Restaurants

First Watch Rises to the Top of Casual Dining

Restaurant Management - Fri, 01/24/2020 - 11:14
First Watch Rises to the Top of Casual Dining danny Fri, 01/24/2020 - 11:14

The breakfast brand was crowned America's favorite brand by Market Force. What does it say about the industry?

January 2020

Editor’s note: This is the first in a series of stories on the state of casual dining based on exclusive Market Force Information data.

Chain restaurants have always fought a unique battle. They not only compete with each other, but with an independent scene that dominates the total U.S. dining landscape in terms of sheer volume. In August 2018, The NPD Group reported a 2 percent drop in single-unit restaurants—there were 352,815 that spring. While down 5,719 from the previous year, it still represented more than half of all U.S. commercial restaurants. Per CHD Expert, the pool of restaurants with 10 or fewer locations counts for 68 percent of all domestic eateries.

NPD estimated that independent commercial operators would spend $43 billion with foodservice manufacturers in 2020, a 3.4 percent compounded annual growth rate over 2018. It will comprise 14 percent of total restaurant operator spend, according to NPD’s Foodservice Future Views.

Forgetting the volume part of this equation, though, chains face another roadblock. There is often, especially among younger consumers in dense, urban markets, negative bias (right or wrong) attached to multi-unit concepts and the generalizations that follow.

CHECK OUT LAST YEAR'S WINNER

But what many brands realize today is that perception spins two ways. It’s why you see legacy chains working backward, in many cases, with their messaging. What happened a few years back, as millennials matured into the marketplace, was that restaurants observed demographic megatrends and decided they had to act now or get buried. Mostly, it led to classic concepts reinventing themselves to fit the needs and desires of guests who grew up in a different generation, with different experiences. And this is where brand drift set in for some of casual dining’s biggest players. In the quest to connect with millennials, restaurants barreled down a path of changing everything they stood for. Abandoning their brand distinction in hopes of appealing to all generations.

“Creating a differentiated experience still matters. Those brands that execute consistently on their brand promise outperform their peers,” says Brad Christian, chief customer officer at Market Force Information.

The unintended side effect being that loyal customers—some who frequented a certain restaurant for decades, sharing through generations—walked into their regular spot and found it unrecognizable. It morphed into just another restaurant chain. And now, the aforementioned battle with independents progressed to critical levels. Because whether or not an iconic chain had 500 or 2,000 locations, it typically got there by following its North Star brand positioning, market-by-market. It was differentiated on day one. Then you toss in a challenged economic climate and other, common restaurant issues, and chain operators quick-reacted, tossing aside their tried-and-true playbooks instead of latching on to brand strengths. Losing grip on their core, in other terms.

This issue has reversed pretty dramatically recently. And what many chains discovered is that their original DNA was actually more appealing to millennials than they thought. IHOP, for one, reported that 51 percent of its customers were aged 34 and below at the start of last year.

Yet, no matter how you look at it, one of the biggest issues with brand drift is that it spreads restaurants thin and gets them away from the basics: Quality, service. Brands that try to stand for everything typically aren’t great at anything. It’s a formula that just doesn’t work today when guests are more discerning than ever.

Market Force Information’s annual casual-dining study—one of the most cited in the industry—surveyed 6,598 U.S. customers on their eating habits, brand preference, visit frequency, brand engagement, customer experience, meal delivery, and social media usage. The goal: Take the pulse of one of the restaurant world’s most fluid categories and see where the opportunity lies.

“It has been our observation through the last five years of this study that success in casual dining more than other restaurant segments really relies on two key factors; the first is the quality of the front-line staff in the restaurants and how trained and engaged they are and the second is making the meal more than just a transaction,” says Brad Christian, chief customer officer at Market Force. “Creating a differentiated experience still matters. Those brands that execute consistently on their brand promise outperform their peers.”

Here are how this year’s rankings sorted out, measured by the company’s Composite Loyalty Index metric (the average of percentage recommended plus percentage of satisfaction at the brand level). It includes restaurants across multiple sectors.

  • 1. First Watch: 68 percent
  • 2. Pappadeaux: 64 percent
  • 3. Texas Roadhouse: 61 percent
  • 4. MOD Pizza (fast casual): 60 percent
  • 4. Mellow Mushroom: 60 percent
  • 5. LongHorn Steakhouse: 58 percent
  • 5. Cracker Barrel: 58 percent
  • 6. Bonefish Grill: 56 percent
  • 6. Maggiano’s: 56 percent
  • 7. Carrabba’s Italian Grill: 55 percent
  • 7. Blaze Pizza (fast casual): 55 percent
  • 8. Sweet Tomatoes (fast casual): 54 percent
  • 8. Cracker Barrel (for its general menu, not just breakfast): 54 percent
  • 8. Marco’s Pizza (quick service): 54 percent
  • 9. California Pizza Kitchen: 53 percent
  • 10. Bob Evans: 50 percent
  • 10. Olive Garden: 50 percent
  • 11. Red Lobster: 49 percent
  • 11. Outback Steakhouse: 49 percent
  • 11. Waffle House: 49 percent
  • 12. Cheddar’s Scratch Kitchen: 48 percent
  • 12. BJ’s Restaurants: 48 percent
  • 13. Logan’s Roadhouse: 46 percent
  • 14. Cheesecake Factory: 45 percent
  • 15. Pizza Hut (buffet category): 44 percent
  • 16. Red Robin: 43 percent
  • 17. Cici’s Pizza (buffet): 42 percent
  • 17. Pizza Hut (not buffet): 42 percent
  • 18. Chili’s: 41 percent
  • 19. Denny’s: 40 percent
  • 19. IHOP: 40 percent
  • 19. Golden Corral: 40 percent
  • 20. Ruby Tuesday: 38 percent
  • 21. Applebee’s: 37 percent
  • 21. TGI Fridays: 37 percent
  • 22. Buffalo Wild Wings: 35 percent

Speaking to the initial, independents point, here’s an interesting data set that emerged from Market Force’s study. Only two of the seven food categories studied (breakfast, buffet, general menu, Italian, pizza, seafood, and steakhouse) favored casual-dining restaurants over locally owned spots for the question, “If given the opportunity, which type of casual-dining restaurant would you choose?”

Breakfast was one: 58 percent said they’d go chain over locally owned. General menu was the other at 61 versus 39 percent.

You can see the full results below.

Market Force Information

With First Watch, a 370-unit brand with restaurants in 29 states, taking the top spot, let’s focus on breakfast for this first story. We’ll get into the other categories and some side topics, like tech adoption and delivery, in later pieces.

Breakfast and brunch: a place for full-service to win

Breakfast has always been an intriguing category in the sit-down world because it provides clear points of differentiation versus quick-serves. For starters, frequenting Dunkin’ on the way to work and grabbing a meal at IHOP on Sunday are two very different occasions. Additionally, as many upstarts, like First Watch, are leveraging, there’s a beverage attachment opportunity that promotes social gatherings in a way few counter-service competitors can. And it fits snuggly into that millennial mindset so many full-service chains are chasing.

Market Force found that 41 percent of the customers it polled said they’ve eaten at a breakfast casual-dining chain in the past 90 days. Here’s how it broke down.

  • General family meal: 69 percent
  • Brought children (under 18 years old): 28 percent
  • General social gathering with friends: 20 percent
  • Celebrated a special occasion: 7 percent
  • Romantic dinner or date night: 3 percent
  • Made a reservation ahead of time: 3 percent
  • Business meal with colleagues: 3 percent

You can see clearly the space breakfast can thrive in: Social gatherings and family. Both are powerful targets in today’s full-service, market-share grab because they represent destinations. It’s harder than ever to chase spontaneous traffic given the convenience options at hand. It doesn’t help that malls are struggling to generate consistent crowds below the A-plus level, too. So, being able to cater to very specific needs—feeling comfortable dining out with your children and meeting friends—are great places to be. And, in this case, they can work together with young families hoping for a social break with other young families.

That would explain why the segment has grown in recent years as millennials age. But with that reality comes competition and the need to win somewhere other than daypart focus.

This chart below shows how breakfast chains have done a solid job on that level.

Market Force Information

This one, however, tells the real story.

Market Force Information

For the question, “which of the following breakfast casual-dining chains have you visited most recently?” IHOP took top billing.

  • IHOP: 33 percent
  • Denny’s: 20 percent
  • Waffle House: 13 percent
  • Cracker Barrel: 11 percent
  • Bob Evans: 4 percent
  • First Watch: 4 percent

Some of that, surely, has to do with the fact IHOP and Denny’s are the largest full-service breakfast brands in America (in that order). IHOP is actually the largest sit-down chain across all segments with 1,705 domestic restaurants. Sister brand Applebee’s has 1,693.

But the legacy giants also deserve credit for their ability to innovate while staying on-brand. Here’s more on how IHOP has done so through smart marketing and timely menu innovation. Here’s a deep dive into Denny’s tech- and design-centric efforts to reach new customers and satisfy die-hards.

You might be asking why First Watch is at the bottom. It’s simply a matter of the emerging arrow pointing up. The Advent International-owned brand was founded 1983 in Pacific Grove, California. But roughly 15 years ago there were just 60 locations, making it one of the fastest-growing daytime-only concepts in the country. First Watch hired Greg Barber as its first chief transformation officer in mid-January. He spent nine years working for PepsiCo, Inc. and clocked time with Mrs. Fields Famous Brands as president of TCBY. His role with First Watch is to lead strategy development.

In Market Force’s study, First Watch sailed competitors when it came to trial.

Percent first time visit

  • First Watch: 12 percent
  • Cracker Barrel: 6.6 percent
  • Denny’s: 5.1 percent
  • IHOP: 3.8 percent
  • Bob Evans: 3.7 percent
  • Waffle House: 3.6 percent

And here’s where First Watch is shining on the ground level.

Market Force Information

Year-over-year, First Watch enjoyed a stellar jump.

Market Force Information

Broadly, customers are looking for pretty specific traits in breakfast chains. To the question, “thinking about your most recent visit to this breakfast restaurant, please rate the following where 1 equals not at all satisfied and 5 equals very satisfied,” here’s how it shook out.

  • Good variety in menu options: 49 percent
  • Friendly service: 49 percent
  • Good value for money: 45 percent
  • Clean interior/exterior: 40 percent
  • Fast service: 37 percent
  • Inviting atmosphere: 35 percent
  • Sensitive to food allergies: 30 percent
  • High-quality food: 29 percent
  • Good specials/promotions/coupons available: 28 percent
  • Healthy food choices: 25 percent
  • Was more of an experience than just a meal transactions: 19 percent

Customers hold back the most on giving top-box ratings for those final two categories, Market Force pointed out.

It’s important to circle how service, value, and speed rise above in breakfast. As future stories exploring other categories will show, this isn’t a universal theme in full service. But it fits the early daypart. The service element is one avenue sit-down chains can separate themselves from the other breakfast options on the market.

The roadmap:

Market Force Information

What breakfast brands need to work on

First Watch took seven of the 11 categories below, crushing the field in healthy choices and food quality.

Market Force Information

One of Market Force’s questions also dealt with problem solving in the restaurant, which can be an area of strength for chains that put stock in it.

In the breakfast category, the company found that nearly one in 10 guests experienced a problem.

Fifty-three percent of people talked to a staff member; 36 percent did nothing; 12 percent completed an online survey; 8 percent wrote a negative comment on social media; 5 percent other; 3 percent contacted the restaurant’s call center; and 2 percent wrote a negative tweet referring to the brand or location.

The lesson there is that it helps to, one, have a designated place in the restaurant for customers to voice their issues. This way, operators can address problems before they blow up (social media). And two, educate servers and GMs on how to talk with unhappy guests. Hearing people out, more often than not, inspires loyalty and repeat visits. The opposite does, well the opposite. And once that comment hits social media there isn’t much you can do to stop the momentum.

That brings up the question, what are people complaining about?

Market Force Information

And what that means.

Market Force Information

Cracker Barrel reported the lowest problem experiences. First Watch was best at resolving them.

Cracker Barrel

  • Experience a problem (percent yes): 5.9
  • Resolved to satisfaction (percent yes): 39

Waffle House

  • Experience a problem (percent yes): 7.5
  • Resolved to satisfaction (percent yes): 32

Denny’s

  • Experience a problem (percent yes): 8.6
  • Resolved to satisfaction (percent yes): 34

First Watch

  • Experience a problem (percent yes): 9.3
  • Resolved to satisfaction (percent yes): 56

Bob Evans

  • Experience a problem (percent yes): 9.3
  • Resolved to satisfaction (percent yes): 30

IHOP

  • Experience a problem (percent yes): 10.4
  • Resolved to satisfaction (percent yes): 38

Where does delivery factor in?

Delivery remains a pretty underserved channel in breakfast. Per Market Force, just over one in 10 breakfast guests said they have used delivery.

  • DoorDash: 32 percent
  • UberEats: 23 percent
  • Grubhub: 14 percent
  • The restaurant’s own service: 12 percent
  • Postmates: 8 percent

By brand:

Market Force Information

Getting social

Market Force noted that about one in 10 guests reviewed breakfast restaurants before showing up. First Watch topped this field as well. Eleven percent of people said they read social media reviews before eating at the restaurant.

  • First watch: 25.9 percent viewed social prior to visit
  • IHOP: 10.6 percent
  • Cracker Barrel: 9.7 percent
  • Denny’s: 9.3 percent
  • Waffle House: 9.3 percent
  • Bob Evans: 7.5 percent

Where it’s happening:

Market Force Information

It was also noted that nearly three in four respondents didn’t know if the restaurant offered a mobile app, paving the way to drive brand awareness. Twenty-one percent said they were aware. And of those, 45 percent actually downloaded the app. It’s all about clearing the gap.

Why are people using breakfast apps?

  • View the menu: 50 percent
  • Find discounts or promotions: 40 percent
  • Participate in the restaurant’s loyalty/rewards program: 31 percent
  • Place an order: 31 percent
  • Get restaurant updates: 27 percent
  • Pay for an order: 26 percent
  • Make a reservation: 16 percent
  • Find location: 14 percent
  • Track an order: 13 percent
  • Read reviews: 11 percent
  • Get directions: 8 percent
  • Get nutritional information: 8 percent
  • Buy gift cards: 4 percent
Market Force Information

The keys takeaways from this section: Good value for money, high-quality food, friendly and fast service, variety, and clean restaurants—those are the satisfaction drivers in breakfast. Start there and the rest should follow.

Coming up next time, we’ll explore the general menu category, and see where brands like Applebee’s, Chili’s, and Red Robin stack up.

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Categories: Restaurants

8 Ways Your Restaurant Can Save Energy

Restaurant Management - Thu, 01/23/2020 - 09:17
8 Ways Your Restaurant Can Save Energy danny Thu, 01/23/2020 - 09:17

Even the smallest of changes can make a big impact on a business’ energy use.

January 2020

Restaurant owners have plenty to worry about through the course of their day. They continuously face uncontrollable variables such as crowds (or lack thereof), changing food prices, employee management, local regulations and accurate accounting. There are only a few things owners can control, and how much energy they can save during their daily operations is one of them.

Small business owners are crafty by nature. They are constantly adjusting, looking at different ways to approach a problem, planning and thinking ahead. Including energy efficiency in that future planning can not only help restaurateurs potentially help their bottom line, but also leaves a positive impact on their environment. Keeping their business up-to-date on how they reduce energy use can shrink a business’ carbon footprint.

Just as business owners analyze trends in their industry and their business operations, they should analyze trends in how and when they use the most energy to see where they can save. Even the smallest of changes can make a big impact on a business’ energy use, particular during busy seasons:

Audit your energy use, not just your books. Requesting an energy assessment from your local energy provider can help identify any opportunities to save energy and money.

Make your thermostat work for you. A programmable thermostat can save an extra 10 percent on heating and cooling costs. They regulate the temperature of the space, so you don’t have to. Adjusting the thermostat by even a few degrees according to when people are in the restaurant can save energy.

Put the closed sign on your equipment. A good rule of thumb for your kitchen equipment: if it’s plugged in, it’s using energy—even if you’ve closed up shop for the day. Unplugging light-up signs and displays when not in use can help you save.

Incorporate your HVAC into your cleaning routine. Dirty air filters make HVAC systems work harder and reduces air flow. With the change in seasons, check to see if your air filters should be swapped out to ensure the system runs more efficiently.

Protect office hardware with a power strip. All those cords coming from your printers, computers and phones use energy even when you’re not using them. Organize and plug them into a power strip to make them easy to shut off at once and to help save up to $100 a year.

Cook up savings by updating your kitchen equipment. The latest cooking technologies can make your restaurant or food service areas more efficient and comfortable, while helping your kitchen workers stay at peak performance. Carefully consider the cost of multiple fixes to an old appliance versus investing in newer, more energy-efficient tools.

Replace incandescent bulbs with LEDs. Don’t let incandescent bulbs fool you. They typically last about 1,000 hours whereas a 12-watt LED bulb can last up to 25,000 hours.

Put motion sensor lights on your payroll. There are some places of your business that can go unvisited for long lengths of time, such as restrooms or store rooms. Reduce the amount of electricity you use by never forgetting to turn off a light again.

Implementing even one or two of these changes at a time can have positive long-term effects on both a business’ bottom line and their local environment. Business don’t have to do this alone. They can look to programs such as Energy Upgrade California, which has a goal of helping small business owners use energy better. As climate change concerns grow it’s up to business owners to set an example for their community and do what they can to control their impact on the environment.

Gloria Colazo is the co-owner of Mariscos El Amateco, a Salvadoran restaurant in Van Nuys and a small business partner of Energy Upgrade California. Gloria has spent decades advocating for better opportunities for women in the workforce and the executive sphere, and has championed for advancement opportunities for all Latinos, representing nationalities from across Central, South, and North America. She is also deeply invested in health education and improving health outcomes for vulnerable communities, and works with local and international relief and aid efforts. She is currently serving as the Regional Director of both the El Salvador Chamber of Commerce and the Ecuadorian-American Southern California Chamber of Commerce, and as Vice-Chair of the Board of Directors at St. Jude Health Centers.

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Categories: Restaurants

City Works Finds the Right Growth Formula

Restaurant Management - Wed, 01/22/2020 - 15:23
City Works Finds the Right Growth Formula danny Wed, 01/22/2020 - 15:23

Bottleneck Management doubled its emerging brand in the past year.

January 2020

Mark Gray, COO of Bottleneck Management, knows that his company’s growing brand, City Works Eatery & Pour House, isn’t immune to all of the challenges facing the casual-dining industry.

However, he believes if a concept focuses on what differentiates itself, there is a chance for success. With the inclusion of an impressive AV package—sports, viral videos, and music videos—paired with a diverse menu of food and beverages, Bottleneck has forged an atmosphere suitable for a wide-ranging customer base, from a family of four to a couple who comes to relax and watch the big game.

Naturally, sustained success feeds directly into growth, which is the path City Works has been on for the past few years. The full-service chain opened four locations in 2019 in Tysons, Virginia, and three Chicago suburbs. That aggressive growth doubled the number of open units to eight. Two more are on the way, as well. A City Works is scheduled to open in Disney Springs, Florida, in February, and later in the year, another will go live in Watertown, Massachusetts, about 30 minutes outside of Boston.

“So, the growth strategy has been to find markets where we feel like the concept is really going to resonate, plant a flag, and I think what everyone will see over the next couple of years is that we go back into those markets and backfill and fill out those markets,” Gray says. “The genius to that concept is that we work in downtown business districts, we work in event-driven [areas], near arenas, and we also work in the suburbs, so our ability to concentrate our resources with marketing, manpower, and also supply chain as we backfill into some of these larger markets where we’ve planted some of those flags—that’s going to be the growth strategy over the next couple of years.”

Chicago­–based Bottleneck was founded in 2001 by college friends Jason Akemann and Nathan Hilding. Chris Bisaillon, their classmate, joined in 2007 and helped grow the company further. In addition to City Works, Bottleneck owns Old Town Pour House, South Branch Tavern & Grille, and Sweetwater Tavern & Grille.

Bottleneck Management Bottleneck Management

City Works' units average roughly 10,000 square feet and each house at least nine flat-screen TVs.

Akemann, Hilding, and Bisaillon refused to have their restaurants be pigeon-holed as a bar, so in 2016, they established City Works to stand out from the competition and prevent market confusion. City Works has now become Bottleneck’s source of growth and its brand of the future. By the end of 2020, it will extend across six states.

The eatery and pour house features more than 90 local, regional, and global brews and 98 percent of its menu is made from scratch. The stores average roughly 10,000 square feet and each house at least nine flat-screen TVs. The largest location is in Frisco, Texas, which boasts 13,000 square feet and 28 TVs. Each of the units are company-owned and there are no future plans for franchising, Gray notes.

In the next year, Gray expects City Works to expand its menu by 20 to 25 more food items and by at least 20 more craft and cocktail beverages.

“Some of the focuses both prior and also forward-looking are obviously our focus on service. We consider that to be a differentiator for us,” Gray says. “And one of the main things that sticks out, anybody with a craft beer focus really needs to be focused on diversifying their beverage program, and we think we were a little bit ahead of the curve on that. There’s a lot of folks selling more craft beers … As craft beer really got flooded with the amount of people participating in it, we began diversifying the beverage program pretty quickly to make sure that we are expanding options. One of the big things that we rolled out this year that’s been wildly successful is best-in-class brunch. Breakfast is obviously a pretty hot segment in the industry right now and we rolled out a brunch meal period that we think is definitely best-in-class.”

In addition to the chain’s amenities, Gray also emphasizes the importance of fostering talent, as well—another factor that’s played a role in the growth of City Works.

Bottleneck Management

City Works caters to a social crowd.

“They’re everything for us,” Gray says. “Financial capital is much easier to find right now than people capital. So developing those internal resources to help you expand—if there’s a restaurant group out there that isn’t making that their No. 1 priority then they are just completely missing the mark. In a 3.5 percent unemployment environment, you have to create and develop those resources, and we’re very proud of what we’ve been doing as far as that’s concerned.”

Gray, one of the newest members of the Bottleneck team, joined on as the company’s first COO in July. He previously worked at Barfly Ventures as its COO and CEO. He described Akemann, Hilding, and Bisaillon as critical to the vision and direction of Bottleneck’s culture. Each of the leaders are involved in site selection, growth strategy, menu development, and strategic hiring.

He was impressed with their engagement and view of the business. The group’s excitement for the growth of City Works and Bottleneck overall convinced him to join six months ago. He says they were open-minded about what the concept could become. He knew it was going to be a partnership and collaboration, and they gave him a level of comfort to provide new ideas and inject energy into the food, service, and beverage programs.

Gray says the sky’s the limit for City Works. From the recently opened sites in Chicagoland in 2019 to the unit situated in Pittsburgh business district since 2017, locations are achieving success, the COO adds.

In his mind, there’s nothing that suggests that trend won’t continue.

“Because the brand shows so much flexibility in where it can operate and be successful, I think our runway for growth is limitless,” Gray says.

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Categories: Restaurants

These are the Top Barriers Facing Restaurants Today

Restaurant Management - Wed, 01/22/2020 - 09:01
These are the Top Barriers Facing Restaurants Today danny Wed, 01/22/2020 - 09:01

And it all starts with labor, as usual.

January 2020

The restaurant industry is laden with dilemmas just like this one. In today’s saturated landscape, consistent execution is key to gaining a competitive edge, whether that’s across two or 2,000 restaurants. It’s often the misstep that turns a hot, emerging chain into a sinking business when expansion begins.

Yet, tight operations are easier preached than performed these days. Rising labor costs and the rate of turnover, along with the standard challenges of maintaining quality control throughout a multi-unit system, can trouble even the best-intentioned operators. Not to mention how quickly social media spreads incidents and negative news, like a lone food safety scare. Controlling the message just isn’t what it used to be.

With all of that taken into account, as is often the case, this challenge opens a window of opportunity for restaurants hoping to differentiate themselves. Putting a continual focus on execution and systems, location by location, can separate top brands in a saturated climate. This will be especially true if some widely predicted economic factors take shape.

Olive Garden parent Darden said at the ICR Conference that it’s already preparing for a recession. But there’s no reason to resign to the possibly as an inevitable setback. “In this recession, closures will be greater this time than they were last time, but there will always be good ideas and well-positioned brands that will be able to add units,” CEO Gene Lee said.

In preparation, Darden is taking a two-front approach to the biggest battle at hand: Labor. It’s working to attract, retain, and engage strong staff, but, at the same time, streamline operations to handle rising costs. And it’s going to ask higher-paid employees to do more.

While these hurdles will be approached differently by restaurant, there’s a consistent theme. Restaurants willing to invest in infrastructure and operations, be it layers of tech or staffing practices, are going to be well equipped when the pressure mounts. Many pundits believe this will ignite as today’s consumer dynamic shifts. If confidence tapers off during a recession, restaurants’ ability to cover traffic gaps with higher checks could be stressed. That’s why, as Darden observed, better-run restaurants will have a leg up. Because quality withstands trends and fluctuations.

It’s unlikely guests universally will tighten their wallets in terms of eating out (even during recessions restaurants prove a popular cost-effective outlet for consumers), but they will become even more discerning. And that’s where operations and execution will flood the picture yet again.

Zenput, a mobile platform that helps restaurants track operations using a phone or tablet, and is used by Domino’s, KFC, Jersey Mike’s, and Chipotle, conducted a study recently to understand the operational challenges facing restaurants. The goal being to uncover top barriers preventing franchise and corporate brands from consistent team execution and customer experiences. The data comes from 295 restaurant operators, everyone from ops leaders to managers, field staff, store managers, IT, C-suite execs, and owners. Forty percent of the pool comprised of franchisees.

Unsplash/Igor Rand

In Zenput’s study, less than one in five operators felt their stores were “very efficiently” complying with operating procedures and key initiatives.

Not surprisingly, it starts with employees

These were the leading barriers to consistent store execution and customer experiences cited by Zeput. All were employee-oriented.

  • Rising labor costs: 48 percent
  • Employee turnover: 44 percent
  • Store employees not being properly trained: 39 percent

Quick-service operators were significantly more likely to cite employee turnover as a top barrier than full-service counterparts. The latter had a larger issue with restaurants not following operating procedures and employees not being properly trained.

This fits. Quick-serves generally flip staffs over more frequently due to seasonal shifts and part-time positions. Panera Bread CFO Michael Bufano told attendees at CNBC’s @Work Human Capital + Finance conference in July turnover was 130 percent at their restaurants. Casual dining sits around 120 percent on average, per Knapp Track.

As restaurant operators will attest, there really isn’t much that can be done to stem the tide of rising wage laws. It’s a dam that’s breaking, state-by-state, whether brands are prepared or not. As of July 1, 2019, the U.S. Department of Labor reported 30 states with minimum wage requirements higher than the federal per-hour standard of $7.25. That number isn’t going to stand pat.

Let’s look at the results further. After the top three, here’s how it broke down. The question in full was, “What are the primary hurdles to driving consistent team execution and customer experiences across your units/stores?”

  • Not all stores correctly follow operational procedures: 36 percent
  • Recruiting qualified/skilled talent: 37 percent
  • Not resolving issues quickly enough: 34 percent
  • Lack of visibility into degree to which each store is complying with operating procedures: 34 percent
  • Not identifying issues early enough: 33 percent
  • Store employee productivity/efficiency isn’t high enough: 33 percent
  • Breakdown of communication between stores, district leaders, and HQ: 32 percent
  • Field manager productivity/efficiency isn’t high enough: 26 percent
  • Government regulations: 21 percent

 

Pixabay

Food safety remains a major concern on the back-end for operators.

A confidence question

Overall, Zenput found chain restaurant operators to have relative confidence in their visibility into store operations, with more than 90 percent believing they have “very clear” or “somewhat clear” control. Notably, only 31 percent of that group elected for “very clear.”

It’s the age-old concern of restaurant expansion, particularly with franchises (at least in terms of general perception). Can you hand the keys to your great idea to someone else and see it flourish? Running a successful restaurant and building infrastructure so others can do so are very different things.

In Zenput’s study, less than one in five operators felt their stores were “very efficiently” complying with operating procedures and key initiatives. So, the visibility factor wasn’t necessarily translating into compliance confidence.

Full-service brands came in at just 11 percent. Quick-service restaurants clocked 27 percent.

The areas restaurant operators said stores are performing best were food-safety protocols (82 percent believe their restaurants are in strong compliance) and brand standards (79 percent). Training processes (72 percent) notched the lowest rate of compliance.

While that doesn’t sound overly troubling, the notion that nearly one out of five restaurants may not be in compliance with food safety protocols or brand standards would keep any multi-unit restaurant operator up at night. It stacks up quickly.

Quick-service restaurants estimated a higher percentage of their stores in compliance among all activities. The largest gaps for limited-service chains versus sit-downs came with brand standards and marketing promotions.

Zenput said a core part of the visibility issue stems from how operators report being able to check in. Traditional tactics remain in use (almost half of operators are communicating via phone calls and text messages). Only 20 percent said they deploy software to improve visibility.

Roughly a quarter of quick-service operators are leveraging software compared to just 15 percent of full-service operators. More than half (51 percent) of operations with 50-plus units are still chatting through phone calls/texts versus 39 percent of smaller companies.

“What is the primary way you are getting visibility into store/unit operational execution?

  • Phone calls or text messages: 48 percent
  • Email: 22 percent
  • Software: 20 percent
  • Paper checklist: 6 percent
  • Other: 3 percent

 

thinkstock

Can you count on your employees to follow company protocol?

A food safety conundrum

Here’s one of the interesting things about food safety. Restaurants have more tools in place to prevent incidents than ever before. And yet they’re also more vulnerable, thanks to social media. Just look at some of Chipotle’s issues a couple of years back. Every case hit the Wall Street stock screener like the sky was on fire.

In Zenput’s survey, nearly all restaurant operators (89 percent) said a customer food safety issue could put their business at risk and lead to negative sales. When you consider shrinking margins, the ability to quickly identify issues and address them is essential. Only 34 percent of respondents said they were very confident their operation was able to do just that. This also appears to be getting worse. In a fall 2018 survey, Zenput found that 50 percent were very confident. That’s a significant year-over-year drop-off. And you can probably blame labor issues once again. Turnover breeds inconsistent performance and a lack of accountability.

Quick-service operators proved somewhat more confident in their ability to address safety concerns quickly, Zenput noted. Forty percent said they were “very confident” in their ability identify issues (versus 28 percent of full-serves).

To the earlier point, though, food safety protocols turn in the highest level of compliance. Simply, it’s one area restaurants cannot afford to underperform. Less than one in four of Zenput’s respondents (23 percent) reported being able to correct potential food safety concerns within 1–2 days once they were identified. Thirty-one percent said it takes between one to four weeks. A relatively higher potion of full-service brands (36 percent) said it takes more than a week to tackle food-safety concerns.

Are audits the answer?

Restaurant field employees know the schedule well. Much of their time can be consumed by audits and everything that entails. But is the investment producing an acceptable return? While audits are essential to ensure restaurants are delivering a consistent experience across units, most operators do not feel audits are being completed “very effectively” at the store level, according to Zenput. Just 22 percent (and 17 percent of sit-down chains) believe so.

Naturally, size is a factor. Of those with less than 50 locations, 25 percent said audits were efficiently performed compared to 17 percent with 50-plus. Audits also appear to be a drain on field staff productivity—82 percent of operators (and 85 percent of full-service ones) said they believe employees are spending too many hours on lower-value tasks when they could be focusing on higher-value activities, like coaching.

On average, field employees are clocking more than 30 combined hours per week on in-store audits, preparing reports, and following up with restaurants to ensure corrective actions were taken. If you’re truly putting in 40 hours flats, that’s less than 10 hours dedicated to some serious levers of differentiation—training, personal growth, organization initiatives, etc.

Smaller operations are spending more time on performing audits/assessments (11.7 hours) and following up (11.3 hours) than larger companies.

The question to ask: Is this how you want your field employees to spend their 40 hours?

Quick-service restaurants

  • Performing in-store audit/assessments: 11.2 hours
  • Preparing reports to submit to HQ: 9.3
  • Following up with stores to ensure resolution: 11
  • Other tasks and responsibilities: 8.5

Full-serves

  • Performing in-store audit/assessments: 10.8
  • Preparing reports to submit to HQ: 10
  • Following up with stores to ensure resolution: 10.8
  • Other tasks and responsibilities: 8.4

 

Jan Vašek

Many operators are still wary of automation. 

Automation is there for the taking, but few are taking it

As Darden’s Lee suggested, restaurants are going to start asking more and more of employees in the coming months. If they’re going to pay more (which they inevitably are) the truth is that many brands will need to hire fewer employees, which means additional tasks shouldered by current staff. Restaurants will need to get more out of every unit and field employee up and down the organization.

“This means embracing new strategies, processes, and automation—technologies that will enable staff to focus on higher-value activity and do it more efficiently,” Zenput said.

Despite that possibility, only 27 percent of operators said their company was embracing technology to automate various aspects of their business “to a great extent. It was higher among corporate stores (33 percent) than franchisees (18 percent). Smaller brands also were more likely to classify their operation’s culture as automation-forward. That’s probably more a product of costs than anything else. Larger chains face added difficulty implementing new systems to automate tasks previously performed by employees. Think of how much it would run to replace tablets at 40 restaurants versus 4,000. Not only the equipment, but the training and compliance concerns, too.

But that’s not to discount the potential. Communication between stores, district leaders, and HQ remains critical to any multi-unit brand’s success. Automation could help, and there’s runaway aplenty to separate from competitors.

Yet most operators continue to use traditional tactics to get visibility into store compliance, as almost half of operators are primarily doing so via phone calls and texts. Only one in five restaurant operators said they were using organizational software.

However, of those who said their brands have embraced automation at least somewhat, 83 percent noted their experience has been a positive one. Only 10 percent of operators said their back of house doesn’t use tablets, meaning restaurants are positioned to implement automation strategies going forward. A strong portion of companies are investing in mobile technology solutions. As you can see below, there are results to chase.

What can automation do?

Very effective store operating procedure compliance

  • Those embracing automation: 40 percent
  • Everyone else: 14 percent

Very clear or somewhat clear visibility into their stores and units:

  • Those embracing automation: 95 percent
  • Everyone else: 86 percent

Can quickly or very quickly identify issues in their operation

  • Those embracing automation: 87 percent
  • Everyone else: 77 percent

Communication is a barrier to consistent execution

  • Those embracing automation: 26 percent
  • Everyone else: 37 percent

Very confident or somewhat condiment in their ability to identify food safety concerns before they become an issue.

  • Those embracing automation: 98 percent
  • Everyone else: 86 percent

Looking to the future

Taking all of this into account, restaurant operators, fittingly, tapped employee productivity as the top-of-mind concern (48 percent) for 2020. Improving store-level compliance with operating procedures (43 percent) was next, followed by boosting field team productivity (42 percent), and improving the completion of tasks at the store level (42 percent).

Concerning mobile-enabling tech, more than half of operators (57 percent) said their back-of-house tablet usage would remain the same over the next year, including 64 percent of sit-down chains. However, 37 percent of quick-serves said their stores would be adding more tablets in 2020 (versus 27 percent of all restaurants).

How it stacks up (in the next 12 months, which of the following are top organization priorities for improving operational execution?):

Improving store employee productivity

  • Quick-serves: 43 percent
  • Full-serves: 53 percent

Improving field team productivity:

  • Quick-serves: 45 percent
  • Full-serves: 39 percent

Improving task completion at stores

  • Quick-serves: 34 percent
  • Full-serves: 50 percent

Improving compliance with operating procedures

  • Quick-serves: 47 percent
  • Full-serves: 40 percent

Improving supply chain controls

  • Quick-serves: 38 percent
  • Full-serves: 40 percent

Employee training

  • Quick-serves: 37 percent
  • Full-serves: 42 percent

Formalizing/documenting guidelines and procedures

  • Quick-serves: 32 percent
  • Full-serves: 32 percent

Mitigating food safety risks

  • Quick serves: 32 percent
  • Full-serves: 32 percent

Improving execution of marketing LTOs

  • Quick-serves: 29 percent
  • Full-serves: 31 percent
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Categories: Restaurants

How Restaurants Can Win Happy Hour in a Modern Age

Restaurant Management - Tue, 01/21/2020 - 04:05
How Restaurants Can Win Happy Hour in a Modern Age rosie Tue, 01/21/2020 - 04:05

Legislation around alcohol discounts remains a moving target, but that doesn’t stop restaurants from pursuing the potentially lucrative daypart.

January 2020

For many consumers, no two words sound sweeter than happy hour at the end of a long, demoralizing workday. Our beloved ritual of kicking back over a few rounds of cheap drinks and bites offers bars and restaurants a great chance to lure in business during down times, carving out a special subcategory of regulars and creating an upbeat, bustling atmosphere for incoming dinner-goers.

Happy hour is also big business. According to 2018 Check-Level Insights Pool data from global analyst Nielsen, U.S. bars and eateries generate 60.5 percent of their average weekly sales from happy hour—a time frame that accounts for just 15 hours of the total business week. The average happy hour check in the U.S. is $68.99 (after discounts), including food and drinks, which is $8 more than the average check during other dayparts.

More surprisingly, Nielsen CGA data shows that Wednesday happy hour traffic is an average of 23.9 percent higher than other weekdays—suggesting Hump Day is something of a happy hour sleeper.

“Happy hour is really important,” says Mark Steuer, chef/owner of Funkenhausen, a German-Southern beer hall in Chicago. “We’re at a point where we have a lot of regulars for happy hour and are filling up the bar every night. It’s not necessarily driving new business, but it’s filling a need period.”

Funkenhausen

Between 5 and 7 p.m., German-style beer hall Funkenhausen serves 7-ounce pours of lagered ale for $3 per glass (left) and offers special, happy-hour-only items like Nashville-hot Schnitzel (right).

The nearly year-and-a-half-old eatery has become especially known for its rotating Kölsch service Monday through Thursday from 5 to 7 p.m. Servers come by bearing trays full of 7-ounce pours of the ice-cold, German-style lagered ale for $3 per glass, which they continually rotate out until asked to stop.

“With happy hour, it needs to be fun, and it needs to be a deal,” Steuer says. “The Kölsch trays especially are something no one else does; it’s interactive and good for groups.”

Knowing the importance of playing the value angle, the beer hall also offers discounted boots of beer and its garlicky giant pretzel ($6 instead of $8). Specialty food items like Nashville-hot schnitzel and smoked chicken wings are only available during happy hour and brunch. The latter makes use of a byproduct of a favorite smoked chicken entrée; the smoked drumsticks are deep-fried and tossed in homemade fermented hot sauce, for $3 each.

The limits of alcohol discounts

Illinois is technically a newcomer to happy hour drink deals, having only overturned the statewide law banning discounted drinks during special times of day in July 2015. Because alcohol-related fatalities number among the leading causes of death in the U.S.—whether from drunk driving, intoxicated violence, or accidental deaths, many states unsurprisingly have laws on the books that attempt to curb consumers’ ability to drink a lot, really fast, for really cheap. Numerous states restrict deals like unlimited or two-for-one drinks, while eight maintain outright bans on discounting alcohol during happy hour (see sidebar).

Businesses have long found clever workarounds to such restrictions while still operating within the letter of the law, from eliminating cover charges to offering discounts on food instead of drinks. Even before Illinois lifted its happy hour ban, for instance, it was perfectly legal for bars and restaurants to temporarily lower the price of alcohol; they just had to discount prices for the entire day.

In 1984, Massachusetts became the first state to ban happy hour specials on alcohol. A year before, the owners of then-newcomer Harvard Square restaurant and bar, Grendel’s Den, had emerged victorious in a drawn-out legal battle challenging a Massachusetts state law allowing churches to veto liquor licenses, which reached the U.S. Supreme Court. The historic legal precedent changed similar laws in nine states and allowed Sue and Herbert Kuelzer to open Grendel’s Bar downstairs in 1983. But they were never allowed to offer $1 happy hour drafts or two-for-one drink deals to bargain-seeking graduate students and locals.

So the pub began plying customers with a free buffet of French bread pizza and pigs in blankets between 5 and 7:30 p.m. to go with their full-price microbrews. When the bar and restaurant merged in 2000, the legendary free buffet was replaced by a daily happy hour special from 5 to 7:30 p.m., during which the entire food menu is half price with $4 minimum beverage purchase.

Because Grendel’s Den offers the same menu all day, there’s no real need for service downtime; happy hour can roll right into dinner service without resetting the kitchen.

“Driving business early in the evening makes a difference on so many levels,” says second-generation owner/operator Kari Kuelzer. “People like to walk into a lively restaurant, especially for the type of service we do, as a casual establishment with casual food. It looks inviting. Plus, it’s a great way for our drinking clientele to get some food in their stomachs.”

Ace Hotel

In Chicago, the Ace Hotel hosts a traditional happy hour at its signature restaurant, City Mouse (top left), and a late-night ‘reverse happy hour’ at its rooftop bar, Waydown (bottom). In less-regulated San Francisco, the marker hotel’s Tratto (top right) offers a special Munchies Menu between 3 and 6 p.m.

From Kuelzer’s point of view, the happy hour ban has never hurt business. On the contrary, she would prefer to never to discount the bar’s main source of revenue.

“To be honest, our occupancy costs are so high that getting into a price war with the place across the street to be able to sell our main source of revenue for $1 would not pay off for anyone,” she says. “It’s not like we have a lot of places with lines out the door. It’s hard to sell enough $1 drafts to make rent when, by law, we’re not permitted to serve an intoxicated person.” Indeed, Massachusetts along with several other states has a so-called dramshop law wherein bartenders who serve visibly intoxicated patrons can face civil charges.

Because Grendel’s Den never had an incentive to carry mass-produced domestic drafts, it instead focused on building its selection of curated craft and imported beer. That program has in turn become a draw for customers and, Kuelzer argues, helped spur the craft beer boom in the region.

“A lot of craft beer companies got started in Massachusetts in the ’80s, and [craft brews] were extremely attractive to places pouring mass-produced, cheaper wholesale products,” she says. “Rather than serving Bud for $2 all day long, we could sell a slightly more elevated product at full price, which meant more money for us.”

One of the original craft beer brands, Sam Adams Beer Co., came calling at Grendel’s Den right around that time. “Basically the happy hour ban happened, and we in Massachusetts were the first part of that craft beer wave. I think the movement would’ve been a lot slower or less significant in the market without it,” Kuelzer says.

Small victories

Not all the laws are workable for everyone, however. Chef Geoff Tracy took on a Prohibition-era rule when he filed a lawsuit in 2018 against the Virginia Alcohol Beverage Control Board (abc) challenging the state’s right to bar him from touting happy hour prices and running catchy slogans like Wine Wednesdays.

Tracy is a prominent local figure with eight restaurants across Maryland, Virginia, and Washington, D.C. The original restrictions, which dated back to 1934, banned any happy hour advertising outside an establishment’s four walls. In 2014, the Restaurant Association of Metropolitan Washington helped loosen some of the rules, such as allowing pubs to promote their drink specials online.

“But it was still very restrictive in terms of words you were allowed to use,” Tracy remembers. “The whole part associated with the First Amendment really irked me. Commercial speech is still protected by the First Amendment; all we were trying to do was share true information.”

Tracy took to posting cheeky tweets from his @chefgeoffs account, like “According to ABC law, I’m not allowed to tell you that happy hour goes from 3 to 7 p.m., or that we have the following specials …,” he says. Anastasia Boden, an attorney from public interest law firm Pacific Legal Foundation, took notice and offered to represent Tracy pro bono in the federal lawsuit filed against Virginia’s ABC. Two identical bills breezed through the state house and senate before governor Ralph Northam signed them into law last summer.

Happy hour is undoubtedly a big part of Tracy’s business model of casual, everyday eateries. In Maryland, where there weren’t such limitations, his restaurant Lia’s bills itself as the best happy hour in Chevy Chase. Still, he concedes that winning this long-fought battle likely isn’t going to make a huge impact on business.

“It was just such a ridiculous law that shouldn’t have been there. I’m almost fighting a battle over the ridiculous as opposed to seeking some massive benefit towards me as a business owner,” he says.

From a PR standpoint, however, it was a pretty genius move that lined up with Tracy’s outspoken persona. “When small-business owners stand up for values and freedoms, it resonates with people,” he says. “You have to be authentic to who you are as a brand. It definitely gives me a little bit of uniqueness.”

For now, his days of battling outdated laws are over, though there remains the somewhat arbitrary rule that bans restaurants from exceeding 45 percent in alcohol sales. “I get where they’re coming from, preventing restaurants from becoming bars,” he says. “I’ve never been close to that issue, so I’ll let someone else pursue it, but that probably should be resolved at some point.”

In the meantime, Wine Wednesday is loud, proud, and in full swing at D.C.’s Chef Geoff’s.

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Categories: Restaurants

For Chefs, Taking Time Away from Work is Critical

Restaurant Management - Tue, 01/21/2020 - 03:37
For Chefs, Taking Time Away from Work is Critical erica Tue, 01/21/2020 - 03:37

Three chefs discuss the importance of taking time away from work to focus on health and wellness.

January 2020

It’s the start of a new year and, as such, the time to establish new habits, revamped resolutions, and—for the foodservice industry in particular—fresh dedication to health and wellness.

Kitchen work is stressful, and the stakes are especially high in fine dining, with chefs anxious to please the customer at all costs. Once you factor in odd hours, always-available quantities of food and alcohol, and high levels of substance dependence, self-care becomes less of a splurge and more of a requirement.

We asked three industry experts how they focus on their own health inside of—and in spite of—the challenging foodservice industry.

Justin Newgaard, Corporate Executive Chef | Morrison Healthcare

Before I was a corporate chef, I was in the restaurant world. I loved restaurants, but one of the greatest happenings of my career was looking at things from a different aspect and realizing that I could work in food and healthcare.

Some of our greatest possible prescriptions come from food. My job is to step back and get back to basics, look at real food and how it can function for your body. I’m a plant-based eater myself, and from a chef’s point of view it’s great; your body feels right, and you’re performing at a higher level.

When I was in restaurants, I loved being in the kitchen. I was one of those weird people who wanted to live in the kitchen. But I advise people all the time that you’ve got to turn it off. You’ve got to go home, and you’ve got to find other hobbies. It’s difficult for someone who lives to put food on plates and make sure other people are enjoying it to step back, but you have to have a hobby. It could be shooting pool, working on a car, or spending time with family, but you have to take your mind off it.

A lot of young chefs come out of school bright-eyed and bushy-tailed, and they get out in the real world and get burned out quickly. You have to learn to evaluate your career from different viewpoints; maybe you get a degree in a different area to fall back on, or maybe you take a step back and look for other ways to learn and work in food.

Lisabet Summa, Culinary Director, Big Time Restaurant Group | West Palm Beach, Florida\

It has been difficult to focus on my own health because working as a chef is very time-consuming and can be an exhausting job that doesn’t leave enough hours in the day for exercise. I prioritize wellness every day for myself but also for the benefit of everybody that I work with; if I don’t start my day with a workout, I’m just not in as good of a mood or as focused, so I go to the gym before going to work.

We encourage our young chefs to live a healthy lifestyle. At the root of our cooking is health and wellness. I confront people who go out back for a break to make sure they aren’t going out back to smoke. If they are smoking, I talk to them about quitting and congratulate them if they do. I like to share my personal experiences and recommendations with people, such as the best footwear, how to deal with headaches, muscle aches, and fatigue. I’m always correcting posture; I often give chefs advice on how to stand in front of a cutting board, how to roll their shoulders back and not lock their knees. I also show them exercises that I’ve learned in physical therapy for issues that come with being a chef.

Alex Harrell, Chef, The Elysian Bar | New Orleans

The single biggest thing that changed my health and wellness for the better was my choice to get sober. It changed my entire mindset and attitude for the positive. I also started out with some other simple things, like making sure that I eat something for breakfast, which made me feel better and gave me more energy. I also started watching what and when I ate. Now I make time to work out at least three times a week.

I think that, as leaders, we need to start making the wellness of our teams a priority. Encourage team members to take time away from the job and also learn to recognize when people are struggling and need help. I try to only schedule people for four days of work per week. The shifts may be an hour or so longer, but the trade-off is that team members get three days off a week for work-life balance.

I’m a single father of two daughters, and I love being an active dad. At the same time, I really love being the chef of The Elysian Bar, and I’m still very passionate about the career I’ve chosen. I’ve learned how to be better at managing my time and how to be more efficient and effective with the time that I have at work. And I’ve learned that I don’t have to do it all by myself. I know how to ask for help if I need it and to delegate responsibilities to the really talented people on my team. By doing these things, I’m able to accomplish what I need to at the restaurant and then enjoy my free time once I leave.

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Categories: Restaurants

Chef Dan Kluger Continues to Surprise the Senses

Restaurant Management - Sat, 01/18/2020 - 15:32
Chef Dan Kluger Continues to Surprise the Senses erica Sat, 01/18/2020 - 15:32

His made-in-house approach connects dishes as humble as calzone to those as gourmet as grilled short ribs.

January 2020

The calzone at Loring Place, a fine-dining restaurant in New York’s buzzy Greenwich Village, may at first seem a bit of an anomaly on the menu. How is a pizza-joint specialty sharing space with more refined items like roasted short ribs with horseradish gremolata? But for those diehards who have followed chef Dan Kluger’s career since his days at Jean-Georges Vongerichten’s ABC Kitchen, or even earlier, at Danny Meyer’s Tabla, this seemingly high-low mix is no surprise.

What makes Kluger such a celebrated and sought-after chef is his reverence for the platonic ideal of an ingredient or a dish. In his capable hands, a calzone isn’t something you make because you have discarded pizza scraps. Instead, it’s a way to highlight his house-made ricotta, the dough made from grains milled at the restaurant, and sausage freshly ground on the premises. This calzone, which New York magazine called “killer,” is a revelation.

Lesley Unruh, One Kings Lane

Your kitchen New Year’s resolution: To get home earlier.

In 2020, you’re most excited for: My cookbook and new restaurant.

Your favorite ingredient to cook with right now: Winter squashes.

The chef you’d love to collaborate with: Ignacio Mattos (Uruguayan chef behind Estela in NYC).

Favorite way to destress outside the kitchen: Spending time with my family and home building projects.

Kluger’s love of food began early, although his path to the kitchen was circuitous compared with many chefs. While his mother baked semi-professionally, it wasn’t until a college internship at Union Square Café that he began to see the restaurant industry as a viable career path. Notably, though, he was working front of house. “The goal, I guess, was to own a restaurant at some point,” he says of his aspirations at the time. “I was spending my days off in the kitchen just to understand what goes on, because I couldn’t own a restaurant if I didn’t know.”

Not long after, he was offered a job as a prep cook, which, after some hesitation, he decided to take. “It was total grunt work and it was eye-opening,” he says. “It was a miserable experience in so many ways, but it was great in others.” It was there, peeling carrots and cleaning calamari, that he began to build his cooking foundations. His skills, learned on the job and not at culinary school, did not go unnoticed.

The next few years brought covetable jobs working under chefs like Floyd Cardoz and Tom Colicchio. In 2010, Kluger came to national prominence when farm-to-table stunner ABC Kitchen opened with him leading the charge as executive chef. The restaurant soon became one of the hottest in New York City, clinching a James Beard Foundation award in 2011 for Best New Restaurant and landing Kluger on Food & Wine’s Best New Chef list for 2012. A sister restaurant, ABC Cocina, followed in 2013, and Kluger was nominated for a James Beard award for Best Chef, New York City in 2014.

After so many years of learning from some of the most celebrated chefs in the country, Kluger was ready to finally helm his own kitchen. Loring Place opened in 2016 and was immediately praised for its innovative American cuisine.

The seasonally changing menu is notable for how it highlights a single ingredient in a dish. Small plates include items like roasted beets punched up with ginger and orange, as well as char sashimi served with a spicy sesame-chile oil.

For Kluger, it was equally important to make as many products in-house as possible. “There was this lightbulb moment [early in my career] of, if I stick to my guns and I make my own things, people will appreciate it for what it is,” he says.

Loring Place makes its own hot sauce, yogurt, and butter, in addition to milling grain blends for bespoke flours, which form the bases of its pasta, pizza, and bread doughs. Kluger’s Grandma Style Pan Pizza has quickly become famous; thick, chewy crust is topped with the holy trinity of tomatoes, mozzarella, and basil, with edges caramelized from a bake in a rectangular sheet pan.

The pastas are often loaded with vegetables and are springy and hearty in a way that only house-made varieties can be. Much trial and error went into the specific grain mix for each of these doughs, and Kluger still has to recalibrate if and when a certain strain may not be available from his local vendor. While he’s loath to name a favorite dish on the menu, he does have preferences on his grains. “The Warthog is probably the one we use the most; it’s been the most consistent,” he says of the hard, red winter wheat.

More tinkering with flour and other ingredients is certainly in Kluger’s future. This year will not only welcome a second restaurant—this one in nearby Long Island City—it will also mark the publication of his first cookbook. For home chefs or other cooks looking to create like Kluger, the tome will be an excellent primer.

“It’s really meant to give people the confidence to build a pantry and cook the way we do, which is that balance of sweet, sour, spicy, and salty texture,” he says. “You can take these ingredients that are, at face value, very simple, like broccoli, and then make them complex because you made a great sauce or charred it on the grill.”

The new, yet-unnamed restaurant will espouse a similar ethos to the book and Loring Place but with a more relaxed attitude. In short, it’ll be seasonal, market-driven American but more approachable than the original restaurant.

“Right now, I’m trying to figure out how to really balance everything and make it flexible enough to suit everybody’s needs,” he says. It’s a challenge for which Kluger is ready. After all, creating a new recipe and tweaking existing ones are all part of the process. “I enjoy that because I think that’s part of what cooking is to me. It’s that tactile, you-have-to-actually-get-involved kind of thing,” he adds.   

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Categories: Restaurants

Johnny Rockets is Going Where the Experiences Are

Restaurant Management - Fri, 01/17/2020 - 16:41
Johnny Rockets is Going Where the Experiences Are danny Fri, 01/17/2020 - 16:41

The legacy burger brand is taking a nontraditional route to growth.

January 2020

Nobody is going to accuse Johnny Rockets of having an identity crisis. The chain’s 1950s diner-style décor, smiley face ketchup plates, and, in select locations, employees who sing and dance on the half hour, have kept it from fading into the burger background for three-plus decades.

But the 341-unit brand has realized something else in recent years. Its experiential strengths lie in site selection. And that’s the emphasis behind what CEO George Michel referred to as a renewed focus on growth in 2020.

Namely, Johnny Rockets wants to target places it can complete an experience for guests, not serve as the entire show. Nontraditional outlets, like casinos, theme parks, airports, and cruise ships—dynamic venues that have proven lucrative to date.

Of the 12 venue types in Johnny Rockets’ footprint, the highest average-unit volume store sits at one of its 18 casino franchises. That restaurant tops at $5.743 million, according to a recent franchise disclosure document. The company’s AUV systemwide (domestic franchises) is $1.228 million.

The casino locations, in total, averaged $2.439 million. In fact, the three highest AUVs in Johnny Rockets’ base could be found at casinos, airports ($1.483 million) and tourist destinations ($1.338 million). Outlet malls ($1.138 million) and theme parks ($1.134 million) followed.

And just in terms of unit count, malls (31 restaurants with AUVs of $968,981), theme parks (25), outlets (19), and casinos (18) comprise the biggest batch.

That’s only going to deepen, says Michel, who took over for Mike Nolan in August. “We don’t see ourselves as being on the street with freestanding restaurants with a drive-thru window,” he says.

Johnny Rockets

Casino units, like this River Spirit location in Tulsa, Oklahoma, are among the highest-performing in Johnny Rockets' system.

For Michel, helming Johnny Rockets is a nostalgic turn. The former Boston Market CEO, who also leads Friendly’s (a Sun Capital-owned chain as well), started his career at A&W Restaurants as a cook when he was 17. He rose to chief executive and also held roles at Burger King, overseeing operations in the Middle East, Asia, and Canada, and Brinker International as chief operating officer, global markets. Michel directed Boston Market for eight years before retiring in May 2018. It’s a career that stretches nearly 50 years.

“I’m really excited to be back in the burger business,” he says. “They have been my foundation, and I’m really excited to be with Johnny Rockets because I believe it’s a very unique experience and a great product as well.”

Much of Johnny Rockets’ growth in 2019 occurred internationally. It opened 16 locations outside the U.S. to up its total to 178 in 26 countries. The chain debuted new-market stores in Spain and Oman.

Stateside, Johnny Rockets opened net 10 restaurants in 2016 before retracting by 17 and eight locations, respectively, in the ensuing years.

Michel says reigniting domestic expansion boils down to the nontraditional angle. Of Johnny Rockets’ 341 restaurants, about half are counter service. It’s built a model over the years agile enough to fit into a variety of real-estate opportunities. Yet Johnny Rockets succeeds most, to Michel’s point, when customers are already chasing experiences.

“The experience is very important and the fact that you’re in a casino,” Michel says, “you don’t just want to go into a restaurant that serves food. You want to add to the experience. That’s where Johnny Rockets comes in and completes the experience.”

Johnny Rockets

Nontraditional growth is going to define Johnny Rockets' growth in 2020 and beyond.

Johnny Rockets’ airport locations are spread globally, from Warsaw, Poland, to Ecuador to Mexico, to Syracuse, New York. Michel says Johnny Rockets’ Americana vibe caters to international audiences because it's visually and instantly recognizable. It’s a setup that shouts burgers and malts. Domestically, it works from a different angle, Michel says. In those cases, it’s about credibility.

Michel says Johnny Rockets wants to engage with the big feeders, like HMSHost, and other airport developers this coming year “to let them know that Johnny Rockets is a brand they should consider seriously.”

Either way, it’s found a comfortable niche between convenience-fueled quick-serves and high-dollar fine-dining spots. The cooked-to-order element (Johnny Rockets scoops ice creams for its shakes, no premix poured into a machine), results in some longer wait times. But Michel says customers don’t mind the 5- to 7-minute cook times. “They know it’s coming fresh from the griddle,” he says. “That’s why our kitchens are open kitchens. It’s not like we have microwaves. It’s not like we have holding equipment to heat chicken and meat.”

“These are the things that make us unique and customers don’t mind waiting because they know they’re getting something different,” Michel adds.

Call it a balance of demand. Johnny Rockets isn’t going to compete with Burger King or McDonald’s, Michel says. Or $1 choices. That’s not to say there’s nothing wrong with speaking to those occasions as a restaurant, Michel says, it’s simply not the category Johnny Rockets believes it can stand out in. And, again, this is why nontraditional, experience-forward venues fit the growth bill.

"We play more in fresh to order, right off the grill, hard scooped ice cream, mixed milkshake, with experience in the restaurants. That’s where I think we differentiate ourselves and that’s why we look forward to these kinds of locations," Michel says.

The brand, he adds, won’t look at freestanding buildings. There remain a number of casinos Johnny Rockets can target, as well as theme parks. He highlighted outlet malls as well because of international travelers.

Overseas, the company plans to grow in countries where it already has strong footholds, places like Chile, Mexico, and the Middle East, as well as some new-market development.

While this unfolds, Johnny Rockets’ menu is taking a bit of a simplification approach. The chain is scaling back from six to four limited-time offers per year. And it will glean ideas from international trends domestically, and vice versa. A Bourbon BBQ Burger and an Irish Crème Extreme Shake are in the works. Johnny Rockets is also investing in a “Fusion” store design that combines some old elements with modern touches. Juke boxes, for example, but now in digital format.

“Our focus is going to be on flawless execution in the restaurants,” Michel says. “That’s how we’re going to stand out.”

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Categories: Restaurants

Is Selling Pizza the Answer for Red Robin?

Restaurant Management - Thu, 01/16/2020 - 15:58
Is Selling Pizza the Answer for Red Robin? danny Thu, 01/16/2020 - 15:58

A partnership with Donatos is ready to ramp up.

January 2020

It began as a quiet test for Red Robin at a lone unit in Cleveland and three in Colorado Springs. By summer, it spread to roughly 24 restaurants. And it was something CEO Paul Murphy inherited when he joined the burger chain in September, ending a lengthy search that stretched back to Denny Marie Post’s April retirement.

Now mired in a broad comeback effort, the burger chain is ready to lift the lid on the program—something it believes could serve as a crucial sales pillar and point of differentiation.

Earlier in 2019, Red Robin engaged Ohio-based Donatos, a 60-unit pizza chain with stores across nine states. The company didn’t promote the partnership, electing instead to address operational kinks and gather customer response. Essentially, Red Robin brought a scaled-down Donatos menu into select units. Restaurants had to reconfigure kitchens to allow for an additional oven, but otherwise the disruption was minimal. Red Robin servers touted new options to customers: a 7-inch, 10-inch, and 14-inch (plus a gluten-free 12-inch) collection of pizzas focused on Donatos core options, like the Founder’s favorite, edge-to-edge pepperoni, Serious Meat, and Very Veggie. There’s also a Red Robin special—the Whiskey River BBQ pizza that plays off one of its staples.

On January 14 at the ICR Conference, 556-unit Red Robin explained the partnership in detail for the first time. Notably, it plans to expand the connection, which it refers to as “nested” inside Red Robin, not co-branded, to 100 locations in 2020. Another 50 are expected in 2021 or 2022.

The company listed a few reasons Donatos fits Red Robin as a menu accompaniment, but let’s start with the metrics. The company said it saw average comparable traffic lifts of 3.5 percent in test markets. That’s a sizable boost given Red Robin’s trends in recent quarters.

The brand released preliminary fourth-quarter results ahead of the conference, noting same-store sales gains of 1.3 percent, year-over-year, and a 3.4 percent decrease in guest counts. Traffic fell 3.1 percent in Q3, 6.4 percent in Q2, and 5.5 percent to start the fiscal calendar.

Assuming the preliminary results stick, Q4’s same-store sales figure gives Red Robin consecutive positive periods following six straight red quarters.

  • Q4 2019: 1.3 percent (preliminary)
  • Q3 2019: 1.6 percent
  • Q2 2019: –1.5 percent
  • Q1 2019: –3.3 percent
  • Q4 2018: –4.5 percent
  • Q3 2018: –3.4 percent
  • Q2 2018: –2.6 percent
  • Q1 2018: –0.9 percent
  • Q4 2017: 2.7 percent
  • Q3 2017: –0.1 percent
  • Q2 2017: 0.5 percent
  • Q1 2017: –1.2 percent
  • Q4 2016: –4.3 percent
  • Q3 2016: –3.6 percent
  • Q2 2016: –3.2 percent
  • Q1 2016: –2.6 percent

The important trend to note here is that Red Robin’s recent positive comps don’t reflect a significant upward move in traffic. Q3’s result was comprised of average check of 4.7 percent and overall pricing, net of discounts, of 1.5 percent. The company’s 3.2 mix increase was driven by Red Robin’s ongoing strategy of lowering discounted Tavern Burger frequency in favor of higher-margin Gourmet and Finest options.

READ MORE: Red Robin looks to recapture the soul of the brand

While that latter goal is important to the improving the health of Red Robin’s business, margins, and traffic base, it was always going to hit transactions.

That’s why Donatos’ 3.5 percent traffic result is something worth chasing through a broader rollout. And there are other factors, too.

Donatos Pizza

Donatos was founded in 1963.

Red Robin’s off-premises business, including catering, jumped 26.9 percent in Q4. It mixed 13.9 percent of the company’s total food and beverage sales—a pretty consistent theme over the past two years (the segment boosted 37.3 percent, year-over-year, in Q3).

For all of fiscal 2018, off-premises hiked 31.5 percent versus 2017 and stood at 9.9 percent of sales. This past year, it rose another 28 percent to 12.4 percent, or $163 million. In 2016, off-premises represented just 5.7 percent of Red Robin’s business.

Delivery, thanks to three major aggregators, currently accounts for more than 5 percent of sales.

Red Robin also plans to launch last-mile delivery in early 2020 where guests can order directly from the site, with delivery outsourced. The move promises favorable economics versus third-party, as well as retention of guest data and customers’ ability to use Red Robin’s loyalty program.

So, while some parts of the burger chain’s business have struggled recently—dine-in sales declined 2 percent in Q3—its away-from restaurant category has not.

Donatos instantly adds a highly incremental delivery channel to Red Robin. Jason Rusk, the chain’s VP of business transformation, previously told Columbus Business First Red Robin wanted to encourage additional occasions with the move. And it looked at concepts with delivery experience and a history rooted in quality. Donatos, which recently signed three franchise deals in Florida, was founded in 1963 when Ohio State sophomore Jim Grote bought a small pizza shop in Columbus, Ohio, from a young seminarian for $1,300.

Donatos has worked under a national umbrella as well. It was acquired by McDonald’s Corporation in 1999 before being sold back to Grote and his daughter, Jane Abell, in 2003.

So far, Donatos has kept its footprint tight to its Midwest base to alleviate supply chain concerns.

Red Robin said Donatos aligns with its customer base—another critical element in play. It fulfills a guest need and is brand appropriate, the company said. Red Robin’s tagline, “Gourmet Burgers and Brews,” isn’t a branding canyon away from pizza

Red Robin

Red Robin has been working on operation fixes throughout this past year.

In tests, the brand said, Donatos improved overall menu appeal and value perception, and aided incremental check and visits among current users. In other terms, it’s helping dine-in business at Red Robin as well as delivery.

There is some cost involved, however. Naturally, even though pizza and burgers are food cousins, Red Robin’s base isn’t accustomed to it. The frequency of people walking in and ordering something they didn’t plan on but were surprised to—pizza—isn’t a strategy that supports itself long-term.

Red Robin said Donatos restaurants would require $30,000 in incremental marketing spend per unit in the first year. Also, a capital cost to the company of $145,000 and pre-opening expense of $20,000 per restaurant.

Red Robin added second year and beyond, there will be about $45,000 yearly, per restaurant incremental gross margin.

It’s clearly an investment Red Robin feels is worth fronting, even listing Donatos as one of its six comeback anchors in 2020. A new service model, menu rationalization, investment in technology, off-premises growth, and portfolio optimization were the others.

From the other side, the deal opens Donatos to a national audience and could perhaps ignite growth.

Red Robin’s evolution with turnover

When 2019 began, Red Robin said it was short 100-plus managers. The brand admitted on several occasions that labor missteps throughout 2018 led to serious issues. The chain cut back positions to save costs, putting table-clearing duties on servers’ plates and asking hosts to handle carryout orders—a recipe for walkway disaster when coupled with off-premises growth.

The company said in Q3, however, it was essentially fully staffed the manager level. Red Robin elaborated at ICR, putting the figure at 98 percent. And you can see below how these trends are moving in the right direction.

Red Robin

And, not surprisingly, Red Robin witnessed guest satisfaction growth parallel to improving turnover rates.

Red Robin

The brand said GM tenure and employee retention drove compelling results.

Looking at traffic, Red Robin’s top 33 percent of performing restaurants reported manager turnover of 21 percent, hourly turnover of 99 percent, with in-restaurant GMs working three years and two months on the job. Sales were also up 7.2 percent. Traffic 2.4 percent.

Here’s how that measures up:

Red Robin’s middle (34 percent): Manager turnover: 24 percent. Hourly turnover: 109 percent. GM time in restaurant: Three years, one month. Sales: Up 1.4 percent. Traffic: Down 3.3 percent.

Red Robin’s bottom (33 percent): Manger turnover: 33 percent. Hourly turnover: 132 percent. GM time in restaurant: Two years, one month. Sales: negative 5.2 percent. Traffic: negative 9.8 percent.

While the notion that retention equals better-run restaurants isn’t a new one, this is a vivid, from-the-floor example.

Additionally, Red Robin’s average wait time in Q4 was 1:58, a decrease of 44 seconds compared to the year-ago period. Guest walk-aways were down 1.5 percent, year-over-year.

Red Robin

For ticket times, Red Robin averaged 11:51 last quarter, 48 seconds better than Q4 2018.

Red Robin

The soul of Red Robin

Despite Red Robin’s lagging trends across 2018 and much of 2019, the company said, through customer surveys, there was reason for optimism. Guests commented they would reengage with Red Robin if the brand drift/service model issues were fixed. And this was something Red Robin had intimate control over—454 of its restaurants (80 percent) are company-owned.

Additionally, the affinity and equity are clearly there for the 1969-founded chain. Two signs say so: There are nine million members in Red Robin’s loyalty program, and about 66 percent of the chain’s sales are its most recognizable item—burgers. Meaning a directional shift wasn’t in the cards necessarily. Red Robin’s comeback is more of a return-to-the-core initiative than a reinvention, which is often an easier and quicker place to start.

One note on the loyalty program. Red Robin said, if just 3 percent of all registered members visit one more time per year, it would generate roughly $4 million in additional revenue this year. Red Robin’s new digital platform, targeted at improving guest ordering experience and order completion rates, would tack on $8 million more, if mobile web order conversions reach desktop levels.

Red Robin also wedges into an interesting value spot. Fast casual averages $12.88 per-person checks while casual-dining is north of $15. Red Robin reports $13.45 (per person, including tip).

But even with all of these platforms to build on, there’s no question Red Robin was getting in its own way from an operations perspective. Mixed messaging was part of that, too.

To crystalized its purpose, Red Robin said, it has targeted “memorable moments of connection.” That splits four ways: Flavor of Americana through gourmet burgers; Family friendly and playful atmosphere; Shareable foods (bottomless steak fries); and Engaged service that “offers the gift of time.”

Red Robin

Red Robin has a few things going on. It introduced headsets in Q2 2019, sticky media in Q3, server point-of-sale handhelds in Q4, and continues a menu rationalization initiative. Red Robin didn’t provide much information regarding a new service model it said will begin to roll nationwide in Q2 2020. It’s currently beta testing at 20 stores. A fresh prototype is in the works as well.

Returning to the messaging angle, though, Red Robin’s “All the Fulls” creative campaign is part of a refreshed omni-channel strategy that leans on targeted marketing. And it’s all about emotional connection. The company said its 30-second sport was one of the top-five strongest performers of Red Robin ads ever tested. Social engagement doubled, year-over-year. Consequently, the chain said it plans to allocate more resources to social and digital channels.

At the end of the day, Red Robin’s goal is to separate by being brand, not price driven. It’s not an overnight fix, but it’s one the chain is clearly—and actively—chasing.

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Categories: Restaurants

P.F. Chang’s to Unveil First To-Go Location in Chicago

Restaurant Management - Thu, 01/16/2020 - 08:36
P.F. Chang’s to Unveil First To-Go Location in Chicago danny Thu, 01/16/2020 - 08:36

The counter-service model is the first of several on the way, the company says.

January 2020

P.F. Chang’s is joining the counter-service ranks, as more and more sit-down chains find themselves doing in recent months. The company told the Chicago Sun Times it plans to open its first “P.F. Chang’s To Go” February 3 at 213 W. Hubbard St. in the Windy City’s River North neighborhood.

The company said it expects to open at least three of the carryout, catering, and delivery focused units in Chicago. And the first debuts weeks after the closing of P.F. Chang’s last traditional location in the city, which stood for 20 years before shuttering January 14. Senior VP of off-premises dining Chris Demery told the Sun Times a non-renewable lease was to blame, and the closure played a key part in the brand’s decision to begin its To-Go journey in Chicago.

“People want good quality food at their door, whether that’s their car door, house door or business door,” he said in the story.

P.F. Chang’s is targeting locations in Chicago’s Loop and Fulton Market to follow, with New York City, Washington, D.C., and Houston as future possibilities.

The stores will feature a stand-up counter and not much room for seating. Demery said P.F. Chang’s was inspired to build the model from shifting consumer preference—where off-site dining is growing at two to three times the pace of four-wall visits.

The company added that it has no plans to phase out dine-in restaurants, of which there are 219 nationwide and roughly 100 more in 25 countries (as well as three airport locations). The broader Chicago area has four units—Lombard, Northbrook, Orland Park, and Schaumburg.

P.F. Chang’s said the To Go store will still feature from-scratch, in-house cooking and a pared down, subset of the traditional menu. Demery told the Sun Times it will showcase about 80 percent of P.F. Chang’s usual offerings. There won’t be alcoholic beverages, however. At least not for now.

The location will offer delivery through two channels—direct via its app and website and through third-party vendors, including UberEats, Postmates, Grubhub, and DoorDash.

In recent weeks, Dine Brands’ two brands, IHOP and Applebee’s, have unveiled quick-service iterations, although the latter appears more of a one-off effort than the first. IHOP’s “Flip’d” concept, which plans to launch next April in Atlanta, is already exploring sites in New York City, Washington, D.C., Denver, and San Francisco, the company said. Additionally, Dine Brands said Flip’d would represent a stand-alone concept within its portfolio. There will be kiosks as well as a build-your-own pancake bar and menu designed for on-the-go occasions.

Applebee’s fast casual, which quietly opened in Birmingham, Alabama, was created by franchise group Quality Restaurant Concepts, a 60-unit Applebee’s operator. It’s a 2,500-square-foot store that features a 72-seat dining room and abbreviated menu with a focus on core classics.

Cracker Barrel is also currently converting its seven Holler & Dash units to Maple Street Biscuit Company stores, a brand it recently acquired for $36 million in cash. The Cheesecake Factory debuted an Asian counter-service brand, Social Monk Asian Kitchen, in February. Bloomin’ Brands tested Outback and Carrabba’s Express models. After first shifting from quick-service, Buffalo Wild Wings rolled a B-Dubs Express prototype in 2017 (there’s one in Hopkins, Minnesota). Part of Hooters’ July sale to Nord Bay Capital and its adviser, TriArtisan Capital Advisors, included the potential growth of Hoots, a fast casual introduced nearly three years ago. Red Robin scrapped Burger Works in 2016.

As for P.F. Chang’s, Paulson & Co. Inc and TriArtisan Capital closed a previously announced deal for the Chinese chain March 1. Financial terms of the acquisition from Centerbridge Partners, L.P. was not disclosed. But Bloomberg reported last January that the sale was for about $700 million. P.F Chang’s more than $675 million of total debt was taken out at part, a private notice sent to investors said.

Headed into the deal, P.F. Chang’s liabilities included about $375 million of secured debut, including $5 million of capital leases, a $317 million first-lien term loan, $25 million of revolver borrowings, and $28 million of secured notes provided by the sponsor. Its borrowings also included $300 million of unsecured bonds, Bloomberg reported.

P.F. Chang’s was founded 1993 in Scottsdale, Arizona.

That move split P.F. Chang’s from its fast-casual counterpart, Pei Wei, which remained in Centerbridge’s portfolio.

The company acquired both brands in 2013 in a deal valued at $1.1 billion. Operationally, the chains were already headed in different directions. Pei Wei moved its headquarters the previous August from Scottsdale, Arizona, to Irving, Texas.

News of a possible transaction began that July, when Centerbridge said it was “an exciting time to explore a sale.” P.F. Chang’s, at that report, was generating average-unit volumes of $4.1 million in its restaurants.

Before the 2012 sale to Centerbridge, P.F. Chang’s reported a 42 percent drop in first-quarter profit to $6.3 million, Revenue was $318.9 million as guest counts sagged. The brand was “fighting to recover from ill-timed price increases,” Reuters reported at the time

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Categories: Restaurants

Why Health-Oriented Beers are Having Their Moment

Restaurant Management - Wed, 01/15/2020 - 03:26
Why Health-Oriented Beers are Having Their Moment erica Wed, 01/15/2020 - 03:26

From functional ingredients to low-calorie counts, these beers are finding fans among athletes and wellness-minded consumers.

January 2020

Up until the last few years, health-conscious or calorie-counting beer drinkers were stuck with one underwhelming option: mainstream light beer. Then, as interest in craft beer swelled, the focus for serious drinkers was entirely on flavor and style, with health a distant afterthought—if any thought at all. Many restaurants and bars adapted to the trend by stocking their draft and bottle selections with more craft options and fewer generic light beers.

But as younger generations focus on overall wellness and seek out alternatives to the high-carb, high-sugar diets of their forebears, a new generation of healthy beverages is surging. Craft brewers have picked up on this trend, bringing a wealth of new beer options to health-oriented bargoers while maintaining their laser focus on flavor.

READ MORE: Why are people drinking less craft beer?

Three notable trends in craft brewing include beers made with power-packed ingredients, low-calorie craft beers, and beer marketed to athletes. They’re worth more than a passing glance from restaurants working to stay relevant in an increasingly wellness-minded world.

Putting the fun in functional

Across beverage categories, from hard seltzer to kombucha to beer, there’s a growing emphasis on culinary and nutrient-heavy ingredients that are meant to add unique flavor and healthful benefits. Brewers are incorporating so-called functional ingredients like bee pollen, coconut water, chia seeds, and sea salt to appeal to beer drinkers looking for a beverage that nods toward healthfulness.

Dogfish Head Brewery makes its SeaQuench Ale with black limes and sea salt; the former ingredient, also known as loomi, is rich in potassium, phytochemicals, and folic acid while sea salt contains magnesium, calcium, and other minerals. Harpoon’s Rec League hazy pale ale includes omega-3 fatty acids and antioxidants. Sufferfest Beer Company brews with bee pollen, which has antimicrobial and antiviral applications, and coconut water—a drink that has risen to prominence thanks to a host of nutrients and electrolytes. (It should be noted that while scientific research has confirmed the potential health benefits of such ingredients, studies have not confirmed their impact within alcoholic beverages.)

Kombucha beer, also known as hard kombucha, is another prominent player in the space. All kombucha has some trace of alcohol thanks to the fermentation process, but the alcoholic version contains enough to elicit a buzz akin to a low-ABV beer.

As a pioneer in the hard kombucha category, Unity Vibration Kombucha won praise from Draft Magazine in 2013 when its Bourbon Peach American Wild Ale was named a top craft brew. Tarek Kanaan, who cofounded the company with his wife, Rachel, celebrates the functional and healthful character of the craft-brewed drink.

“We don’t pasteurize; we let it stay raw and living,” he says. “It has all the natural phytonutrients from the raspberry, the peaches, juniper berries, and elderberry juice. Our products contain plant adaptogens and probiotics [and] healthy compounds in plants like hops, ginger, anything that betters your body.”

The return of low-cal

Craft breweries are moving assertively to appeal to drinkers who both appreciate the full flavor of microbrews and desire lower-calorie options. Calories in beer come from the ingredients that are put into it; soluble proteins carry over a caloric content during brewing. Designing a low-cal craft beer requires starting with flavorful raw materials that translate to fewer calories and vivid taste.

“People naturally view craft beer as this heavy, hard-to-drink beer, compared to macro light-lager breweries,” says Fred Rizzo, director of brewing operations at Avery Brewing Co. “There’s an educational trend toward ‘you can have your cake and eat it too’: delicious beer with low calories.”

Avery’s Pacer IPA is a hop-forward, hazy IPA with 100 calories and 3.5 grams of carbs. Dogfish Head’s Slightly Mighty is a 95-calorie, 3.8-gram-carb IPA that packs a tasty punch. Other options in this category include 99-calorie Ballast Point Lager from Ballast Point, 99-calorie Da Shootz from Deschutes Brewery, and Harpoon’s Rec. League, which clocks in at 120 calories.

“It’s incredible to see just how quickly the category has exploded,” says Harpoon Brewery innovation brewer Tom Graham. “Two years ago, a craft brewer putting a calorie count on a can was all but unheard of. Now you can look in the craft beer cooler at almost any store and see multiple examples of great low-calorie options. It’s really becoming a great time for folks that are into craft beer but also want to maintain an active lifestyle.”

Chasing the athletes

Although there have long been examples of beers that celebrate hikers and campers—such as Long Trail Brewing Co.’s Long Trail Ale released in 1989—brews marketed specifically to athletes, such as endurance runners, are a newer phenomenon.

The most notable example is Sufferfest, which was founded in 2016 to focus solely on gluten-reduced beers for endurance athletes and other adventuresome individuals. Founder Caitlin Landesberg started the company after realizing how integral beer was to competitive running—an approach that’s exemplified in the brand’s “will sweat for beer” motto.

As Landesberg became a serious runner in her 20s, she found that at the finish line of many races, participants often celebrated with a commemorative pint of beer.

“As someone focused on a healthy and active lifestyle, I became more particular,” she says. “Is there a lot of sugar in it? Is it gluten-free? I started thinking of my favorite brands. What would Clif Bar or Gatorade do if they made a beer? That’s how that concept ignited.”

Other craft brewers are increasingly adopting similar positioning. Harpoon’s Rec. League calls itself the “Cool-Down Companion,” for example. The packaging for Avery Brewing’s Pacer IPA features a competition medal embossed with a running trail and the tagline “adult participation trophy.”

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Categories: Restaurants

Lessons Learned at ICR: Fridays Gets Bar-Centric, and Darden Preps for a Recession

Restaurant Management - Tue, 01/14/2020 - 09:02
Lessons Learned at ICR: Fridays Gets Bar-Centric, and Darden Preps for a Recession danny Tue, 01/14/2020 - 09:02

The biggest full-service brands are bracing for more changes.

January 2020

When strategic communications and advisory company ICR hosts its annual conference, it's a chance for full-service industry giants to gather and talk about the past year—and set goals for the one ahead.

Whether it’s Denny’s discussing new updates, Darden laying out the facts of its surging business, or a number of other restaurant companies sharing recent successes and upcoming opportunities, the conference is a chance to glean valuable lessons from relevant experiences belonging to major players in the industry. Here’s what we learned from the first day of this year’s event.

TGI Fridays

When your brand is in need of rejuvenation, it’s OK to look backward to past success.

TGI Fridays traffic has struggled to gain footing over the last year. CEO Ray Blanchette knows the brand needs a facelift.

“I‘ve been involved in some restaurant turnarounds over my career … our domestic U.S. business is in need of rejuvenation,” Blanchette said Monday. “I think what we’ve done is spent time looking inward and looking for a fundamental truth about our business that we can talk about to reinvigorate our guest. For Fridays that’s fairly easy—if you ask people for a Fridays story it’s always a bar story.”

Traffic dropped 6.8 percent at franchised restaurants and 4.5 percent at corporate restaurants over the last 12 months, the company said. For Blanchette, the way to drive those visits back up is to restore the brand’s bar heritage.

READ MORE: Fridays to go public after $380M deal

Blanchette returned to lead Fridays after working at Carlson Restaurants Worldwide, (the brand’s former parent company) years ago, and then leaving to work with other brands for more than a decade. Other alums from the chain’s more successful years have also returned, infusing the company with old-yet-new talents who know the brand and are ready to turn it around.

Since joining Fridays, Blanchette bought on John Neitzel and Jim Mazany to run franchising and company stores, respectively.

Friday’s is split nearly down the middle when it comes to U.S. versus international locations; only 46 percent of the 831 units are domestic. Blanchette said that revenues come from four main channels—U.S. franchises, U.S. corporate stores, international franchises, and licensed branded products sold in retail.

TGI Fridays

TGI Fridays knows where its brand equity is: At the bar.

Within those U.S. restaurant channels, roughly 30 percent of sales are generated from the bar. Many goals for Fridays in 2020 and beyond center around alcoholic beverages, then. Blanchette said this means emphasizing new, value-driven drink options and happy hours.

Refocusing on bar tradition goes hand-in-hand with Fridays seasoned franchises—franchise owners within the system have an average 15 years of experience. But there’s a balance of past and future influences that’s also required.

Blanchette said that strengthening underperforming franchisees is another focus; for instance, in the brand’s important Boston market, 40 to 50 percent of existing directors of operations and general managers have been replaced over the last three months. Buying back some franchised locations is also part of this strengthening process. In January 2020, the chain bought back 36 stores altogether; 20 in Western markets and 16 on the East Coast.

Together with an added focus on delivery (roughly 13 percent of sales fall into the off-premises category now), boosting loyalty program membership, and launching new retail products, Fridays is leaning back into what made them successful in previous years, with the idea of leveraging past prosperity for future triumphs.

In November, GIF Holdings, LLC and Allegro Merger Corp. announced they signed a definitive agreement for “a business combination transaction,”—a move that would result in Fridays becoming a publicly listed company. At closing, TGIF’s holders received a combination of cash and stock valued at $30 million. Allegro assumed roughly $350 million of net debt.

Carlson sold TGI Fridays to Sentinel Capital Partners and TriArtisan Capital Partners for $800 million in 2014. Carlson bought the brand a decade after it was started, when it had just 11 stores.

Systemwide sales for the 12-month period that ended September 30 were about $2 billion. Average annual-unit volume was $2.7 million.

Blanchette was hired in October 2018 after nine months as CEO of Ruby Tuesday. He succeeded Aslam Khan, a Fridays franchisee.

Olive Garden

Olive Garden still has room to tweak with its menu.

Darden

Be realistic about the state of the industry, and about what your brand(s) do wrong and right.

Darden has a massive presence in the full-service industry: The family of restaurants boasts roughly 1,800 locations, featuring recognizable brands like Olive Garden and Longhorn Steakhouse.

The company’s size and firmly-established position within the industry doesn’t mean it isn’t greeted with challenges. CEO Gene Lee is already anticipating the effects of a widely predicted upcoming recession. Rather than worry about the potential setback, though, he’s realistic about preparing for it.

READ MORE:

Olive Garden stays cool in the value wars

Why Darden is thriving in the labor crisis

“In this recession, closures will be greater this time than they were last time, but there will always be good ideas and well-positioned brands that will be able to add units,” he said Monday.

Lee added that human resources are the hardest to come by in the industry and its biggest challenge at the moment. Thus, Darden is focused on attracting, retaining, and engaging strong staff ahead of an economic slowdown. In addition to streamlining operations to make room for rising labor costs, Lee said more will be expected out of employees earning higher wages.

“We will retain people and they have to be better trained—if we’re going to pay some of our back-of-house people what we’re paying them, we’re going to ask them to do more. We haven’t gotten a lot of pushback on that,” Lee said.

The Darden executives are realistic about their company’s strongpoints and limitations as well as the industry's. Darden’s portfolio features a wide array of brands—meaning when one has a weak quarter, another restaurant’s success can downplay the other brand’s mistake. But, in spite of this, Darden’s individual brands have varying objectives.

Lee said Olive Garden has the potential to slim down the menu, which would streamline operations to free up more money for labor.

Cheddar’s Scratch Kitchen—which Darden acquired around three years ago—is in need of a more established company culture. Those at Darden know the brand’s identity and stable of strong team members need to be firmed up, and aren’t interested in rapid growth without this foundation first.

“We’re starting to finally have a Cheddar’s culture. We’re trying to build the foundation to do this for the long term. We are not in a hurry to just start adding units. Before I start focusing on day-to-day comps I want to see manager turnover south of 20 percent and employee turnover south of 80 percent,” Darden CFO Rick Cardenas said Monday.

And when it comes to third-party delivery, Darden isn’t afraid to skip smaller off-premises orders in favor of bigger catering sales. The company has been reticent to adopt third-party delivery and has developed in-house to-go programs instead. Cardenas reported that the average takeout order ticket price for Olive Garden is around $350. “We’d much rather do that delivery than $12 lasagna,” he said.

Furthermore, partnering with third-party services would take away some of the control over quality, accuracy, and promptness that Darden currently has over its off-premises operations. In the light of a possible recession, the company would rather leave behind small orders than take a risk on a system that could divert control and revenues from its portfolio of brands.

“We have business growing at double digits without it,” Lee said. “We’re willing to give up an occasion here or there.”

Denny's remodel program is ready for a 2.0 look.

Denny’s Corporation

Leave no stone unturned when it comes to updating a legacy brand.

Denny’s is in the middle stages of a brand revitalization, refranchising plan, and real estate strategy upgrade. The family-friendly diner chain is changing up its menu, store designs, business model, locations, and more, searching for stronger footholds for its legacy brand in 2020.

Denny’s CEO John Miller reported Monday that the brand achieved its ninth consecutive year of domestic system-wide same-store sales growth in fiscal 2019 at 2 percent (1.9 percent at company-run stores and 2 percent at domestic franchises). On a two-year basis, Denny’s comps are up 2.8 percent, comprised of 3.7 percent growth at company restaurants and 2.6 percent at franchises.

Over those nine years, 380 new stores have opened, putting Denny’s at just over 1,700 restaurants internationally. But the chain isn’t resting on those positive numbers.

The Denny’s Heritage model—a revamp that straddles the line between bright, updated color and nods to the brand’s longevity—was launched in 2014. By 2019’s end, about 80 percent of the Denny’s system had undergone some design updates, and now the company is rolling out Heritage 2.0, a new, even more modern remodel, the company announced/

Other elements of the guest experience have changed, too; around 80 percent of menu items have been improved or changed entirely since the revitalization’s beginnings, and, as of December 2019, roughly 89 percent of domestic restaurants are active with at least one delivery service. The top dayparts for these locations’ off-premises sales are late night and dinner, with 65 percent of online orders placed by a younger-skewing set of consumers aged 25-44.

“Our off-premises initiatives—our Denny’s On Demand platform—has allowed us to modernize the brand with increasing relevance among younger guests. Denny’s was the first of the family diner brands to launch online ordering with delivery where available,” Miller said.

But the changes Denny’s has made to its franchising and real estate strategies are arguably more landmark than its customer-facing updates. Its refranchising plan was announced in October 2018, with the goals of giving loyal, high-performing franchises the chance to quickly grow their holdings and also bring younger franchisees into the fold. The initial goal was to sell 115-125 company stores; as of December 2019, 113 units had been sold, and Miller said there’s the potential for a few more sales in 2020.

The 113 restaurants sold took Denny’s from 90 percent franchised to 96 percent, leaving 68 company stores across 11 states. The expected cost savings of the entire plan are anywhere from $11 million to $13 million.

The real estate strategy facelift is two-fold: Denny’s plans to sell between 25 and 30 percent of the roughly 95 properties it owns now, generating proceeds of around $30 million. Then, those proceeds will be used to replace the sold sites with higher quality real estate, upping the value of the brand’s total portfolio. As of Monday, six pieces of real estate have been sold and four new ones purchased, and more site swaps are on the way.

The company also announced preliminary Q4 results: Same-store sales lifted 1.7 percent, including a 0.5 percent at corporate units and 1.8 percent growth at franchise.

Ruth's Chris Steak House

Ruth's Chris is sticking to its core traits and operating practices.

Ruth’s Hospitality Group

If they’ve worked so far, don’t be afraid to continue relying on those strategies.

Boasting a 55-year history, Ruth’s Hospitality Group (Ruth’s Chris Steakhouse) knows the secret to its sauce by now.

Much of what still works for the brand was put into place long ago—for example, franchising, which isn’t the most common growth strategy for steakhouses—has been in place for Ruth’s since the 1970’s.

The brand’s continued success found through reliable, disciplined processes is perhaps the reason for its wariness to jump on every trend. When it comes to delivery, for instance, Ruth’s isn’t in any hurry to couple up with third-party services.

The company offers online ordering and delivery in 20 markets, but CEO Cheryl Henry said Monday that widespread delivery wasn’t a top priority for the steak chain.

“Delivery might not be as meaningful for this high human touch brand as it is for others. We have very specific guideposts about how we think about using tech and data,” she said.

Instead, the brand is focusing on maintaining its strict focus on operational excellence (case in point, broiler chefs across the system are recertified every 60 days), finishing up a 2014 revitalization plan, branching out to smaller markets, and continuing to grow at a slow and steady pace.

The 2014 revitalization plan—which emphasizes wider bar spaces in some of the older restaurants—is two-thirds of the way completed across Ruth’s 86 company and 73 franchised restaurants. The idea is to better accommodate the Gen X core customer base, a group that Henry said third-party demographics research showed to be the most cynical of today’s diners, and also a group in search of quality dining experiences that allow casual dress.

The target for new company units each year is three to five stores—which is not exactly accelerated growth. Franchising allows this “system growth without additional company capital,” Henry said. For 2020 and 2021, seven new leases have been signed, and the chain is pushing into less-employed markets with franchise owners; places like El Paso, Texas, Albuquerque, New Mexico, and Fort Wayne, Indiana, which, according to Henry, report $5 million in sales annually.

When it comes to why people visit Ruth’s Chris Steakhouse, not much has shifted over the years. The three top visit categories are special occasions, like birthdays and anniversaries, business dining (or private dining and catering), and just because (often motivated by the brand’s Tastemaker wine-pairing dinners and happy hour promotions). With the typical occasions still drawing diners, it makes sense that Ruth’s would stick with the recipe that has made it successful: a strong core of trained chefs and prime steaks, disciplined growth, and stringent financial management.

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Categories: Restaurants

Inside The Cheesecake Factory’s New Restaurant Empire

Restaurant Management - Mon, 01/13/2020 - 15:36
Inside The Cheesecake Factory’s New Restaurant Empire rosie Mon, 01/13/2020 - 15:36

What does the future look like for the casual giant and Fox Restaurant Concepts after their blockbuster merger—and what does it mean for the industry?

January 2020

Despite having opened dozens of unique restaurants and planting flags across the country, Sam Fox is far from jaded when it comes to new opportunities. In fact, his excitement is almost palpable. Last July, the 10-time James Beard semifinalist for Restaurateur of the Year entered into a deal with mega-chain The Cheesecake Factory—one that is sure to prove a game-changer for Fox Restaurant Concepts.

“Our company is evolving, and we’re going to be a national player. Having the partnership with The Cheesecake Factory and their expertise is great,” Fox says. The Cheesecake Factory, which first opened in 1978 and now has more than 200 units, paid $353 million for the company and the portion of Fox’s North Italia brand that it didn’t already own. The Calabasas Hills, California–based company had already invested $88 million in FRC for a stake in North Italia and Flower Child—the latter of which Fox developed thanks to a minority investment from Cheesecake in November 2016. Since then, the industry juggernaut invested $88 million in North Italia and Flower Child in anticipation of their purchase.

Fox launched FRC in tandem with his first restaurant, Wildflower, which made its debut in Tucson, Arizona, in 1998. Since then, the group has flourished, opening multiple concepts while also selling a few, including True Food Kitchen, which was purchased by P.F. Chang’s in 2012. FRC now boasts 11 brands, minus North Italia: Flower Child, Culinary Dropout, The Henry, Blanco, Doughbird, Olive & Ivy, The Greene House, The Arrogant Butcher, Zinburger, Wildflower, and The Rocket.

All are approachable, casual restaurants—ranging from farm-fresh food to Mexican to pizza—and number a total of 49 locations across nine states and Washington, D.C. Now that The Cheesecake Factory owns all of its assets, FRC will operate as an independent subsidiary with Fox and his team continuing to lead day-to-day operations.

Flickr User: m01229

With a national footprint of more than 200 units, The Cheesecake Factory has the infrastructure and capital to grow Fox Restaurant Concepts.

Fox and friends

North Italia, a full-service Italian concept, has 21 locations in 10 states and D.C. Each unit pulls in about $7 million annually. Moving forward, The Cheesecake Factory will run the brand from its California headquarters and already has expansion in mind.

“North Italia has a clear growth pattern and will grow about 20 percent a year. Next year we’ll do six more stores and then build on that,” Fox says. The growth will be in both the number of locations and its geographic footprint; The Cheesecake Factory sees the potential for 200 domestic units.

At 24 locations, Flower Child is the second-largest FRC brand and will remain under Fox’s purview. The concept can best be described as a fast-casual iteration of True Food Kitchen—the full-service restaurant Fox developed with holistic wellness guru Dr. Andrew Weil. Given the demand for healthier, plant-forward fare and the boom in fast casual, Fox will focus his attention, at least initially, on growing Flower Child. Like North Italia, he thinks it can expand about 20 percent annually—for an estimated four to five locations this calendar year.

“I’m excited about [being able to] grow and innovate Flower Child. Culinary Dropout is also going to go on a bit of a growth pattern with three new units in the near future,” Fox says.

He’s also scouting new real estate for The Henry—a classic American restaurant and bar that harkens back to the Gatsby era—as well as a seventh location of Blanco Tacos & Tequila, which is slated to open in Denver later this year. Furthermore, the restaurant group is busy at work on a second location for Doughbird. “We have so many irons in the fire that we’re always busy,” Fox says.

Such ambitious growth will come more easily to FRC now that it has an injection of capital, not to mention long-term backing. “We’ll have more growth capital, more strategic planning for the brands in the portfolio,” Fox says. “We’ll grow the existing brands, and I think you’ll see something else out of us,” though he offered up no clues as to what a new concept might look like.

The combined company, according to statements by The Cheesecake Factory, is expected to gross almost $3 billion in 2020 with an expected revenue growth of more than 8 percent.

*/ /*-->*/ Squad Goals

With roughly a dozen new concepts under its purview, The Cheesecake Factory has various benchmarks set for 2020. During an October investor call, CEO David Overton laid out the following expansion goals for the year ahead. At press time, three of the expected 20 openings remain a mystery.

Cheesecake Factory units: 6

North Italia units: 6

Flower Child units: 5

Units of an unconfirmed Fox Restaurant Concept: 3

A win-win acquisition

Opinion on the Cheesecake-FRC deal varies. Fox is squarely on the positive side, pointing out that the deal gives his restaurants room to grow fairly unconstrained. It’s not a one-sided deal, though. For as big as it is, The Cheesecake Factory stands to gain much, too.

“They’ll both benefit, and it gives The Cheesecake Factory a new source of potential growth down the line, and that’s been one of their biggest challenges,” says Jason Moser, a senior analyst at investment firm Motley Fool. “You can only have so many restaurants before you get saturated.”

They’re a good match, too, he adds, in that the two companies have similar cultures. It’s an opinion that Fox himself echoes.

“We’re really well-aligned and have been partners for the last three years, so we dated before we got hitched. We know our strengths and our weaknesses. [The Cheesecake Factory] is a lot bigger than we are, but we’re similar: founder-led and passionate about the restaurant business,” he says.

Fox points to growth, purchasing, facilities, and strategic planning as areas where the larger brand’s expertise will be valuable. “They’ve done a great job of building an organization with more than 200 restaurants across the country and having that road map is something we’ll benefit from,” he adds.

Another big advantage for FRC comes in the form of The Cheesecake Factory’s national infrastructure, which makes sourcing and supply chain support easier. At a time when more concepts are prioritizing fresh ingredients and seasonal offerings, building their own supply chain can prove difficult, Moser says. By joining a company with an existing network, FRC has an edge over competing restaurant groups of roughly the same size.

On the flip side, The Cheesecake Factory will gain access to a more nimble, creative mindset that large, legacy chains often lack.

“It will probably help with innovation at The Cheesecake Factory, which is kind of a restaurant of yesterday, while Fox is a restaurant of today,” Moser says. “This gives them a chance to expand their customer base dramatically. My bet is they will at least want to groom the North Italia concept, given that it’s pretty well proven.”

He expects to see The Cheesecake Factory expand another one or two of the brands while also shedding a couple of the Fox concepts. Unless The Cheesecake Factory’s own smaller brands (Grand Lux Café and RockSugar Pan Asian Kitchen) are deemed underperformers, Moser predicts they’ll fit in well with the growth strategy for the FRC brands.

Fox Restaurant Concepts

Fox Restaurant Concepts run the gamut, including Blanco (top, middle, and bottom left), Flower Child (top right), and North Italia (middle and bottom right).

Cheesecake’s next act

In considering what the future would have looked like for Fox without this acquisition, Moser imagines the restaurant group would likely have needed to pursue an IPO to access more capital. But such routes can be treacherous for smaller operations that often lack the girth to keep Wall Street investors satisfied, Moser says.

Peter Saleh is a managing director specializing in the restaurant sector at global financial services firm BTIG. He expected The Cheesecake Factory to only buy North Italia and Flower Child. The purchase not only surprised him but also troubled him.

“This could be a distraction to their management team, and the talent at their headquarters could want to go work on the new, shiny, exciting concepts, and that is probably Flower Child or North Italia,” Saleh says.

In his opinion, the merger could benefit some of the concepts while leaving others neglected. “Restaurant companies that have multiple brands under one umbrella are usually successful at one brand, and the others go by the wayside. And they almost never have them doing well at the same time,” he adds.

The challenge for The Cheesecake Factory, Saleh says, is remaining focused on its restaurants and stabilizing traffic to them. “Right now, the number of people coming into the restaurants has been declining every year. The last positive year of guest counts [increase in foot traffic] was 2012,” Saleh says.

Despite the lengthy downturn in traffic—a challenge facing many fellow casual-dining chains—The Cheesecake Factory has continued to generate steady financials; in fiscal year 2018 average-unit volumes clocked in at $10.7 million, representing a 1.7 percent uptick in comp sales.

Still, Saleh qualifies the sales increase, explaining that opening new locations and raising menu prices have partially offset the decline in transactions.

Under that line of reasoning, the acquisition was all the more crucial for The Cheesecake Factory.

“When you stop growing as a restaurant, you have to figure out what your next act will be,” Moser says. He doesn’t expect the acquisition to drive traffic to Cheesecake’s own restaurants, nor does he foresee the partnership being highlighted in any way so as not to affiliate one brand with the other.

The Cheesecake Factory isn’t resigned to ever-shrinking traffic and guest visits. Last spring, the chain began testing a smaller, 5,500-square-foot prototype that could open the door to new real estate opportunities. That said, it does behoove the mega-brand to hedge its bets with some fresh blood.

And as for Sam Fox, he’s happy to be along for the ride.

“I’ve never been part of a public company, so it’s creating a whole lot of learning opportunities. Hopefully we’ll do things that are meaningful to them and to us. And hopefully we’ll get better every single day,” Fox says.

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Categories: Restaurants

Tech Provides the Runway for Kura Sushi

Restaurant Management - Mon, 01/13/2020 - 15:22
Tech Provides the Runway for Kura Sushi danny Mon, 01/13/2020 - 15:22

The brand sees potential for 300 domestic locations.

January 2020

Kura Sushi USA, a technology-enabled Japanese restaurant chain that went public in August, believes it has significant runway for growth in existing and new markets—a level of optimism that is in line with its long-term goal of opening about 300 units.

The chain, which has 24 domestic units, said operating numbers will continue to improve because of current amenities. One of those is the expansion of Kura’s rewards program, which offers guests a $5 coupon for every $50 spent. The chain reports that members of the rewards program have larger average checks and higher return rates. The program should roll out across all units sometime during fiscal 2020.

The platform, which has been in place since August, has played a role in top-line growth. Kura did not provide specific numerical data on the success of the program, but did note that engagement rates with customers who received coupons are high and registration rates are consistent.

Then there’s the added technology piece. Kura has tested touch-panel bill ordering at its Little Tokyo unit in Los Angeles where customers can order drinks from their table by using a touch screen.

“We expect the rewards program and the touch-screen drink ordering, along with marketing initiatives and the new menu items, to drive continued comp growth across our system,” Jimmy Uba, president and CEO of Kura, said during a recent conference call.

Comp sales have surged lately, too. Kura reported year-over-year growth of 7.9 percent for Q1 of fiscal 2020, following a 9.4 percent increase in Q4 of fiscal 2019. The Q1 performance also gave Kura a two-year stack of 12.3 percent. Those numbers were fueled by a 3.1 percent jump in average check and a healthy 4.7 percent increase in traffic. Operating loss stood at $1.4 million compared to $400,000 during last year’s Q1, and net loss came in at $1.2 million, or 15 cents per diluted share, compared to $400,000 in 2019, or 8 cents per diluted share.

“Our first-quarter loss was generally in line with our expectations, and we continue to expect our profits to be generated during the second half of the fiscal year, in line with historical cadence,” Uba said. “ …  We expect to be near breakeven in Q2 before steadily improving in the back half of the year. All in all, we are excited about the coming year.”

The chain experienced lower-than-expected sales in four stores located in shopping centers that aren’t fully occupied, it said. Although tenants moving into a shopping center are out of its control, Kura said, in areas with fully occupied shopping centers, units are driving comp sales, such as Austin, Texas, Doraville, Georgia, and Frisco, Texas, in Q1.

For the full fiscal year, the company expects between a 2–4 percent increase in comp sales. Ben Porten, investor relations manager for Kura, said what appears to be a slow down for fiscal 2020 is really due to strong comp sale increases in fiscal 2019, which were 4.4 percent, 6.8 percent, 7.6 percent, and 9.4 percent, respectively. The other factor involves the tailwinds from full occupancy at some of their locations, which is expected to taper off.

As of now, the company sits at two dozen restaurants across California, Texas, Georgia, Illinois, and Nevada. Kura remains on track to open six units by the end of fiscal 2020, some of which expand into new areas like Washington, D.C. The most recent unit opened in Katy, Texas. It was supposed to debut in Q1, but was delayed until late December because of difficulties with scheduling the final inspection. The company said the delay was an anomaly and won’t be typical for store openings going forward.

“We had a fully built store that we had to sit on for about two months, just because we couldn't schedule the final inspection,” Porten said. “And so, we don't expect that sort of delay to recur. It's never happened before.”

Three units are under construction right now while Kura has executed leases for the remaining locations. The full-service chain will work on three locations in Q4 at the same time—Bellevue, Washington, Washington, D.C., and Sherman Oaks, California. Two of those are scheduled to open in Q4 while the Bellevue spot may get pushed to fiscal 2021.

Kura recently added Kim Ellis to its board of directors to assist with the growth as well. She previously served as the executive vice president of development at Panda Express, and oversaw the opening of more than 600 restaurants in five years.

“Results in the first quarter included strong comparable restaurant sales growth, as guests continue to respond positively to our premium ingredients, affordable price points, and most importantly, the distinctive ‘Kura Experience,’” Uba said. “We remain excited about the balance of fiscal 2020 and have a number of drivers in place that we believe can sustain our momentum. Furthermore, we have a strong development pipeline that will enable us to bring our unique brand to a growing number of guests throughout the country.”

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Categories: Restaurants

Restaurants Turn to In-House Specialties to Beat the Competition

Restaurant Management - Mon, 01/13/2020 - 15:22
Restaurants Turn to In-House Specialties to Beat the Competition erica Mon, 01/13/2020 - 15:22

As restaurant competition becomes more cutthroat, chefs are leaning on in-house specialties to differentiate their concepts and win loyal guests.

January 2020

“My philosophy is that you come to a restaurant in order to see what that chef is capable of doing.” Brian Bruns, chef and co-owner of Flat & Point, a new restaurant in Chicago, takes that statement seriously. It’s hard to find a dish on the menu in which the majority—if not all—of the components weren’t made in-house. And Bruns is far from alone in this approach.

As the competition stiffens amid market saturation, it’s no longer enough for operators to serve good food. To truly stand out, restaurants must shine. In-house specialties, from house-made ramen broth to freshly churned ice cream, are one way to do that.

At Flat & Point, the whole menu is intertwined, with many in-house items depending on each other in some way. “We want all items we bring into the restaurant, be it meat or vegetable, to serve many purposes,” Bruns says. To that end, the chef and his team make the bread, ricotta cheese, pasta, charcuterie items, and all the sauces on premises.

In addition to showcasing creativity, Bruns says, cooking this way has both environmental and economic benefits. “We use every bit of something before it goes into the compost,” Bruns says. “Sometimes products don’t even make it to the compost because after being used multiple times, they end up on a dish.”

Seasonality and local foods often play into house specialties, as the ingredients not only taste better but are also less costly to transport and produce fewer emissions. At the Ritz-Carlton Resort in Lake Oconee, Georgia, chef Edgar Carrera changes items like apple butter or spiced nuts based on what’s available.

“We have a strong focus on sourcing and collaborating with regional farmers and food artisans to provide the most authentic experience when possible,” Carrera says.

Nick Strawhecker, chef and owner of Forno in Omaha, Nebraska, has a similar approach when it comes to his tigelle, a traditional Italian street food that’s similar to an English muffin stuffed with meats, cheeses, and spreads.

“Locality and seasonality are very important to us,” Strawhecker says. “For the tigelle we do a lot of jams, pickles, and ferments, which have the additional environmental benefit of extending the life of a food from one season to the next.” Recently the tigelle dish has featured jams made from tomatoes and eggplant. The two vegetables flourish in Nebraska during the mid- to late summer, allowing Forno to preserve and serve the jams into the fall and winter.

It’s not only food menus that are jumping on the in-house bandwagon. At Stratus Rooftop Lounge in Philadelphia, bar manager Mirek Struniaski makes as many cocktail components as possible, including peanut butter–washed bourbon, house-made tiki bitters, and a cinnamon whiskey that’s concocted with allspice, cloves, and honey from local beehives.

As part of Kimpton Hotels, Stratus Rooftop Lounge uses house-made items as a means to both elevate the guest experience and spotlight locally sourced goods. The specialties also help build loyalty by providing a memorable guest experience. “Guests love knowing that they are getting the freshest and sustainably sourced products for their hard-earned money,” Struniaski says. “They love the surprise of asking for a fireball shot and being delivered a handcrafted, and arguably better, product.”

Carrera also uses his in-house specialties to enhance the guest experience beyond the Ritz-Carlton premises. Guests may find a hand-labeled jar of spiced nuts in their rooms or a jar of fresh preserves, ready to take home, by their dinner plate in the restaurant.

“We strive to achieve an emotional engagement through the different experiences and elements that tie our unique location and resort together,” Carrera says, “something that will let our guest remember their experience here.”

Some restaurants have gone even further by bringing their best-loved specialties into the consumer market. Today, reservations at Stephanie Izard’s pair of concepts are among the most coveted in Chicago. But when she opened her first spot, Girl & the Goat, in 2010, she never would have guessed that one of the most popular dishes at the meat-heavy restaurant would be the green beans.

“Guests were constantly asking for the sauce to use at home to turn up the flavor for their own veggie dishes,” Izard says. “That’s when I decided to start bottling it.” The resulting lineup, under the name, This Little Goat, includes sauces and spice blends that are available in select-area supermarkets.

At the Alabama-based chain Full Moon BBQ, co-owner David Maluff experienced a similar demand from guests. “The popularity of the Full Moon products that were being served in our stores is what inspired us to take our bread-and-butter items like barbecue sauce and chow-chow and move them to the consumer market,” Maluff says.

Traditionally, the world of consumer-packaged goods has largely been dominated by limited-service operators like Full Moon rather than full-service independents or small hospitality groups. Venerated chefs like Izard entering the arena could signal a shift.

For her part, Izard views the commercial line as another way of connecting with her guests, even after they leave the restaurant. “We’re always trying to improve consumer experiences in their home kitchens,” she says.

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Categories: Restaurants

Restaurant Sales Plummet Down the Stretch in 2019

Restaurant Management - Mon, 01/13/2020 - 08:57
Restaurant Sales Plummet Down the Stretch in 2019 danny Mon, 01/13/2020 - 08:57

Could this be a sign of things to come this year?

January 2020

The headline is a troubling one: December’s same-store sales growth of negative 2.1 percent was the worst result for the restaurant industry in more than two years. Was it surprising, though? Black Box Intelligence predicted in November the industry would limp down the stretch in 2019. The reason being mostly two-fold—a strong 2.1 percent run in December 2018 to compare against and the calendar shift of Thanksgiving.

Those factors took hold in Black Box’s latest report. “As bad as the month seemed, as we said last month, the top-line growth result is not telling the full story,” said Victor Fernandez, vice president of insights and knowledge for Black Box Intelligence, in a statement. “As Thanksgiving was celebrated so late in the month, it fell into December for 2019 according to the calendar we use for reporting.”

Thanksgiving typically sours restaurant sales, on a broad scale, due to closures and people staying at home. It’s a boon for some (Cracker Barrel) but that’s not the norm.

The real debate, however, concerns whether the shift spotlighted a blip that should be ignored, or whether December’s results suggest a rocky 2020. Fernandez said the first week of the month (where the holiday factored in) resulted in a double-digit percentage point drop in same-store sales. Still, the rest of the weeks of the month also tracked negative. “Coupled with the fact that December of 2018 was strong in terms of same-store sales thus presenting a challenging comparison, December of 2019 was projected to be weak regardless of holiday shifts,” he said.

Stepping back to a broader view, same-store sales growth in Q4 of 2019 showed comps falling 0.1 percent. That’s an improvement of 0.3 percentage points over Q3. Also, calculating same-store sales growth over a two-year period reveals 1.4 percent growth against Q4 2017. The result is the best two-year figure in all of 2019 and the fifth consecutive quarter in which the restaurant industry was able to post positive gains under this longer-term picture.

Over the course of 2019, sales growth for restaurants achieved small positive momentum, Black Box reports. Same-store sales clocked in at 0.1 percent. Importantly, this means restaurants have witnessed positive growth for the last two consecutive years (growth was 0.8 percent in 2018).

Yet can this really be labeled a full-on success? It depends on how you view the sustainability of what’s driving the momentum.

Fernandez said sales growth continues to be “crippled by declining traffic.” The offsetting factor—guest check—has been just large enough to generate some positive results. “Given the traffic challenges facing the industry, stronger and sustained long-term sales growth is really not an option,” Fernandez said.

Just look at December. Same-store traffic fell 5.7 percent, reflecting the negative effect of the Thanksgiving calendar shift. Again, though, this issue extends further. Q4 and 2019 traffic growth rates reinforce the idea that falling guest counts are, along with workforce pressures, the biggest roadblocks facing chain restaurants, Black Box said.

Comparable traffic growth declined 3.4 percent in Q4. Along with Q3 2019, these are the only quarters with traffic growth worse than negative 3 percent since Q3 2017. For the entire year, traffic fell 3.1 percent—a drop of 1.2 percentage points measured against the growth recorded in 2018.

Naturally, this is affecting segments differently. Family dining, fine dining, and upscale casual turned in the best results in Q4. After a challenging 2017, family dining has enjoyed a resurgence of late. Here’s a look at how Bob Evans has embraced a dynamic sector. And how IHOP became America’s largest sit-down chain in recent months.

Fine dining posted three consecutive years of sales growth, perhaps lending credence to the theory that today’s consumer is willing to spend more on experiences.

As Black Box points out, fine dining continues to focus on delivering superior dine-in service while much of the industry shifts toward off-premises business. So, suddenly, fine dining finds itself at an enviable point of differentiation.

“This segment is also driven by expense account users that continue to entertain their clients as a key business strategy,” Black Box said. “The attention to quality and service seems to resonate well with fine dining corporate and personal diners given the positive same-store sales growth achieved by this segment over the last three years.”

Upscale casual also recorded positive sales growth in Q4 but did notice a small dip in sales for the entire year compared to 2018.

By market, out of the 11 regions tracked by Black Box, the Western classification was the only to experience positive same-store sales in December. Texas, New York-New Jersey, and New England took the biggest hit. The latter witnessed a negative 7.64 percent decrease in traffic. In November, 71 percent of local markets reported positive. Just 22 percent did so in December.

While all of this unfolds, staffing difficulties continue to rise for restaurants. After a few months of flat and even improving employee retention, rolling 12-month turnover rates climbed again for hourly employees and restaurant managers during November, according to Black Box’s Workforce data. Turnover remains at historically high levels.

And, once again speaking to a consistent theme throughout 2019, the issue was compounded by the reality it is also becoming increasingly harder to find qualified employees to fill vacancies created by turnover. Per Black Box, by the end of Q3, 63 percent of restaurants said it was more difficult to recruit hourly staff versus the prior quarter; 58 percent said the same of restaurant managers.

This issue spiked at quick-service restaurants, with a higher percentage saying they are having a harder time finding hourly employees and managers than just three months ago.

“As a result, the percentage of restaurant locations that is understaffed is increasing. For an industry that relies heavily on its workforce, this can only mean bad news. Especially when taking into consideration guest sentiment,” Black Box said.

Joel Naroff, president of Naroff Economic Advisors and a Black Box Intelligence economist, said 2020 should mirror 2019 when it comes to the economy. “If you liked 2019, you will enjoy this year. If you were disappointed, then plan accordingly. While the fears of an all-out trade war seemed to have dissipated [and hopefully will not re-emerge], that does not mean the economy is likely to rebound sharply. In the U.S., consumer spending is being restrained by softening gains in wages, even as job growth remains solid and labor shortages continue to plague business. Globally, forecasts are for soft growth in China and Europe to continue.”

“There is little reason to expect a major upturn in business investment,” he added. “Government spending, a prime factor in growth, may be limited by the return of trillion-dollar budget deficits. In other words, there are few factors that would constrain growth significantly or cause it to accelerate sharply. For the restaurant industry, that implies modestly rising demand this year.”

Black Box did caution, however, political instability tied to an election year could challenge operators.

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Categories: Restaurants

Chef Cara Chigazola Tobin on Why Burlington Rocks

Restaurant Management - Thu, 01/09/2020 - 15:12
Chef Cara Chigazola Tobin on Why Burlington Rocks rosie Thu, 01/09/2020 - 15:12

For James Beard semifinalist Cara Chigazola Tobin, Vermont’s largest city does farm-to-table and small-town hospitality best.

January 2020 Honey Road */ /*-->*/

Cara Chigazola Tobin

Top Picks

Pho Hong

Penny Cluse Cafe

Taco Gordo

Zero Gravity Brewpub at American Flatbread

Rustic Roots
(in nearby Shelburne)

You may not guess it given her love for New England, but chef Cara Chigazola Tobin originally hails from California. After a bit of coastal back-and-forth, she landed in Cambridge, Massachusetts, in 2010 where she served as chef de cuisine at renowned restaurant Oleanna.

Longing to put down roots in Vermont, Tobin opened Honey Road along with her business partner, Allison Gibson, in summer 2017. Specializing in Mediterranean mezze, the restaurant was a James Beard Award semifinalist for Best New Restaurant the following year, and Tobin herself has racked up two semifinalist nods as Best Chef: Northeast, too.

For her, Burlington has the Goldilocks appeal—a strong, tourism-driven economy and a nuanced dining scene, but within a small, tightknit community—making it the perfect place for her to call home.

Honey in the land of maple syrup

I chose the name because of a story about this town, Kars, in northeastern Turkey. When the men went to war, the women revived honey-making and the town’s economy—and it was all on this one road. The idea of these women making a business and thriving, that’s what my business partner and I did.

That James Beard luster

Vermont has something like three tourists for every resident. It’s actually really helpful when we’re on these lists because people seek us out. It also gives the locals a little bit of pride. I want people to know about Burlington and come here.

Burlington must-have

Maple syrup, of course. Cheese, too. My son has recently been eating Cabot cheddar with maple syrup. I don’t know how much more Vermont you can get.

Why Burlington rocks

It’s such a sweet little town. You still get that city vibe, but it’s also so community-driven. It’s the best of both worlds. You can go to some little hole-in-the-wall place or end up at a big farm-to-table restaurant.

The scene

Everyone loves to follow the farm-to-table approach. We have a lot of awesome local stuff, everything from proteins to dairy to vegetables. People are even growing saffron now. You can eat quite a bit of stuff without even having to leave the state.

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Categories: Restaurants

Restaurant Marketing: 3 Smart Ways to Appeal to the Senses

Restaurant Management - Wed, 01/08/2020 - 13:25
Restaurant Marketing: 3 Smart Ways to Appeal to the Senses danny Wed, 01/08/2020 - 13:25

Here are some offline and online tactics to speak to customers.

January 2020

Restaurant marketing is no easy feat. After all, how do you effectively advertise a product when the primary selling point is its taste? Let’s run through three smart marketing strategies that will help you ensure your food or drink products appeal to all the senses. Offering actionable advice on both online and offline marketing tactics, here’s how to ensure your tasty treats stand out in an increasingly saturated industry

Find your USP (and emphasize it)

No matter if you’re a microwave meal manufacturer for large-scale grocery stores or a grower of fresh produce for local establishments, your specialist sector is likely to be inundated with food and drink manufacturers offering the same product—so how do you ensure yours is noticed? The answer: find your USP (unique selling point).

What exactly this unique selling point is very much depends on your product type. For the best success, keep an eye on the latest restaurant and industry trends and try to align your USP accordingly. For example, with sustainability becoming an increasingly popular consumer preference worldwide, look to heavily emphasize any product that is sustainably sourced as a key characteristic.

To reinforce your USP, look to adopt a focused SEO (Search Engine Optimization) digital marketing strategy. Carry out keyword research surrounding your USP (using the aforementioned example, you may research around ‘sustainable food’ as a starting point), optimizing the page content and blog posts on your website for terms with substantial search volumes. This will help your brand website rank higher in Google search positioning, increasing organic traffic and subsequent brand and product exposure. And the best part? That organic traffic will be in the form of consumers specifically searching for products with your USP, meaning you’re more likely to see conversions in the forms of purchases as a result.

Get social media savvy

After taste, undoubtedly the best sense to target with a food marketing strategy is sight—as what better way to advertise your product than a mouthwatering picture that instantly gets the consumer’s taste buds tingling? With this in mind, look to capitalize on the popularity of visual content on social media platforms such as Instagram and Facebook.

Take pictures of particularly aesthetic foods such as the tantalizing melted cheese on a scrumptious burger, using this as the basis for a social media post or advertisement. Instagram and Facebook both offer great targeted advert options that enable you to narrow down your desired reach by demographic, so consider who your audience is and target them accordingly. For instance, if you’re a local food or drink retailer, consider a social media advertising campaign that’s tailored to people within your area. Assuming your food looks the part, you’ll no doubt see an influx of engagements, hopefully driving conversions as a result. As an added incentive, why not pair your advert with an exclusive discount offer to really get people talking?

Network, network, network

In today’s digital age, it can be all too easy to get caught up in the world of online—but this isn’t to say that traditional marketing tactics can’t still pay dividends.

Networking is one of the oldest tricks in the marketing book—and for good reason! Look to network with anyone and everyone as a means of promoting your food and drink business. There are always plenty of events both locally and nationally, so keep an eye on industry calendars and get involved - think pop-up markets, industry showcases and everything in between. And the best part? You can utilize your trump card—taste. Offer free samples and giveaways and allow your food or drink to speak for itself.

With the right know-how, there’s an array of channels you can explore to effectively market your food and drink products. For the best success, look to utilize both digital and physical marketing strategies—as long as it tastes good, you’ll find customers coming back time and time again as a result.

Jon Leighton is the Director of Land Digital, a full-service digital agency providing made-to-measure marketing, design and development solutions to help businesses in the UK solve their commercial problems.

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Categories: Restaurants

Red Robin's Operations Chief Leaves Company

Restaurant Management - Wed, 01/08/2020 - 09:01
Red Robin's Operations Chief Leaves Company danny Wed, 01/08/2020 - 09:01

Guy Constant joined the company in 2016.

January 2020

Red Robin announced in a January 7 securities filing that executive vice president and chief operating officer Guy Constant’s employment has been “terminated without cause.” The casual burger chain has begun an external search for his replacement, it said, with SVP and chief people officer, Michael Buchmeier, serving in the interim role.

Red Robin did not offer any additional information. Constant was promoted to the COO position in January 2019, replacing Carin Stutz, who had held the title since April 2016. Like Constant, Stutz, the former president of McAlister’s Deli and CEO of Cosi, was “terminated without cause.”

Prior to his promotion, Constant served as Red Robin’s chief financial officer starting in December 2016 (Lynn Schweinfurth is the chain’s current CFO). Most recent to the hire, Constant was CFO and EVP of finance and treasurer for Rent-A-Center Inc. Previously he served in various executive roles at Brinker International, including EVP and CFO, president of Chili’s global restaurant division, senior vice president and vice president of finance, and senior director of executive compensation. 

From early 2019 to now, much of Red Robin’s C-suite has changed. Following Stutz’s departure in September 2018, chief executive Denny Marie Post announced she would step aside to retire in April, effective immediately, after seven years with the company and three as CEO. Patty Moore, the company’s board chair for nine years, took over and Red Robin kicked off a lengthy search for Post’s replacement.

In September, Moore announced her retirement when Red Robin announced Noodles & Company chairman Paul Murphy would lead the company. He directed the fast casual since 2017, where he was responsible for 459 locations across 29 states. Before, Murphy was CEO of Del Taco Restaurants from 2009–2017, overseeing 543 stores with revenues of $470 million. Other roles included leadership positions at Einstein Noah Restaurant Group, Inc. for 11 years, including as president, CEO, and board director from 2003–2008.

When Constant took charge of operations, Red Robin was staring down a turnaround effort that stemmed from several internal challenges. Post said at the time that Red Robin was committed “to regaining our operational edge in this increasingly complex and competitive environment.”

Constant was tasked with leading supply chain, facilities, and development. But notably, he had to address some key declining metrics across multiple areas of Red Robin’s business. In the quarter heading up to the executive change, the brand’s total ticket times out of the kitchen and wait times were up about a minute on average. Red Robin witnessed an alarming 85 percent lift, year-over-year, in walkaways. Revenue fell 0.6 percent to $315.4 million. The company reported a loss in the quarter of $1.9 million, or 14 cents per share, from a profit of $6.9 million, or 53 cents per share, in the year-ago period.

This was due, in some respects, to growing complexity in Red Robin’s business thanks to rising off-premises sales and turnover concerns. Red Robin went to a team service system model earlier that year that required servers to bus as they go, something Post said Red Robin “did not execute … well at all.”

The chain approached cost-cutting measures by cutting back on labor, asking hosts to handle carryout orders as well.

In response, walkways jumped as total ticket times lifted. Tables weren’t being cleaned efficiently, either.

Red Robin appeared to be making progress under Constant’s leadership. This past quarter—Q3 of 2019—the brand posted a quarterly loss of 24 cents per share compared to a gain of 16 cents in 2018. Same-store sales increased 1.6 percent to snap a six-period negative streak, although traffic fell 3.1 percent. The comps result marked three straight quarters of accelerating gains and was comprised of average check of 4.7 percent and overall pricing, net of discounts, of 1.5 percent. For perspective, Red Robin’s Q2 traffic was down 6.4 percent. Some of the bump came from an “All the Fulls” campaign Schweinfurth said “had a significant positive impact on our traffic trend.”

However, some back-end fixes were starting to show, too, the company said.

The climb back to positive same-store sales

  • Q3 2019: 1.6 percent
  • Q2 2019: –1.5 percent
  • Q1 2019: –3.3 percent
  • Q4 2018: –4.5 percent
  • Q3 2018: –3.4 percent
  • Q2 2018: –2.6 percent
  • Q1 2018: –0.9 percent
  • Q4 2017: 2.7 percent
  • Q3 2017: –0.1 percent
  • Q2 2017: 0.5 percent
  • Q1 2017: –1.2 percent
  • Q4 2016: –4.3 percent
  • Q3 2016: –3.6 percent
  • Q2 2016: –3.2 percent
  • Q1 2016: –2.6 percent

When 2019 began, Constant said in November, Red Robin was short more than 100 managers across its 561-unit system. At Q3’s end, Red Robin was “essentially fully staffed” at the manager level and its turnover numbers were best in class for casual dining—a move that helped crew-level performance as well, Constant said. “Now, with more fully staffed management teams, we are also able to reduce the churn of managers between locations and provide a better and more stable experience for our team members,” he said. “The resulting benefit is apparent in the progress we have made in hourly turnover numbers which improved, again, in the third quarter as they have throughout 2019, in sharp contrast, we continued deterioration in turnover and staffing metrics seen throughout the industry.”

One of Constant’s main points was to improve front-of-house engagement by having managers establish a better presence on the floor and move them to the host end during peak hours. He said the focus rerouted a guest satisfaction trend that was headed in the wrong direction after metrics reached a low point at the end of Q4 2019. He said they hit their highest level in more than three years at Q3’s close.

Ticket times also improved more than 90 seconds in Q3 thanks, in part, to Red Robin’s “Maestro” platform that zeroes in on kitchen managers and works to coordinate fast and accurate delivery of food at the right temperature. 

Additionally, the chain worked to shift labor investment from overstaffed shoulder hours to understaffed peak hours, Constant said, and improve throughput at critical times. He added Red Robin’s renewed focus on staffing yielded improvement in Q3 on guest ratings for speed of service, food temperature, and cleanliness, which led to repeat business.

The next evolution for the brand was to add labor hours during busy shifts to aid off-premises volume. The chain’s away-from-the-restaurant segment, including catering, increased 37.3 percent, year-over-year, in Q3 to comprise 13.2 percent of the company’s total food and beverage sales.

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Categories: Restaurants

When is the Right Time to Rebrand Your Restaurant?

Restaurant Management - Wed, 01/08/2020 - 03:08
When is the Right Time to Rebrand Your Restaurant? rosie Wed, 01/08/2020 - 03:08

Rebranding signals a shift in priorities or persona and can be the ideal antidote for a restaurant struggling to stay relevant.

January 2020

When the time rolled around to celebrate the 25th anniversary of Benjy’s, a beloved Houstonian establishment serving innovative New American fare, owner and founder Benjy Levit found himself facing an interesting question from his collaborator, chef Seth Siegel-Gardner.

“We were discussing what I was doing to celebrate the 25th anniversary,” Levit says. “I said ‘not much, maybe a few throwback dishes.’ He asked if that was what I really wanted to do, and I realized I wanted to move forward rather than celebrate the past.”

This began the process of a major reinvention. In October 2019, Benjy’s closed for a few days to implement a new, bright, modern interior, plus a fresh menu featuring creative, shareable plates. The only thing that remained untouched was the concept’s classic chocolate cake.

The new version of Benjy’s has been met with rave reviews, and, Levit says, has allowed him to achieve a goal of creating a fun, convivial meeting place.

Traditionally, restaurants have rebranded with new decór and signage every 10 years or so. But things are different now, says Renae Scott, president of Strategic Marketing Solutions, which works with companies across the restaurant industry.

“It’s almost as if as soon as you finish one refresh, you start thinking about improvements for the next one—now in terms of three to five years,” she says.

Scott sees required changes happening in three major areas during a rebrand: food attributes, such as quality ingredients, authenticity, and transparency; off-premises dining through delivery, takeout, and catering; and the dining experience.

Brands should tackle these areas by emphasizing their positive attributes, Scott says. For example, if a restaurant wants to appeal to younger consumers’ demand for authenticity and transparent ingredients, it might open up the kitchen so the make-line is viewable. Adding a simple nook for third-party delivery workers or customers waiting for take-out orders is an easy way to keep up with the ever-growing off-premises dining trend. Changing it up with an Instagrammable wall arrangement or new set of décor elements can easily boost digital engagement.

These solutions are easier than overhauling an entire menu or service concept. “Often the most impactful changes can be the least expensive,” Scott says.

Still, sometimes brands are committed to making large-scale changes. After 40 years of operation, Mimi’s Bistro & Bakery, formerly Mimi’s Cafe, decided it was time for a bold move. In 2019, following two years of deliberation and careful work, the Dallas-based brand unveiled not only a new name and tagline, but also an updated restaurant design, a special Bites + Beverages menu, fresh house wines from France, and a new focus on baked goods and other French connections.

“It’s a full rebrand,” says Tiffany McClain, head of marketing at Mimi’s. “It’s very exciting, but it takes a lot of confidence and belief in what you’re doing.”

To that point, Scott emphasizes that restaurants looking to do a full rebrand, especially one on the scale of the Mimi’s reinvention, need to proceed carefully in order to draw in new guests without alienating core audiences. She recommends extensive consumer testing, which Mimi’s did throughout the rebranding process.

The Mimi’s team considered changing the name entirely, but focus groups revealed that wasn’t what was needed in order to meet the restaurant’s goals, McClain says. “We needed to change the tagline because ‘café’ wasn’t conveying that we’re a place you can come and relax, have a nice glass of wine, great coffee, great bakery items, [and] hear the wonderful French music,” she says.

Scott recommends operators work with outside design firms while rebranding in order to keep the project on track and aligned with consumer needs. McClain, who used a third-party team when leading the overhaul, says it helped balance various parties’ perspectives. The Mimi’s creative, corporate, and legacy teams were all brought in during the rebranding process, and the third-party presence helped all departments feel that their viewpoints were considered, McClain says

Both Benjy’s and Mimi’s kept culinary redevelopment in-house. “The chef and I take notes and pictures of food and menus when we travel,” Levit says. “We started with those notes and then took a group trip to Los Angeles to help solidify our vision.” The three-month development process resulted in an inventive menu of small, medium, and large shareables, ranging from hamachi with cucumber water to sea urchin carbonara with leek.

For the Mimi’s menu revamp, marketing and branding personnel worked closely with the culinary team—a joint effort that made the process smoother. By the end of the final collaborative taste test, new dishes were ready to roll out. “The biggest pillar of the Mimi’s brand is fantastic, fresh food,” McClain says. “You have to know what your pillars are when you’re rebranding. It has taken acts of bravery to go out on the limbs that we have.”

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Categories: Restaurants

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