Archive for July, 2011

McD: Price Increases Haven’t Hurt Traffic

Monday, July 25th, 2011

McDonald’s Corp. attributed the brand’s strong second-quarter earnings to efforts to expand accessibility for guests in the United States and around the world with modernized restaurants and new menu items.

The company also said two price increases in the United States, which stemmed from its need to battle rising food costs, was not affecting traffic or leading to a change in menu mix.

For the June 30-ended second quarter, McDonald’s net income rose 15 percent to $1.41 billion, from $1.23 billion in the same quarter a year earlier. Earnings per share rose 19 percent to $1.35, from $1.19. Second-quarter revenue rose 16 percent to $6.9 billion, reflecting an increase in global same-store sales of 5.6 percent.

Same-store sales rose 4.5 percent in the United States, 5.9 percent in the company’s European division and 5.2 percent in the Asia-Pacific, Middle East and Africa, or APMEA, division.

Frozen drinks are hot in U.S.

McDonald’s chief operating officer Don Thompson said a very strong June propelled McDonald’s second-quarter domestic same-store sales to a 4.5-percent increase. Driving that bump was advertising the 20-piece McNuggets item with new dipping sauces, introducing McCafé’s Frozen Strawberry Lemonade and Mango Pineapple Real Fruit Smoothie. Two previous menu price increases also drove the same-store sales result. In a research note earlier this week, securities analyst Mark Kalinowski of Janney Capital Markets projected a 4.6-percent quarterly increase in domestic comparable sales, based on a prediction of a 7.3-percent spike in U.S. same-store sales.

Total McCafé sales rose 29 percent in the second quarter compared with the same quarter of 2010, Thompson said during a conference call with investors.

“From a percent-of-sales perspective, we still view ourselves as an underdog in frozen beverages,” Thompson said. “Being the underdog is a great thing because we have even more opportunity to take share, and we can do it at the speed of McDonald’s.”

The chain’s price increases of 1 percent in March and 1.4 percent in May have not affected flow-through or menu mix negatively, officials said.

“We’re seeing good reaction to the price increases so far,” said chief financial officer Pete Bensen. “After the one in March, flow-through was above average, probably because we hadn’t taken a price increase in so long. It’s too early to read May’s, but based on June results, it’s also being accepted … Is it changing consumer behavior? Not really, because we’re not seeing a dramatic spike in the Dollar Menu.”

Thompson added that the Dollar Menu still accounts for between 10 percent and 11 percent of sales.

“The mix has stayed basically the same, but we’ve got a lot more customers coming into the restaurants,” he said. “Being able to talk about core products and premium items like Angus [Third Pounders], along with beverages and along with value, really helps us win.”

Thompson would not specify whether McDonald’s gains in market share have come at the expense of any particular competitor or segment, but pointed out that the chain’s sales growth has been incremental across many categories. Oatmeal has helped bolster breakfast sales, and $1 soft drinks have combined with McCafé upgrades to keep beverage momentum strong, he said, while initiatives to increase through-put and peak-hour performance — 40 percent of the U.S. system has 24-hour or extended-hour service, and there are now 2,200 double drive-thrus in the United States — also add to the top line.

Even increased competition from “better-burger” brands like Five Guys helps McDonald’s, he added.

“More premium-burger chains coming into the marketplace is good for us,” Thompson said. “Those burgers have a higher margin, and we have some of those same menu offerings, and when [other brands] advertise them, we get the benefit. We’ll manage it appropriately from a price perspective and offer it at a value proposition appropriate for us.”

Worldwide

Restaurant reimaging and an emphasis on value drove double-digit gains in operating profit in McDonald’s other areas of the world, Thompson and Bensen said. Upgrading the look and feel of restaurants in Europe contributed to operating-profit growth of 10 percent in constant currencies across those markets, which benefited from particularly strong sales in Russia, France and the United Kingdom.

Modernizing restaurants and promoting premium menu items has helped the brand stay positive across Europe, whose consumer confidence and unemployment vary widely from country to country, some of which are facing austerity measures.

“It’s an interesting set of markets,” Thompson said. “For our business, we just focus on being able to have value at each menu tier and innovative products, and that we’re there for our consumers from a convenience factor and base value factor.”

While many of the operators in Europe and APMEA are excited to test McCafé Frappes and Real Fruit Smoothies in their markets, the United States likely will explore importing big sellers from abroad, such as the McWraps or premium burgers like the 1955 from Europe.

“We lean on the U.S. for the beverage innovation, and we look to Europe for burger innovation,” Thompson said. “We also see great things out of Asia for chicken and snacking. You’ll see some of those come through in the U.S.”

Operating income grew 19 percent in constant currencies in APMEA. As with competitor Yum! Brands Inc., China will fuel much of the growth in McDonald’s international business in 2011, with 175 to 200 units set to open this year.

Labor costs have inflated slightly in China this year, Bensen said, but much of the wage pressure McDonald’s feels gets offset by being able to sell to more customers with disposable income, and the brand has created value offerings at breakfast, lunch and snack times to capitalize.

“Second-quarter comps were up 14 percent in China, mostly in guest counts,” Bensen said. “Traffic is very strong there, and the key to that in a high inflationary environment is everyday value.”

Value offerings at lunch have helped stabilize sales in Australia, which experienced a dip in its economy, and Japan, where all but 17 of the system’s 3,300 restaurants are back open after March’s earthquake and tsunami.

Bensen added that emerging markets other than China would add units this year: 225 in Europe, 90 in Latin America and 450 in APMEA excluding China — including 100 in Japan, 30 in South Korea, and about 20 in Turkey, the Philippines and Malaysia.

The chain also continues to test more than 750 self-order kiosks in France, and contactless-payment systems currently working in the United Kingdom and Switzerland soon will be rolled out to the brand’s restaurants in Italy and Poland. Nearly 1,700 dessert kiosks are in place across APMEA, driving sales across multiple dayparts and snack times.

Oak Brook, Ill.-based McDonald’s operates or franchises nearly 33,000 restaurants around the world, including more than 14,000 locations in the United States.

Read more: http://www.nrn.com/article/mcdonald%E2%80%99s-price-increases-haven%E2%80%99t-hurt-traffic?ad=news#ixzz1T8J0hxl4

Applebee’s On its New Facebook Strategy

Monday, July 25th, 2011

Facebook, one of the biggest names in social media, has upgraded its Places feature in ways that operators and social-media experts say will benefit the nation’s biggest restaurant chains — mainly by allowing large chains to execute or modify promotions at the unit level.

With added management tools to Facebook Places, “parent” brands can create and manage a Facebook page for every “child” location in its system.

Scott Gulbransen, Applebee’s director of social media and digital content, said more local functionality in Facebook Places should give the Lenexa, Kan.-based chain a way to quickly execute and modify Facebook offers at the unit level, like a recent “Girls’ Night Out” promotion.

Gulbransen spoke with Nation’s Restaurant News about how the new Facebook Places could expand the “local social” marketing space for large chains.

The Facebook Places update seems to present a tradeoff to restaurants: You have your work cut out for you in claiming and managing the many “child” – or unit – locations, but there are greater opportunities to distribute store-level offers and deals.

The relationship we have with our provider helps because they help us claim our locations and handle response needs, so outsourcing is just easier. I congratulate Facebook for understanding the needs of companies like ours. If you have multiple units the scale of ours, you have unique problems. At first, Facebook Deals and Groupon made it easier for local, single units to do these offers, and now they’re getting focused on larger brands. We have 42 franchisees and 2,000 restaurants, so we showed the need to do more significant offers in different, regional ways.

Applebee’s has done some brand-wide Facebook offers, but how does having more local capabilities augment its strategy?

We think it validates the approach we took from the beginning, trying to bring the brand promise of the neighborhood [restaurant] to life. To pay off that relationship with the guest at the local level, you have to have that control, and it also needs to be able to scale. It’s going to help everybody in the space because we can adjust offers based on market conditions, which we couldn’t do before without spending a ton of money. Now we can switch offers quickly and swap them out efficiently, whereas before it was much more clunky and we had to redevelop and redeploy them one at a time. You also can pull some triggers on offers and communications to drive traffic [on a] day or daypart where you need it.

Does this change the competition for location-based social media against sites like Foursquare?

Facebook has glommed on to the needs of big brands with large footprints … and they’re the first to market. There’s still a lot of shakeout that needs to happen in the geo-location space. But the numbers speak for themselves: 90 percent of check-ins are happening on Facebook. Love them or hate them, they’re leading the way in that space too, and brands like ours have to fish where the fish are.

Gowalla and Foursquare have a hip factor to them, but over time, it’ll be hard to not see Facebook winning here. Google Plus just rolled out and can integrate Google Places, and to me, if there’s going to be any big competition among geo-location sites, Google might try to play there and become the big competitor to Facebook.

Read more: http://www.nrn.com/article/applebee%E2%80%99s-its-new-facebook-strategy?ad=news#ixzz1T8GmfsLx

Wienerschnitzel at 50 Years

Monday, July 18th, 2011

Fifty years ago this month, John Galardi opened a hot dog stand in Wilmington, Calif., dubbed Der Wienerschnitzel, a name invented by his wife.

Galardi had worked with Taco Bell founder Glen Bell Jr. and wanted to start a concept of his own. As the hot dog stand evolved, it became one of the first quick-service restaurants with a literal drive thru — not a driveway up the side of the building, like most, but one that went right through the middle of what was then typically an A-frame building.

Today, Wienerschnitzel claims the title of largest hot dog chain in the world with 352 locations. At 50 years old, the brand is continuing to evolve.

Over the years, Wienerschnitzel dropped its “Der” — though it reappeared this year briefly in honor of the anniversary — and the menu grew to include hamburgers, turkey dogs and Angus beef dogs. The brand was named the official hot dog of several sports venues, including those of the Los Angeles Angels of Anaheim baseball team, the Mighty Ducks hockey team and the Sacramento Kings basketball team.

In 2003, Wienerschnitzel bought co-branding partner Tastee-Freez LLC and now offers ice cream in 90 percent of the chain’s units.

Parent company The Galardi Group, based in Irvine, Calif., also owns The Hamburger Stand brand.

Same-store sales have been positive this year as the message of everyday value strikes a chord, said Dennis Tase, who also celebrates an anniversary this year: 30 years as president of Wienerschnitzel.

Anniversary events for the chain planned all year have helped drive traffic, he said.

On Sunday, Wienerschnitzel locations are offering three core menu items, including chili dogs, mustard dogs and kraut dogs, for 61 cents each, to correspond to the founding year of 1961. Guests can also win a trip to Germany, a new Fiat car, free food and other prizes. And this month the chain’s Wiener Wagon has been visiting California cities to give away free chili dogs.

Tase spoke with Nation’s Restaurant News West Coast bureau chief Lisa Jennings about the road going forward for Wienerschnitzel.

Wienerschnitzel is an all-franchised brand. How did that come about?

John had friends who wanted to open stores, and that’s how he started franchising. At one point, there was talk of going public, but he never did. He was a young guy at the time, and there were guys in New York trying to convince him it was the best thing to do. But it turned out it wasn’t the best thing to do.

Today, we are a fully franchised company, but about 80 percent of stores are traditional franchises and 20 percent are what we call limited franchises. It’s basically a 30-day franchise agreement where the franchisee is responsible for the customer and employees, but we guarantee food costs in the back door.

We’ve been doing that for a long time. It gives people that don’t really have money to get into their own franchise business the opportunity to get in, go through training and run their own store. We control the land, building and equipment for limited-franchise stores, so their only investment is a small deposit.

How has growth been trending?

It slowed down three years ago, especially over the last two years. There was no money for anyone to build new buildings or invest in anything. But we’ve seen in the last six months people who want to build again. We have about eight stores coming in the next 12 months.

What’s your pitch for potential franchise owners?

We’ve been in business for 50 years and we have a very good family culture. We know how to control food costs and labor. We’re good with the numbers. We’re known for hot dogs and chili, as well as ice cream. Our average volumes are around $700,000 to $725,000. Some do less, but we have others doing $1 million. Quite frankly, we court people that we approve for franchisees. We want them to be part of our culture.

My favorite Wienerschnitzel location is one of the old-fashioned A-frames in Santa Monica, Calif. How will the look change going forward?

Our growth will come from new business model of making more of less, so to speak. Real estate is expensive in the western U.S. and we have to figure out a way to build for less and still make money on existing models.

One thing we’re looking at is an in-line concept with no drive thru. That type of real estate is [much] more available. When we do drive thrus, we’re also looking at doing end-cap positions. There seems to be more of those available today.

We’ll be doing a very limited number of freestanding units in future. That’s not a viable position in today’s economy.

Our most recent opening was a full-sized restaurant in a Texaco gas station. It’s doing significantly more than we ever thought it would do. We have four or five of those in gas stations, so we’re going to be looking at that.

How has the menu evolved over the years?

The original hot dog is still the focal point. The best sellers are the original dog and the Angus all-beef dog, which is much larger.

Over the years, we’ve added others. We have a turkey dog. We have a chili hamburger. Anything we put chili on sells well. It’s the original chili and the “secret recipe” is kept in a safe.

We have sold the chili in stores, but the grocery business is a lot more competitive and it’s not something we need to focus on. We also sell corn dogs in schools and mini corn dogs at Sam’s Clubs and such, but we’re not building that business.

Anything new coming to the menu?

We have some menu changes in test. There’s a Junk Yard Dog, which is a chili dog with cheese, onions, mustard and fries on the dog, for $1.99. We’re also testing a Texas-size Angus dog with chili, jalapenos and other things. And there’s a corn dog in a bun with chili and cheese.

We recently brought back pretzel buns, and in the fall we’re bringing back pastrami on hot dogs as a limited-time offer. Every time we’ve brought pastrami back, it has resonated very high in sales. Franchisees would like to see it permanently on the menu, but I see it like the McDonald’s McRib. Every time they bring it back it’s an event.

You lowered the price of your corn dog last year to 79 cents. How are commodity costs affecting your pricing?

Like everyone else, we’re seeing an increase in food cost. I think the best way to handle it is what you do with promotions: What you promote at what time of year. Promoting hamburgers now would be tough.

We took a 2-percent price increase in June. But since January, we’ve experienced on average about a 4-percent to 4.5-percent increase in same-store sales. Customer counts and check averages have gone up, too. With those going up, you don’t need to chase everything with price.

We kicked off this year by lowering the price of our chili dog, the best seller, to 99 cents and we saw tremendous increases in sales. We’ve had other promotions like five for $5. We’re keeping the pressure on everyday value.

Read more: http://www.nrn.com/article/wienerschnitzel-50-years?ad=news#ixzz1STYRWwxD

How Restaurant Remodeling Pays Off

Monday, July 18th, 2011

Remodeling restaurants has been the go-to sales driver for much of the restaurant industry during the past few years, either by refreshing a brand in danger of going stale or by innovating design and menu to reignite growth. For Fazoli’s, which has refurbished 99 company-owned stores and 15 franchised units in the past 18 months, it’s both.

The nearly 250-unit quick-service Italian chain is in the midst of a brand repositioning plan that began with menu upgrades in 2009, which alone stopped years of sales and traffic declines. Beginning in January of 2010, the brand started updating unit décor and rolling out its “Enhanced Service Program,” or ESP, with fast-casual touches like food runners and real plates.

In 2012, once most of the system is remodeled, the next phase will include a franchise push and locations in nontraditional venues to help reignite growth.

“This takes our brand from competing on speed and price with the fast-food players to being a true premium QSR and getting closer to the fast-casual level,” chief executive Carl Howard said. “With ESP and a new menu you could replicate at home but wouldn’t want to, we’ve got good food comparable to casual players, but with an average check and convenience that are much more attractive.”

For many large, mature chains, there is no room for hundreds of extra U.S. units. So remodeling stores to add sales layers or to encourage more frequent and lengthier guest visits has become the way to grow. McDonald’s, for instance, already has upgraded 1,800 of its more than 14,000 domestic restaurants, with another 9,000 units cited as candidates for remodeling or rebuilding in the long term.

Darden Restaurants Inc. also announced it would remodel hundreds of its Red Lobster and Olive Garden locations over the next several years. In addition, Wendy’s has identified remodeling and the testing of a new prototype as a major brand investment this year now that it has sold a majority interest of former sister chain Arby’s. The upgrades, along with several menu innovation moves, are meant to lay the groundwork for more domestic unit growth.

Fazoli’s décor and service tweaks have prepared the system for growth in 2012 and beyond and also will allow the chain to introduce an overhauled menu by early November. The new “mega menu” will feature a low-calorie section, chopped salads, a build-your-own pasta option, fresh baked sandwiches and a 500-calorie line of flatbread pizzas.

Not only is Fazoli’s getting its franchisee community to remodel stores, some franchisees are realizing high-double-digit same-store sales returns on their upgrades, compared with a 5-percent increase company stores typically have achieved, Howard said.

“We went first and got really good results,” Howard said, “but then a franchisee in the Chattanooga, Tenn., area dipped his toe in the water with one store, and his sales went up 20 percent and they’re still up.

“Another franchisee nearby remodeled her three stores and she was up 30 percent year-over-year, and the Louisville market’s been up between 6 percent and 10 percent,” he said.

The overhauled menu, which, like the ESP remodel, debuted in the Dayton, Ohio, market and began testing in St. Louis in late June, has not produced a significant mix shift, Howard said, but it’s increasing repeat traffic and lifting sales across the board steadily.

“It’s coming along fantastic,” he said. “Dayton [same-store sales are running] up 5 percent to 6 percent, over the 7-percent gain from the year before. Average check and profit are up, as are consumers’ intent to return and intent to recommend. We’re checking this important box as a piece of our brand evolution and repositioning.”

Growth targets for 2012 would be a handful of company stores to fill out a few existing markets, six nontraditional units and locations from 12 new franchisees, Howard said.

The incremental repositioning strategy — menu tweaks in 2009, testing ESP in 2010, remodels and the new menu this year, unit growth in 2012 — was the way to go for Fazoli’s, Howard said.

“It’s all about how we go from $1 million in [average unit] sales to $1.1 million, then $1.3 million,” he said. “When I started here in 2008, everybody was burned. The franchisees and the parent company [Sun Capital Partners] weren’t into spending a bunch of money. We could have done a lot of this earlier, but [we] needed a lot of proof … I like the company that continually makes the business case for things.”

Read more: http://www.nrn.com/article/how-restaurant-remodeling-pays?ad=news#ixzz1STMoM17T

Denny’s Debuts New ‘Fit Fare’ Menu

Tuesday, July 12th, 2011

Nearly three months after it launched its Baconalia menu celebrating all things bacon, family-dining chain Denny’s has introduced Fit Fare, decidedly less indulgent meals for guests seeking lower-calorie foods.

Spartanburg, S.C.-based Denny’s said the new menu items fit two of the following four qualifications: “lean,” with 15 or fewer grams of fat per serving; “light,” with fewer than 550 calories per serving; “protein,” containing more than 20 grams of protein per serving; and “fiber,” with more than eight grams of fiber per serving.

Fit Fare dishes have been integrated into the chain’s standard menu rather than getting the standalone treatment of Baconalia, the All Nighter and the $2 $4 $6 $8 Value Menu.

“Denny’s recognizes the importance [of] provid[ing] choices that cater to our guests’ dietary needs,” John Dillon, vice president of marketing, said in a statement. “Whether it’s reducing fat and calories or increasing fiber intake, our Fit Fare menu has delicious options to satisfy any taste, budget or dietary preference.”

Some of the new items are lower-calorie variations of Denny’s signatures, like the Fit Slam, a more healthful Grand Slam breakfast consisting of scrambled egg whites with spinach and grape tomatoes, turkey bacon, an English muffin, and a side of fruit.

New lunch options include the Chicken Avocado Sandwich and the Cranberry Apple Chicken Salad, while Tilapia Ranchero and Sweet and Tangy BBQ Chicken round out the dinner menu.

Guests also can opt for Fit Fare upgrades to regular entrees by substituting egg whites, wheat pancakes and chicken sausage for standard breakfast fare at no additional charge.

Denny’s operates, licenses or franchises more than 1,600 restaurants in the United States and seven foreign countries.

Read more: http://www.nrn.com/article/denny%E2%80%99s-debuts-new-%E2%80%98fit-fare%E2%80%99-men?ad=food-and-beverage#ixzz1RucRvImz

A Look at Chuck E. Cheese’s New Pizza

Tuesday, July 12th, 2011

Chuck E. Cheese’s has nearly completed the systemwide rollout of a new pizza recipe that features a crisper crust, fresh-shredded mozzarella cheese and reduced food costs, the chain said Monday.

Before the rollout began in March, parent CEC Entertainment Inc., which operates and franchises the 554-unit system, had used a blend of frozen and fresh cheeses. The use of block cheese, shredded in-house, has actually reduced food costs, said Brenda Holloway, the company’s marketing manager. CEC Entertainment is based in Irving, Texas.

“It makes for a fresher product,” Holloway said, “and the cost savings was a nice perk.”

The new pizza features unfrozen dough, a crispier crust, fresh vegetables and natural mozzarella cheese.

“We completely reformulated the dough to make a more consistent product, and it’s much crispier,” Holloway said. The sauce recipe remains unchanged, she said.

As part of the new pizza rollout, CEC is offering guests coupons and urging them to email photos, stories and videos to memories@cecentertainment.com. Some of those will be featured on Chuck E. Cheese’s Facebook page.

CEC Entertainment has 554 units in 48 states and seven other countries and territories. The company owns and operates 507 of those in the United States and Canada.

Read more: http://www.nrn.com/article/look-chuck-e-cheese%E2%80%99s-new-pizza?ad=news#ixzz1RuLVyBG0=

Quiznos Hires Financial Advisors to Restructure

Tuesday, July 12th, 2011

Quiznos Corp. confirmed Monday that it has hired a restructuring team of financial and legal advisers to rework the sandwich chain’s finances.

The law firm Paul Weiss Rifkind Wharton & Garrison LLP and investment bank Moelis & Co. were reportedly hired by the Denver-based company last week.

Company officials confirmed via e-mail Monday that it brought in help to “drive an outcome that will help Quiznos grow and prosper.

“Quiznos has hired a financial advisor to assist in working constructively with its lenders to develop a proper financial structure for the company,” officials said in a statement. “We expect these activities will not adversely impact Quiznos’ customers, franchise owners, employees or business partners.”

According to a Bloomberg news report, Quiznos founder Rick Schaden and partners were planning to invest about $50 million in new equity to help refinance debt to avoid potential default this year. The chain’s ownership team includes CCMP Capital Advisors LLC, and Schaden’s private equity firm Consumer Capital Partners. The Quiznos chain totals 3,500 units.

Citing unnamed sources, Bloomberg reported that Quiznos is working with Deutsche Bank AG (DBK) to offer new debt in conjunction with the equity.

A rocky 2010

In 2010, Quiznos received an injection of capital from primary shareholders, and the company said at the time that it had amended the terms of existing secured debt with its lenders to provide the chain with resources and flexibility to further growth objectives.

In January, however, Quiznos said it would lay off about 154 employees worldwide to cut expenses and provide more financial support to franchisees. At the time, the company blamed the slow economy for the need to cut costs.

Also in 2010, Quiznos finalized a $206 million settlement with as many as 8,000 current and former franchisees involved in four class-action lawsuits.

The settlement ended multi-year litigation that involved allegations of racketeering and corruption, as well as complaints about supply and food costs, marketing and advertising funds and royalties owed by franchisees that bought but never opened stores.

Quiznos denied all claims and agreed to the settlement without admission of liability.

Looking ahead

The sandwich chain is looking to expand, and recently reported a franchise agreement that could add 200 sandwich shops in Brazil – part of an overseas push that includes about 40 countries and territories.

The chain also announced a partnership with Hess gas-and-retail outlets in Florida to add 50 new Quiznos locations there by the end of the year, which is part of an ongoing strategy to move into more convenience store locations.

Read more: http://www.nrn.com/article/quiznos-hires-financial-advisors-restructure?ad=news#ixzz1RuKu8cka

Concerns Voiced on Menu-Labeling Proposals

Wednesday, July 6th, 2011

Foodservice associations presented their comments and concerns about proposed federal menu-labeling regulations to the U.S. Food and Drug Administration Tuesday, the final day for submitting public comments on the legislation to the agency.

The regulations, which are a provision of federal health care reform, or the Patient Protection and Affordable Care Act of 2010, were published April 1 by the FDA. The public and interested parties were given 90 days to comment on the regulations.

Comments on behalf of the foodservice industry — which addressed such concerns as flexibility, timing and costs — were submitted by a coalition comprising the National Council of Chain Restaurants and the National Restaurant Association, as well as by the International Franchise Association.

“Our members strongly supported adoption of a national menu-labeling law, and we look forward to the orderly implementation of these requirements,” said NCCR vice president Scott Vinson. “However, we have grave concerns regarding certain of the FDA’s proposed interpretations of the [legislation].

“We hope the FDA will carefully consider our comments and adjust the final regulations to be consistent with the statute,” he said.

The regulations outline nutrient-labeling requirements for restaurants that are part of a chain with 20 or more outlets. Restaurants affected would be required to prominently post calorie counts for standard items on menus and menu boards as well as calories per serving for each item on a buffet, salad bar, cafeteria line or self-service display.

“Given the complexity of the restaurant industry and the many different types of concepts ranging from quick service to fine dining, we appreciate the FDA’s efforts to draft these regulations,” said Dawn Sweeney, president and chief executive of the National Restaurant Association.

“In our comments we have outlined some of the ways we believe the regulations can be improved and strengthened, to better allow restaurants and foodservice outlets to most effectively display nutrition information.”

Issues addressed by the coalition’s comments include:

• Nutrition information and enforcement
The coalition asks that the FDA utilize a “reasonable basis” standard rather than a standard use for packaged foods produced in a food-processing facility to determine nutrition calculations. The reasonable basis determination — which was developed by the FDA 20 years ago for chain restaurants seeking to voluntarily offer nutrient guidelines to consumers — may be based on nutrient databases, USDA-approved cookbooks, laboratory analyses and other reasonable means described in FDA’s regulations. Restaurants that employed a reasonable basis standard to arrive at nutrition levels and have training and operation controls in place would not be punished for potential variations in nutrition content.

• Who is included
The NRA said it “feels strongly” that “similar retail food establishments with restaurant-like operations” should be required to adhere to the same menu-labeling requirements as restaurants. The proposed regulations currently do not include movie theaters, amusement parks, general merchandise stores, hotels, trains or planes.

“When Congress wrote the legislation, it had a notion of a level playing field,” Vinson said, noting that it also was unclear whether convenience stores and service stations fell under the regulations.

• Disclosure flexibility
Given the diversity and complexity of the restaurant industry, the coalition recommends that broader flexibility is required to convey nutrition information in a way that works for a restaurant and customers. The proposed regulations, for example, state that calories must be posted on menus and menu boards in the same color and similar font size and must have the same contrasting background as the associated menu item. The coalition suggests the FDA adopt standards simply stating that the nutrition information must be presented in a manner that is clear and conspicuous to the consumer. In addition, it suggests that the FDA formulate a set of rules on font size and color. If a restaurant adheres to those guidelines, it would be considered in compliance.

• Updating nutritional information
Because of factors outside a restaurateur’s control — for example, when an ingredient becomes unavailable from a supplier and nutrition content is altered by the use of a substitute ingredient — the FDA should adopt a flexible policy that allows restaurants to update menus in concert with regular menu cycles.

• Timing of implementation

FDA’s proposed regulations currently give restaurants six months to comply after the regulations are issued. The NRA, NCCR and IFA all recommend that the timeline for compliance be no less than a year.

• Costs for smaller franchisees
The IFA also told the FDA that it had “significant concerns” concerning the “economic burden” the regulations would put on two- or three-unit franchisees. “For these individuals, the prospect of implementing the new law will most certainly be a daunting and costly regulatory burden,” the IFA said in a statement.

“Although franchisors may share in some of the implementation costs, the current economic uncertainties make any unnecessary costs for small businesses burdensome and problematic.”

The FDA is expected to review the comments over the coming months and formulate final regulations.

“As the leading voice on behalf of chain restaurants, NCCR encourages the FDA to continue its work on this important rulemaking, and we urge that the final rule allow for flexibility, workability and clarity for chain restaurants and consumers alike,” said Rob Green, NCCR’s executive director.

Read more: http://www.nrn.com/article/concerns-voiced-menu-labeling-proposals?ad=business#ixzz1RLsBw1Ni