Archive for August, 2010

Magazine highlights foodservice industry’s diversity policies

Tuesday, August 31st, 2010

Foodservice and hospitality companies dominated Black Enterprise magazine’s recent “40 Best Companies for Diversity,” taking nearly a quarter of the spots in the publication’s 6th Annual Diversity Report.

Black Enterprise analyzed the top 1,000 publicly traded companies and 50 leading global companies with U.S. operations, looking at the percentage of minorities in their employee bases, boards of directors, senior management and suppliers ownership.

Foodservice and hospitality companies on the 2010 list include:

• Aramark, Philadelphia
• Burger King Corp., Miami
• Darden Restaurants Inc., Orlando, Fla.
• Marriott International Inc., Bethesda, Md.
• McDonald’s Corp., Oak Brook, Ill.
• MGM Mirage, Las Vegas
• Sodexo Inc., Gaithersburg, Md.
• Starwood Hotels & Resorts Worldwide, White Plains, N.Y.
• Yum! Brands Inc., Louisville, Ky.

See the complete list here:

“At Burger King Corp., we have always strived to foster an inclusive work environment and have ensured that inclusion and diversity are woven into not only our business strategy, but also our culture,” said Robert Perkins, Burger King’s vice president for inclusion and talent management.

“By continually recognizing and appreciating the differences in each individual, BKC is committed to helping our employee base grow both personally and professionally,” Perkins added.

Also included in Black Enterprise “40 Best Companies for Diversity” are such industry suppliers as American Express Co., The Coca-Cola Co., and Pepsico Inc.

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Burger King Testing First Stuffed Burger

Tuesday, August 31st, 2010

Burger King CEO John Chidsey last week told analysts that although sales were down for the fourth quarter and full-fiscal year, the chain has learned a valuable lesson. “Consumers are willing to pay higher price points for quality products,” Chidsey said of BK Fire-Grilled Ribs, which increased the average check in Q4 even as comp sales declined 1.5%.

Chidsey said the ribs experiment proves the viability of offering more premium-price products to balance low-end products such as Buck Double burgers and $1 breakfast items. In February, Chidsey said the chain’s new batch broilers would allow menu expansion including stuffed burgers. Making good on that suggestion, Burger King now is testing its first cheese-on-the-inside stuffed burger: the Jalapeño Cheddar Stuffed XT. As first reported by blogger Indy Grub Review, the stuffed burger is on the menu in Indianapolis, a favorite proving ground for QSRs, priced at $4.35 for the sandwich, $5.69 for a combo meal.

Chidsey also told analysts that Burger King will roll out new breakfast items in September, as planned. It also will launch promotional support for its signature Whopper, a program it previously pursued in Europe. Beverage and dessert platforms will continue to be retooled, and the chain will conduct a pre-Christmas promotion with Microsoft’s Kinect gaming accessory.

Restaurants shift egg suppliers after recalls

Monday, August 23rd, 2010

With a second supplier recalling shell eggs over salmonella concerns, restaurant operators said they were working to find safe sources of the product.

More than 1,000 people across the country by Friday were reportedly identified as having the strain of salmonella enteritidis that has been linked to shell eggs served in restaurants or sold in stores in multiple states. Health officials say the number of salmonella cases from May through July is approaching 2,000 — nearly three times the average number of cases recorded for the same period over the past five years — though not all have been identified as the same strain tied to the eggs.

As of Friday, the U.S. Centers for Disease Control and Prevention had identified 26 restaurants or events where more than one ill person with the outbreak strain had eaten. The CDC did not identify the restaurants or their locations.

Wright County Egg, a Galt, Iowa-based egg producer that has recalled an estimated 380 million eggs over the past week, was the egg source for 15 of those restaurants or events, the CDC said.

On Thursday, however, Hillandale Farms, based in New Hampton, Iowa, also issued a voluntary recall of eggs packed under the Hillandale Farms, Sunny Farms and Sunny Meadow brand names, as well as loose eggs packaged under the Wholesome Farms and West Creek brands.

By Friday, the breakfast-heavy IHOP chain said it had identified and replaced all the recalled eggs among its 1,466 restaurants.

Patrick Lenow, spokesman for IHOP parent company, Glendale, Calif.-based DineEquity Inc., said a few stores were unable to get shell eggs for short periods last week, and instead used pasteurized liquid egg products that the chain typically uses for scrambled eggs and omelets.

“Some restaurants had maybe a day or a half day when shell eggs weren’t available,” Lenow said.

Smashburger, which offers a fried egg as a burger topping and hard-cooked eggs in some salads, said four of its 74 locations were forced to find alternative egg sources following the recall.

“This is unfortunate that this happened with eggs, but I think consumer confidence will bounce back because this was a sporadic event,” said Tom Ryan, founder of Denver-based Smashburger.

Ryan said the fried eggs sometimes served on the chain’s burgers are cooked to safe temperatures.

In Los Angeles County — where health officials said Friday that about 60 people have been identified as having the strain of salmonella tied to the egg recall — restaurant operators said consumers were not being shy about asking for their eggs runny.

The four-unit Pitfire Pizza chain, for example, offers “green eggs and ham,” a pizza topped with braised rapini, prosciutto, Parmesan and an egg. The pizza is cooked in an 800-degree oven, said Pitfire co-owner Paul Hibler, which would likely kill the bacteria.

After the recall, however, Hibler said he switched egg suppliers to a local farm, which he felt was safer.

“We’re paying twice as much for eggs now,” he said. “It’s not a huge impact because it’s really just one dish, but it’s just to be on the safe side.”

Egg recall details:

The recalled Hillandale eggs were distributed to distribution centers, grocery stores and foodservice companies in Arkansas, California, Iowa, Illinois, Indiana, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Texas, and Wisconsin.

The Hillandale eggs have plant numbers 1860 with Julian dates ranging from 099 to 230; and plant number 1663, with Julian dates ranging from 137 to 230.

The recalled eggs from Wright County Egg were distributed to food wholesalers, distribution centers and foodservice companies in California, Arizona, Missouri, Minnesota, Texas, Georgia, Washington, Oregon, Colorado, Nevada, Iowa, Illinois, Utah, Nebraska, Arkansas, Wisconsin and Oklahoma.

The eggs were packed in varying sized-cartons under the following brand names: Albertson’s, Farm Fresh, James Farms, Glenview, Mountain Dairy, Ralph’s, Boomsma’s, Lund, Kemps and Pacific Coast.

The first batch of Wright County Eggs recalled on Aug. 13 had the Julian dates 136 to 225 and plant numbers 1026, 1413, and 1946. The company later expanded the recall to include eggs with the Julian dates ranging from 136 to 229 and plant numbers 1720 and 1942.

The CDC is investigating the salmonella outbreak with the Food and Drug Administration, the U.S. Department of Agriculture’s Food Safety and Inspection Service and various local health officials.

Drinks fuel July sales surge for McDonald’s

Monday, August 9th, 2010

McDonald’s Corp. said beverages at both ends of its price spectrum led the way to a 5.7-percent increase in U.S. same-store sales in July.

The strong sales in McDonald’s domestic system of more than 14,000 restaurants contributed to a global same-store sales increase of 7 percent in July. Same-store sales increased 5.3 percent in Europe and 10.1 percent in the Asia/Pacific, Middle East and Africa division.

McDonald’s said the continued strength of its core menu items and value offerings like the Dollar Menu contributed to the sales increase, but it singled out drinks in particular for the brand’s success in the United States in July.

The chain expanded its McCafe line with Frappes earlier this year and rolled out Real Fruit Smoothies systemwide in July. Initial demand for the smoothies was so strong that McDonald’s did away with plans for a national sampling event over supply concerns. In addition, several markets have promoted a $1 any-size offer for soft drinks and sweet tea.

“Our customers are at the heart of everything we do, and our strong July sales performance reflects our commitment to them,” said Jim Skinner, McDonald’s chief executive. “We’re listening to our customers and offering the right combination of high-quality food and beverage choices, convenient locations with extended hours, and outstanding value across the entire menu.”

McDonald’s pointed to France, the United Kingdom and Germany as particularly strong markets that drove sales growth in its European business in July. The company has continued to reimage restaurants across the division, similar to the remodeling push in the United States as a way to grow sales over the long term.

In the APMEA region, new menu items and a strong breakfast performance contributed to the same-store sales increase, with Australia, Japan and China leading the way, the company said.

Systemwide sales increased 6.8 percent, or 8.3 percent in constant currencies, for July, the company said.

Oak Brook, Ill.-based McDonald’s operates or franchises more than 32,000 restaurants in more than 100 countries.

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Darryl Strawberry opens sports bar

Monday, August 9th, 2010

New York restaurateur Eytan Sugarman has teamed up with former New York Mets and New York Yankees player Darryl Strawberry to open a sports bar in Queens.

Strawberry’s Sports Grill seats 160 people in 2,800 square feet in multiple rooms, featuring 17 high-definition televisions. It is decorated with baseball memorabilia, including Strawberry’s original locker from his days with the Mets, the cleats Charlie Hayes wore when he caught the game-winning ball to win the 1996 World Series for the Yankees, Chuck Knoblauch’s World Series Trophy from the Yankees’ 1999 win, and pieces of former Mets home Shea Stadium’s original foul pole signed by Tom Seaver.

The restaurant is co-owned by Sugarman and Strawberry, who recently was inducted into the Mets’ Hall of Fame. A spokeswoman for the restaurant said Strawberry was assuming a managerial role in the restaurant, “overseeing operations, mingling with fans and just lending a hand.”

Jay Lippin is the restaurant’s chef, although the restaurant’s hamburgers were developed by Chris Russell, former chef of New York restaurant brgr. Burger choices include turkey burgers, lamb burgers and a vegetarian falafel burger. Also on the menu are the usual sports bar fare plus barbecued rib and chicken.

Sugarman also owns Southern Hospitality, which he conceptualized with pop singer Justin Timberlake. Although Timberlake is not currently involved in that restaurant, he did attend the Strawberry’s opening on Wednesday, along with major league baseball stars Nick Swisher, David Robertson, Tino Martinez, Bernie Williams, Bobby Valentine, Dwight Gooden, Mickey Rivers and Whitey Ford. Models, reality television starts and television and stage actors also were in attendance.

Sugarman is planning on opening a second Southern Hospitality restaurant in Manhattan’s Hell’s Kitchen neighborhood, but the specific time frame has not been set.

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Subway says breakfast a success

Monday, August 2nd, 2010

After serving breakfast for four months Subway said the daypart has increased sales systemwide and exceeded expectations, leading the sandwich chain to expand the early-morning menu with limited-time offers and explore the service of more coffee or espresso-based beverages.

In an interview with Nation’s Restaurant News, Larry Varvella, Subway’s research and development project leader, said the chain’s foray into breakfast — a daypart filled with heavyweights McDonald’s and Dunkin’ Donuts — was a success for the brand and its franchisees.

“We’re very excited that our initial results show it is outperforming even our original expectations,” Varvella said. “Those original expectations were based on our franchise owners breaking even at the least. Of course we fully realized that to be a major player [at breakfast] we needed a long-term commitment. We figured that would be a three-to-six-month period. The last thing we wanted was for our owners not to be profitable.”

The Milford, Conn.-based quick-serve sandwich chain introduced its breakfast program April 5 to more than 25,000 Subway restaurants across North America. The menu features egg and cheese sandwiches served on whole-wheat English muffins, flatbreads or Subway’s traditional 6-inch and foot-long hoagie breads at a prices ranging between $1.75 and $2.25 for the English muffin melts, $2 to $3.50 for the 6-inch hoagies or flatbread sandwiches, and $4 to $6 for the foot-long variety.

The chain entered breakfast as more research highlighted the daypart’s growth potential and popularity with consumers. According to a study conducted by market research firm Mintel Research earlier this year, the breakfast foodservice market is expected to grow 13 percent through 2014. In addition, two of the fastest-growing menu items at quick-serve restaurant chains are specialty coffees and breakfast sandwiches, according to NPD Group, a marketing research firm based in Chicago.

More sandwiches are on the way, Varvella said, although he would not disclose what was in test or when new items would debut.

“We are definitely looking at introducing new items through limited time offers,” he said. “We fully believe that new products are one of the life-bloods of a restaurant chain. We want to keep [the program] new and exciting, and have a lot of items in the pipeline.”

He added that Subway also is exploring the possibility of expanding its beverage line to include espresso-based and flavored coffee drinks.

“Coffee has been a very strong part of our program,” Varvella said. “We’re looking at expanding with Seattle’s Best above and beyond standard drip coffee.”

Though Varvella would not disclose sales for the breakfast program, he indicated there are several barometers that have determined its success, including the acceptance by Subway franchisees.

“The franchisees are happy and the customers are buying the product,” he said. “In the past the menu mix was higher in non-breakfast items, but now we’re seeing equal amounts [in sales] of about 50 percent breakfast and non-breakfast, which, again, is ahead of projections.”

Varvella noted that the two best-selling breakfast items include the egg white western melt and the double bacon and cheese omelet. Latest promotions have highlighted the steak, egg and cheese sandwiches.

Alan Warmund, president of Subway Development of Washington, the McLean, Va.-based area developer of 1,100 franchised units in the mid-Atlantic region, said many franchisees are upbeat about the breakfast program’s success.

“It is doing much better than expected from ground zero,” Warmund said. “The results have been extremely encouraging; overall in our territory, the owners are happy and sales are growing.”

Warmund agreed with Varella’s assessment of a 50-50 split between breakfast and non-breakfast item sales, mainly because the chain’s full menu is now available from 7 a.m. onward, depending on location.

“We’re selling a lot of standard items along with breakfast items,” he said. “We’re really offering a full menu from 7 a.m. on. Why wait in line at lunch if you’re already there in the morning? I think it’s great. We don’t care what we sell; we just know we’re selling more.”

Warmund expressed skepticism over the possibility of Subway growing its coffee program, however. He said the equipment would be too expensive to implement systemwide. He noted that the needed equipment could cost between $10,000 and $15,000.

Subway now operates or franchises more than 29,000 locations in 86 countries.

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Taco Bell adds street-food-inspired tacos

Monday, August 2nd, 2010

Taco Bell has launched a line of street-food-inspired tacos, including one with shredded pork.

The new Cantina Tacos come in fire-grilled chicken, beef carne asada and pork carnitas flavors. Each is served on corn tortillas and topped with chopped onion, cilantro and a lime wedge.

They are available at participating restaurants among the chain’s nearly 5,600 units nationwide for $1.49 each, $2.79 for two, or $4.99 for two tacos and a 30-ounce drink.

“Our Cantina Tacos are based upon authentic-style Mexican street tacos, which are designed using simple, fresh ingredients, that customers regard as high quality,” said Taco Bell Cop chief marketing officer David Ovens.

Taco Bell joins a growing number of restaurants promoting street-food-style items.

ESPN Zone launched a fleet of food trucks in June serving a menu developed by Los Angeles food-truck chef Roy Choi. The trucks, which operated in Los Angeles and New York, were part of a World Cup soccer promotion.

In April, celebrity chef Rick Bayless opened a street-food-oriented taqueria called Red O in Los Angeles.

Chicago-based Lettuce Entertain You Enterprises opened a street-food-themed Taco Shack in Las Vegas in March.

Taco Bell said the Cantina Tacos are being promoted through national television and radio advertising as well as through social media efforts and in-store advertising.

Draftfcb of Irvine, Calif., is responsible for the television advertising, including a 30-second spot called “Calling Card,” narrated by a lime, which introduces the new tacos while a couple enjoys eating them.

Draftsfcb also is doing in-store signage, while digital marketing is being done by R/GA of San Francisco.

Taco Bell, based in Irvine, Calif., is a subsidiary of Yum Brands, Inc., of Louisville, Ky., which also operates KFC, Pizza Hut, Long John Silver and A&W restaurants.

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High-tech dispensers boost beverage sales

Monday, August 2nd, 2010

Restaurant operators participating in product tests of Coca-Cola’s new Freestyle fountain dispensers say despite some challenges, including retrofitting operations and consumer training, beverage sales have increased steadily since installing the high-tech machines.

The Freestyle System uses touch-screen technology and dispenses 106 variations of drinks, including combinations of different sodas, water and flat beverages, a big departure from the traditional soda fountains that offered only six to eight flavors.

After undergoing beta tests in 50 stores from September 2009 to April 2010, the Freestyle dispensers are now in a second phase of testing, according to the Atlanta-based Coca-Cola Co.

Foodservice executives at Stevi B’s Pizza and Firehouse Subs, which have participated in tests of the Freestyle system, said the dispensers’ sleek design and ability to serve a variety of flavors, as well as the interactive nature for customers, have resulted in a surge of drink sales.

Stevi B’s chief executive Matt Loney reported an increase in takeout beverage sales at the three stores that began using the system in late June. He said nine of his pizza-buffet restaurants are involved in the second round of testing.

“I can tell you, and this is kind of interesting, that we offer [special] to-go cups as an upsell, and in the seven days before [we put in the machines] we sold 29 cups,” he said. “In the four days since June 23, we sold 133.”

Firehouse Subs chief executive Don Fox said the amount of in-store dining has increased since the machines were installed at stores in Atlanta last September.

“We’ve got more people eating in the restaurants,” he said. “We’re up 3 percent, which is important for our brand. The consumer loves [the machine]; we’ve sold more soft drinks because of it. I do know that we’ve seen an increase in fountain sales as a percentage of our beverage mix. Our soft drink incidence is up about 5 percent.”

Slow pours, ice dispensers some challenges to overcome

While the machine has helped restaurant chains increase beverage sales — a large part of any foodservice operation and the most margin friendly — some challenges do exist, executives noted, including longer pour times and a smaller ice machine.

According to Coke, the pour time for a first-time user is about 26 seconds, but repeat customers average around 17 seconds per pour.

“The queue is a little long, but it does seem like people are figuring it out pretty quickly,” Stevi B’s Loney said.

Fox also noted that lines for the machine can be long, but that customers had yet to complain.

The executives from Stevi B’s and Firehouse Subs also said there were challenges involved in the switch to the new dispensers. They had to retrofit their drink counters to accommodate the Freestyle system, which is narrower and taller than traditional dispensers, and the ice machine required some changes to operations.

The ice machine is smaller, Loney said, “you either have to hand-load it or buy a new icemaker so there certainly is some cost.”

Fox of Firehouse Subs also cited the ice as a challenge in using the new dispensers.

“We had a little issue with the ice dispensing,” he noted. “There was too much spillover since it’s such a small area. And since you don’t have the same amount of space as normal, you can’t afford to let anything accumulate. That was the one technical glitch we ran into.”

Loney and Fox both said the Freestyle system works well for their specific operations, however. Stevi B’s estimated a return on investment at stores where retrofitting occurred to hit about 70 percent. At new locations or if construction is not an issue, the company expects to achieve a much larger return.

“For us, this was as much about being the right fit with our system as it was additional Coke purchases,” Loney said. “Being a buffet [operation], the customers interact with the [soda] machines. To be able to roll out a machine that has 106 flavors is a good marketing fit for us. It expands the flexibility we provide to our customer base.”

Added Fox: “We’re more fast casual, and dining times are longer [for us] so it’s really a good fit in our case.”

Coke’s fresh take on soda

Gene Farrell, Coca-Cola’s vice president of jet operations, said the new technology behind the Freestyle is the result of the company’s search to expand its foodservice business, which he said was limited by the traditional dispenser equipment.

“The business model hadn’t changed in years,” he said. “We could only offer six to eight choices and knew we had different tastes to feed, but didn’t have the ability to deliver in the foodservice environment.

“We realized we couldn’t do it through incremental change; we had to think about reinvention,” Farrell added. “So we looked at other technologies in the marketplace to revise the dispenser technology and realized if we brought together dispensing and packaging technology we could reinvent our restaurant-side business and give consumers the variety they are looking for.”

Farrell said the Freestyle dispensers were designed to allow for more interaction, upping the customer’s entertainment quotient.

“We spent a significant amount of time designing the user experience,” he said. “While the actual transaction time takes a bit longer, it hasn’t had an impact on the customer’s perception of or overall speed of service.”

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