Archive for January, 2012

Wendy’s Talks new marketing, menu plans

Monday, January 30th, 2012

In 2012, the last place Wendy’s wants to be is “caught in the middle” — losing traffic on the high end to fast-casual brands or getting undercut by value-focused quick service or convenience chains, said Emil Brolick, chief executive of The Wendy’s Co.

Given that competitive landscape, Brolick said Monday at Wendy’s Investor Day, the chain will focus its energy and capital expenditures on menu innovation, corporate-store remodels and a new marketing campaign aimed to highlight itself as a premium quick-service brand, or one that offers a fast-casual restaurant experience for fast-food prices.

“We have a very clear vision of where we want to take this brand and how we’ll get there,” said Emil Brolick, the chain’s president and chief executive. “We have a number of platforms that will get us to an accelerated growth trajectory.”

He added that Wendy’s would target systemwide same-store sales growth between 2 percent and 3 percent while aiming to deliver on new positioning that chain officials call “A Cut Above.”

Innovation on the menu

New products, from reformulated core items like Wendy’s French fries and Dave’s Hot ‘N Juicy cheeseburger to a completely new line like its test of breakfast in several markets, drove Wendy’s success in 2011, officials said.

For 2012, Wendy’s is targeting improvements and line extensions around its chicken sandwiches, Frosty desserts, chili and baked potatoes, as well as premium products like the Black Label hamburger currently in test.

The Black Label hamburgers being tested now come in two varieties: Bacon Portabella, with portabella mushrooms, Muenster cheese and garlic aioli; and the Spicy Santa Fe, with guacamole, jalapeno, aged Cheddar-Jack cheese and a cilantro-lime sauce. They are being tested at price points around $4.49 to $4.69, representing a premium positioning over Dave’s Hot ‘N Juicy.

The brand also would add the breakfast platform to 50 locations it plans to remodel in 2012. Chief operating officer Steve Farrar said sales results are meeting expectations in markets like Phoenix, Pittsburgh and Kansas City, Mo., are increasing sales from a year earlier, even with marketing spending falling 10 percent and coupon activity falling to 20 percent of year-earlier efforts.

“We’re going to make a long-term incremental investment in marketing for breakfast,” Farrar said. “As far as breakfast expansion, we’ll continue to do so in 2012, including in a new market in the Northeast.”

Remodeling to drive results

Wendy’s also hopes to get more sales leverage through remodeling company-owned stores, in order to drive sales and prove the model to franchisees, officials said.

Brolick and others said the “Image Activation” remodels have increased sales at 10 locations that were reimaged in 2011, and 47 percent of the overall sales increase comes from dine-in sales, which has a higher average check than Wendy’s typical transactions from the pickup window or for carryout.

Wendy’s plans to remodel 50 company-owned stores and build 20 new corporate locations, and the brand expects franchisees to open 40 more units in 2012, Brolick said.

Recruiting and training have been a big part of the sales performance at reimaged units, Brolick said. During construction of the brand’s 10 remodels, Wendy’s re-interviewed every staff member at those locations, including general managers and area regional managers, and re-hired only the “five-star athletes,” said chief operating officer Steve Farrar. That focus on people will spread throughout the system, he added, whether locations are remodeled or not.

“We can win with our five-star athletes, but we don’t have to wait for remodelings to recruit them,” Farrar said. “Our immediate goal is significant improvement in the customer experience across the entire brand.”

New marketing to debut

Brolick also disclosed that Wendy’s would unveil a new advertising campaign in the second quarter of 2012, tentatively titled “Code Name: RED.” The current branding effort, “You know when it’s real,” has lasted for 55 commercials and is the longest-running campaign of the many attempts Wendy’s tried after losing founder and spokesman Dave Thomas in 2002.

Thomas filmed more than 700 TV spots for Wendy’s, but following his death, the brand struggled to find an effective advertising voice, switching campaigns and ad agencies several times. One attempt with a new spokesman, Mr. Wendy, lasted only nine commercials, while the “red wig” commercials from 2006 lasted for 24 spots but were what Brolick characterized as “embarrassing.”

“When we make those product changes, we have to have an effective way to communicate those ideas,” Brolick said. “We had the most effective spokesperson ever in Dave Thomas. I think the current campaign is the best effort since the Dave Thomas campaign, but we can take it higher and make it harder-hitting and bring home more of Wendy’s core attributes.”

The strategy around Wendy’s new marketing effort would differ from the brand’s normal approach, Brolick added. While Wendy’s usually had 11 “national marketing pillars,” or small campaigns, during the year and would dedicate perhaps three of those to promoting its price-value equation, the brand will aim higher with all 11 pillars in 2012, Brolick said.

“With all the competition today, you have to give yourself the opportunity to lay some equity on top of your messaging and communicate the difference you stand for,” he said. “The last thing you want to do is step away from price-value, but if you do it in a pillar format, you can put your average check at risk. We feel we’re better off having 11 messages a year [with Wendy’s pitched as] a higher quality, with the underlying continuity of price and value.”

Wendy’s operates or franchises more than 6,500 restaurants in the United States and 27 foreign markets.

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Restaurants Kick off Super Bowl Promos

Monday, January 30th, 2012

Super Bowl XLVI will be the year’s most important game not only for the New York Giants and New England Patriots, but also for the restaurant industry.

The Feb. 5 contest is one of the biggest sales days for several pizza and wing brands, and many other chains not normally thought of for party food are planning big offers this year.

According to estimates from the National Restaurant Association, 48 million Americans will order takeout or delivery food from a restaurant while watching the Super Bowl. Another 12 million people are expected to visit a restaurant or bar to watch the game.

Day of dough for pizza chains

Pizza Patrón, the Dallas-based chain of 100 restaurants in seven states, is hoping not only to sell lots of pizza, but also to remind its customers that it offers chicken wings and several dips, said brand director Andrew Gamm.

“Super Bowl Sunday is not the biggest day of the year for us, but it’s in the top four or five, and we want to improve and capture more business,” Gamm said.

Pizza Patrón has introduced four new Party Paquetazos — which means “combo” in Spanish and is pitched toward the chain’s core Hispanic demographic — combining wings, large pepperoni pizzas and five-piece orders of QuesoStix. They range in size from a $34.99 Paquetazo of 30 wings, two orders of QuesoStix, two pizzas and three dips, to an $84.99 combo of 90 wings, four orders of QuesoStix, four pizzas and eight dips.

Wings are featured prominently because Pizza Patron is hoping to become a one-stop shop on game day for customers, who told chain officials that they often were making two trips to buy pizza and wings from separate restaurants, Gamm added.

“On average, wings are between 10 percent and 14 percent of our sales mix, but since they’re so synonymous with the Super Bowl, we saw an opportunity to capitalize,” he said. “We matched ourselves up against some wing concepts and what they offer, and tried to create the benefit that for the same price, you get pizzas in your deal as well.”

The brand isn’t hoping for just a rush of these party orders on Super Bowl Sunday, Gamm said, but hopes to kick off continued orders of the Paquetazos throughout the year.

“Our franchisees immediately asked if they could run this all year,” he said. “With our Hispanic-customer focus, soccer is real big with them, and that season runs through early June. We developed our POP and marketing materials to run for an extended period of time.”

Papa John’s Pizza also is looking to get a yearlong boost from the game as the official sponsor of Super Bowl XLVI and the National Football League. This year the Louisville, Ky.-based brand is tying a nationwide giveaway to the Super Bowl’s pregame coin toss, and is advertising the promotion with commercials starring founder John Schnatter and football players Peyton Manning and Jerome Bettis.

Through Feb. 1, people can vote at to predict whether the coin toss will come up heads or tails. If a majority of Americans vote the correct call, the more than 3,000-unit pizza chain will give away a one-topping pizza and a two-liter bottle of soda to every customer enrolled in its Papa Rewards online-loyalty program, to be redeemed the day after the Super Bowl.

“This won’t be an easy call for America, but as the official pizza sponsor of the NFL, it’s an easy call for Papa John’s to offer a promotion like this to our loyal customers,” Schnatter said in a statement. “The Super Bowl is the largest stage in all of sports, and it’s the biggest sales day of the year for us.”

Papa John’s set a single-day sales record last Super Bowl Sunday, selling more than 1 million pizzas.

Wing chains look to take flight

Super Bowl Sunday is always one of the biggest consumption days for chicken wings, and several chicken wing brands step up their game every year for the NFL postseason.

Buffalo Wild Wings is offering a takeout special of 24 wings plus two side dishes or shareable plates, which also comes with peel-and-stick “eye black” stickers. The Minneapolis-based chain also schedules extra staff for Super Bowl Sunday at its more than 815 locations to handle the highest volumes it sees all year, officials said.

According to Harris Interactive data supplied by the National Chicken Council, about 23 percent of people watching the Super Bowl on television eat chicken wings while doing so, and about 1.25 billion wings are expected to be eaten during the weekend.

Wingstop, the Richardson, Texas-based chain of 500 locations, expects to sell 5.6 million wings during Super Bowl weekend. If the brand meets its sales expectations this year, it would mark the 12th consecutive year that Wingstop sets a single-day sales record.

“Wings are becoming the go-to snack for Super Sunday parties,” Jim Flynn, the brand’s chief executive, said in a statement. “The menu at a watching party has become almost as important as who wins the game. Our fans place orders weeks early, and Wingstop starts prepping for the big day months in advance.”

The chain said sales on Super Sunday are 290 percent over the typical Sunday on average. Wingstop is projecting sales growth of 12 percent compared with last year’s Super Sunday. Former Dallas Cowboys quarterback Troy Aikman has been the chain’s spokesman since 2003 and recently joined its board of directors.

KFC also is using the Super Bowl occasion to promote its Sauceless Hot Wings, recently offering them for 50 cents per piece.

Other foods get in the game

Super Bowl promotions are not limited just to pizza and wing chains, however.

Chipotle Mexican Grill, for instance, is hoping to drive orders of its Burritos by the Box offer for the Super Bowl without participating in the expensive advertising during the game. So the Denver-based brand is offering half-priced boxes of six burritos or more in the “Super Big Internationally Televised Professional Football Bowl Game Half Price Party in a Box” promotion on Feb. 5.

The chain is referencing but not naming the Super Bowl with its social-media profiles, website and in-store signage.

Columbus, Ohio-based Charley’s Grilled Subs, on the other hand, is running its “Grill-Iron Classic” competition through Feb. 20 to build up its Facebook fan base and promote its core Philly Cheese Steak and California Chicken Sub.

Fans are invited to “like” Charley’s Facebook page and vote for their favorite between the two subs, in exchange for free food or an entry into a sweepstakes for one of nine $500 cash prizes.

“Our Charley’s Philly Cheese Steak has had a legendary following for 25 years, but over the past few years the brash new California Chicken sandwich has built its own cult-like following,” said Mike Cassar, vice president of marketing for the 450-unit brand.

“We know a good rivalry when we eat it, so we are playing the two coastal favorites against each other by plying our socially savvy fans with free food and prizes for their vote,” he said.

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Restaurants Offer Chinese New Year Specials

Monday, January 23rd, 2012

These days many diners are attracted to food with a story. The Asian Lunar New Year — a holiday that anticipates the coming spring and is celebrated in China, Japan, Korea and Vietnam —is loaded with symbols, celebrated through eating, intended to bring good fortune in the year ahead.

On Jan. 23, the Chinese will usher in the year 4709, which on their 12-year zodiac cycle is a year of the dragon, symbolizing intensity, enthusiasm, vitality, leadership and strength.

Lucky foods eaten during the 15-day festival include noodles for longevity, peanuts for auspicious new beginnings, spring rolls for prosperity, dumplings for wealth, whole fish for abundance, melons for health and family unity, pork for strength, sweets for happiness, and oranges and other citrus for several reasons.

Restaurants across the United States are serving up many such dishes, and a number of them also are handing out hóng bāo, red envelopes traditionally containing money, but in this case containing gift certificates to be redeemed on their next visit.

P. F. Chang’s China Bistro is doing just that during the celebration. From Jan. 23 through Feb. 6, each guest will receive a red envelope to be opened by a manager or server on their next visit. The gift certificates must be redeemed by March 4. P. F. Chang’s is also offering a promotional Dragon Punch cocktail featuring Chinese beer, vodka infused with dragon fruit and Sriracha sauce.

Casual-dining Chi Dynasty in Studio City, Calif., also will hand out red envelopes with $8 in “Chi Bux” to be used at a future visit. Its celebration will feature a lion dancer, Chinese drummers and red paper lanterns in their parking lot.

The eight-unit Big Bowl chain, based in Chicago, is starting its celebration early, on Jan. 19, with specials such as shrimp and chive dumplings in a fiery sauce meant to represent a dragon. They also will serve a Cantonese-style lobster, as the Chinese word for lobster translates as “dragon shrimp,” and because lobster also is eaten for abundance. Almond cookies, representing gold coins and thus good fortune, will be served, along with spicy peanuts.

On Jan. 20, the Lettuce Entertain You Enterprises subsidiary will host a “good luck gamble” for each table to roll a pair of dice. Whatever number comes up, that number of dollars will be deducted from the check.

On Jan. 22, all guests will receive a hóng bāo with a $10 or $25 gift certificate or gift card for a free appetizer, dessert, housemade ginger ale or bottled Big Bowl sauce. Children will get a hóng bāo with a $1 bill.

Finally, on Jan. 23, a free dinner, dine-in only, will be provided to anyone born during a year of the dragon: 1928, 1940, 1952, 1964, 1976, 1988, 2000 and 2012.

Panda Express has relaunched its firecracker chicken breast as a limited-time offer from Jan. 4 through Feb. 15.

The spicy dish features wok-fried red and yellow peppers and spicy black bean sauce. Facebook fans of the quick-service chain will get a coupon for a free serving of the dish on Jan. 23.

Wolfgang Puck helped legitimize Chinese as fine-dining food in the United States with his restaurant Chinois on Main, and several of his restaurants are celebrating the New Year with specials.

His WP24 Restaurant and Lounge at the Ritz-Carlton, Los Angeles, is offering a $16 Dragon Fire cocktail, made with muddled jalapeño, añejo tequila, orange liqueur, grapefruit juice, lime juice and simple syrup, served in a Martini glass with a salted rim and garnished with sliced jalapeño.

Puck’s The Source in Washington, D.C., is featuring a $125-per-person menu from Jan. 23 through Feb. 3, featuring dishes that represent the five Chinese “elements” of fire, water, wood, earth and metal.

Fire is represented by wok-fired lobster dumplings with XO chile sauce. The water course is a roasted loup de mer with preserved lemon and black pepper sauce. Next is an applewood smoked Peking duck with Chinese mustard and duck fried rice. For earth, chef Scott Drewno is preparing Szechuan pepper crusted filet with wok-fired “longevity noodles.” Metal comes with the dessert course: golden pineapple sticky cake with black pepper ice cream and a gold dusted chocolate talon.

The 26-property Destination Hotels & Resorts is launching a new culinary program for the Chinese New Year called “Destination Dish.” Each month, every hotel will highlight one “seasonally relevant” ingredient, starting with a lucky citrus fruit, the kumquat.

Koi in Evanston, Ill., will feature a traditional Lion Dance on Jan. 21, and from that night through Jan. 26 will feature a Good Luck Menu with items such as Szechuan won tons with peanut sauce, lychee chicken — chicken for prosperity, lychees for family harmony — beef with bamboo shoots — because “bamboo shoots” in Chinese sounds like “wishing that everything would be well” — and seafood pan-fried noodles. Additionally, the restaurant’s signature Dragon Maki sushi roll will be offered for $5 on Jan. 23 instead of the usual $12.95.

Foumami, an independent quick-service restaurant in Boston that makes sandwiches in thick Chinese pancakes called shaobing, will offer a La Long, or spicy dragon, sandwich of pulled pork rubbed and braised in a lucky red-colored spicy Chinese barbecue sauce topped with red cabbage and scallions and drizzled with a spicy jalapeño-based sauce. It also will be serving a longan melon soda, since melon promotes family unity and the Chinese word for longan translates as “dragon eyes.”

Many restaurants also follow the custom of giving to charity during the season.

Big Bowl will donate up to $5,000 to the Make-A-Wish Foundation from sales of its seasonal blood orange ginger ale.
Panda Express is offering its free Chinese New Year Learn with Me Program to elementary schools across the country. Geared for second through fourth graders, it teaches about traditional Chinese holiday celebrations.

Doc Chey’s Noodle House, based in Atlanta, is donating $2 for every purchase of its $12 Lucky Sampler trio to the Atlanta Community Food Bank. The sampler includes shrimp rolls, dumplings and peanut noodles.

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Starbucks to Add Alcohol, Food to More Units

Monday, January 23rd, 2012

Starbucks said Monday it will expand its offer of beer, wine and an expanded food menu to a handful of stores in Atlanta and Southern California before the end of 2012.

Five to seven locations in Chicago were already scheduled to offer alcohol and the expanded menu this year in a move to build evening daypart traffic.

Currently, Starbucks offers the options only at five locations in Seattle — the company’s home base — and one in Portland.

The first to test the expanded menu was the Olive Way location in Seattle, which began offering the expanded food and beverage menu in October 2010.

In December, Starbucks officials said units testing the new format have shown double-digit same-store-sales increases after 4 p.m.

Starbucks said the expanded format will be available in four to six units in each market of Atlanta and Southern California. The beer and wine list will be selected to reflect local customer tastes and preferences, the company said.

Food offerings will include savory snacks and small plates, as well as hot flatbreads.

The restaurants will also incorporate more flexible seating to accommodate both individuals and small groups, as well as larger parties like community meetings or book clubs, the company said.

Clarice Turner, Starbucks’ senior vice president, U.S. operations, said building an evening daypart is a natural progression for the coffeehouse chain.

So far the company is pleased with results and eager to test it in new markets, she said.

“As our customers transition from work to home, many are looking for a warm and inviting place to unwind and connect with the people they care about,” Turner said in a statement. “At select stores where it is relevant for the neighborhood, we are focused on creating an atmosphere where our customers can relax with a friend, a small bite to eat and a cup of coffee or glass of wine.”

Burger King Tests Delivery in United States

Monday, January 16th, 2012

Burger King Corp. is weighing the addition of a delivery option to its restaurants in the United States, a convenience the chain has long offered in several countries overseas.

Four restaurants in the Washington, D.C., area currently are testing delivery service, said Kristen Hauser, a spokeswoman for the Miami-based quick-service chain.

The test will be expanded to 16 stores by Jan. 23, she said, but no specifics regarding the timing of a possible national roll out were available.

Burger King said it has been offering delivery for years with great success at locations in Mexico, Turkey, Brazil, Columbia and Peru.

For the U.S. test, guests can order online at or by phone. The restaurants will deliver to a physical address within a 10-minute drive of test units.

Guests are charged a $2 fee for delivery and the minimum order is $8 to $10, depending on the store.

The delivery menu includes items like burger combo meals, chicken tenders and bottled drinks. But the chain is not delivering fountain drinks, ICEE beverages, shakes, coffee or breakfast items, Hauser said.

The test stores are using new delivery packaging technology in conjunction with thermal bags to keep food hot and fresh, Hauser said, although no details were available.

If the company decides to expand the service nationally, Burger King could become the first national quick-service burger chain to do so.

McDonald’s for some time has offered delivery service in select stores in Manhattan, but spokeswoman Danya Proud said the company has no immediate plans to expand the option.

Johnny Rockets has tested bicycle delivery in some cities, as have other limited-service brands, like Subway, Pinkberry and Wow Bao.

Burger King, which operates or franchises about 12,400 locations globally, has been exploring a number of innovations since it was acquired by private investor group 3G Capital Management in 2010.

In December, the company said it plans to expand use of the new Coca-Cola Freestyle beverage machines to more than 850 company-owned locations.

Earlier, the chain rolled out new French fries as part of an ongoing menu upgrade. Other additions have included new soft-serve ice cream and desserts, and the premium Chef’s Choice burger.

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California Food Truck Recovers After Theft

Monday, January 9th, 2012

Food trucks may be seen as a road to riches for foodservice entrepreneurs, but the owners of the No Tomatoes truck in Los Angeles learned over the holidays that plans can be curbed quickly by theft.

Several suspects have been charged in Fresno County, Calif., in connection with the Dec. 23 theft of the bright orange No Tomatoes truck from its commissary in Los Angeles. Police discovered the truck three days later in a motel parking lot six hours away in Fowler, Calif., with its signage skin partially peeled off and repainted with the words “Bad Boy Burgers.”

“The food truck industry out here is still a little bit like the Wild West,” said Kim Billingsley, director and co-owner of No Tomatoes, which took to the road on Oct. 22, 2010. A year later Billingsley opened the brick-and-mortar No Tomatoes! Indian Café in Los Angeles.

The theft generated attention on Twitter, where fans joined the hunt with Tweets about the license plate number.

Billingsley said the truck driver left the leased truck at the Slauson Foods commissary in Los Angeles at about 3:30 p.m. on Dec. 23. The truck was reported missing on the afternoon of Dec. 25, after a search failed to turn up the half-ton truck.

Billingsley filed a stolen vehicle report with the Los Angeles Police Department, and authorities in Fresno County, Calif., nearly six hours away, discovered it in a motel parking lot on Dec. 27 near Fresno.

One of the suspects is a former employee of No Tomatoes, Billingsley said. “The manager of this little motel had seen these guys spray-painting the truck,” Billingsley said. “He questioned them, got a license plate number and then called the police.”

The suspects had repainted the passenger/service side of the truck, as well as the front and part of the driver’s side. They also had peeled off any reference to the brand and city-issued permits, decals and health department grades.

“The one thing they didn’t remove was the license plate,” Billingsley said.

Billingsley said the truck, which is leased from Slauson, is covered by insurance, but she is unsure if the insurance company will cover any loss of income. The truck returned, in its “Bad Boy Burger” state, for service on Jan. 2 during the Rose Bowl game in Pasadena, Calif., Billingsley said, but the owners hope to get it rewrapped with No Tomatoes signage

“Because it’s still kind of the Wild West,” Billingsley said, “you don’t always get the cream of the crop people to work for you. It’s long hours. It’s often affected by the weather, or the truck breaks down. It can be very stressful. It’s not for everybody.”

The New Year holiday has delayed getting the No Tomatoes signage back, but the owners hope to have it back in shape by next week.

Billingsley said her insurance company told her food trucks usually are stolen and sent to a chop shop to be sold for parts, and that an intact truck repurposed is rare.

She also said the commissary is changing its security policies and now keeps the truck keys themselves under lock and key to prevent further thefts.

“Food trucks are not for the faint of heart,” Billingsley said. “For our café, I don’t have to worry about someone coming in and moving my restaurant.”

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Baskin-Robbins to Expand to Vietnam

Monday, January 9th, 2012

Baskin-Robbins has signed a master franchise agreement to open its ice cream and frozen dessert shops in Vietnam.

The Dunkin’ Brands Inc. subsidiary said Blue Star Food Corp., a Vietnamese food manufacturing company, has agreed to open approximately 50 units over the next several years.

The first three units are slated to open this week in Ho Chi Minh City. Among them is a three-story flagship store featuring a new design for international units. The flagship location includes an expanded topping station and interactive LCD menu displays, as well as new pink spoon-shaped door handles, walls textured like waffle cones and more lounge-style seating.

Popular American ice cream flavors will be available, as well as those more suited to Southeast Asian palates, such as green tea and Mango Mania — mango ice cream with pieces of mango, kiwi, pineapple and strawberry.

Baskin-Robbins recently opened its 4,000th location outside the United States in Singapore. The snack chain operates about 2,600 units domestically.

Baskin-Robbins’ international division accounted for about 15 percent of Canton, Mass.-based Dunkin’ Brands’ total revenue in the third quarter ended in September.

Dunkin’ Brands’ chief executive Nigel Travis called Baskin-Robbins a “jewel in the crown,” when discussing the results in November, and said it had significant growth potential.

He noted that customization was necessary overseas, citing traditional moon cakes in China and snowman cakes and scoops in the Middle East and South Korea.

“Baskin-Robbins is one of the world’s most respected brands,” said Nguyen Thanh Nam, general director, Blue Star Food Corp. “We are proud to represent Baskin-Robbins in Vietnam and look forward to bringing Baskin-Robbins’ world-class ice cream, cakes and treats, along with the fun and great value associated with the company, to people throughout the country.”

Other American restaurant chains also are finding opportunities in Vietnam. Yum! Brands’ KFC already operates about 100 restaurants there, while CKE Inc. has at least one Carl’s Jr. unit open and said it plans to open 25 outlets there over the next six years. Pizza Inn already operates in Vietnam, and Round Table Pizza recently announced plans to open in the country as well.

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Industry Experts Forecast 2012 Trends

Tuesday, January 3rd, 2012

Nation’s Restaurant News asked some of the industry’s top trend-watchers to discuss what they expect in the year ahead. Here are their top predictions:

Hudson Riehle, senior vice president, research, National Restaurant Association

There’s no economic rebound to prosperity, but it will continue to be a better environment than it was in 2008, 2009 and 2010.

Restaurants will benefit from pent-up demand. Two out of five American adults said in a recent survey that they are not using restaurants as often as they would like. Even modest employment growth should boost confidence and cash on hand, encouraging consumers to return to restaurants.

Food costs will remain a huge challenge, with wholesale food price inflation running at 8 percent — the highest it’s been in three decades. Operators won’t be able to pass on high input costs on a one-to-one basis, so the focus will remain on driving out costs while hopefully growing sales.

Nancy Kruse, president, The Kruse Company

The three ‘zations will grow in importance.

• “Premiumization” is now a basic diner expectation, given the proliferation of upgraded, enhanced, or higher-end products at modest prices. Examples: T.G.I. Friday’s new Langostino Lobster-topped entrées or Arby’s medium-rare Angus beef sandwiches.

• “Customization,” which is the have-it-your-way notion brought into the 21st century by concepts like Chipotle’s ShopHouse Southeast Asian Kitchen and Pizza Inn’s Pie Five Pizza Company.

• “Miniaturization,” or the continued growth of small plates, snacks and downsized portion options, which have been driven by price sensitivity, consumer interest in sampling, grazing or sharing, and health concerns.

More chains will return to the earth and emphasize real, fresh or local foods to the maximum extent that they can, given the constraints of their systems. For example, McDonald’s new ad campaign emphasizes farmers and ranchers. Similar efforts have been seen from Culver’s, Wendy’s and Domino’s.

Daypart disintegration will accelerate as snacks and off-hours options like “linner” – a daypart between lunch and dinner – make inroads at the expense of conventional meal periods. Drivers behind that trend include 24/7 lifestyles, declines in conventional 9-to-5 work habits, interest in less expensive options and the growth of the Millennial generation. For example, the super-hot Publican in Chicago has a formalized “afternoon menu” starting at 3:30 p.m.

Bonnie Riggs, restaurant analyst, The NPD Group

Fast casual will remain hot. The segment’s year-to-year traffic rose 6 percent for the year ended Oct. 31, and more operators are looking to capitalize on its appeal. With quick-service brands like McDonald’s upgrading menu items and decors and casual-dining chains introducing fast-casual variants.

Better-for-you foods are in, as consumers trade French fries and soft drinks for items deemed more healthful, such as Subway’s Fresh Fit offerings and those with a health halo, such as Carl’s Jr.’s turkey burger line.

Darren Tristano, executive vice president, Technomic Inc.

Consumers hesitant to spend want twists on the familiar, such as comfort foods with gourmet, ethnic artisanal or wood-fired flare, and innovative sandwiches, wraps, pizza and pasta.

Commodity costs will drive rustic fare made in-house as operators stop buying value-added items in favor of cheaper cuts, beans, grains and produce that require more back-of-house prep to make into honest, home-style food.
Seasonal and local sourcing will continue to grow, driven by a less-is-more culinary trend and the need for a more transparent and efficient supply chain.

John Barone, president, Marketvision

Choice beef prices will rise. Drought in the southern plains has reduced cattle herds and caused a lot of feeder cattle to be marketed at lower weights, resulting in less overall beef, even less choice-grade beef and higher prices in 2012. This situation may not improve much in 2013.

Another year of high fuel prices. Diesel prices jumped 28.7 percent to an average $3.85 per gallon nationally in 2011, and look to be similar in 2012. The logistics of managing freight into distribution centers, and then on to restaurants will be one of the biggest challenges for supply chain professionals in 2012.

Lower grain prices. Record-high grain prices led to more planted acres globally, and those added supplies will dampen U.S. export prospects. The result will be lower year-over-year corn and wheat prices, albeit these will be coming down modestly from record-high levels.

Larry Miller, analyst, RBC Capital Markets LLC

There’s more risk than reward in restaurant stocks in 2012, as food costs remain high. If sales slow while costs are high, companies will experience multiple compression — and miss their earnings-per-share estimates — since average checks are already under pressure from discounting and soft traffic.

Late 2012 could benefit from the presidential election, especially if same-store sales can stay in the 2-percent to 2.5-percent range through the first few quarters. On top of electorate optimism, easing year-over-year food cost comparisons could lift stocks. In the meantime though, consumers seem to be tapped out and will keep their spending in check.

Stock picks: Yum! Brands Inc. because emerging markets such as China, India and Africa still show promise; Starbucks Corp. could benefit from favorable coffee costs later in the year and the full contribution of K-cup sales; and Jack in the Box Inc. is poised to benefit from its refranchising efforts, higher margins and revved-up growth at Qdoba.

Steve Caldeira, president and chief executive, International Franchise Association

Franchising is expected to grow in 2012, with, franchised quick-service restaurant sales increasing an expected 4.4 percent and franchised full-service restaurant sales expected to increase 4.2 percent in 2012. Both projections are lower than the 5-percent average growth anticipated in 10 franchise segments, based on a survey conducted for the IFA by the IHS Global Insight consultancy. In addition, the number of franchised quick-service restaurants is expected to grow 2.6 percent, to 151,347 units, and the number of franchised full-service restaurants is projected to grow 2.1 percent, to 36,095 units.

Access to capital will remain the No. 1 issue for franchising in 2012. While there’s been a bit of a thaw for both big and small businesses, there is a long way to go.

Tax reform will be a huge issue in the coming year as uncertainty surrounding tax issues and health care reform inhibit the ability to make informed business decisions.

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Car Dealerships Become Non-Traditional Restaurant Sites

Tuesday, January 3rd, 2012

While not yet a driving force in non-traditional restaurant sites, auto dealership showrooms are starting to add enhanced dining options.

At Frank Kent Motor Co. in Fort Worth, Texas, a Honda dealership recently upgraded its 40-seat dining area, called Twin Creeks Café, which had opened with the showroom and service area last fall. The dealership revamped the menu and repositioned the offerings, while taking the foodservice management in-house.

Frank Kent Motor co-owner Corrie Watson said the recent rebranding has provided a helpful service to customers.

A Frank Kent spokeswoman said the menu now offers an array of options, including salads with house-made dressings, grilled fish of the day and tenderloin filet. Prices are generally under $12, and the café is open from 7:30 a.m. to 6 p.m. from Monday through Saturday.

“The feedback has been overwhelmingly positive,” Watson said. “Our customers appreciate a convenient, healthy option.”

Additionally, Watson said Twin Creeks has even been receiving catering requests.

The dealership tapped David Rotman, the former owner of Fort Worth’s popular Café Aspen, which closed in February 2010 after more than 20 years in business, to revamp the menu.

Besides lunch and dinner items, Rotman added breakfast dishes, like Mexican- and Greek-style omelets, waffles, pancakes, egg and cheese tacos and paninis, and chorizo quesadillas.

“Café Aspen had a faithful following in Fort Worth, and the team at Frank Kent was sad to see it go,” Rotman said. “It’s an honor to give some of these dishes a new life at Twin Creeks Café.”

In early 2012, the Cohn Restaurant Group of San Diego expects to unveil a 10,000-square-foot restaurant in the three-level Lexus Centre in Escondido, Calif.

The California Lexus restaurant project, called Vintana, remains in the planning stages, according to a Cohn representative, but the company is developing a menu. The project also calls for 20,000 square feet of outdoor event space that could be used for private functions, as well as for other meeting and banquet facilities.

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