage rises to $6.55 an hour, from the current $5.85.

That may be the most universal of the changes. Perhaps the most limited is the virtually overlooked menu-labeling requirement that takes effect tomorrow in Mississippi, which is to catfish what Iowa is to corn. Starting at midnight, restaurants with catfish on their menus will be required to let patrons know the origin of the fish. If it comes from Mississippi, the place can meet the requirement by erecting a sign or placard on the premises. But if it’s imported, that fact has to be pointed out on the menu, in the same font and type size as everything else.

Feature Mississippi catfish, and you have to post a sign. Feature another nation’s, and you have to reprint your menu. The impression of the state’s school system may be about to change.

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Friday, June 27, 2008

Carbon footprints on restaurateurs’ backs

This just in from the Wile E. Coyote Falling Anvil Alert Service: Stay inside. The well-intentioned forces that hope to make the world a better place for chipmunks and koala bears are about to drop some serious (and no doubt recycled) iron on the restaurant industry.

You might even spot some casual-dining operators atop the cliff with them, though they could end up victims as much as supporters. Their curbside takeaway business would no doubt benefit if the ecologically-minded put the brakes on quick-service drive-thrus, as a number of activists are already vowing because of pollution concerns. The proponents of bans on drive-thrus or car idling could probably live with casual dining’s system of running an order out to patrons’ SUVs or hybrids as soon as they pull into designated parking spots.

It’s the drive-thru that has the Dark Greens stomping their Birkenstocks. Isn’t wasteful idling as much a part of that experience as yelling into a microphone? And isn’t that both contributing to global warming and wasting precious gas? Why not ban it?

And that’s exactly what Minneapolis did a little over two weeks ago. Cars that sit still outside of traffic for more than three minutes have to shut down their engines or risk getting ticketed.

Other areas, like Madison, Wis., are weighing the possibility of banning new drive-thrus. And interest in that method of cutting auto emissions is approaching a national crusade in Canada, with at least nine major cities considering a prohibition on the drive-up.

But the casual restaurant operators may soon have their own sustainable fish to fry. Conservationists hoping to stigmatize bottled water on ecological grounds succeeded last week in recruiting the Klingon Empire to their cause. After hearing that San Francisco mayor Gavin Newsom had outlawed his city’s purchase of bottled water, the U.S. Conference of Mayors passed a resolution that obliges the 250 members to look into a similar rule within their respective jurisdictions. Already, the tribal leaders of Ann Arbor, Mich., have agreed not to allow bottled water to be served at city events.

So far, restaurants have only been pressured by the pro-tap forces to stop selling bottled water, instead of being forced by law. But certainly that insistence they forego the high-margin item is going to grow much, much stronger. Indeed, the industry is even hearing it from its own members. At the trade’s big convention last month in Chicago, some attendees groused that the panel of speakers at one event was provided with single-serving bottles of water, instead of a pitcher and glasses. It probably didn’t help that the green movement was going to be one of the topics discussed.

So what’s an industry to do? For one thing, catch up with Road Runner of public opinion. When I mention the possibility of a drive-thru or idling ban, restaurateurs always shoot me that same look they’d direct at a deranged street person. It reminds me of the bemused look they used to get when the topic of menu labeling came up at the beginning of the decade.

Secondly, the debates have largely been waged thus far on the basis of emotion, not fact. How much pollution do cars in a drive-thru actually contribute, and how does that compare with the emissions generated by parking, or stopping and starting the engine?

And what is the carbon glass print, so to speak, for water that comes from a bottle rather than a tap? How much energy is needed to wash pitchers or glasses for the stuff that comes out of a pipe in the kitchen? And how much of an impact did that pipe have? What about the effect on reservoirs that have already dwindled below the high-water mark?

Some hardcore research is clearly needed. Just try to avoid a provider that goes by the name of Acme. Its products have proven time and again to be ineffective, especially if they have a fuse.

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Monday, June 23, 2008

Daydream believers

I was trading air-guitar licks the other day with Bluto Pilkbean, the imaginary childhood friend who helped me invent the flying car and a way of extracting super-human strength from Twizzlers. He’s recently made a name for himself in the fanciful field that’s filled many a restaurateur’s daydreams of late, the silver bullet.

“Pilkbean,” I said after we’d decided not to take the Sports Illustrated swimsuit models to dinner, “do you really buy this malarkey? So many things are stacked against the industry that all the experts are calling this a perfect storm. An operation is going to soar out of hell just by adding sliders or upgrading its coffee?”

“This from the person who believed he could obliterate all homework by electrifying Silly Putty,” he retorted. “Besides, you’re forgetting that most adapters combine the magic pills. McDonald’s is focusing on breakfast and beverages. Taco Bell is embracing cheap-o deals and new drinks and breakfast. Applebee’s is not only touting sliders and bargain-rate lunches, but also inviting customers to submit videos for a new campaign. It’s a matter of mucho mojo, mi compadre.” Pilkbean had never been quite the same since the trip to Tijuana.

“Who cares if you offer five or 50?,” I responded. “What does it get you other than one turn of consumers’ heads?”

“A point of differentiation.”

“For how long? If these killer plays do anything, everyone and their cousin copycats ‘em. It’ll be curbside takeaway or the Bloomin’ Onion all over again.” I looked to see if he was reaching for his combination death ray pistol/Pez dispenser, because I had him now.

“There’s always something new,” he noted calmly.

“Such as?”

“Well, right now some fast-casual chains are adding table service. All kinds of concepts are giving away food to bolster traffic. Eat ‘n Park and Chipotle are supposedly looking to use more local ingredients. Red Lobster just announced that it’ll give space on the menu to a dish created during one of those cooking-contest shows.”

“Isn’t that exactly what Friday’s did?”

“Well…maybe. But there’s talk of going even farther afield. Some concepts are talking about radical steps like upgrading service, renovating dining rooms, or”—he actually shivered at this point—“trying to hire and retain the best employees. Gives you goose bumps, doesn’t it?”

“You’re an idiot,” I assured. “Now let’s get back to work on our Red Sox immobilization spray.”

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Tuesday, June 17, 2008

(Jolly old) BK sliders

Even with the U.K.’s love of all things royal, the Burger King may never have enjoyed a reception quite like he’s getting these days across the pond. The blogosphere is rippling with British-accented talk of the wooden-faced icon’s latest European menu addition, a product that seems likely to jump back home at some point. After all, what do Brits know about sliders?

Yet that’s what BK added to the menu of its British operations in late May. Not that this is your conventional mini-burger, a la what you’d get at White Castle, Krystal or any number of chains or fine-dining restaurants these days in the States. Indeed, BK’s new Angus 6 Pack is actually an oversized, scallop-edged burger that’s served with what could best be described as a modular bun. The patty is actually meant to be six small, interconnected burgers. The top and bottom of the bun are similarly styled. Patrons are urged to pull the item apart to form six minis—two topped just with catsup, two with catsup and cheese, and two with bacon added to those garnishes.

If the Angus 6 Pack is indeed added to the menus of stores in the U.S., it wouldn’t be the first time that Burger King featured sliders. In the 1980s, the chain added a multi-pack of minis called Burger Buddies. The product was indeed to be purchased as a snack. But franchisees yelped about the item because the little patties would slide through the grill of the concept’s signature chain broiler.

The use of a bigger, six-in-one patty would alleviate that problem.

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Friday, June 13, 2008

Applebee's to try a chill pill?

Consumers may soon be spying a stockpile of thermometers behind the bar of their nearest Applebee’s. The new parent of the troubled casual-dining brand is looking to put more fizz into alcoholic beverage sales, and one of the means it’s considering is the schtick used by a franchisee in Ohio. The operator touts his beer as the coldest beer in town, and proves it by putting a thermometer into each glass when he serves it.

Julia Stewart, chairman and chief executive of DineEquity Inc., the clunky new moniker of IHOP Corp., told investors last week that Applebee’s new executive team will likely check out the gimmick for possibly wider adoption. “Don’t laugh—there’s probably a notion there that I want to exemplify [sic] and test,” she said at the Goldman Sachs Investor Conference.

During the Q&A session following her presentation, Stewart noted that Applebee’s is already one of the nation’s highest-volume beer sellers, but observed that wine could represent an opportunity.

She also repeated an earlier avowal to avoid the prior administration’s mistake of trying to make Applebee’s menu more sophisticated than patrons would like. She indicated that the brand should stay within its niche with she characterized as finger-food-type items. But she also noted that the bill of fare needed an update. Deep-fried mozzarella sticks were cited in particular as a tired nod to yesteryear.

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Thursday, June 12, 2008

'There goes the free Starbucks'

The worst part about getting fired from the CEO’s job at Starbucks is having to tell your mother, according to Jim Donald, who found that out for himself in January. Four months later, he was willing to talk about that day with a Fortune magazine editor, who convinced him to join two other victims of high-profile sackings for a joint soul baring of what they’d learned.

But it was far from a pity party. “This is what happens in the big leagues,” Donald remarked during the four-party Q&A with Fortune’s Patricia Sellers. He and his fellow boardroom casualties—JetBlue founder David Neeleman and former Motorola CEO Ed Zander—offered a dry-eyed assessment of why they were deposed.

Donald, for instance, said he should’ve pushed for faster international development. “The international markets don’t have as quick returns as the U.S.,” h said. “But if I’d known the U.S. economy was going to crash, I would have invested earlier.” His replacement as CEO, board chairman and former head bean Howard Schultz, has pledged to accelerate Starbucks’ development overseas while shutting weak U.S. outlets.

It was Schultz, Donald said, who actually wielded the axe, and he did it after giving his one-time protégé a hug. “It was on a Sunday evening, at Howard’s house,” Donald told Sellers and his fellow topple-ees. A greeting was followed by an embrace, then the news that Starbucks’ board had decided to make a change. Donald made it sound as if he didn’t have time to put his latte down.

The 54-year old said he headed home, where his wife expressed surprise that he’d was back already. “Laura said, ‘Wow, that was a quick meeting. Did you lose your job?’ I said, ‘As a matter of fact, I did.’”

The one-time head of Wal-Mart’s grocery operations said the most painful part of the experience was calling his mother the next day. Indeed, he said, that experience “probably” made it “the toughest day I’d ever faced, ever. Ever, ever, ever!” But, he indicated, she took it well.

Donald expressed no resentment about what happened to him. Nor did he speak of Schultz in anything but a neutral tone. Sellers asked Donald if he’d ever work again for a company’s founder, as he did at Schultz (a nit-picking point: Schultz founded Starbucks Corp., but not the Starbucks brand).

“Founders have a way of being engaged in the business, being emotionally connected to that brand or to that product,” he responded. “So would I work for a founder? Yes, absolutely.”

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Monday, June 9, 2008

Web watchdogs can definitely bite

The Wall Street Journal outed several chains this weekend for switching to smaller beer glasses without adjusting prices or otherwise letting on. You’d think that’d trigger a fit of spin-doctoring from the likes of Hooters, GameWorks, Damon’s and Romano’s Macaroni Grill, but they wisely offered nothing more than the few qualifiers and no-comment that were included in the article. Even then, they came within a maraschino cherry stem of being sentenced to eternal avoidance by the modern-day equivalent of vigilantes: Web habitués who share a fanatical cause. In the era of the keyboard-empowered consumer, reckless indeed is the consumer brand that tries to pull one over on patrons, especially when it comes to value.

The situation is nearly a perfect homily as to why. The Journal, after all, was merely a messenger, relaying the lynch-mob talk that the chains and other beer-serving establishments had frothed up by switching from true pint glasses, capable of holding roughly 16 ounces of brew, to variations with a thicker glass bottom that leaves room for only 14 ounces. The motivation is obvious: With grain prices driving up the cost of beer, cagy operators are holding the price of their standard tap serving while slyly providing less beer.

As the article noted, consumers are catching on, and fast. Seven months months ago, a college researcher with a blog called Beervana started what he dubbed The Honest Pint Project, whereby he’d push for a full 16-ounce tap beer by publishing the names of drinking establishments in his native Portland, Ore., that offer a serving of at least that volume.

The parent of the Honest Pint Project, identified in the Journal article as Jeff Alworth, has raised his ambitions since then. “I will support a statutory change if it comes to that—and maybe it should,” he wrote in a blog installment posted today.

Yet Alworth sounds like an aggravated PTA member compared with the hops panthers who offered their comments, suggestions and assessments on “So if there’s a beer bar on this site that has recently adopted this practice, can we call them out?,” asks a poster identified as guzzle211, who joked that he was already lighting a torch.

“What would it take to get legislation passed with regard to this? How did they do it in other countries?,” asks Josquin.

It goes without saying that establishments switching to what a Journal source dubbed “falsies” shouldn’t try to deceive patrons about the change (for the record: GameWorks said a mistake in glassware was made at a single unit, only franchised Hooters units offered the smaller glasses, Damon’s does not deny the change, and Romano’s had no comment). Risking the alienation of longstanding customers over two ounces of tap beer is crazy enough. Amplify that by the speed of gripe on the internet and there’s no doubt about the glass being half-empty.

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Saturday, June 7, 2008

A turn for the worse on menu labeling

One of the industry’s key defenses against menu labeling has been rendered useless by a recent court filing that could also break up the trade’s Hail Mary play for softening the impact of nutrition-disclosure mandates. The actions, little-noticed outside of the regulatory and legal worlds, came not from the restaurant business’ usual adversaries on diet-related matters, but from the hoped-for ally known as the U.S. Food & Drug Administration.

The development was the latest in the prolonged legal effort by the New York State Restaurant Association to overturn a New York City requirement that local chain units post calorie counts on menu boards, regular bills of fare and drink menus. The association filed a lawsuit in federal court that asserts the city does not have the authority to regulate nutrition disclosure, since that power resides exclusively with the FDA.

Not so, the FDA itself said in a friend-of-the-court brief that was filed on May 29. The agency, which has been expressly granted the right to specify and police what nutritional information is printed on grocery-store items, told the court that it doesn’t have a hammerlock on menu disclosure. Only if a restaurant makes a health-related claim—such as pronouncing an item life-prolonging or cholesterol-reducing—do FDA rules pre-empt state or local regulations, the agency said.

The take-away for state and local jurisdictions that want to require restaurants on their turf to divulge nutrition information for all menu items: Knock yourself out.

The filing by the FDA, which had been requested by the 2nd U.S. Circuit Court of Appeals, in effect scuttles the pre-emption challenge that a number of restaurant groups have either eyed or actually tried in their efforts to fend off labeling mandates. But the damage to the industry’s defense strategies could go farther than that.

As I’ve mentioned in a column, there’s a growing sensibility within the restaurant industry that menu-labeling requirements are going to be a new reality, no matter how unpleasant the trade might find them. It’s a tide that the business may simply not be able to hold back. Some broad-minded thinkers are proposing behind closed doors that the industry temper the effects by suggesting the federal government take the lead on menu disclosure.

That way, the proponents argue, chains would have to meet only one set of disclosure standards from coast to coast, instead of a hodgepodge of obligations that could vary from town to town. Chains that operate in both Seattle and New York, for instance, will be required to provide one set of info on the West Coast, and another type on the East. Branches in the two cities will almost certainly end up with different types of menus and menu boards, which may be still different from the ones required for Santa Clara or San Francisco Counties in California.

But now the FDA has said that Congress didn’t want it to regulate restaurants, so states, counties and municipalities are the ones to fill the void. I’m certainly no lobbyist, but it seems that the industry would have to push legislation through Congress that would call for menu regulation by the agency. It could be one of the smartest things the industry has ever done. But a firefight will almost certainly erupt as rank-and-file operators balk at the notion of asking for government regulation. In the minds of those who are still thinking in yesterday’s terms, it’d be like pushing for a tax increase.

And then there’s the wild card that was dealt to the industry just this past week. A group of consumers has sued Applebee’s and Brinker International for allegedly misstating the nutritional information they voluntarily post on their menus. The class action suits allege that Applebee’s understated the fat content of its Weight Watchers-branded selections, and that Brinker similarly bent the truth the same on Chili’s Guiltless Grill section.

Those brands voluntarily disclosed information and ended up getting sued. When chain after chain after chain is posting analytical data to meet disclosure requirements, won’t the industry become the barrel where litigation-minded lawyers and consumers can draw a bead on the next fat tuna they’d like to fillet in court?

If the industry does proceed with its efforts to legislate federal labeling regulation, it would be well served to also incorporate some defenses against bounty-hunting of that nature.

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Friday, June 6, 2008

Politics as unusual

The public’s interest in politics has been honed to a keen edge by the uncertainty over who’ll be sitting in the Oval Office next February. But the restaurant industry has been doing less handicapping than hedging. Indeed, the trade’s main lobbying forces have been quietly seeking insurance of sorts to protect the trade’s political interests regardless of who prevails in the November election.

That was evident during last month’s board meeting of the National Restaurant Association. As we reported at the time, the group voted to pursue an initiative whereby restaurateurs would be solicited to work in the campaigns of whichever candidate drew their support. The objective was to have a member of the business inside the tents of what were then the three main candidates. “When they win, we want friends who were friends [to them] before they won,” explained Bob Leonard, the IHOP franchisee who heads the NRA’s Political Action Committee.

That effort to curry favor with Democrats as well as Republicans has been seen in other actions by the group, large and small. For instance, as was noted earlier in this space, the association lined up John McCain to deliver a keynote address at its annual mega-convention in Chicago. I and apparently others chided the NRA for always selecting a speaker from the more sympathetic side of the aisle instead of taking a nonpartisan approach to booking presenters. In press releases issued after McCain appeared, the association noted that Sens. Hillary Clinton and Barack Obama had been invited to appear as well but had declined. It didn’t sound like the same NRA that had once boasted about its insider status with the Republican White House. It was as if it quietly removed that elephant pin from its lapel.

Fast forward to earlier this week, when the association and its longtime ally, the National Council of Chain Restaurants, formally praised a new law that aims to protect restaurants from being sued for printing credit card expiration dates on charge receipts. Obviously the two groups had pushed for the measure. They succeeded in part by working with Rep. Barney Frank, the liberal Democrat from Massachusetts, and Sen. Chuck Schumer, a party standard-bearer from New York. These are not the industry’s usual allies.

The NRA and its usual cohorts haven’t switched allegiances, to be sure. The group reportedly spent $200,000 last week alone to help one of its own, former chairman Ed Tinsley, win the Republican nomination for a U.S. House of Representatives seat from New Mexico. The association has very expressly indicated that it wants a member of the industry inside the Capitol, watching out for the business and presumably working closely with it to promote favorable measures. It’s hardly standing on the sidelines in that contest, and the party it favors is no secret, at least in that Congressional race.

But clearly its striving to work with the party that’s quite possibly going to control both the White House and the Capitol next year.

Every time restaurateurs are surveyed about what they regard as their biggest concerns, burdensome politics and regulation rank high on the list. If the industry slipped into a partisan mode in the current environment, that concern may move even higher.

Instead the NRA and the NCCR are taking a more pragmatic course. And it could prove a smart one indeed.

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Wednesday, June 4, 2008

Goody's no gum drop

Here, completely free of charge, is my suggestion for how McDonald’s should advertise the under-sung health move that it made today: As a camera pulls back, viewers see shadows starkly playing against a wall. It’s clear what the two people out of range are doing to make the images dance across the backdrop, even if they can’t be seen. Elbows are swung, holds are attempted and broken, a body is lifted and slammed to the ground. Grunts and outcries of pain are interrupted by taunts of “No trans fat to slow me down now, huh?,” “What, not enough niacin?” and “Oh, too few calories to keep going, Buttercup?” The frame pulls back to reveal Cindy Goody, the quick-service chain’s new U.S. director of nutrition, sitting atop a prone Marion Nestle, the famed nutrition gadfly, her arms firmly pinned to the ground. “Well,” says Goody, “I guess we know who’s going to be doing the talking about McDonald’s nutritional values from here on in.” Cue the “I’m lovin’ it” theme music.

A tad extreme, admittedly, but it does get across the point that McDonald’s USA has fortified itself with a well-known, highly respected new authority on family nutrition. Indeed, it’ll be harder for the diet activists to throw mud at the chain with Goody lending her reputation to Big Mac. This, after all, is the Ph.D holder who once crafted an article called “Snack Attack! Over 150 Guilt-free Treats for Healthy Munching.” And we’re not talking about a story in “Family Circle.” She wrote it for a professional journal called “The Diabetes Educator.” It’s just one of what appears to be a number of instances where Goody melded a scholarly and a popular approach to nutrition. If she manages to similarly synthesize those sensibilities for McDonald’s, she could be a formidable addition indeed: Nutritional science in a wrapper of plainspoken, sensible language.

Skeptics will no doubt disparage the hiring as a sop to the nutritional whiners. Nestle and her ilk carping again about too much fat or way too many calories? Quick, trot out Goody and a plate of Apple Dippers.

McDonald’s would deserve a skewering if that proves to be the case. But if it actually does tap Goody’s expertise to develop more healthful choices and teach the public some fundamentals about eating right, the development will be a goodie indeed.

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Sunday, June 1, 2008

Surgical scars from cutting costs?

The only thing that could make commodity costs any scarier is having your distributor sales rep show up in a hockey mask. No wonder restaurateurs are going to extremes to bring down their expenses. It should be even less of a surprise that some are now realizing they’ve gone too far.

The Le Madeleine bakery-café chain found that barrier last week, as it acknowledged to its hometown paper, The Dallas Morning News. As officials explained, local customers let the chain know loud and clear that they weren’t going to pay for bread they formerly got for free. The charge came to only 50 cents for two slices of the sourdough bread, and that was levied only if the patron didn’t buy an entrée, soup or salad. What’s more, the shift had been tested in other locations, reportedly with no fallout.

Not so in Dallas, where the chain has been a favorite for two decades. After receiving hundreds of e-mailed complaints, the chain discontinued the cost-cutting measure. “We made a mistake and we adjusted," CEO Mike Shumsky told the News.

A similar public admittance came Sunday from Eric Kozlowski, a co-owner of the Primanti’s restaurants in south Florida. When a moonshot in cheese and flour prices cost the Italian eateries an extra $2,400 a week in food purchases, the company switched to lower-quality flour for its pizzas, Kozlowski told The Miami Herald. Patrons couldn’t discern the change from the menu, but they could certainly taste it, according to Kozlowski. “I was saving money, but I was potentially chasing away some of my customers who are really pizza connoisseurs,” he told the Herald.

He and his partners reportedly switched back to the higher-grade flour and then raised the price of a large pie by $2.

According to the article, sales jumped 10 percent.

Judging the elasticity of consumer tastes may not be that easy. Recent days also brought an acknowledgement from Miller Brewing that consumers are trading down from premium brews to bargain-priced beers, which presumably would also cost restaurants less.

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