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Focus Brands to Buy Jamba Juice for $200M

August 6th, 2018

On Thursday, Focus Brands Inc. and Jamba, Inc. announced that the companies have entered into a definitive merger agreement, where Focus Brands will acquire Jamba for $13.00 per share in cash, in a transaction valued at approximately $200 million.

The deal is expected to close in the third quarter of 2018.

“Benefiting from an extremely loyal customer base and strong franchise operators, Jamba Juice is one of the category leaders in the fast-growing smoothie and juice category,” said Steve DeSutter, CEO of Focus Brands in a news release. “We are excited to welcome Jamba Juice with such an iconic heritage into our family of well-known and highly loved ’fan favorite’ brands.”

Atlanta-based Focus Brands is the parent company to Carvel, Moe’s Southwest Grill, McAlister’s Deli, Auntie Anne’s, Cinnabon and Schlotzsky’s. Through these brands, Focus Brands is franchisor and operator of more than 5,000 restaurants, cafes, ice cream shop and bakeries in the U.S., the District of Columbia, Puerto Rico and over 50 foreign countries. Jamba Juice has more than 800 locations worldwide.

“We are delighted to have reached this agreement with Focus Brands and are confident that it will result in a positive outcome for our guests, our franchisees and our employees,” said Dave Pace, CEO of Jamba, Inc in the news release. “Over the last few years, we have worked hard to strengthen our foundation and reposition this iconic brand for the future. Partnering with Focus Brands will allow us to build on this work and further accelerate the Company’s growth.”

North Point Advisors LLC is serving as financial advisor, and DLA Piper LLP is serving as legal counsel to Jamba. Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal counsel to Focus Brands.

Costco Ditching Polish Dogs for Acai Bowls

July 10th, 2018

Is Costco’s food court menu jumping on the good-for-you bandwagon?

The notoriously media-shy company has been quietly phasing out a signature favorite on its famed food court menu: the Polish dog. The Issaquah, Wash.-based retailer has been experimenting with healthier menu options, including an acai fruit bowl and a salad topped with a soy protein mimicking the flavor of barbecue pork.

When asked about the ditching of the Polish dog, Costco gave few details to Nation’s Restaurants News. “Costco Management is only confirming that Costco did eliminate the Polish dog,” a company representative said in an email.

Costco, whose food court hot dogs and pizza are just as famous as its treasure-hunt warehouse specials, revealed more about the menu changes in a Facebook post after several customers complained about the missing 1/4-pound spicy frankfurter. One customer said he drives 200 miles to shop at Costco, a trip that includes eating a Polish hot dog.

“We’re sorry to hear that you’re missing the Polish dog,” the company told one guest.

“We try and keep our Food Court exciting by adding new items. Of course, we can’t keep everything on the menu so we do have to make some adjustments. We appreciate you posting. We’ll definitely record your interest in the return of the Polish dog to our Food Court.”

On Monday, a Costco in Southern California was still selling a Polish dog with a 20-ounce soda for $1.50. A food court employee said the Polish dog would be around for about another week before being taken off the menu. She confirmed that an acai bowl topped with blueberries and dried, crunchy baobab fruits is new on the menu.

The Costco menu board promotes the $4.99 bowl as “antioxidant rich.”

Another new item causing buzz in recent months is an entree dubbed the “Al Pastor Salad.”

The salad triggered a debate on one social media site as some argued that the title was deceptive. For Southern California fans, anything labeled “Al Pastor” typically refers to tacos made with richly marinated pork or chicken. But this dish is topped with chunky soy pieces. If you don’t read the fine print, consumers said, it looks like real meat.

Costco describes the protein as a “plant based protein (soy)” in the menu description. The main menu board and kiosk menus do not refer to the $4.99 salad as a vegetarian variation.

Cheesecake Factory to Debut Fast-Casual Social Monk Asian Kitchen

June 25th, 2018

Cheesecake Factory Inc. said Friday it will open the first location of Social Monk Asian Kitchen, a pan-Asian fast-casual concept, this fall, offering new details on a spinoff the company had discussed — but remained tight-lipped on — for over a year.

The restaurant, which will open in Thousand Oaks, Calif., is the Calabasas Hills, Calif.-based company’s second foray into Asian cuisine. Its first, RockSugar Southeast Asian Kitchen, currently has two locations.

Social Monk’s name, according to a spokeswoman for the brand, “is a playful but intentional juxtaposition of the concept’s social appeal and its warm, understated charm.”

Mohan Ismail, RockSugar’s Singapore-raised chef, created the Social Monk menu and will lead its culinary operations. But the new concept will “stand apart from any comparisons to its parent company,” the company said.

The menu “span across several Asian countries” with dishes like salads, sandwiches, rice and noodle bowls, and frozen custard.

The concept will embrace the “fast fine” model of service — guests will order at the counter and be served at their table.

“Social Monk is designed to appeal to busy, active guests seeking a unique and authentic restaurant experience in a fast-casual setting,” a company spokesman said in an e-mail.

The concept will open at the Promenade at Westlake in Thousand Oaks, Calif. this fall.

McDonald’s to Phase Out Plastic Straws in UK and Ireland

June 18th, 2018

McDonald’s will start phasing out plastic straws in about 1,300 restaurants in the United Kingdom and Ireland, the company said Friday, replacing them with paper straws in restaurants starting in September.

The transition to alternative straws in those countries should be complete in 2019. Belgian restaurants are also testing straw alternatives, with more trials planned for select restaurants in the U.S., France, Sweden, Malaysia, Norway and Australia later this year, McDonald’s said.

Francesca DeBiase, executive vice president of global supply chain and sustainability, said McDonald’s is testing straw alternatives in other countries “to provide the best experience for our customers.”

“We hope this work will support industry-wide change and bring sustainable solutions to scale,” she said in a statement.

The company said it would also experiment with offering straws on request only in some global markets.

“We are eager to learn from these tests around the world to develop solutions that are scalable across the globe,” the company said.

The announcement follows several planet-friendly goals made by McDonald’s in recent months. One goal is to source 100-percent of guest packaging from renewable, recycled or certified sources by 2025, the company said.

In March, the Chicago-based chain set an ambitious goal to cut greenhouse gas emissions 36 percent by 2030.

The burger giant, which recently relocated its headquarters to a nine-story LEED certified building in Chicago, said it will reach its emissions reduction target by adding innovative and energy-efficient technologies at its restaurants, including energy-efficient kitchen equipment, sustainable packaging and recycling.

Seattle Approves Tax on Sweetened Beverages

June 12th, 2017

Seattle has joined a growing number of jurisdictions to approve a tax on the distribution of sugary drinks, including soda.

In a 7-to-1 vote, the Seattle city council approved the new tax on Monday, which proponents say will reduce consumption of sugary drinks, particularly in lower-income neighborhoods with high rates of childhood obesity and diabetes.

After much debate, the council approved a tax rate of $0.0175 per fluid ounce, which means a 12-ounce soda will cost an additional 21 cents.

Business groups opposed the tax, saying it would hurt small businesses, workers and the local economy. The Seattle Restaurant Alliance said the tax on soda syrups alone will cost more than the product itself.

The alliance sought amendments to ease the impact on small business without opposing the bill outright. But the restaurant group expressed disappointment in the result.

“We are disappointed that the proposal is moving forward without providing protections for the small businesses it will hurt,” said Steven Hooper Jr., co-founder and CEO of Kigo Asian Kitchen, and an alliance board member.

The move will also hit lower-income communities the hardest, said Taylor Hoang, owner of Pho Cyclo Café and an alliance member.

“Small businesses face a lot of challenges, and our city council should be supporting them, not making it harder for them to serve our community,” Hoang said.

Seattle joins a number of cities and counties that have taxed sugary drinks, including Berkeley, Calif., Philadelphia and Cook County, Ill., which includes Chicago. Similar taxes are coming to San Francisco and Boulder, Colo., although voters said no to a soda tax in Santa Fe, in May.

In Seattle, the tax includes all sweetened beverages, including soda, sports drinks, energy drinks, and sweetened iced teas and coffees, as well as juices, flavored waters and non-alcoholic mixers with added sweeteners.

The tax does not include drinks with milk as the primary ingredient, beverages for medical use, diet drinks for meal replacement, infant formula, alcohol, drinks that are 100-percent fruit or vegetable juice, or beverages with fewer than 40 calories per 12-ounce serving.

The tax is reportedly expected to raise about $15 million to help support a city food stamps program that encourages people to buy more fruits and vegetables, as well as job training programs, college scholarships and initiatives that give access to preschool.

Bojangles’ Expands ‘Restaurant of the Future’ Prototype

May 2nd, 2017

Bojangles’ Inc. continues to expand its “restaurant of the future” prototype, with an opening scheduled soon in Greenville, S.C., the company said Tuesday in a first-quarter earnings release.

The Charlotte, N.C.-based chicken and biscuits chain, which will debut the new prototype in its hometown of Greenville’s Historic West End district next January, said aspects of the new design will be used in remodeling as well.

“The feedback we will gather from these locations will enable us to fine-tune the prototype so that we offer only the highest quality experience to our customers,” said Clifton Rutledge, Bojangles’ president and CEO, in a statement.

“We also have several remodels underway that include elements of the new design concept,” Rutledge said. “Our excitement for these projects is shared by our franchisees, and together we will take Bojangles’ to the next phase of its growth.”

For the first quarter ended March 26, Bojangles’ reported a net income decline of 2.9 percent, to $7.6 million, or 20 cents per share, from $7.8 million, or 21 cents per share, the previous year. Revenue rose 3 percent, to $131.5 million, from $127.6 million the previous year.

Systemwide same-store sales decreased 1.7 percent, with a decline of 3.5 percent at company-owned restaurants and a drop of 0.5 percent at franchised units. The company said same-store sales at company-owned stores included declines in transactions and mix, partially offset by menu price increases.

Rutledge said “challenges persist in our industry,” but Bojangles’ would stay the course.

“We remain confident in our positioning and ability to stay in front of significant trends through innovative product offerings and investments in our people and technology to ensure operational excellence,” he said.

As of March 26, Bojangles’ had 728 restaurants, primarily in the Southeast. Of those, 314 units were company-owned and 414 locations were franchised.

KFC to Remove Antibiotics from Chicken

April 10th, 2017

KFC will serve chicken raised without human antibiotics in the U.S. by the end of 2018, the company said Friday, adding its considerable weight to the push to change the way poultry is treated.

The Louisville, Ky.-based chain, the country’s second-largest fried chicken concept, behind Atlanta-based Chick-fil-A, said its commitment extends to both bone-in and boneless chicken.

“We’re constantly working to meet the changing preferences of our customers, while ensuring we deliver on the value they expect from KFC,” Kevin Hochman, president and chief concept officer of KFC U.S., said in a statement. “Offering chicken raised without medically important antibiotics is the next step in that journey.”

The Natural Resources Defense Council, a New York-based environmental group, has been pushing KFC for nearly a year to change its practices regarding antibiotics. The group endorses KFC’s move.

“KFC’s new policy
will be a game changer for the fast-food industry and public health,” Lena Brook, food policy advocate for the NRDC, said in a statement. “The market is responding to consumer demand for better meat. This commitment from the nation’s most iconic fast-food chicken chain will have a major impact on the way birds are raised in the U.S. and in the fight against the growing epidemic of drug-resistant infections.”

Hochman said the change required “a lot of planning,” including collaborating with more than 2,000 farms in more than a dozen states where its chickens are raised.

Farmers had used antibiotics in chickens to stimulate growth, but growing concern over the impact of this practice, and notably its potential to encourage antibiotic resistance in humans, has led to a push to change the practice.

The NRDC, which has helped lead the push, estimated that 40 percent of the chicken industry is now either under an antibiotics commitment or is already using responsible practices. Eleven of the 15 largest restaurant chains in the U.S. have committed to ending the use of antibiotics on some level.

There is some evidence that such actions can improve sales: McDonald’s Corp. said sales of its Chicken McNuggets increased last year, after the company said it removed antibiotics from the menu item.

It’s believed that KFC’s move could be significant in moving the industry overall closer toward not using antibiotics.

Matthew Wellington, program director for the U.S. Public Interest Research Group, or PIRG, a consumer group, said KFC’s move alone could push the percentage of the chicken industry under an antibiotics commitment or already using responsible practices to more than 50 percent. That would signal a major shift in chicken production, he said.

For one thing, KFC is a big buyer — it’s the largest chicken-on-the-bone quick-service chain in the country. By extending its commitment to bone-in chicken, many suppliers it uses will have to extend those policies to their entire flocks. Therefore, KFC’s move will affect more than just the chicken it buys, Wellington said.

“It’s making much more of a ripple effect,” Wellington told Nation’s Restaurant News.

In addition to eliminating the use of medically important antibiotics from chicken, KFC also pledged to remove artificial colors and flavors from its chicken. The company said 100-percent of its menu, excluding beverages and third-party products, would be free of food dyes by the end of the year.

“To extend our [antibiotics] commitment beyond our boneless menu items to include all of our chicken required detailed and thoughtful planning over the past year, including utilizing the USDA’s Process Verified program to ensure our suppliers can meet our requirements,” Vijay Sukumar, chief food innovation officer for KFC U.S., said in a statement. “We’re proud to make a commitment this expansive and believe this change will aid in shifting the rest of the industry.”

Wendy’s Plans to Add 1,000 Units by 2020

February 27th, 2017

To get bigger, The Wendy’s Co. is getting smaller.

The Dublin, Ohio-based burger chain wants to add another 1,000 locations by 2020, executives told investors on Thursday. One strategy the company plans to use to encourage that growth is a new, more flexible design that will enable Wendy’s to go into smaller spaces.

Traditionally, the quick-service chain needed at least an acre of real estate to build its traditional, standalone units. But its new “smart design” can go into much smaller spaces, said Abigail Pringle, Wendy’s chief development officer.

“The new designs enable the company to build on half an acre or even a quarter of an acre if needed,” Pringle said.

Wendy’s currently has just more than 6,500 locations worldwide. It wants to grow to 7,500 units by 2020. The locations would be both in North America, where the brand has commitments from operators to build at least 500 locations, and internationally
— where Wendy’s wants to grow from 439 locations now to 850 units.

Traditional sites are more difficult to open because real estate is more challenged today than it was a decade ago. One-acre sites in high-traffic areas don’t exactly grow on trees. And when they come along, they can be expensive.

The new design, executives said, is $300,000 cheaper than a traditional site.

That’s not the only strategy the company is using to expand add locations. Wendy’s is also adapting to urban areas.

“We are looking far beyond suburban markets,” Pringle said.

And the company is also looking at co-developing with convenience stores and other real estate opportunities, such as inline sites and strip-center end caps. And the company wants to convert vacated buildings — and not just restaurants.

One conversion opportunity, Pringle said, is banks.

“The real estate marketing is changing,” she said. “Banks are going less with bricks and mortar. And they already have a drive-thru.”

Wendy’s discussed its long-term strategy with investors on the same day it preannounced earnings for the fourth quarter ended Jan. 1. The company said same-store sales increased 0.8 percent in the quarter and 1.6 percent for the full year in North America.

Revenue in the quarter fell 33 percent, to $309.9 million, in the quarter, from $464.4 million, due to lost sales from the sale of restaurants to franchisees. Net income also fell, to $28.9 million, or 11 cents per share, from $85.9 million, or 31 cents per share.

Executives at the presentation said they want to increase profitability in addition to adding new locations. Some profitability will come from reductions in general and administrative spending. Wendy’s said it wants to cut another $35 million from G&A spending by 2020.

“We’re committed to accelerating savings,” Penegor said, although he noted that the company is currently developing plans to cut those costs.

Wendy’s said Thursday that it added 58 new restaurants worldwide in 2016.

“That was the highest global total since 2005,” Penegor said.

To get operators to build new locations, Wendy’s isn’t just using a smaller design. It’s also offering incentives.

In past years, Wendy’s would give operators building new units a 2-percent royalty abatement for the new unit for three years. Now the company will reduce costs by 5.5 percent in the first year the location is open, including a 2-percent royalty discount and a 3.5-percent ad fund discount

The abatement is reduced to 4 percent in the second year, including 1 percent on royalty payments and 3 percent on ad fund payments.

“This is about driving net new incremental growth,” Pringle said, noting that the company is leveraging its ad fund payments to drive growth. “After year two, there’s more money into the ad budget that was not there before.”

Wendy’s has also used its refranchising deals, and even franchisee-to-franchisee sales, to convince operators to add locations.

The chain has sold more than 1,000 locations to franchisees since 2013, following the sale of 537 locations in the third phase of that effort. Wendy’s has reduced its company-owned unit count from 1,427 locations in 2012, or 22 percent of the system, to 330 units now, or 5 percent.

The company has sold many of these locations to operators willing to build new locations.

“We wanted to focus on growth,” Wendy’s CEO Todd Penegor said. “We’re bringing in strong operators with strong balance sheets and with commitments to grow the system.”

Wendy’s also has a “buy-and-flip” strategy, in which it directs the transfer of franchisee-owned locations to preapproved operators willing to remodel locations and build new units.

“We are the ones playing matchmaker,” Pringle said. “We’re evaluating existing franchisees interested in leading the system. We want to work with them to find the right buyers.”

As part of these strategies, Wendy’s now has fewer, larger franchisees. In 2012, the company had 440 franchise companies. Today it has 375. The average size of a franchisee has increased from 11 locations to 15 units.

“Some larger franchise operators have used the opportunity to consolidate the market,” Penegor said. “They wanted to control pricing, advertising, they wanted to control development and they didn’t want to encroach on someone else. We have a healthier franchise community.”

Pizza Hut Pledges to Fill 11,000 Jobs

January 23rd, 2017

Pizza Hut pledged Thursday to fill 11,000 job openings, including many as it gears up for its busiest sales day, on Feb. 5, Super Bowl Sunday.

The Plano, Texas-based division of Yum! Brands Inc. said the positions will be at corporate and franchised locations for everything from pizza makers and delivery drivers to store managers.

Kelly McCulloch, Pizza Hut senior director of human resources, told Nation’s Restaurant News Wednesday that “as we head into one of the busiest weekends of the year, we wanted to make sure we had enough team members there to help us deliver a great experience for our customers.”

She said the 11,000 jobs were a combination of existing openings and planned positions, but prospective employees could apply for them all.

Pizza Hut has 120,000 employees across its 6,300 domestic locations, McCulloch said.

“The biggest component for preparing for something like this is to make sure our franchise partners out there are up to speed and prepared for what we hope will be an influx for the application process online, and even walking through the door,” McCulloch said.

More than 5,900 of Pizza Hut’s U.S. restaurants, or 94 percent, are operated by franchisees, she noted. The company has a centralized application website that candidates can use.

“They can apply at the central location and then that information is routed to the location that is nearest location to them,” McCulloch said. “Our metro areas tend to have the biggest hiring needs. Typically, that’s where most of our restaurants are located.”

Pizza Hut has participated in the 100,000 Opportunities Initiative, a coalition of employers spearheaded by Starbucks Corp. in 2015, but McCulloch said this is the first time that Pizza Hut has announced an initiative on its own.

“This initiative is unique to us,” McCulloch said. “As a brand, we have a high number we are going after.”

McCulloch said some of the hiring is aimed at growth for the brand ahead as well.

“There’s no real deadline for this,” she said.

Among incentives, McCulloch noted, is Pizza Hut’s “Life Unboxed EDU” program, which was launched in 2015. That program offers employees at company-owned restaurants and participating franchisees — and their families — 50 percent off tuition to attend career-boosting educational courses at the online Excelsior College.

“All of our team members as well as their families can participate in that program,” she said. “Offering it to the family members sets us apart.”

Pizza Hut has more than 15,600 restaurants in 97 countries.

Yum China Opens First Taco Bell in Shanghai

January 18th, 2017

Yum China Holdings Inc. and Taco Bell Corp. on Monday officially opened the first China unit of the Mexican-inspired brand in Shanghai.

The restaurant debuted near Shanghai’s landmark Oriental Pearl Tower in the Lujiazui area, the city’s central business district.

“Leveraging our deep insights into Chinese consumer preferences, developed from close to 30 years operating in this market, we thoroughly researched and fine-tuned the Taco Bell menu for China,” said Micky Pant, Yum China CEO, said in a statement. “And the initial response from customers is very encouraging.”

The menu features the brand’s favorites that have been adapted to local tastes, including a shrimp and avocado burrito, a Crunch Taco Supreme with nacho sheese sauce and a Volcano Chicken Burrito with Sriracha sauce.

“Taco Bell is an innovative brand with a strong heritage that we believe will resonate well with Chinese millennials,” Pant said.

Taco Bell has more than 7,000 restaurants, with more than 300 units in 26 countries outside the United States.

Yum China Holdings, with executive offices in Shanghai, licenses other Yum! Brands concepts in mainland China, including KFC and Pizza Hut. It owns more than 7,300 restaurants, including the Little Sheep and East Dawning concepts.