Archive for September, 2012

Early Holiday Shopping Forecasts Suggest Good News for Restaurants

Tuesday, September 25th, 2012

Early forecasts for the holiday shopping season indicate sales and foot traffic will climb this year, with people spending more time in malls and visiting more stores — which could indicate more business for restaurants, say industry experts.

In one of the first forecasts for the season, Chicago-based retail analyst ShopperTrak predicted this week that national retail sales will increase 3.3 percent during November and December, compared to last year, and foot traffic will increase 2.8 percent.

That’s good news for restaurants, said Bonnie Riggs, restaurant analyst for market research firm The NPD Group.

“If stores have more foot traffic during the holiday shopping season, restaurants will benefit,” she said. “If shoppers are out and about going in and out of stores, they’ll make time to stop for a meal or snack at a restaurant. Having a nice meal at a restaurant is, for many, a part of the holiday shopping tradition.”

ShopperTrak’s forecast is slightly more optimistic than one expected out the week of Sept. 24 from the International Council of Shopping Centers, or ICSC. In a preview, officials said ICSC is predicting general retail sales to rise 3 percent this year during the holidays.

ICSC’s forecast this year encompasses October, November and December, given that several major retailers are planning to launch Christmas holiday promotions even before Halloween in a trend called “Christmas Creep.”

While neither forecast includes restaurants, general retail activity is typically an important indicator for the foodservice industry, which is hoping to capture hungry shoppers out for a bite to eat.

The 2011 holiday season proved to be a good one for restaurants, in part because of mild weather in most parts of the country. Industry-wide same-store sales rose 5.4 percent last December over the prior year, a jump from the 2.9-percent year-over-year increase seen in November 2011, according to the NRN-MillerPulse Survey.

Darren Tristano, executive vice president of market research firm Technomic Inc., predicted this year’s holiday season will be even better for restaurants. Consumer confidence is up and unemployment rates have stabilized, he said.

“People shopping more is going to lead to more restaurant occasions,” he said. “Projections of foot traffic being up will definitely increase the likelihood of increased sales for restaurants.”

ShopperTrak’s forecast indicated that retailers have seen sales growth over the past two years, with year-over-year increases in 34 of the past 35 months. This year’s expected growth in foot traffic, however, will be a turnaround after five years of negative trends. Last year, foot traffic declined 2.2 percent over the prior year.

Overcoming obstacles

Ed Marcheselli, ShopperTrak’s chief marketing officer, said the expected increase in foot traffic doesn’t necessarily mean more consumers will be out shopping.

“What we’re seeing is that people are visiting more stores, and overall they’re spending more time shopping,” he said. “That’s an opportunity for restaurants to capture lunch and dinner business.”

However, ShopperTrak is not predicting that consumers will buy more this season, in part because of results from this year’s back-to-school shopping season in August.

While foot traffic rose a whopping 11.1 percent in August, according to ShopperTrak, actual retail sales increased a disappointing 0.9 percent, according to the U.S. Department of Commerce. “You’d think that 11-percent traffic growth would have driven even higher revenue growth, but that didn’t happen,” said Marcheselli. As a result, ShopperTrak’s forecast is “guardedly positive” for the end-of-year holidays, he said.

“We see people returning to malls and going to more stores, but there’s still a lot of economic uncertainty in general,” Marcheselli said, adding that this year’s election will also likely dampen the impact of retail marketing efforts in October.

In the past, national elections tend to delay shopping activity, according to ShopperTrak. In 2008, for example, shopping activity dropped about 6.3 percent during the week before election day — though that year was also when consumer confidence was at its lowest as a result of the recession.

However, Marcheselli said, “Political advertising tends to suck all the oxygen and makes it difficult for retailers to get their message out.”

The good news: Shopping also tends to rebound quickly after Election Day, ShopperTrak indicated. “Consumers who were distracted during the election, however, generally dive into the holiday shopping season after the ballots are counted,” the report said. “Store managers must have their marketing and advertising ready to go on Nov. 7 to capture the full sales potential of this holiday season.”

Holiday timing boosts promotions

This year there will be 32 days between Black Friday, the day after Thanksgiving, and Christmas: the longest interval possible. The period will also include two extra weekends — including one between Christmas and New Year’s Eve, when retail stores tend to be particularly crowded.

Hanukkah also falls 11 days earlier than last year, allowing retailers an opportunity to boost sales earlier in the season, the ShopperTrak forecast said.

Last year, a number of major retail chains, including Walmart, Toys R Us, Target, Best Buy, Kohl’s and Macy’s, opened their stores at midnight on Black Friday or even earlier on Thanksgiving evening, and industry observers expect that trend to increase this year.

According to the National Retail Federation, a record 226 million consumers shopped during last year’s Black Friday weekend, spending an average of $398.62, compared with $365.34 the prior year.

ShopperTrak estimated that shoppers spent $11.4 billion on the Friday after Thanksgiving alone, indicating a 7-percent year-over-year increase in sales that day and a 5.1 percent increase in foot traffic – boosted in part by the earlier openings.

Fred LeFranc, founding partner of consulting group Results Thru Strategy, said it remains to be seen which segments within the restaurant industry might benefit most from the shopping crowd.

“If consumers are feeling confident, then casual dining will do better as they will treat themselves to a meal as long as they are out,” he said. “If not, they may be more frugal and grab a quick bite at a QSR or fast casual.”

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Consumers Trading Down from Fine Dining to Quick Service

Tuesday, September 25th, 2012

Casual-dining chains may be missing an opportunity to capture patrons of fine-dining restaurants who are looking to cut back on spending, according to new consumer research by consulting firm Consumer Edge Insight.

For the first in a series of quarterly Restaurant DemandTracker surveys, Stamford, Conn.-based Consumer Edge Insight in July asked about 3,100 consumers across the country who visit restaurants at least once per month about what makes them choose one restaurant above another, focusing on about roughly 45 national family- and casual-dining brands and seven fine-dining chains.

Not surprisingly, consumers overall said they were cutting back on dining out and spending less in restaurants.

About half of those surveyed said they had less money to spend, but how they deal with the situation varies. About 60 percent of participants said they have traded down to less expensive dining options, while another 55 percent said they order less expensive items on restaurant menus and 51 percent take advantage of dining discounts or promotions.

However, the survey found that consumers that trade down from fine dining tend to skip the mid-price tier in the casual-dining segment. Among respondents who have been eating at quick-service restaurants more often in the past year, for example, 26 percent said they are eating at fine-dining restaurants less often; 23 percent eat less often at casual-dining concepts; and 15 percent are cutting back on fast-casual dining, the survey found.

David Decker, president of Consumer Edge Insight, said many consumers were trading down from fine dining for economic reasons. But rather than taking the smaller step down to casual dining, “a lot were trading down to quick-service or pizza restaurants,” he said.

In fact, the survey found, casual-dining brands tended to pick up more incremental traffic from consumers trading up than from those trading down. Of those customers who said they have been eating out more often at casual-dining restaurants in the past year, 15 percent said they’ve been cutting back on quick-service visits; 15 percent are eating less often at pizza/takeout restaurants; and only 12 percent said they were eating out less often at fine-dining restaurants.

That trend could be explained two ways, said Decker. Some consumers may be suffering such financial pressure that they are compelled to trade all the way down the price spectrum, he said. But it could also mean that casual-dining chains aren’t doing enough to communicate that value message to those looking to trade down from higher-end concepts. Instead, many have been focusing their market share battle on lower-priced competitors.

“Casual-dining operators have to figure out how to establish their relevance for the fine-dining customer with a trade-down mindset,” said Decker. “If restaurants can figure out how to reach that customer — what price point or menu item it takes — there are a lot of those customers out there.”

Value drives loyalty

The survey also asked consumers what drives their loyalty. Within the casual- and family-dining segments, offering a good value was the most-cited factor, mentioned by 57 percent of respondents. Convenience was also a key attribute, cited by 54 percent, as was good service, cited by 50 percent. Cleanliness was the fourth most commonly cited attribute driving loyalty, and having great-tasting food was only the tenth most important factor.

Decker said four casual/family-dining brands were identified by consumers as having good value: Applebee’s, Chili’s, Denny’s and Waffle House — each brand rated highest by 43 percent of respondents. Applebee’s and Chili’s also were ranked highly for having convenient locations.

However, Decker said the results also suggest that consumers may be subconsciously settling for less-great-tasting food in favor of a lower price point and convenience instead of choosing casual/family-dining brands with a strong value proposition and a large geographic footprint.

Within fine dining, 40 percent of consumers ranked having high-quality food, good service, and cleanliness equally as the top factors driving restaurant visits. The brands ranked highest for food quality were Ruth’s Chris Steakhouse, cited by 60 percent, and Capital Grille, cited by 53 percent.

Ruth’s Chris was also rated highly by 52 percent of respondents for having good service, and 56 percent of those surveyed also gave the chain a high rating for cleanliness.

In addition, Morton’s was cited by 48 percent of respondents for good service, and McCormick & Schmick’s was ranked highly for cleanliness by 55 percent of those responding.

Decker said the survey results indicated that fine-dining concepts must also look for ways to protect market share from the ongoing “trade-down state of mind” among consumers.

“Given the many headwinds, there’s very much a value mindset out there, and reducing spending on restaurants is a popular way to economize,” he said. “Fine-dining restaurants need to focus on their value proposition as well.”

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Corner Bakery Café Franchise Deals Move Brand into New Regions

Thursday, September 20th, 2012

Corner Bakery Café has signed a franchise agreement to open its first restaurants in the Pacific Northwest and expects to reveal several East Coast deals soon, the concept’s vice president of franchise sales said Tuesday.

The Dallas-based company’s most recent deal was announced last week with Northwest Bakery Cafe LP, a group of veteran restaurant operators that also own 95 Jack in the Box locations. Northwest Bakery plans to open 18 restaurants in and around Seattle over the next seven years, the company said.

“We already have a good presence on the West Coast,” said Jonathan Benjamin, vice president of franchise sales, citing existing cafes in the Los Angeles area and a development agreement for the Bay Area of Northern California. “This will help complete our presence. We’d like to be in Portland, Ore., and some other areas as well.” He said other target areas include Las Vegas and some East Coast markets.

Zee Rajput, co-operator and owner of Northwest Bakery Café, said the company plans to open two units in the next 24 months that will likely be located in Seattle and Bellevue, Wash.

“Seattle is a very vibrant cultural city, and there’s a coffee culture there,” Benjamin said. “We think we’ll fit into that and be attractive to consumers there.”

Corner Bakery recently opened several franchised cafes in Florida and signed a new area development agreement for the Tampa, Fla., region. Benjamin said the company expects two other development deals on the East Coast, but he could not yet provide details.

“We believe that over 20 years we’ve perfected the model,” he said. The “most successful recipe” for unit size covers around 3,800 to 4,000 square feet with 110 seats, he added.

Corner Bakery has recently expanded its franchise sales team. “We realized we couldn’t cover coast-to-coast with just one or two people,” said Benjamin, who joined the company earlier this year. The company this summer has hired Nick Booras from Boston’s Gourmet Pizza and Gregg Koffler from Wyndham Worldwide as directors of franchise sales.

Franchise interest has increased as the lending environment has become more favorable, Benjamin added. Corner Bakery has a program lender on board, and “beyond that we have a lot of inquiries from lenders,” Benjamin added. He noted that the company is looking for commitments from experienced restaurant operators who will develop five or more cafes.

Atlanta-based Roark Capital Group acquired Corner Bakery Café in June 2012 in its purchase of Il Fornaio America Corp., which also owned Il Fornaio and Canelleto Ristorante Veneto.

Founded in Chicago in 1991, Corner Bakery Cafe began franchising in 2008 and now has 142 restaurants in 15 states.

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Hash House A Go Go Reaps Benefits of Specialty Beverages

Thursday, September 20th, 2012

Hash House A Go Go, a seven-unit casual-dining chain known for its huge portions and over-the-top presentations, had to work extra hard on its beverage menu when founder Andy Beardslee opened the first location in San Diego in 2000: He didn’t have a liquor license.

“So they needed to come up with specialty beverages they could sell without alcohol,” said Jim Rees, the Hash House co-owner and partner who bought from Beardslee the right to open more locations. Rees has since opened four units in Las Vegas, one in Reno, Nev., and most recently, a Chicago location that opened six weeks ago.

Those units have full liquor licenses, but they have maintained the brand’s heritage of specialty nonalcoholic beverages with a focus on detail.

“We do a virtually endless selection of coffee and mochas,” Rees said, simply by adding flavored syrups to a double shot of espresso. Then steamed two-percent milk is added for a latte, and chocolate milk is added for a mocha.

The espresso drinks are layered in a clear Lexington glass and then topped with more syrup. The glass is placed on a plate that’s garnished with more syrup, and sometimes an added accoutrement “which carries the flavor profile from top to bottom,” Rees said.

For example, the Banana Latte is garnished with a quarter banana, still in the skin, that’s caramelized with a blowtorch and placed on the plate. The Butterscotch Latte is served with a butterscotch candy, and the Cinnamon Roll Latte comes with cinnamon sticks.

Other specialty drinks include the S’mores Mocha, served in a large white coffee cup and topped with caramelized marshmallows and graham crackers, and the Caramel All Over, served cold in a 20-ounce glass and topped with whipped cream and caramel. These specialty drinks cost $6.95, and the regular lattes and mochas are $5.95.

The single most popular drink at Hash House A Go Go is the Kiwi Watermelon Lemonade. For that item, kiwi syrup is squeezed into the bottom of a glass and topped with house-made lemonade and fresh-squeezed watermelon juice. The drink is served with a large watermelon wedge and a big straw for $4.95.

The Kiwi Watermelon Lemonade sells particularly well now that it’s being served in the chain’s new 20-ounce glasses that are built on a slant so that they look like they’re leaning. “It’s so much the visual. When you sell one, you sell 20,” Rees said. “It’s been a great program for us.”

Drinks are so popular at the restaurant that Hash House A Go Go is busy when other restaurants are empty. “One of our busiest times of the day is between 9:30 and noon, when most restaurants have nobody in them,” notes Rees, as customers come in for a leisurely late breakfast or a drink.

Rees said his restaurants serve between 1,500 and 2,000 people a day with an average check of around $15.50.

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Five Steps to Local Sourcing for Restaurants

Tuesday, September 11th, 2012

Local sourcing isn’t a one-size-fits-all operation for restaurants. Operators must consider factors such as restaurant or chain size, concept and philosophy, and menu ingredients when tailoring an approach. However, operators who are looking into sourcing products locally can follow a few basic guidelines to get started. These five tips, which include advice from operators who are successfully incorporating localization on their menus, can serve as a starting point.

1. Look at your needs and parameters.

Perhaps no restaurant in the United States uses only local ingredients, so when trying to buy local products, realize your limitations. Figure out what sorts of local products can be used in your restaurant and how much of it you’ll need.

Blue Hill at Stone Barns, a restaurant in New York State whose purpose is to use the bounty of the farm on which it’s located, as well as that of other local farms, has bought dried beans from California, for instance.

Fast-casual salad and frozen yogurt chain Sweetgreen uses between 25 percent and 40 percent local product. “A small percentage of our menu is flexible,” said Nic Jammet, a founding partner of the chain. “But we had some things that were locked in.”

2. Develop relationships.

Meet local farmers. A farmers market is a good place to start, so get involved with the local farmers market organization.

Keep in mind that farmers can charge consumers more for their product than you want to pay, so be willing to commit to buying their food in bulk. Then, pay them promptly to develop trust. “A lot of farmers are apprehensive dealing with restaurants because they’ve been burned in the past,” Jammet said.

Eventually, you’ll want to reach a point where you can commission the farmers to grow the produce that you want. Keep in mind that you also need to commit to buying it.

3. Get your staff to buy in.

Bring cooks, managers and servers to the farms where you’re sourcing your ingredients so that they understand what you’re using and why.

4. Brag about it.

Let customers know what you’re doing in a way that’s not obnoxious, especially since you might have to charge more for your local products. For example, every Sweetgreen location has a “local list” that tells customers what comes from where. It’s displayed on a chalkboard for people who are interested in knowing.

Also consider shooting videos at farms that are good suppliers and posting them on your web site. “It allows customers to get a much stronger connection to the food,” Jammet said.

5. Befriend distributors.

If you have three or fewer restaurants and are a loyal customer, farmers might bring their product to you. If not, you’ll need help from distributors. Work with them to coordinate how they might send empty trucks returning from long-distance hauls to swing by farms to pick up your produce.

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Restaurant Redesigns Focus on Visual Experience

Tuesday, September 11th, 2012

Restaurant brands that are reimaging themselves are paying close attention to the visual experience within their new prototypes.

While many redesigned restaurant models include expanded or more flexible seating options that aim to be more convenient for guests and more efficient for staff, they also feature upgrades meant to give customers visual cues about the food and service. For instance, chains such as On the Border, Panda Express, Domino’s Pizza, Wendy’s and Granite City Food & Brewery are investing in more display cooking and digital signage elements.

Quality on display

Several chains are testing out more display cooking in their new store models, from an open kitchen at a new On The Border to the “Pizza Theater” in place at a handful of remodeled Domino’s units.

Dennis Lombardi, executive vice president of Columbus, Ohio-based WD Partners, said lots of sight lines into the kitchen at full-service restaurants or even a limited-service restaurant like Domino’s can be as important to consumer perception of food quality as the photos on the menu or menu board.

“That move toward more theater is being pushed around the idea of freshness, wholesomeness and made-from-scratch cooking, and the desire to create those perceptions,” Lombardi said. “Consumers can’t discern between what’s made on site or what’s finished on site, so even a finishing kitchen that is open to them would work.”

At a recently opened prototype in Bedford, Texas, 155-unit On the Border Mexican Grill & Cantina incorporated a more open kitchen where guests could catch a glimpse of food being built. The chain also makes fresh guacamole tableside. Chief executive Stephen Clark said On the Border considered changes to everything the consumer sees in the restaurant.

“It’s meant to enhance the overall guest experience and perceptions of the brand,” he said. “We’ll be looking at music and uniforms, plateware, glassware, and the menu look, feel and design, in addition to culinary enhancements to core items and … new items.”

Domino’s only has about 12 of its 4,900 domestic restaurants fully remodeled to include its pizza theater, where guests can look into the kitchen and watch dough being tossed and pies getting topped, but spokesman Chris Brandon said future remodels and new builds would incorporate the more open kitchen whenever possible.

He stressed that the design upgrade was not intended to keep pace with fast-casual competitors but rather to reclaim the chain’s heritage as a pizzeria.

“The cool thing about this is we’re continuing a tradition from our stores and most pizzerias,” he said. “People wondered if we’re jumping on the bandwagon of being more interactive and digital, because a lot of QSRs have gone that way, but we’re not mimicking anybody. It’s more about re-energizing the tradition of the pizzeria, where you see the prep process and watch cooks tossing the dough.”

Guests at the newest Granite City location can’t see inside the giant brewing stills where the chain’s proprietary beers are made, but they’re no less a focal point than other display-cooking elements at other restaurants.

A significant architectural difference for Granite City’s prototype in Troy, Mich., is that the on-site brewery is more central and visible from the bar area, which chief executive Rob Doran hoped would build up bar business even more.

Granite City also rearranged seating in the redone bar area to capitalize on the visual cues from the brewery. “During our research, we learned that 40 percent of people came to our restaurants in parties of two, but there weren’t any two-tops to be found,” Doran said. “We swapped out a lot of four- and six-seaters for banquettes with more flexibility. The customer has really responded with a lot of repeat business.”

Signs of the times

At the newest location of nearly 1,500-unit Panda Express, a prototype in Balch Springs, Texas, nearly all the menu signage is digital above the make line and in the drive-thru lane. The chain also has switched much of its lighting to light-emitting diode, or LED, which not only looks more modern but is more energy-efficient, said Tabassum Zalotrawala, Panda Express’ vice president of architecture, engineering, facilities and strategic sourcing.

The new location opened in late August. Panda Express will open a second prototype later this fall in Memphis, Tenn.

More chains have turned to digital signage to improve their buildings’ perceptions or occasionally distract customers during their wait times for pick-ups because the technology is improving and the costs to implement it are coming down, Lombardi said.

“I think we’re just touching the surface of what we’ll see in digital in the years ahead,” he said. “I think you may even see it more in drive-thrus, between the ordering station and the pick-up window. There’s an opportunity for a lot more innovation around storytelling.”

Like Panda Express, Wendy’s has made digital signage part of the new designs it has tested throughout the past year.

In addition to digital menu boards, Wendy’s also has included free Wi-Fi as part of the in-store experience at its prototypes, which has had an effect on the types of seating offered. Along the tall windows in the back of a prototype restaurant in Columbus, Wendy’s had a “Wi-Fi bar,” meant to encourage people to sit and linger. Similarly, Panda Express noted people taking advantage of communal tables to sit and use the chain’s Wi-Fi.

Wendy’s, which operates or franchises more than 6,500 restaurants, announced in its most recent earnings call that it would accelerate its pace of remodeling from 50 reimaged units and 17 new builds this year to 100 remodels and 20 new builds in 2013. Executives said the 10 new-prototype restaurants that opened last year have shown a sustained average lift of 25 percent to average unit volume.

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Wolfgang Puck to Open Two Restaurants at MGM Grand Detroit

Wednesday, September 5th, 2012

Wolfgang Puck is continuing to grow his restaurant empire with two new venues scheduled to open at the MGM Grand Detroit.

The two restaurants will bring the number of venues operated by Puck’s Las Vegas-based Fine Dining Group to 21. Puck also operates or licenses about 80 limited-service restaurants, including Wolfgang Puck Express outlets in airports.

In the Detroit resort-casino, Puck had operated Wolfgang Puck Grille for about five years before that concept closed in May.

Puck’s two new restaurants will move in to other spots at the resort, which currently house two restaurants by multiconcept operator Michael Mina: Saltwater and Bourbon Steak.

Resort officials said they did not have a date for the closure of the two Mina venues, but after five years and completion of their contract, the MGM Grand Detroit and The Mina Group have “mutually decided to pursue new opportunities,” said Steve Zanella, the resort’s general manager.

“We have greatly enjoyed our relationship with the Mina Group and thank them for their contribution to our success,” Zanella said in a statement.

Saltwater will be replaced with Wolfgang Puck Pizzeria & Cucina. It will be a second location of the pizzeria concept, which is also in Las Vegas at City Center, another MGM property.

Bourbon Steak will be replaced with Wolfgang Puck Steak, a new concept for Puck that will be a contemporary steakhouse offering traditional favorites, including steaks and other meats, shellfish and roasted whole fish, along with a selection of sauces and sides, an international wine list, and custom-crafted cocktails.

The pizzeria will feature a more approachable menu, with nearly a dozen of Puck’s signature oven-baked pizzas, house-made pastas and other Italian specialties. Both restaurants will be helmed by chef Marc Djozlija, a Detroit native and former chef of Wolfgang Puck Grille, who has been with the Puck fine-dining group for more than a decade.

The announcement comes just a few months after Puck opened a new casual-dining pizza concept in June in Charlotte, N.C., one of four planned as a test. Puck has also temporarily closed his iconic restaurant Spago in Beverly Hills, Calif., which is undergoing a redesign. The new-and-improved Spago is scheduled to reopen later this month.

Puck’s growing company also includes a large catering arm, and a line of licensed retail products, cookware and cookbooks.

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Johnny Rockets Joins ‘Better Burger’ Players with Quick-Service Concept

Wednesday, September 5th, 2012

A Johnny Rockets franchisee is testing a new quick-service variant of the burger brand in Phoenix that could become a future growth vehicle.

Franchise operator Richard “Rip” Riva of J. Rockets Enterprises, based in Scottsdale, Ariz., last week opened a new concept called JR’s Burger Grill, in collaboration with franchisor The Johnny Rockets Group, based in Aliso Viejo, Calif.

JR’s Burger Grill offers a simple menu of burgers and sandwiches, similar to that of Johnny Rockets, but with dishes smaller in size and at a lower price point. “It’s QSR pricing and convenience with a fast-casual setting,” said Cozette Phifer Koerber, Johnny Rockets’ vice president of brand marketing and corporate communications.

A classic single-patty burger, for example, is $2.99 at JR’s Burger, compared with $5 to $8 at Johnny Rockets, said Vinnie Calcagni, vice president of operations for JR’s Burger Grill. Shakes are $2.95, about $3 less than at the full-service chain and about 4 ounces smaller.

The ingredients are the same quality as the full-service brand, Calcagni noted, but the buns and burger patties are slightly smaller. JR’s menu also includes other classic sandwiches like a BLT, grilled cheese and chicken breast, as well as fries, onion rings and kids meal options.

The new restaurant’s décor is also contemporary and simple, a step away from Johnny Rockets’ classic 1950s-style diner design.

“It’s definitely a laboratory for us,” Koerber said of the test with J. Rockets Enterprises. “We couldn’t have found anyone better to try this.” The franchise group operates five other Johnny Rockets locations in Arizona, as well as eight Arby’s restaurants in Washington state and Idaho.

Calcagni said one goal of testing the quick-service variant of Johnny Rockets is to better compete with the growing number of fast-casual “better burger” players, like Smashburger and Five Guys Burgers and Fries. “Smashburger and other fast-casual, on-the-go type restaurants seem to be doing really well,” he noted. “So we thought that would be something we’d like to tap into.”

The 2,500-square-foot former Johnny Rockets location that now houses JR’s Burger Grill is also next to a shopping mall property that has shifted from big chain stores to more discount retail concepts, and the customer demographics have changed, Koerber said. Rather than looking for a sit-down Johnny Rockets experience, guests appeared to want something quicker and less expensive, without the need for adding on a tip.

Calcagni added that the new concept would be careful not to draw business away from the group’s other Johnny Rockets locations nearby, which have been trending positive in sales this year. Staff members at JR’s Burger, for example, won’t dance or break into song with the jukebox, as they might do at Johnny Rockets.

“The last thing I want to do is turn them away from Johnny Rockets, because that’s what we are,” he said.

If the test is successful, however, the new JR’s Burger could be a concept that might fit in locations that wouldn’t work for Johnny Rockets, he said. “It’s not discounting the brand or the product. It’s responding to a realistic demand out there,” said Calcagni. “In this crazy financial world, you have to try to do something a little different.”

Meanwhile, Johnny Rockets is opening even larger restaurants. Earlier this month, the second largest Johnny Rockets in the U.S. opened in Rancho Mirage, Calif., with 5,200-square feet and seating for nearly 200. The largest location opened in the amusement park Knott’s Berry Farm in 2006.

Operated by franchisee Nick Thomas, the Rancho Mirage location offers breakfast — from waffles to smoothies — as well as an expanded menu with more healthful options, such as spinach salad, and more indulgent offerings like cakes and desserts.

Johnny Rockets operates or franchises about 222 locations domestically. The chain is also aggressively growing overseas with the goal of more than doubling the 68 restaurants currently operating in 16 countries internationally.

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