Live from MUFSO, Day Two

This is being written live from the Washington, D.C., ballroom where some 600 chain-restaurant leaders have gathered for their annual download of ideas, insights and connections. For the complete thread of what's happening at MUFSO, read from the bottom up.

Tues., 11:20
The panelists' advice to a young person who wants to evolve into a leader:

"Find someone who can mentor you and work with you closely."--Wingstop's Flynn

"Pay attention to detail."--BJ's Deitchle

"Be a teacher."--Kenneth Pondery, CEO of First Watch

"Hire good people, listen to them, be very clear about what you want them to do, and respect them."--Puzder

"In order to grow your business, you have to grow yourself. Study constantly. Read books. Go to seminars. Look at every aspect of your business. Master your craft by developing yourself."--Joseph Tortorice, presidet, Jason's Deli.

"Take a risk."--Greg Creed.


Tues., 11:06
Is there a disconnect with reality here? As someone just asked from the audience, how can the heads of six major chains say they're not worried about the economy, as the panelists have repeatedly professed?

Given that food is not a luxury, there's no need to be on suicide watch, one of the panelists explained. "If I was selling Mercedes-Benz, if I was selling jewelry, I'd be worried," said CKE's Puzder. "But I'm selling fast food. If that soccer mom stops coming into Carl's Jr. for a burger, then our economy would be in worse shape than I thought."

Greg Creed, president of Taco Bell: "You can't go to a supermarket and get the ingredients and make it yourself for what we charge."

Puzder again: "We think next year will be a good year for this industry and a good year for us."

Doherty: "I don't know about the audience, but I'm surprised there's not much gloom and doom up here. There's just some problems that have to be worked through."

Tues., 9:40
Andrew Puzder, CEO of Carl's Jr. and Hardee's parent CKE Restaurants: "Our margins have improved for each of the last four quarters." But, he acknowledged, "Our margins are certainly not what they were in 2006." One of those statements was not a surprise.

Puzder recounted how CKE's purchase of Hardee's "crippled" the company, driving its stock price down to $2 from the low 40s. He was the general counsel for the company at the time, and the problem was apparently tossed onto his lap. Under his leadership, the company's concepts are now outpacing most of their competitors.

Puzder just noted how one official of CKE has just instituted a rule that new hires in his area be able to speak English, an unimaginable requirement in the tighter labor market of a year ago. That policy was also mentioned by a panelist yesterday, for the same reason. The greater availability of English-speaking hourly talent seems to be an overlooked silver lining of the current economic storm.

Tues., 9:32
Jim Doherty, Nation's Restaurant News' group publisher and moderator of the Presidents' Panel, has just asked the five CEOs on the panel about how much time they spend in their chains' units. The lowest figure was 20 percent of the time; the highest, 50 percent of the time.

Tues., 9:27
Flynn has just recounted a few details of working at Popeyes when the concept's eccentric founder, Al Copeland, was still involved. He noted that he tries to be at his desk by 5:30 a.m. Copeland would routinely roll into the office at 3 or 4 p.m., Flynn explained.

Copeland, who died a few months ago, has come up a number of times in conversations here at MUFSO. One of the more interesting mentions was a ghost story starring Al. It seems that some AFC veterans went to Copeland's funeral, where a priest recounted how Al traveled through Europe toward the end of his life, looking for a cure of the rare cancer that had afflicted him. Among the stops was Lourdes, a major shrine in the Catholic faith because the Virgin Mary is said to have appeared there. A priest accompanying Copeland said he looked over at one point and saw a woman kneeling by Al's wheelchair. When he looked back, the woman was gone.

The caravan-for-a-cure continued on to Germany, where Copeland visited another place that was known as a site for miracles. The priest saw the same woman again, kneeling once again by Copeland's wheelchair. Once again she disappeared.

Tues., 10:22
Bingo: Jim Flynn, CEO of Wingstop, just noted that he's a graduate of the Naval Academy. He made reference to serving on submarines. Flynn was asked if he knew John McCain, since their attendance of Annapolis apparently overlapped. Flynn drew a laugh by divulging that McCain had a reputation of being an avid hazer and hellraiser.

Tues., 10:12
The Presidents' Panel, traditonally one of the true high points of MUFSO, has just begun. This year's panel includes Jerry Deitchle, CEO of BJ's, who just mentioned something that's often overlooked when industry veterans talk about what makes a successful chain CEO. Deitchle, like so many of his peers, spent some time in the military. It's a common trait of industry leaders, whether we're talking about Norman Brinker, Joe Lee, Roland Smith of Arby's or Jim Skinner of McDonald's.


Tues., 9:30
A gem from Jim Sullivan: "Look, it's no secret today that things are tougher than a woodpecker's lips."


Tues., 9:20
An interesting statistical tidbit from the presentation of the Spirit Awards, an honor bestowed on outstanding foodservice employers: The average turnover of hourly employees within fine dining is 102 percent. Morton's, the winner for that segment, has brought down its churn to 39 percent.

Tues., 8:40
Motivational speaker Marcus Buckingham is on the stage. Having seen Marcus before, I'm not feeling motivated, though he's clearly resonating with the crowd. But perhaps this affords an opportunity to present two informational gems from yesterday's sessions. Both came from Kent Rathbun, chef-owner of the Jasper's high-end restaurant chain. The concept had been chosen by NRN's editors as one of the year's hottest concepts.

During a panel of those concepts' operators, Rathbun noted in passing that Jasper's had cultivated a nice little niche business with private-jet catering. Its home base of Dallas, he explained, is surrounded by small airports that serve the executive traveler who has her or her own plane. As he noted, the downturn really hasn't put much of a crimp in their spending. Rathbun said he reaches out to the personnel at the airports, who are often asked by the jets' passengers and crews about where they could get a good meal. Jasper's has taken steps to make sure it's the concept that's named.

Rathbun also offered some insights into music, a key component of ambience that's often overlooked by the style addicts who notice things like color patterns or staff uniforms. Rathbun acknowledged that the element is important enough to merit his personal attention to the selections that play. His strategy is drafting four distinct lists--one each for lunch, dinner, after 8 p.m. and after 10 p.m. Each list steps up the intensity of the music both in volume and tempo, he explained. The energy-building process has been successful enough to prompt requests by patrons for the playlists.

Tues., 8:15 a.m.
The day is starting with a presentation from the National Restaurant Association about its revamp, the result of a strategic study that was expected to cost the organization in the neighborhood of $1 million. The plan calls for updating the association by focusing on four key areas. For a quick rundown, check out our story from this week's issue of Nation's Restaurant News. Link to it here.

Is there green in green?

The green movement has been a boon for puffins and wombats, but what’s it done for participating restaurants’ P&L’s? Subway co-founder Fred DeLuca used a rare public appearance earlier this week to divulge a few dollars-and-cents results for his brand.

The chain has snagged a fair amount of ink for what franchisees are doing with eco-friendly restaurants. The first wave—one unit in Florida, two in Oregon—did enough environmentally to earn a LEEDS (Leadership in Energy and Environmental Design) certificate from the U.S. Green Building Council. It's the Good Housekeeping Seal of Approval for ecological effort, earned in this instance by the use of ceiling tiles made of recycled material and reliance on sunlight for much of the interior illumination, among other steps.

The first green Subway, in Florida, cost $10,000 to $15,000 more to build than a conventional unit, DeLuca said during the Food and Restaurant Industry Forum, an event co-hosted Monday on Wall Street by the National Restaurant Association and NASDAQ.

The “jury is still out” about what return the franchisee might see on that added investment, DeLuca said. But he voiced doubts that the payback will offset the cost differential.

The wildcard, he said, is the value of public appreciation. “Some customers do choose that store over others—customer appreciation could pay off in the long term,” he explained.

Headquarters has described the green Subways as labs, and not necessarily prototypes. Officials say the stores will be used to develop and refine eco-friendly processes and features that could become part of the chain’s specs. They’ve also indicated that the first three units will be monitored for at least a year to determine how Subway’s operations mesh with the green backdrop. They’ve described the tests in part as an attempt to realize new efficiencies

The Florida unit opened in November, and the first foot long was served up in the Oregon stores in December.

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.

Tales of the talks

Sit long enough in one spot at the NRA show and you’re likely to witness either an awards ceremony or a speech. Yet, my fellow sore-footed conventioneers, where was the event that tied the two together? Honors were bestowed for standout performances in any number of areas, from culinary-school academics to menu making. Similarly, I listened to more than 50 presentations from a podium during my four days at the show. Some of them clearly deserved the distinction of a prize. So here, to plug an obvious hole in the book-sized list of convention activities, is the inaugural presentation of the Outstanding Oratory Achievement Awards, popularly known as the Oo-Aahs.

Return of the Herminator: With Indiana Jones and Batman making their comebacks, is it any surprise that one of the industry’s own action heroes would strut back onto the stage? Herman Cain has been out of the business for eight or 10 years, working in politics and hosting a radio show in Atlanta. But he clearly hasn’t lost his touch for rousing an industry audience. The former head of the NRA and Godfather’s Pizza, who once shot up at a town-hall meeting to out-debate a stunned President Clinton, knocked the dust off chandeliers with two booming presentations. At a luncheon that brought together hospitality-school students and industry luminaries, the one-time senatorial candidate recounted how his father worked three jobs so he could realize his dream of buying a house where Cain and his brother would each have his own bed. “Twin beds?,” Cain boomed. “We’d been sharing a cot in the kitchen. We thought we’d died and gone to heaven.”

That night, at a gala where he was awarded the lofty distinction of Diplomate by the NRA Educational Foundation, Cain sounded a more somber tone. “Some of you may have heard that I had cancer,” he said in a voice that could slip deeper than a foghorn. “I say ‘had cancer,’ because I had cancer. I’m now 100 percent cancer free.” Word that he’d beaten Stage Four colon cancer, delivered in his evangelical style, had the audience roaring.

But he was no match for his fellow award-winner, a thoughtful, a bashful by comparison chef from Washington, D.C.

Ricchi rocks the house: The Diplomate designation was also bestowed that night on Chris Ricchi, chef-proprietor of Ristorante i Ricchi in the nation’s capital. Looking more like a surfer on spring break than a working mom with two grown children, Ricchi was profiled in a video that highlighted an aspect of her life that was unfamiliar to many of us. Ricchi’s son, the tape explained, had a disability that required his enrollment in a specialized school in the D.C. area. The place sounded like a wreck, with a leaky roof, grounds that had all the warmth of a war zone, and a food service whose only recognition would likely come from health authorities. An administrator recounted how Ricchi took a look at the place and calmly informed another parent, “We can do better.” She then proceeded to raise some $4 million for a transformation.

Taking the podium, Ricchi acknowledged that she’d raised the money by turning to her peers in the restaurant business, who “all opened their checkbooks.” Then she asked her children to stand, including the son whose life had been so powerfully affected by people in that very room. The applause could’ve been heard on the space station.

“This is it,” she roared with a fire that could only come from the heart. “This is what’s important. It’s all about how we can help others. And no one does it better than this industry.”

There were more napkins dabbing eyes than you’d see at a wedding.

But Ricchi wasn’t the only speaker to prompt the sort of sniffling you might hear from first graders on Day One of school. The industry was introduced the next morning to the well-spoken young director of training for Whataburger, who pulled no punches about where she came from.

‘I had to get out.’ “I grew up in Haines City, Fla., in a neighborhood where drugs were available 24 hours a day,” Nicole Jackson recounted in the printed bio that was handed out for the NRA’s Faces of Diversity Awards. “My mom worked a lot but partied a lot, so we lived with my grandmother.”

“We lived on public assistance, and I was told I could aspire to be a janitor or a maid,” she wrote. “I knew I had to get out.”

She did, ultimately picking the restaurant industry as her path. The first step was a crew position at a McDonald’s, earning $3.35 an hour. She quickly moved up there, was hired away by Krystal, and then by Whataburger. And there she was on Sunday, winning an award from the restaurant association for showing others how to climb out of their dire circumstances.

“It may seem like an award to you,” she told the directors of the National Restaurant Association. But for her, she explained, it was validation of the good she’d found in the job—not only for herself, but for the people with whom she worked every day. “We are counselors to 16-year-olds,” she exuberantly reminded the industry greybeards. “We are supplemental income because someone was a little short that month.”

Addressing some of the biggest names in the business, Jackson summoned an extra measure of volume and enthusiasm to let them know, “You wrote the lyrics to our new song. And we will pay it forward.”

Miscellaneous stuff I learned at the NRA show

The National Restaurant Association’s annual convention abounds in educational sessions, including 14 on green issues alone. But many of the revelations come elsewhere, as these minor gems attest:

Who said restaurants don’t offer health insurance? Oh, sure, you may find an operator here or there that takes a progressive stance on benefits, and there’s always Starbucks, the exception that ostensibly proved the rule. But few people in the general public—much less those in the industry—would expect to find health coverage available from the mega-sized quick-service chains, where the size, turnover and young age of the workforce presumably pushed the benefit beyond the point of feasibility. Not so, McDonald’s CEO Jim Skinner revealed in his address to convention attendees this afternoon. All 9,000 of the franchisor’s company-operated restaurants now provide employees with access to coverage. But, Skinner acknowledged in one of several surprising flashes of candor, “it’s available, but not necessarily affordable.” He seemed to suggest that affordable health coverage is one of the goals the industry should pursue in collaboration, instead of each operation scrabbling in isolation. More on that in a later post.

New fruits are ready to drop on the U.S. market. You never know who you’ll see or hear among the tens of thousands who attend the restaurant show. Who, for instance, would have expected to catch a cameo appearance by New Zealand’s ambassador to the United States at the NRA’s board meeting? Yet there was Roy Ferguson (are you supposed to put an “Honorable” or something before his name?), talking about the efforts underway in his country to provide American restaurants with delectable new choices. Among the bunch, Ferguson said, are new fruits like the kiwi berry, a kiwi that could be eaten without being peeled.

But that’s not the only new fruit heading to the States. Tonight a group of us from Nation’s Restaurant News visited the Chicago outpost of Sushi Samba, the popular fusion-cuisine concept from New York. The concept’s Joanna Cisowska mentioned that the restaurant is participating in a Brazilian food festival, a first-of-its-kind event in the city that was scheduled to coincide with the convention. The festival is aimed not at consumers but at American restaurateurs who are visiting Chicago for the show. The government of Brazil hopes to promote the foods of that nation to restaurateurs from all over our country. Among the items they’ll be invited to sample is a fruit called cupacu, which Cisowska described as a new “super-fruit” that could be as warmly embraced by the health-conscious as acai. At the end of the meal, we were surprised with desserts that were made with cupacu, a purple puree that contrasted beautifully with the tapioca below it. Apparently it’s hardly a novelty in its native land.

Pasta prices are hard to hedge. Bakers can try to temper the spike in wheat costs by locking into long-term contracts or otherwise striving to hedge against the inflation. Not so with duram wheat, the sort that’s by pasta makers, a supplier explained. The market for that variation is purely transactional—buy what’s available at whatever price you can, without the benefit of long-term deals. He also revealed that the price of the wheat appears to have topped out.

James Brown has a following on the NRA board. Association director and Golden Corral chief executive Ted Fowler once described the board as “stale, male and pale,” Multicultural Outreach Committee chairman Daniel Halpern revealed to his fellow directors in explaining why his committee had been launched several years ago. Now, Halpern said, the diversification push is bringing results, though the board can’t let up in that effort. The situation, he said, brings to mind the words of “the poet James Brown: ‘I’m not asking you to give me anything. Just open the door and I’ll get it on my own.’” Get down, y’all.

Vegas hookers will run you $250 an hour. That nugget was overheard on the hotel shuttle bus from the convention hall. The speaker was apparently enlightening a less-worldly compatriot who mistakenly thought Sin City was all about gambling, shows, and eating the food of famous chefs. The forced listener looked as if he’d have paid $250 at that moment for a can of Lysol. Given the look of the speaker, he must have had a coupon to get the rate he cited.

Elephant & Castle has the best meatloaf in Chicago. Overheard during that same bus trip.

Curtain rises on Chicago restaurant show

The restaurant industry did its part today for Dr. Scholl’s and the trophy industry, converging on Chicago for its annual epic march through the aisles of McCormick Place, then rousing itself to cheer through a marathon of awards presentations. Yet the usual epidemic of blisters and vocal-chord strains were darkened this year by the whispered laments of business conditions. Operators started off cheerily, then slid into grim assessments of customer-traffic and food-cost trends. And suppliers glumly speculated that booth traffic would be tempered as operators cut back on the number of people they brought to the show, if they budgeted to come at all. Nor, they pointed out, are their ingredients costs any better than restaurateurs’.

Yet the aisles were crowded today at McCormick, with a healthy showing of red badges, that all-important sign of the operator. Trying to navigate my way through the nibblers, tire-kickers and serious shoppers, I spied a McDonald’s director, a top executive of Auntie Anne’s, a large contingent from White Castle, a number of onsite feeders, and more than a smattering of independents. It was hardly a scientific assessment. But equally casual assessments in past years found far fewer of those red badges.

In the way of trends, clearly the green movement is gaining share of tongue. It was a standard add-on to dialogues, as in, “and it’s sustainable, too, because….” Or, “how about the environmental impact?” I was sorry to miss a discussion this morning between culinary educators, students and industry officials, about what’s being taught to restaurant and hospitality students about ecological practices.

I suspect that I’ll notice a marked shift when I poke around the booths tomorrow toward the slanted. Certainly slanted tableware—a soup bowl whose bottom is slanted, so the liquid pools in the bottom for easier spooning, for instance—has been noticeable during some of my recent restaurant visits. The Gage, for instance, sells its wines-by-the-glass in small carafes that are skewed. Their bottom is flat, but the body and neck slant forward, making for a more dramatic presentation and easier pouring. More on this after I check the dishware booths in the next few days.

But undoubtedly the dominant talk of the show was about the difficulties of the time. One person cited a supplier whose costs have jumped by the scale of a moonshot because of escalating grain costs. Several recounted conversations where the participants wondered what casual-dining brands would disappear. Others speculated about what wounded brands in the market would likely be acquired, possibly for conversion.

It would have been nice to check the possibility of an acquisition with some of those brands. But it seems that several decided not to send their executives to the show this year.

The house party

A heads-up to National Restaurant Association show coordinators: There is a second political party out there, you know. The association served up a pleasant surprise Monday by announcing that John McCain is going to drop by the industry’s mega-get-together next week in Chicago, first to speak to attendees, then to powwow with industry leaders about travel and tourism. His participation will follow by two years the unscheduled appearance of President George W. Bush, one of a long line of political speakers that also includes his mother, Barbara (accompanied by her dog, Millie), Ronald Reagan (in his second post-White House public appearance), Gerald Ford and Herman Cain. In one of those uncanny coincidences that no bookmaker in Vegas could anticipate, all were Republican (though I can’t absolutely swear to Millie’s political persuasion).

It’s easy to see why. As James Carville quipped at his recent appearance at an industry event, “I’d like to say hello to all of my fellow Democrats. All eight of you.” This is a obviously a Republican industry. And the whole point of a convention is being with persons of your own calling.

It’s great that McCain will be addressing the NRA’s convention. Indeed, it’s a tribute to the association that it can land figures of that stature, and the timing couldn’t be more perfect. This election is truly a race, with the outcome as uncertain as any I’ve witnessed. And you’re talking about someone who can recall listening to John F. Kennedy’s warning about some missiles in the place where Ricky Riccardo came from. A presentation by McCain could stimulating experience indeed.

But even rabid GOPers would have to acknowledge that their flag-bearer may not be the one voted into office six months from now. Nor is there any speculation about the Arizona senator’s claim to represent the team. His appearance may be more of a rah-rah event than a sobering moment of thought.

Face time with Obama or Clinton, in contrast, might have been far headier. If they’ll truly be enemies of the industry, isn’t it better to have a sit-down now, figuratively speaking? Where do they stand on industry issues like menu labeling, no-match letters or foreign tourism promotion? Inviting the trade’s adversaries might have been far more educational than a pep rally. And if the choice of the Democratic candidate has still yet to be decided, wouldn’t it be interesting to determine which one the industry would prefer to see in the race?

For all I know, the NRA did invite one or both of the Democratic contenders, and was turned down by each. Or that there might be a surprise last minute stop-by by one or both, akin to George W. Bush’s unexpected presentation in 2006.

That would be a pleasant surprise indeed, and I don’t say that because of my own political leanings. During times of political uncertainty like these, it’s better to learn what your adversaries are thinking than it is to review the points of agreement with the entrant you prefer.

Speaking of immigration

One of the highlights of last week’s Multi-Unit Foodservice Operators conference was a panel discussion of the nation’s immigration problem and what should be done about it. Discussion, debate, argument—why get hung up on semantics?

And yet semantics, as the panelists noted, is often what keeps tempers burning when the topic arises in any public forum. As National Restaurant Association chairman Dick Rivera observed, a hardliner on the panel referred to “legal immigrants” but “illegal aliens.” Clearly “aliens” is a more pejorative and loaded word, applied more often to mutant invaders from space than foreign students who over-stay their visas.

Rivera was brilliant in arguing for a moderate approach to resolving the issue of illegal immigration. And, perhaps not surprisingly, he suggested the process begin with the adoption of a new glossary. A key point of contention is whether the 12 million illegal aliens estimated to be in the country right now should be forced back to their countries of origin before they can begin to seek legal residence within the United States. To do otherwise, conservatives argue, would be granting amnesty to obvious lawbreakers.

“I prefer the term ‘plea bargain,’” said Rivera. The illegals should have to pay taxes and perhaps fees or fines, rather than get away scot-free, he explained. But they should also be allowed to stay, which he defined as “being on parole.” As long as their behavior remains lawful, why not let them continue to work and live here while they seek legal residence?

It was a dash of reason and level-headedness, elements that sorely seem to be missing from the discussion of immigration, if you can even call that screaming match a discussion.

One other interesting tidbit that emerged during the panel: One expert noted that about 7 million of the nation’s estimated 12 million illegal immigrants are currently working. The restaurant industry has estimated that it alone employs about 1.4 million of that illegal workforce, or 20 percent of the tally.

Clearly the “problem,” to use another loaded word, is a major one for the trade. It’s fortunate that Rivera has suggested a vocabulary that will serve the business well in its attempt to foster an actual discussion on immigration. And, thanks to that presentation at MUFSO, it’s a give-and-take that shouldn’t be alien to the trade.