Archive for February, 2014

Grill Concepts to Grow Public School Gastropub

Wednesday, February 26th, 2014

Grill Concepts Inc. is moving forward with a growth plan that includes adding four to six units of its new Public School gastropub concept before the end of next year.

Grill Concepts, parent to the 20-unit Daily Grill chain and seven-unit Grill on the Alley concept, was publicly traded until late November 2013 and taken private late last year by longtime investor Charles Mathewson, who was the majority shareholder for the preceding four years. Mathewson is the retired investor and chair emeritus of gaming machine manufacturer International Game Technology Inc. and was a founder of financial firm Jefferies & Co.

Bob Spivak, Grill Concept’s president and chief executive, said Mathewson is now the sole owner of the Los Angeles-based company and is supporting growth for its four concepts.

Leading that growth is Public School, which Grill Concepts began testing in 2012 after converting the bar of a Daily Grill location in downtown Los Angeles.

Since then, the company has opened two more freestanding Public School units, each named for the area code of the location. The Public School in Culver City, Calif., for example, is P.S. 310, the area code for West Los Angeles, while Westlake Village, Calif., is P.S. 805.

A fourth Public School is planned for Sherman Oaks, Calif., before the end of 2014, Spivak said. Next year the concept is expected to open in Northern California, Texas — with locations in both Dallas and Houston — and Washington, D.C.

With a focus on craft beer and a chef-driven menu, Public School is designed to appeal to a younger demographic than Daily Grill or Grill on the Alley, said Spivak.

At Public School, there is no nationally advertised beer on the menu, but there is a wide selection of local microbrews and craft beers.

Spivak sees a world of opportunity in beer similar to that of wine three decades ago, when most Americans thought all red wine was Burgundy and all white wine was Chablis, he said. Now the average diner is much more wine savvy and understands a lot more about different varietals.

“Beer is in that spotlight now,” said Spivak.

While a relative few consumers fully understand the craft beer world and the differences among microbrews now, that will soon change.

Public School is designed to capture that interest by offering an “education in the art of food and beer,” said Spivak.

Guests can sample beers until they find something they like — and will likely return since the beer may not be widely available.

Casual dining has seen a “paradigm shift” in the past five years, said Spivak. A new genre of casual dining concepts is emerging, and Public School fits right in.

“The casual-dining market today is looking for non-chain chains,” said Spivak. “‘Chain’ is kind of a dirty word today. Now people are looking for high-energy restaurants with really quality hand-made food.”

The two Public School units open longer than a year have seen 10-percent same-store sales increases and average between $1,000 to $1,500 per square foot in sales, he said, with about 40 percent of sales coming from the bar. The restaurants are typically about 3,500 square feet.

Meanwhile, Grill Concepts is also growing its Daily Grill concept again. The company recently opened its 20th location in a casino in Northern California with a more modern prototype.

“I call it the 21st Century Daily Grill,” Spivak said.

Same-store sales for the Daily Grill chain have been in the 4 percent to 5 percent range, he said.

Grill on the Alley may also expand. Spivak said the company hopes to put one of the restaurants on Pennsylvania Avenue in Washington, D.C., soon.

The original Grill on the Alley, which opened in Beverly Hills, Calif., 30 years ago, remains a preferred “commissary to the entertainment industry,” said Spivak, where Hollywood agents and their clients gather to power-lunch on a regular basis.

Grill Concepts also has a coffeehouse concept, which it created for a hotel location of Daily Grill in Seattle. Dubbed “In Short Order,” the coffee concept is also available as secondary option where there is a need near one of the other restaurants.

Spivak is a founder of Grill Concepts who attempted retirement in 2006, only to be brought back to the CEO seat by Mathewson in 2010.

“I failed retirement,” Spivak said. “I’m not going anywhere.”

Charcuterie, Egg Most Buzzed-About Menu Items

Thursday, February 20th, 2014

If you want customers to buzz about your restaurant’s appetizers, give them charcuterie or ceviche. Want guests to be excited about fish? Try tuna. And no matter what sort of savory dish you offer, it’s likely to be talked about more if you add bacon to it or put an egg on top.

That’s what the latest data on online restaurant reviews indicates, according to newBrandAnalytics.

The Washington, D.C.-based social media intelligence firm monitors online reviews and mentions of buzzworthy restaurants — mostly fine-dining establishments run by popular or celebrity chefs — on sites such as OpenTable, TripAdvisor, Yelp, Twitter and Facebook.

The firm uses what chief executive Kristin Muhlner calls “deep text analytics” to determine whether the commentary indicates that the customer would return to the restaurant or recommend it to others. NewBrandAnalytics further examines those comments to see what dishes or ingredients were mentioned positively.

“The food and beverage industry is not unlike the fashion industry in that trends come in and out of fashion, and they often start at the top,” said Muhlner.

However, to make sure the data aren’t skewed by the selected trendy restaurants — or by a small number of chefs getting excited about a particular ingredient unlikely to gain followers elsewhere — they check it against the menus of about 100,000 restaurants worldwide.

Eggs replaced truffles as the number one most mentioned ingredient on menus in 2013.
“It’s not a menu analysis but a loyalty analysis of dishes and ingredients,” Muhlner said.

In the appetizer category, four of the five most frequently mentioned items are new to the list, including charcuterie, burrata (a mozzarella ball stuffed with cream and shredded mozzarella), deviled eggs, and zucchini cakes or breads. Ceviche fell from second to third place.

Just as charcuterie came from apparently nowhere to top the list of starters, eggs and egg yolk skyrocketed to first place in 2013, among ingredients mentioned anywhere on menus, displacing truffles. Bacon held steady in second place, and pickles remained at fourth place. Yogurt rounded out the top five.

Other ingredients that popped in popularity but didn’t break into the top five were Sriracha sauce and kimchi.

In the vegetable category, brassicas came on strong, with Brussels sprouts supplanting asparagus as the most buzzed-about green. Asparagus fell to number two, while cauliflower and kale hit fourth and fifth places. Beets held third place.

“Brussels sprouts peaked in 2013,” Muhlner said. “Kale was new in 2013 and really peaked quickly.”

In the bread category, biscuits were the most buzzed-about item, followed by “toasts,” — mostly starters of toast points topped with savory elements such as chicken liver, mushrooms or bone marrow. Flatbread, which topped the list in 2012, fell to fifth place, behind rolls and sourdough.

When it came to seafood, lobster stayed at the top of the list, but crab entered the top five in second place. Oysters jumped from fifth place to third, passing shrimp, which fell from fourth to second place. Mussels rounded out the top five, while octopus and scallops fell out of the top five.

How Winter Weather is Impacting Restaurants

Friday, February 7th, 2014

Restaurant companies are suffering from a bad case of winter blues this year, and it’s not just record-cold temperatures, snow and ice keeping guests at home.

Wall Street analysts predict that rising heating bills will take a cut of already limited consumer discretionary spending, serving as a “crowding out” factor that will likely last through late spring.

Charles Grom, analyst with Sterne Agee, estimated in a report released Wednesday that natural gas bills — the primary source of heat for about half of U.S. households — will rise about 73 percent this winter, translating to about a 6-percent drag on consumer spending, with particular ramifications in the Midwest and Northeast.

The average heating bill in 2012 was about $768 for natural gas, but Grom projects this year’s spending will be closer to $1,326, and will impact spending into the spring, given the delay as consumers receive their heating bills.

“We’re incrementally concerned that retail sales could stay under duress, particularly given the ‘sticker shock’ impact from these higher bills,” he wrote.

It has been a bad winter, the second coldest since 1970, writes Grom, with the most snow in three years. Wisconsin, Minnesota and Iowa have experienced double-digit declines compared with last year, and Midwestern and Northeastern states have all suffered colder winter months compared to the previous year. Ironically, the warmest state was Alaska, Grom noted.

Grom pointed to Sonic as one brand that might be hit particularly hard by the weather, in part because of its drive-thru model, but also because almost 79 percent of the chain’s store base is in states hit by the cold.

Other analysts pointed to companies like Potbelly Corp., Bravo Brio Restaurant Group Inc., Panera Bread Co., Chipotle Mexican Grill Inc., Noodles & Company, and Del Frisco’s Restaurant Group Inc. as being vulnerable, based on locations in weather-impacted states.

The weather was largely to blame for negative Knapp-Track results in January, according to other analyst reports. The same-store sales index for casual dining fell 2.6 percent in January, a sequential improvement over the 6.1-percent decline the index showed in December. Casual-dining traffic fell 4.4 percent for the month, which was the same decline Knapp-Track reported in December.

Stephen Anderson, senior analyst for Miller Tabak + Co. LLC, predicted comparisons will be easier for restaurant companies in February and March. Fundamentally, Anderson sees an improving macroeconomic backdrop that will benefit restaurant companies despite the temporary weather volatility.

“We argue continued improvement on payrolls and thus on discretionary income remain more powerful longer-term indicators on the health of the restaurant sector,” he wrote.

Barring unforeseen shocks, like a spike in fuel prices, he said, “we expect a sustained rebound in the same-restaurant sales in the next couple of quarters to the positive 1 percent to 2 percent range.”

Nicole Miller Regan, a senior research analyst with Piper Jaffray, wrote in a report released Wednesday that December monthly sales at places serving food and drinks rose 4.1 percent in December to $47,571, according to the U.S. Census Bureau. Meanwhile, monthly sales at grocery stores increased 3.8 percent on a year-over-year basis, to $49,360.

“Historically, the dollar gap between grocery stores and foodservice sales had been flattening, with grocery store sales higher than foodservice sales,” she wrote. “Food away from home contributed 49.1 percent of total sales, an increase of 10 basis points compared to last year.”

In a separate report released Wednesday, Miller Regan also cited data from restaurant consulting group and research firm AlixPartners, which said in a recent “State of the Restaurant Industry” webinar that consumers expect to spend about 9 percent less per restaurant meal this year.

After asking consumers what they expect to spend on restaurant meals in the next 12 months, AlixPartners projected the average would dip to $13.55 this year compared with $14.91 last year.

When asked how often they expect to dine out within certain restaurant segments, consumers indicated they expect to eat more often at convenience stores, fast-casual restaurants and fine-dining establishments, compared with the prior 12 months.

Dining at grocery stores is expected to decline, and consumers also say they will eat slightly less often at quick-service and casual-dining restaurants.

Consumers also appear to be less pessimistic about the economy, with 47 percent saying they feel “bad” or “not good” in the first quarter of this year, falling from the 56 percent who said the same two years ago.

More consumers described themselves as neutral about the economy this year — 31 percent versus 25 percent two years ago — indicating a “wait-and-see” position, Miller Regan noted.

As a result, consumers are still searching for value when dining out, she wrote. That trend will only further the “blurring of the lines” between industry segments, Miller Regan argued.

“These trends could help spur the next round of culinary innovation similar to what we saw with the advent of small plates and shareable dishes, which, despite carrying a lower price point versus a typical entrée, proved to be at least margin neutral (and often accretive), as well as an incremental traffic driver,” she wrote.

Despite the weather and continued malaise about the economy, Miller Regan remains positive on the restaurant industry, especially brands that utilize what she calls a “perfect recipe for restaurant success” by having brand equity, deploying asset-light growth and capitalizing on licensing opportunities.