No Happy Meal toy, though

Discounting, it seems, is highly relative. Knocking $2 off the price of a pie may work in the pizza business, but the high-ticket Ruth’s Chris chain has to operate on a different scale. So, after posting a 15-percent drop in comp sales for its non-franchised steakhouses, the wheezing brand is planning a mail drop of $25-off coupons. It's also experimenting with the fine-dining equivalent of value meals.

Upper-bracket bargain hunters will already find a new steal at the (steak)house that Ruth built: A five-ounce lobster tail stuffed with crab meat and coupled with a six-ounce beef filet for $39.95. Not exactly a Chicken Snack Wrap, but clearly a deep discount by the standards of the chain's market.

Three other Cadillac-echelon combos are in test. The Ruth’s Classic comes in two versions. For $39.95, patrons can pick an entrée, side and dessert. If they pop for the $49.95 version, the choices also include a full-sized rib eye, a lobster tail and lamb chops.

Simultaneously, the chain is testing a three-protein deal that would make Michael Jacobson overheat before he could condemn it as an obesity booster: A meat, a fish, and a chicken selection, accompanied by a side and a dessert, for $44.95.

“Frankly it's too much food,” Ruth’s Chris acting CEO Michael O’Donnell told shareholders.

And, perhaps, too much of an outlay. O’Donnell said the Ruth’s Trio will be recast with smaller portions and a price “in the $29.95 range.”

During a financial conference call convened by the chain’s parent, Ruth’s Hospitality Group, O'Donnell also mentioned a re-affiliation with Cameron Mitchell, the Columbus, Ohio, restaurateur who sold the company his Mitchell’s Fish Market and Mitchell’s Steakhouse chains. O’Donnell wasn’t clear on the nature of the affiliation, but indicated that the entrepreneur would be accessible if the company needed his expertise. “He has kindly agreed to be available to us on a limited basis,” O’Donnell said.

Live from MUFSO

Greetings from the ballroom where some 600 industry leaders have gathered for NRN's annual MUFSO conference. I'm going to provide the highlights, as well as an overall sense of the conference's mood, by live blogging for the first time. This is best read from the last posting up to the first.

Mon., 2:05
Tase noted that Wienerschnitzel has saved $125 per restaurant per month by swapping out its incandescent light bulbs for flourescent versions.

Ken Reimer of Baker Bros., the fast-casual deli chain, is echoing what other operators have said during MUFSO: Using standardized restaurant features can cut costs and construction times. Reimer said that many of his chains' units buy their supplies from Home Depot.

Leondakis said her company's fine-dining restaurants cut costs, not to mention water and detergent use, by foregoing tablecloths. She noted that restaurants are being designed with hardtop tables, even when they're position as a fine-dining choice.

Mon., 1:55
Denise Tase revealed that Wienerschnitzel is trying end-cap locations because of the lower costs. He noted that the chain will spend about $500,000 for one of those locations, turnkey, while the cost of a traditional store could run to more than $1 million.

Mon., 1:40
Among the fast-circulating pieces of gossip here at the conference is the departure of David Goronkin from Redstone American Grill, where he'd served as chief executive and president since early January. Goronkin had resigned the same posts at Famous Dave's of America to join the upstart Redstone concept, a venture of Champps founder Dean Vlahos.

Staffers in New York were able to confirm that Goronkin did indeed part with the chain last week. They're awaiting a callback to get the details.

Mon., 1:35
Niki Leondakis from Kimpton Hotels & Restaurants is offering the wartime perspective of fine dining. Discounting or deal-making "has to be more subtle," she explained. She recommended "doing anything that conveys a sense of value."

She addressed what she acknowledged is the fine-dining version of "bundling," where disparate elements of a meal are packaged into an attractively priced packaged deal. At Kimpton, that means combining a meal with theater tickets.

Similarly, she said, the company's in-hotel restaurants are going to local businesses and offering a discount to employees who come for a special "event." A slight twist, she said, was creating a Hungry Actors' Club, to draw in folks who are drawn by both the networking opportunity and the deal that's extended.

Among the new things Kimpton is trying is cutting the price of a bottle of wine in half.


Mon., 1:30
On stage are the three chain executives participating in our "Capital Ideas in Challenging Times" panel, a look at the tactics operators are using to weather the grueling current economic environment.

Dennis Tase of Galardi Group, parent of the Wienerschitzel chain, just touched on what has proven to be a theme of the conference: Discounting may get butts in seats today, but what's it going to mean when conditions improve? Won't it ultimately cheapen the concept? Will the discounting binge leave a hangover of sorts?

Clearly much of the industry regards that issue as purely academic; they're discounting like Christmas tree vendors on Dec. 25. Yet the question underscores the underlying optimism that the industry will rebound from the current mess. It's just a matter of time.

The full-service barbell

From an infomercial yet to be filmed:

FRENETIC VOICE-OVER: Tired of sagging customer counts and flabby marketing efforts? Show investors who’s their daddy with this breakthrough way to keep patrons coming back. Soon your only worry will be getting all that extra money to the bank![Background image of an armored car being loaded with sacks marked “$$.” Cut to a guy who looks like Danny DeVito, tossing fistfuls of Benjamins into the air with near ecstasy.]

VOICE-OVER RESUMES, SPEEDED UP TO 78 RPM: Introducing…the Barbell Concept!! Already used by chains like McDonald’s, Taco Bell and Wendy’s, the Barbell Concept is now fully adaptable to full-service operations. Here’s how it works: Offer a menu of everyday bargains, like the section of entrees now offered for as little as $7.95 on most McCormick & Schmick menus. But there’s more! While you capture bargain hunters with those head-turning deals, boost your check averages with premium products. Enticed by wild halibut, Alaskan salmon or sea bass? McCormick & Schmick is selling it to “high end guests” for $30!!

[Cut to a picture of a buxom woman in a bikini, holding a fake old-fashioned barbell as she oohs and ahhs. The weight on one end is marked “Value,” the one other, “Premium price.”]

VOICE-OVER: Here’s what management has to say:

[Cut to a photo of Doug Schmick, the company’s chairman and CEO. He addresses the camera as “ACTUAL COMMENTS” flashes under the image.]

SCHMICK’S VOICE: With a consumer with household incomes lower than $75,000 who visit us one to two times a year, the majority of our menus have what we call a ‘value band,’ which is made up of anywhere from 10 to 14 items priced between $7.95 and $13.95. The value band accounts for only three to five percent of our menu mix, but appeals with the middle-income consumer.”

[Cut to a picture of a restaurant manager happily pushing a wheelbarrow full of greenbacks.]

VOICE-OVER RESUMES: Be part of the trend that’s remaking casual dining. Outback features a $9.99 steak and an average check in New York of $32! Texas Roadhouse has 19 entrees priced under $10, PLUS a $17.99 prime rib!!

Don’t miss out on today’s hottest full-service trend!! Get your barbell strategy today!!!

Our operators are standing by.

[Close with this disclaimer, presented in type too small for a sharp-eyed mouse to read:]

All information taken from recent conference calls.

'President Skinner here'

It’s 3 a.m. and American families are safe and asleep. But there’s a phone ringing in the White House. Who do you want to answer it? If it’s a financial crisis, I’d vote for Jim Skinner, CEO of McDonald’s. With the chain posting an 8.3 percent leap in domestic same-store sales for February, after a nearly unbroken stream of bad news from other restaurant chains, he and his team have shown they know how to pull prosperity out of a trying situation. Indeed, we might want to consider steroid testing.

Okay, okay—Leap Year helped a lot, with Feb. 29 getting credit for four percentage points. But we’re still talking about a pretty heady jump in comps. And from what? The chain says the pole vault over last year’s tally is due to the push behind breakfast, coffee and everyday bargains. With the exception of Yum’s and CKE Restaurants’ brands, what quick-service chains aren’t doing that right now? How many have succeeded the way McDonald’s has?

Of course, it helps to have the chain’s marketing kitty, which is roughly equivalent to NASA’s budget for the Saturn project. But even competitors will have to acknowledge that they must be doing something right up at Oak Brook. Barack and Hillary should stop by for a quick tutorial on turning a wheeze into a “Whoa!”

Divide and conquer?

I hope you can hear me over all that fiddling. It’s that damned pack of economists, wailing away as they watch the business climate soften like an overripe peach. They’re more concerned about declaring a recession at precisely the warranted moment than they are about the meltdown already evident in industries like the restaurant business. It’s a good thing the trade is taking matters into its own hands. While the Brooks Brothers set jams away, restaurateurs are trying R-word remedies like this recent phenomenon of adding more pricing tiers.

If you stop by an Au Bon Pain bakery-café right now, you can forego the usual salad or sandwich and economize a bit with one of the regional chain’s new small plates. But your options don’t end there, or even with picking which of the 14 new Portions you’d like. Go for the hummus and cucumbers, and you pay $2.99. Trade up to one that includes meat, like the Thai peanut chicken, and you’ll have to pop for $3.49.

In another economic climate, might the fast-casual chain not have bothered to create two pricing groups a mere 50 cents apart?

Similarly, if you wanted to trade up from fast food to a full-service breakfast, Denny’s has just the option for you. Or options, really. Try one of its three new “real” breakfasts (as opposed to the “fake” ones purportedly offered by quick-service restaurants), and you’ll pay $5.99. But each has a trade-up option: Pay a buck more, and get a few add-ons—another bacon strip, sausage link and hash browns, maybe.

The notion is certainly not new. It’s a staple of the industry to offer a soup or salad add-on for a slight bump in the price of an entrée.

But the tactic seems to be gaining momentum, and sometimes with a twist. In the standard version, you offer a lower priced option, like Quiznos’ $2 Sammies sandwiches. In some instances, even that price is segmented, into Bargain and Bargain Plus.

Perhaps the poster concept is Starbucks. Once upon a time, the coffee king offered its drinks in three sizes, in prices ranging from high to stratospheric. Now the chain is testing a $1 “short” option that comes with free refills. Some stores are also experimenting with coffee made in a press pot, priced at more than $2. That price falls between the charge for a standard cup of Coffee of the Day and the usual hit for premium espresso-based drinks.