Archive for May, 2012

Summer Tourism Outlook Positive for Restaurants

Tuesday, May 29th, 2012

The summer tourism season is beginning, and restaurant operators and analysts see smoother sailing this year than in the last several vacation seasons.

Increased summer restaurant employment projections and improved confidence indexes signal a positive outlook for travel and tourism, which National Restaurant Association research shows produces about 40 percent of restaurant sales.

“We are feeling quite positive on tourism this season,” said Larry Majewski, who with wife, Rebecca Majewski, owns the two-year-old Parador restaurant in Egg Harbor, Wis., in the center of the popular Upper Midwest vacation peninsula known as Door County. “Our bellwether is what the innkeepers report, and their bookings are up this year over last. That’s our No. 1 indicator of how things are looking rosy.”

Door County draws the majority of its visitors from cities within a few hundred miles, including Chicago and Minneapolis, Minn., as well as Milwaukee and Madison, Wis. Their plans are affected by gas prices, which have fallen into the mid-$3-a-gallon range from around $4 a gallon earlier this year.

Easing prices at the gas pump have helped boost consumer confidence. The Thomson Reuters/University of Michigan final index of consumer sentiment on Friday climbed to 79.3 in May from 76.4 in April. The May figure is the highest since October 2007, before the recession began tightening its grip on travel wallets.

A survey in April by the U.S. Travel Association and MMGY Global found the percentage of U.S. adults expecting to take at least one leisure trip between May and October climbed to 65 percent — up three percentage points from April 2011 and eight percentage points from April 2010, when only 58 percent of U.S. adults said they planned to take a leisure trip in the next six months.

The AAA auto club’s survey of Memorial Day travel plans, which proves to be an indicator of overall summer travel, found 34.8 million Americans planned to take trips of at least 50 miles on the weekend. That was about 500,000 more than planned to travel for Memorial Day 2011 but about equal to the holiday two years ago, the auto club said. About 30.7 million — or 88 percent — of the travelers this year plan to drive, the AAA said.

That figure provides good news for operators like Cracker Barrel Old Country Store Inc., which has many of its 615 units on major arterials. The Lebanon, Tenn.-based company said earlier this week that customer traffic was up in the third-quarter, as it was in the second.

Julie Davis, a spokesman for Cracker Barrel, said, “It’s fair to say we’re looking at a positive summer.” Earlier in the year, Cracker Barrel moved some of its annual advertising spend to its fourth, or summer, quarter and will highlight new radio spots to catch motorists as well as other early bird and lunch specials, including a popular new $5.99 baked potato lunch.

To accommodate what they expect to see in increased summer business, restaurants are expected to add 450,000 jobs this summer season, a 4.6 percent increase over the March 2012 employment level, according to NRA projections released Thursday. That will produced the industry’s highest summer employment numbers since 1993, the NRA said.

Hudson Riehle, the NRA’s senior vice president of the research and knowledge group for the Association, said that level is its “highest on record.” Restaurants employ about 13 million people nationwide.

States projected to add the most jobs related to eating and drinking during the 2012 summer season are: New York (43,800); California (32,900); Massachusetts (28,800); Texas (24,600); New Jersey (22,900); Michigan (20,100); Ohio (19,900); and Illinois (19,400).

Eating and drinking establishments added 444,100 jobs during the 2011 summer season, 427,100 jobs during the 2010 summer season, and 391,300 jobs during the 2009 summer season. Only construction produces more summer jobs than the restaurant industry, the NRA said.

Some of those additional jobs go to expanded foodservice programs in areas before untapped. Irving, Texas-based Omni Hotels & Resorts, for example, is expanding its poolside menu offerings to generate more revenue from the summer hot spot. The 24 Omni properties that have pools will have an “Art of the Water” menu for summer, featuring cocktails and ice cream.

David Morgan, Omni’s vice president of food and beverage, said in a statement that “by elevating the quintessential summer ingredients — cocktails, ice cream and water — we are able to ensure our guests genuinely enjoy their time by the pool.” The hotels are offering regionally inspired cocktails, such as an elderflower champagne Collins in the Northeast and a “skinny” chipotle margarita in Texas.

The menu also features three ice cream sandwiches from the Los Angeles-based food truck company Coolhaus, including a Brown Buttered Candied Bacon Ice Cream with a Chocolate Chip Cookie Ice Cream Sandwich. The menu launches at U.S. locations Memorial Day and will be served through Labor Day, the company said.

Summer tourism customers have expectations of excellent quality food and experience, said Parador’s Majewski, whose restaurant has 50 seats plus additional in the bar and patio.

“But it’s the local clientele that’s just as important,” he said. “They are the ones that have word-of-mouth influence. People need to know that something is extraordinary to break out of their patterns.”

Majewski, who worked at the Trump Hotel in Chicago before opening Parador in the resort community, added, “There’s always the challenge of the finicky nature of seasonality. You always have to be prepared for highs and lows.”

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Dunkin’ Donuts: No Rush for West Coast Expansion

Monday, May 14th, 2012

A distribution center for Dunkin’ Donuts is scheduled to open in Phoenix this fall, paving the way for the brand’s cautious return to the West Coast.

The hopes of Dunkin’-loving, East Coast-born Californians were raised this week after a Dunkin’ Donuts outlet opened on the Southern California Marine base Camp Pendleton. It was the first to open in the state since 2002, when the chain pulled its final location out of Sacramento.

One report called Camp Pendleton opening the equivalent of California’s beloved In-N-Out Burgers opening a unit in New York. Dunkin’ officials, however, said the Camp Pendleton location is part of the chain’s strategy of opening on military bases, and it doesn’t necessarily mark a flood of new units to come to the Golden State.

Dunkin’ Donuts has 26 outlets on military bases worldwide, including 19 in the U.S., and the company is actively looking to develop more, said Michelle King, a company spokeswoman.

“We recognize there is a lot of demand for Dunkin’ Donuts in California, as evidenced by the fact that California is the No. 1 state for sales of our bagged grocery coffee,” said King. However, she added, “Camp Pendleton is a unique nontraditional location, and it will be some time before we consider expanding in California beyond the military base.”

The Canton, Mass.-based chain has been growing aggressively in recent months, using what King described as a disciplined “hub-and-spoke” approach. “When we enter California, we want to do it right,” she said, “and we want to make sure the infrastructure is established to satisfy the needs of our guests.”

This week, the National DCP LLC, or NDCP, Dunkin’ Donuts’ franchisee-owned distribution and purchasing cooperative, announced it had signed a lease for a distribution center in Phoenix — the first to be located West of the Mississippi River.

The distribution center will supply food, paper, and equipment to about 80 restaurants in Arizona, Texas, Nevada and New Mexico, King said.

“It has the ability to service more Dunkin’ Donuts restaurants as the network grows,” she said. “At this point, the center is sufficient for our needs (and) supports our Westward expansion.”

King noted that the NDCP plans to have a network of distribution centers that can “flex to meet our franchisees’ needs.”

Dunkin’ Donuts had about 15 units in California in the late 1990s. The chain attempted to open in Sacramento in 2002, but all the locations ended up closing because “the time wasn’t right for the brand, and the infrastructure didn’t exist to grow and expand in the state,” King said.

California is also a hotbed for archrival Starbucks Corp., as well as donut competitor Krispy Kreme.

Dunkin’, however, has almost 7,000 U.S. locations — mostly in the East — and the company has said it plans to more than double its number over the next two decades.

Last year, Dunkin’ saw the opening of 243 units, and 260 to 280 net domestic locations are planned for 2012.

International growth is also a big push for the brand. This week, Dunkin’ opened its first units in India and Guatemala, for example.

In New Delhi, India, two restaurants opened, the first of 500 planned over the next 15 years by franchisee Jubilant FoodWorks Ltd. — the largest international store development commitment in the chain’s history.

Market research firm Technomic Inc. said coffee consumption in India doubled between 2001 and 2010, but it remains only about 5 percent of U.S. consumption levels on a per capita basis, indicating a solid growth opportunity.

Starbucks also is scheduled to open its first location in India later this year.

In Guatemala, the first of four locations planned there opened this week. The unit marks an expansion of Dunkin’s existing relationship with franchisee Grupo Intur, which operates 42 Dunkin’ locations in Honduras.

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Major Pizza Brands Form American Pizza Community

Monday, May 7th, 2012

Prompted by widespread dissatisfaction with the federal menu labeling regulations that were passed in 2010 as a part of the sweeping health care reform package, a coalition of major pizza chains have banded together to form The American Pizza Community.

The association, which represents about 20,000 locations across the country, was established to raise the profile of pizza operators with lawmakers and others, and to advocate for programs that will enable the segment to grow and continue to create jobs.

Founding members of the group are Domino’s Pizza, Godfather’s Pizza, Hungry Howie’s, International Pizza Hut Franchise Holders Association, Little Caesars and Papa John’s Pizza.

“The pizza community has a great story to tell,” said Lynn M. Liddle, chair of The American Pizza Community and executive vice president of communications, investor relations and legislative affairs for Domino’s Pizza in Ann Arbor, Mich.

“We are an entrepreneurial industry that provides a fresh, wholesome and customizable product,” she continued. “The American Pizza Community is launching to tell that story and to set the stage for continued success in the years ahead.”

The group is planning to kick off its efforts in June by visiting with members of Congress and their staffs in Washington, D.C. “The first step is to make legislators understand what our industry means to the American economy,” Liddle said. “We want them to know who we are, what we do and whom we touch. We want to tell them as they think about legislation, try to keep us in mind and help us to grow.”

Lobbying also could play a bigger role for the association in the future, she said.

General discontent with national menu labeling regulations helped to galvanize pizza operators to form their own organization, Liddle said. Major pizza brands earlier had agreed to support national menu labeling regulations in an initial iteration of the bill — the Labeling Education and Nutrition, or LEAN Act — which would have provided them with more flexibility concerning the posting of nutritional data.

“We said let us do it online or in a brochure in the store — we’re fine with that. We’re already doing it,” Liddle said. “But it’s too hard for us to do menu boards. The menu is too variable. If you do the calculations, you’ll find there are 34 million ways to prepare a pizza.”

Nevertheless, the final measure — called the Menu Education and Labeling, or MEAL, Act — required that all information be posted on menus and menu boards.

“We intend to push for more flexibility in the law,” Liddle said, adding that once the association is up and running, it will continue to grow. “I feel confident that once we gain some traction, we will attract more members,” she said.

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Happier Hours at Restaurants

Monday, May 7th, 2012

With many spending-shy consumers still waiting for the economic storm clouds to pass, a growing number of casual-dining operators are discovering that beefed-up happy hours can boost traffic and provide a financial bright spot in their sales mix.

From the all-$5 drinks and small plates at the earlier-than-normal happy hour at Roy’s Hawaiian Fusion to the classic Sizzle, Swizzle & Swirl promotion at Ruth’s Chris Steak House, operators are finding ways to better employ staff and space, build sizable incremental sales, and entice first-time users to return for non-happy-hour meals.

And customers are responding, experts say. 

The Addison, Texas-based Bar Louie concept, which has 56 units in 16 markets, has seen its happy hour sales increase 32 percent year over year. But the chain also finds itself catering to a new, more demanding customer, as well.

“We’re seeing our consumers getting a lot smarter and a lot more educated,” said Blake Rohrabaugh, director of beverage at Bar Louie parent BL Restaurant Operations LLC. “We try to stay a couple of steps ahead and keep the bars cutting edge.”

Well-designed happy hours can offer a range of benefits to operators. According to Jay Goldstein of Advance Foodservice Consulting in Allen, Texas, happy hour programs can:

• create another opportunity for guests to visit the concept,

• potentially increase visit frequency,

• address the growing trend of snacks versus full meals,

• offer a taste of upscale food in a difficult economy,

• introduce new guests to a concept and bring them in for full-meal occasions,

• capture a part of the market that is value oriented when making dining-out decisions,

• carve out opportunities for groups to gather informally and sample different plates.

Erika Buesing, senior director of marketing at BL Restaurant Operations, added that while the happy hour drinks and half-price appetizers at Bar Louie are priced aggressively, they are still profitable.

“Our big emphasis is on enhancing the guest experience and bringing them in for that social component so they can stay later at full fare,” Buesing said.

A survey conducted by the Chicago-based consulting firm Technomic Inc. for American Express MarketBriefing earlier this year found that “given a choice, most people like to visit their favorite spot for happy hour on a Friday” — 58 percent of men, 55 percent of women. But a sizable number of consumers also said they were open to happy hour deals on Wednesdays and Thursdays.

“Happy hours are rarely offered on weekends, since the point is to fill up bars and restaurants at slow times,” Technomic said. “But it may be worthwhile to note that 64 percent of respondents say they would patronize a Saturday happy hour if one were offered.”

Helen Mackey, director of beverage strategy at Ruth’s Chris, said the chain’s two most recent bar programs reflect guests’ needs while reinforcing the brand.

Mackey said Ruth’s Chris’ “new vintage-inspired cocktail program is a celebration of our New Orleans heritage and the city’s ties to the birth of the American cocktail, at the same time that it speaks to the level of sophistication and hand-crafted care our guests are looking for in a cocktail experience.”

She said the Sizzle, Swizzle & Swirl Happy Hour program targets the young professional who is looking for a place to unwind before heading home.

“We want to make first-time guests our regulars by providing the same level of service as in the dining room — over-delivery on quality of food, drinks and experience, now at a $7 price point in the bar,” Mackey said.

Technomic suggested that restaurants should align happy hour drink and food menus with the restaurant’s overall positioning.

For example, Roy’s Hawaiian Fusion offers a 4:30 p.m. to 7 p.m. happy hour with special island mixed drinks, wines and Hawaiian appetizer plates, all offered at a flat $5 each. The happy hour starts a little earlier than at many establishments, but a server at a unit in Dallas said the restaurant is staffed and getting ready for dinner service anyway, so it ends up providing sales in a small section of the restaurant.

P.F. Chang’s China Bistro’s Triple Happiness Happy Hours features items such as Tuna Tataki Crisp and $6 signature cocktails like a Dragon Martini.

El Torito also offers a happy hour in the cantina with margaritas, domestic draft beers, well drinks and wine for $3 each, along with foods such as beef taquitos rancheros, nachos and quesadillas.

Zinburger, the growing chain owned by Fox Restaurant Concepts of Scottsdale, Ariz., offers a happy hour Monday through Friday from 3 p.m. to 6 p.m. On Wednesdays, however, guests can enjoy half-price bottles of wine.

Goldstein of Advance Foodservice cited Blue Fish in Dallas, which runs bar specials seven days a week from 4:30 p.m. to 7 p.m. with a small-plate sushi menu priced between $2 and $5. 

And Brio Tuscan Grille features a weekday in-the-bar menu with 10 high-end food offerings — like beef carpaccio, ravioli caprese, or spicy shrimp and eggplant — priced at $3.95 and drink specials for $5.

Gordon Biersch, the brewpub concept, offers a variety of happy hour specials on small plates ranging from $5 to $11. They accompany drink specials, which are served in the bar from 4 p.m. to 7 p.m. on weekdays. As is the case at other casual-dining chains, the deals pick up again from 9 p.m. until closing on weekdays, which allows the staff to direct customers to the bar while clearing and cleaning the main dining room.

Food is important to the happy hour mix.

In its survey Technomic found that only 2 percent of customers don’t like to eat during happy hour. About 53 percent preferred typical bar bites such as nachos and chicken fingers, 21 percent liked meatier items such as burgers or sliders, and 10 percent went for pizza. About 10 percent favored sophisticated small-plate fare.

The latter segment is the target of Ruth’s Chris, which in March began offering such items as prime tenderloin skewers, seared ahi tuna, spicy lobster and New England lobster roll — all priced at $7 in the bar. Mackey said it was aimed directly at creating new loyal guests.

Pricing-scheme choices varied, as well, according to Technomic. The No. 1 choice was a free or low-cost buffet, with 38 percent of those surveyed marking that as their preferred option. Another 31 percent were drawn to an across-the-board half-off on all appetizers, and 28 percent chose the simplicity of specially priced items, such as $1 pizza slices or half a dozen wings for $2.

Buesing of Bar Louie said the chain has found connecting happy hour promotions to typical “celebration-linked holidays” like St. Patrick’s Day, Mardi Gras and Cinco de Mayo can be effective. 

“We can blow those out as talking points,” Buesing said. Other concepts have found similar success. McCormick & Schmick’s, now owned by Landry’s Inc., in 2011 hosted an Early Filers Happy Hour with Tax Relief drink specials.

Buesing also said happy hours that draw clientele from nearby neighborhoods can be marketed effectively through lower-cost social media platforms like Facebook and Twitter, on which that company puts a high emphasis. Each unit is encouraged to have its own Facebook page to engage guests and fans, she added.

Ruth’s Chris also relies heavily on social media marketing, Mackey said. 

“We have been able to build a following mainly through word-of-mouth and social media,” she said.

Tampa, Fla.-based Bonefish Grill in February beefed up its $5-cocktail happy hour with what it called Happier Hours from 4 p.m. to 6:30 p.m, promoting them through a special Facebook page invitation. The promotion includes such new food options as a Lollipop Sushi Roll with salmon, tuna and crab wrapped in cucumber and served with a rice wine-wasabi dipping sauce, and Bang Bang Tacos with shrimp.

The appeal of drinks makes the happy hour occasion more social. Technomic’s research found that beer and cocktails weighed almost equally overall, but there were preferences along gender lines. While 64 percent of customers said beer appeals to them, 62 percent said they prefer cocktails or mixed drinks. The study also found 81 percent of men chose beer versus 48 percent of women who opted for a brew. Cocktails were preferred by 71 percent of women and 51 percent of men. Wine was preferred by women and straight liquor by men.

“In addition to adult beverages, about half said they often choose soft drinks, with no significant gender differences,” the study found.

Happy hours have been so successful at Bar Louie, the chain is extending hours to 3 a.m. Monday through Friday where laws allow, Buesing said. 

Rohrabaugh added that Bar Louie’s drink menu in May will become “a little crazier.”

“We’re bringing the fresh juices like mango and lime juice more to the forefront,” he said. “We’re also doing a couple cocktails, including one that’s a Mexican hot chocolate recipe.” 

And, he added, coconut water is the new pomegranate.

Meanwhile, Rohrabaugh said: “We’re looking at our wine and pricing it differently. As a company, we sell spirits the most, then beer, and then wine, which is usually a distant third.” 

He said the more aggressive wine pricing is intended to grow the “group experience.” He also expects to see bars doing more with craft beer as consumers become more educated and anticipates perhaps small flights of craft beers being offered in happy hour specials.

“All signs point to continued growth of the happy hour daypart,” Technomic concluded in its study.

“Consumers want to keep dining out, but affordably — and often beyond the boundaries of traditional meals and meal times,” the consultancy added. “Restaurants that offer and promote happy hours with attractive prices and alluring food and drink have a key opportunity to turn their premises and labor to profit at an otherwise ‘dead’ time of day.”

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