Yum Might Sell Stake in China Business
Yum Brands Inc. might sell a 20-percent stake in its China operations as part of an upcoming spin-off, the Wall Street Journal reported. According to the report, Yum is in talks with private-equity groups in the hope of selling a 19.9-percent stake in the business to avoid a tax bill in the upcoming spinoff and potentially add China know-how to the operation. The Wall Street Journal said the business could be worth close to $10 billion. “We continue to make good progress since we announced the transaction separating Yum and Yum China into two powerful, independent, focused growth companies. We will provide updates on the transaction at appropriate times and we won’t comment on rumors or speculation,” said a Yum spokesperson. Yum is planning to spin off its China operations this year, which would make that business a franchisee of the Louisville, Ky.-based operator of KFC, Pizza Hut and Taco Bell. Yum has built an impressive business in fast-growing China. But it has largely done so through company-operated locations, while it mostly franchises everywhere else. China’s surging growth has been good for Yum, with system sales growth in that country of 35 percent in 2011 and 23 percent in 2012, according to Securities and Exchange Commission filings. Yet those sales have stagnant the past couple of years due to a pair of food-safety scares that, in particular, hurt business at KFC in the country. China revenues in 2015 were just more than $6.9 billion, roughly the same as in 2013. The slowed sales have put pressure on Yum to do something with the China business because Yum is so dependent upon it for revenues and profits. Yum has 7,176 locations in China as of the end of 2015, according to its most recent annual report. That is just 17 percent of the company’s more than 42,000 global locations. But, because those locations are mostly company operated, the China business accounted for 53 percent of Yum revenues last year, and nearly 40 percent of the company’s operating profits. Greg Creed, Yum CEO, said at a recent conference call that the spin-off would create “two powerful, independent growth companies,” and that Yum China will be able to grow after the separation. Yum China doesn’t have any external debt and has been able to self-fund its growth for the past decade, and still has considerable runway for growth. Yum China plans to open the first Taco Bell location later this year. “China has earned the right to be independent,” Creed said. – Source: NRN.
Starbucks Plans to Donate 100% of Unsold Food in America
The company said that it will aim to contribute “100%” of its leftover food from its 7,000-plus U.S. locations by this time next year thanks in part to a new partnership with Feeding America, which has a national network of food banks. The idea didn’t come from Starbucks’ corner offices — it came from baristas behind the counter. “Our people just felt so badly. And this has been going on for quite some time. And so we started doing our homework– municipality by municipality,” Starbucks CEO Howard Schultz said in an interview with CNN’s Poppy Harlow. Donating surplus food is not a new idea. Chipotle, Cheesecake Factory, Yum! Brands’ KFC and Taco Bell, and Darden’s Olive Garden already do it. Even Starbucks has donated unsold pastries to the Food Donation Connection since 2010. But the U.S. Department of Agriculture estimates that 30% to 40% of America’s food supply is wasted. At the same time, a significant number of Americans go hungry. According to the USDA, 48.1 million — or about one in seven — Americans lived in households in 2014 that, at some point during the year, were unable or unsure of where to get their next meal. “I’m always trying to educate myself on the current social issues of our time,” Starbucks CEO Howard Schultz told CNN’s Poppy Harlow. “And one of them is the fact that there are so many people in America that do not have the next meal to eat.” While Starbucks has tried to donate food in the past, it didn’t have a “consistent process to do so,” Starbucks spokesperson Erin Schaeffer said. “The challenge was finding a way to add fresh or perishable food, like breakfast sandwiches and salads to the donation pick up while preserving the food’s quality throughout the process,” Schaeffer added. Starbucks plans to have given out 5 million meals — including breakfast sandwiches, paninis and salads — by the end of 2016. The company has invested in research to determine the best way to ensure food stays safe until it is consumed. – Source: CNNMoney (New York).
McDonald’s Strategy May Include a Simplifying Slogan. Restaurant Filed Trademark Application for ‘THE SIMPLER THE BETTER’
McDonald’s filed a trademark application for the phrase “The Simpler the Better” in early March. But there are no signs yet of what plans the Golden Arches may have to use the line in its marketing. The March 4 filing shows the company seeking a trademark to use “THE SIMPLER THE BETTER.” in the restaurant industry. The filing comes as simplification has become a theme at the chain in recent months. McDonald’s has been reducing the number of items displayed on its drive-thru menu boards, for example, to help speed up ordering. It has also tried to streamline some operational steps in order to reduce complexity and costs. At the same time, however, it has been offering more customization options, such as adding different sauces and toppings to appeal to diners looking for personalized sandwiches. Adding All Day Breakfast to the menu has also added some complexity to operations, as restaurants now must prepare certain breakfast items throughout the day. BurgerBusiness.com first reported the trademark application. “We routinely file intent-to-use trademark applications as part of our regular course of business,” McDonald’s said in a statement to BurgerBusiness.com. “We can’t share details at this time as to how this trademark may or may not be used.” The application with the United States Patent and Trademark Office shows the phrase in all capital letters with a period at the end: THE SIMPLER THE BETTER. It also says the mark “consists of standard characters, without claim to any particular font, style, size or color.” – Source: Advertising Age.
Caliber Brings First Innovative Burger Theory Restaurant to Arizona
Arizona’s first Burger Theory, a build-your-own burger restaurant concept, opened its doors to the public in Central Phoenix this past weekend following the purchase and renovation by Caliber, The Wealth Development Company. Burger Theory is a part of the Holiday Inn & Suites Phoenix Airport North included in the successful Caliber Distressed Real Estate Income Fund (CDIF) responsible for purchasing and renovating the hotel and restaurant property. “We have been told that Caliber’s design on this restaurant will set the franchise development standard for Burger Theory concepts moving forward in the West,” says Chris Loeffler, CEO of Caliber. “We believed the area was in need of a great restaurant concept such as this. With the Burger Theory opening, it will assist our Holiday Inn & Suites to achieve and exceed its $1.7 Million food and beverage revenue budget. It is Caliber’s goal to always meet or exceed investor expectations.” Burger Theory and the Holiday Inn & Suites Phoenix Airport North are one of the many properties purchased through the multi-investor fund, CDIF, LLC. At over $27 million in total capital raised, Caliber closed the fund one year earlier than anticipated, exceeding its original target of $25 million in capital. Caliber’s positive economic impact continues to contribute to Phoenix’s growing real estate market and the investment in Burger Theory will further expand Phoenix’s economy. The Burger Theory concept was developed by Holiday Inn and the Intercontinental Hotel Group, offering business travelers and vacationing families a unique and comfortable dining experience along with the highest quality of ingredients. Burger Theory provides guests with an exceptional and diverse menu, from build-your-own burgers with an array of toppings to salads, wings and signature entrees. The restaurant also offers a great breakfast, well received in only the first few weeks of operations. The 3,600-square-foot restaurant is adjacent to the Holiday Inn & Suites Phoenix Airport located at 4401 East McDowell Road, off of 44th Street and McDowell. It is the first Burger Theory location with a patio and has access from 44th Street, McDowell Rd, and the hotel courtyard. – Source: fsrmagazine.com.
Chipotle Files Trademark for ‘Better Burger’
Chipotle apparently has burgers on its mind. The Denver-based chain applied for a trademark for ‘‘Better Burger’’ earlier this month, according to a filing with the U.S. Patent and Trademark Office. A spokesman for Chipotle, Chris Arnold, noted the company has already started a pizza chain concept called Locale and an Asian food chain concept called ShopHouse. Arnold said the company has noted the ‘‘Chipotle model could be applied to a wide variety of foods.’’ Chipotle, which has more than 2,000 locations, has surged in popularity by touting fresh ingredients and the flexibility to customize orders. That has led to numerous other ‘‘fast casual’’ restaurant openings. More recently, however, Chipotle Mexican Grill Inc. is fighting to recover from a series of food scares that sent sales plunging. – Source: The Boston Globe.
The ONE Group Announces New COO
The ONE Group Hospitality, Inc. announced the appointment of Alejandro Munoz-Suarez as chief operating officer (COO), effective March 31. He will report directly to Jonathan Segal, The ONE Group’s CEO. Formerly president of B&B Hospitality’s Pacific Division, Munoz-Suarez will be responsible for leading business growth initiatives and driving profitability. In the near-term, he will manage the opening of several restaurants currently under construction or in development, including STK locations in Boston, Orlando, San Diego, Denver, Miami, Austin, Dallas, and Toronto. “Alejandro’s lengthy tenure at B&B Hospitality provides a deep level of expertise in how to aggressively grow and scale a hospitality company, which will be instrumental in supporting the ambitious plans we have set through 2017,” says Jonathan Segal, CEO, The ONE Group. “We remain focused on expanding the STK brand both domestically and internationally, and we are thrilled to have such a seasoned hospitality veteran join The ONE Group.” – Source: fsrmagazine.com.
Captain D’s Names New CFO
Captain D’s LLC named Keith Davis its new chief financial officer. Davis will oversee the company’s finance and information technology departments. He is a longtime industry veteran who has worked with several chains, including 130-unit Tavistock Restaurants, where he was the CFO. He has also worked with Round Table Pizza, Beverly Enterprises, Landry’s and Pizza Hut. “We’re thrilled to welcome Keith to the Captain D’s executive team as our chief financial officer and have no doubt that his impressive financial experience in the foodservice industry will be a huge asset as we continue our momentum of compounding success,” Phil Greifeld, CEO of Captain D’s, said in a statement. “Throughout his career, Keith has developed a wealth of business acumen and best-in-class financial capabilities that I know will enhance our business strategies.” Nashville, Tenn.-based Captain D’s Seafood has 516 locations, and is coming off of a year in which the company recorded 4.3-percent same-store sales growth — the seafood chain’s fifth consecutive year of same-store sales growth. – Source: NRN.
Irish Firm Buys Smith & Wollensky Restaurant Group
Irish firm Danu Investment Partners Ltd. has acquired Boston-based Smith & Wollensky Restaurant Group Inc. from aBunker Hill Capital LP consortium, and sees opportunities for growing the upscale steakhouse brand, the two companies said recently. Dublin-based Danu already licensed the Smith & Wollensky name for a London restaurant that it opened in June 2015, the company said. Terms of the deal were not disclosed. Danu now owns seven of the eight U.S. locations, includingBoston; Chicago; Columbus, Ohio; Houston; Miami Beach, Fla.; and Las Vegas. Danu also obtained worldwide licensing rights to the Smith & Wollensky brand. The New York Smith & Wollensky location, which opened in 1977, remains in founder Alan Stillman’s control via Quality Branded Restaurants, formerly known as Fourth Wall Restaurants, the company said. Stillman also founded the TGIFridays concept. “We’ve been huge admirers of this iconic brand for decades, having hosted a great number of business dinners cutting into S&W steak,” said Leonard Ryan, one of three Danu principals, in a statement. “It has incredible equity and enormous potential internationally,” Ryan said, “And there is still significant untapped potential in the U.S. for S&W and the emerging Wollensky’s Grill concept.” The Wollensky’s Grill concept was created in 2014 from the lower level of company’s Chicago restaurant. Michael Feighery, president and CEO of Smith & Wollensky, said the grill was intended to broaden the steakhouse concept’s audience. “We’re trying to make it more approachable for the guests,” Feighery said at the time. “We know the steakhouse segment is quite a commitment when it comes to cost and dining out. We want to make the grill a lighter, more casual version of the main dining room. It will be more accessible but still have a lot of the elements you would expect from the Smith & Wollensky dining experience.” Danu’s Smith & Wollensky unit in London features elements that the company plans to borrow in future development, including two full bars, two main dining areas, a full butcher shop and an on-site dry-aging room. Of the Danu deal, Feighery said in a statement: “To be partnered with a group of hospitality professionals that appreciate the ongoing need to invest in our people and our facilities is critical to our success. Danu has that insight and they share in our vision for growth both here and abroad.” Danu also said Tommy Hart, who served as managing partner and general manager of Smith & Wollensky New York for 27 years, will join the SWRG board and advise the company on its development plans. In 2007, Smith & Wollensky was taken private in a deal worth more than $90 million with private-equity firm Bunker Hill Capital. Patina Restaurant Group, originally reported as part of that deal, had a management contract to operate the restaurants, a company spokeswoman said. That deal resulted after a takeover attempt and bidding war with Landry’s Inc. of Houston. Danu Investment Partners is an holding company founded in 2009 and with investments in a range of business sectors, including hospitality. – Source: NRN. Correction: March 21, 2016 This story has been updatedto correctBunker Hill Capital’s ownership of Smith & Wollensky.
McDonald’s, Pizza Hut Cook Up New Plans for India
McDonald’s Corp. had to do the unthinkable this year: change the decades-old recipe of its signature two-patty chicken burger in India. Battling a slump in sales, the Oakbrook, Ill.-based company redesigned the Big Mac of India—known as the Maharaja Mac, one of its best sellers for 20 years. It switched to thicker chicken patties and added jalapeños and a habanero sauce in January. It also launched a meatless Big Mac—a first—for India’s many vegetarian consumers, using two corn and cheese patties. “Everyone needs to reinvent to stay relevant,” said Amit Jatia, vice chairman of Westlife Development Ltd., which runs the McDonald’s outlets in western and southern India. “Even though the market is tough, you can still do things that can get you ahead.” India’s once seemingly insatiable appetite for fast food has hit a wall at McDonald’s, Pizza Hut, KFC and other established global brands, deflating optimism that untapped demand in the 1.2 billion-person market will offset slumping consumption in the West and China. While the overall market for eating out is projected to expand, growth is slowing and less of it is happening at the international chains that were the trailblazers in India. Euromonitor International expects sales from India’s food-service industry to reach 8 trillion rupees ($116 billion) this year, up 11% from last year. In 2008, in comparison, the industry grew at 16%.
The fast-food first movers of the West that landed in India more than 15 years ago are trying to reinvent themselves, hoping to avoid the kind of demand implosion that forced Yum Brands Inc., which controls brands like Pizza Hut, KFC and Taco Bell, to rethink its investments in China. “The last two years have been the worst,” said Ajay Kaul, whose Jubilant Foodworks Ltd. Runs Domino’s Pizza in India. The early movers built too many stores too soon anticipating a “. . . deluge of guys coming into the middle class,” he said, but “that conversion has not happened.” The biggest global fast-food brands had been rolling out outlets at an ever-accelerating rate in Asia’s third-largest economy. Nearly half of Domino’s 1,000 stores in India, for example, were built in the past five years. But the anticipated take off in customers has been weaker than expected. Hundreds of millions of Indians still live below the international poverty line of $1.90 a day, making fast food an expensive treat for the vast majority. Meanwhile, India’s first generation of fast-food fans—the few who can afford french fries—are increasingly switching to newcomers. In recent years megacities have been flooded with new outlets from Staarbucks Corp., Burger King Corp., Wendy’s Co. as well as homegrown upstarts like spicy-potato slider chain Goli Vada Pav, tea chain Chaayos and India’s answer to Starbucks, Café Cofee Day. The competition widened diners’ choices, analysts say, leaving the first movers struggling to retain the cachet for customers who once aspired to dine in their outlets. “What used to be a playground for five big global brands has now become a playground for 10 big brands and hundreds of smaller players,” said Unnat Varma, who heads Pizza Hut in India. India’s increasingly sophisticated and demanding consumers blame the big fast-food players for failing to keep pace with changing tastes. For much of the last decade, sampling McDonald’s fare was an exciting new experience. Consumers say these days their outlets and menu items look dated compared with the new competition. “Earlier when we thought burgers, we thought McDonald’s,” said 27-year-old Suchi Sabhrawal, who assists an interior designer. “Now there are so many cooler options.” McDonald’s share in India’s fast-food chain market slid from 38% in 2009 to 26% in 2014, according to Euromonitor. Pizza Hut’s share in the pizza chain market slumped to 18% from 31%. Sales growth has tapered off, too. In 2013, Yum’s sales in India grew 20%; last year, sales dropped by 5%. Westlife, which runs more than 200 McDonald’s outlets in western and southern India, reported sales at 7.64 billion rupees last year. That represents 3% annual growth, down from 26% in 2013. Same-store sales growth at both companies has slipped for two consecutive years. The chains have big expansion plans for India and need to act swiftly to avoid Yum’s fate in China, where a 2012 food-safety scandal combined with a shift in diners’ preferences and intense competition to erode much of the brand’s novelty, analysts say. Last year, the company decided to spin off its Yum China business into a separate, publicly traded franchisee. Yum says it is restructuring the way it manages its outlets in India to revive growth. The India division shut down 235 restaurants in the last two years, and last year it finished consolidating most of its franchised outlets under one franchisee. Yum currently has around 800 stores in the country. Other fast-food chains are revamping their menu and upgrading the look of their restaurants. Besides the redesigned Maharaja Mac, McDonald’s has introduced new products to spice up its menu, including an ice cream dish with chili flakes. It has also brought its McCafe coffee shops to India. Mr. Kaul, of Jubilant Foodworks, says Domino’s is trying “every trick in the book.” To target cost-conscious consumers Domino’s offers big discounts, and to add variety for the veteran pizza consumer, it hired a Michelin-starred Indian chef to design pizzas. Pizza Hut is currently offering a mini chickpea pizza for under $1 and said it is considering inviting diners into the kitchens to create their own pizzas. The market leaders are hoping they can get back on track to fast expansion. Mr. Jatia plans to double his McDonald’s store count to about 400 in the next three to five years, while Domino’s plans to erect 150 new stores every year over the same period. Yum hopes to take its store count to 2,000 by 2020. “These are difficult times,” said Mr. Varma of Pizza Hut. “People with staying power will withstand the short-term pressures. The ones who don’t will have to shut shop.” – Source: The Wall Street Journal.
Dunkin’ Donuts Continues Mexico Expansion
Dunkin’ Donuts has signed a franchise agreement with family owned Alimentacion Mexico Americana, part of Berny Group, to develop 20 new Dunkin’ Donuts restaurants in Mexico. This franchise agreement covers areas including the states of Yucatán, Campeche, Quintana Roo, Veracruz, Tabasco, and Chiapas. With the signing of this agreement, Dunkin’ Donuts has plans to develop nearly 150 restaurants in Mexico over the coming years, according to a company press release. “Our new franchisee, Alimentacion Mexico Americana, has extensive quick-service restaurant and operations experience in Mexico, and we are thrilled they have chosen to expand the Dunkin’ Donuts brand in the Yucatán region,” said Grant Benson, vice president of global franchising and business development for Dunkin’ Brands. “As we continue our ongoing expansion throughout the country, these new restaurants will satisfy a growing consumer demand for Dunkin’ Donuts in Mexico.” Dunkin’ Donuts currently has more than 11,700 locations in 43 countries around the world. Dunkin’ Donuts restaurants in Mexico will feature the brand’s range of hot and iced coffees, lattes, espressos, cappuccinos, teas, frozen drinks, croissants, donuts, and sandwiches. The brand will also offer regional menu items to cater to local tastes. In October 2015, Dunkin’ Donuts opened its first two restaurants in the country with the Mexican subsidiary of Sizzling Platter, a franchisee of Dunkin’ Donuts in the United States and China. This group signed a franchise agreement to develop more than 100 locations in the Distrito Federal, as well as the states of Hidalgo, México, Morelos, Jalisco, and Querétaro. Additionally, Grupo CF Del Noroeste signed a franchise agreement in November 2015 to develop 25 additional restaurants in the areas including Sonora, Baja California, Baja California Sur, Chihuahua, Sinaloa, Nayarit, Durango, and Zacatecas. Dunkin’ Donuts is looking to recruit qualified, multi-unit franchisee candidates to develop the brand in portions of El Bajio, including San Luis Potosí, Gaunajuato, and Aguascalients, as well as Monterrey and the rest of the state of Nuevo León. The company is looking for franchisees with a proven track record of success in the restaurant industry, strong financial backgrounds, a deep knowledge of their local communities and a passion for Dunkin’ Donuts. – Source: QSRWeb.com.
Women’s Foodservice Forum honors NRA CEO
The Women’s Foodservice Forum honored National Restaurant Association president and CEO Dawn Sweeney with the Fritzi Pikes Woods Trailblazer Award at its annual leadership conference in Dallas. The award, named for the WFF’s former chief who died in 2013, is presented yearly to someone who supports gender diversity and helps create new opportunities for women. “When we build our teams and push each other outside our comfort zones, we’re blazing trails,” Sweeney told the audience March 13. “When we allow ourselves to envision a future that is brighter, more diverse and inclusive and then take steps to make what we’ve envisioned a reality, we are blazing trails.” Sweeney, the NRA’s CEO since 2007, said she was honored to receive the award bestowed on former Harman Management Chair Jackie Trujillo, Dine Equity President and CEO Julia Stewart, Sodexo Region Chair for North America and CEO Schools Worldwide Lorna Donatone and PhaseNext Hospitality President and CEO Roz Mallet, who presented her with the award. “Dawn has blazed many trails in the last eight years,” Mallet said. “She demonstrates the selfless philosophy of leadership and has an industry point of view that positively influences and impacts everyone and everything she touches.” Thanks to Sweeney’s commitment to advancing women’s careers, the NRA has quadrupled the number of female members elected to its board over the last three years, Mallet noted. “Dawn not only executes with excellence, she also leads every interaction with passion and respect for those who get the work done — our employees,” she said. “She not only blazes new trails by role-modeling great leadership qualities, but continues to create new opportunities for all of us through her representation of the industry.” Sweeney said she looks forward to more years of advancing women leaders. – Source: The National Restaurant Association.
Arby’s Kicks Off 2016 with Significant Restaurant Development and Signings Momentum
Arby’s Restaurant Group, Inc., parent company of the franchisor of the Arby’s brand, has announced the signing of several recent franchise development agreements beginning late Q4 2015 through today, for the development of 138 new restaurants. This news follows a strong year of development for Arby’s in 2015 with 61 new restaurant openings and 179 remodels system-wide. “As we begin 2016 and execute against our strategic priority to expand aggressively in the United States and select global markets, this is an encouraging start to the year for Arby’s,” said Paul Brown, Chief Executive Officer, Arby’s Restaurant Group, Inc. “We are more focused than ever on bringing Arby’s restaurants to new markets and further expanding in existing markets to Serve, Refresh and Delight our guests with an experience that is truly unique to Arby’s.”
Arby’s remains on track with its goal to reach $4 billion in total system-wide same-store sales (SSS) by the end of 2018. Arby’s achieved industry-leading system U.S. SSS growth of 8.1% in 2015 – more than three times the growth rate of the Quick Service Restaurant (QSR) industry*. Revitalized restaurants have experienced post-remodel SSS increases of approximately 15 percent, in some cases upwards of 20 percent. Recent multi-restaurant commitments from existing franchisees beginning late Q4 2015 through today include: • Arby’s largest franchisee, United States Beef Corporation (U.S. Beef), owned by brothers, Jeff & John Davis, to open 70 new restaurants. • DRM Inc., owned by Matt & Marc Johnson, committed to opening 25 new restaurants across Iowa, Wisconsin, Nebraska and Illinois. • Turbo Restaurants, LLC., operated by Guillermo Perales, to open 15 new restaurants in the Houston market. This is in addition to 15 new restaurants that Turbo agreed to develop in Dallas under a previous development agreement. Turbo has also committed to remodeling 12 Arby’s restaurants in the Dallas market. • CAROLINECO, L.P. d.ba. Loves Travel Stops, led by Greg Love, committed to 15 new restaurants in Travel Plazas throughout the United States, reinforcing the confidence that exists with the new Inspire restaurant design in non-traditional formats. • Mosaic RBNC, LLC, operated by Murad Karimi, committed to opening 5 new restaurants in Raleigh, NC. • ALB Restaurants, LLC, owned by Michael Breitfelder, committed to opening 2 restaurants in Milwaukee and Madison, WI. • T.G.J. and Co., Inc., led by Tom Johnson, III, committed to opening 2 restaurants in Knoxville, TN. Additional single-restaurant commitments from late Q4 2015 through today include: • New franchisee, Croteau-Gilbert Ventures, LLC, operated by John Croteau, Nashua, NH. • Newberry Restaurant Group, Inc., owned by Jake Rasor III, Laurens, SC. • Heartland Beef, Inc., led by Tom Browne , Terre Haute, IN. • J & J Ostrowski Enterprises, operated by Jeremy and Jennifer Ostrowski, to relocate a restaurant in Rhinelander, WI. Further, the ARG Development team is announcing new leadership additions to help guide the Brand growth. Last September, industry leader Greg Vojnovic, was named Chief Development Officer, reporting to Brown and joining the Arby’s Executive Team. Restaurant industry veteran, Jim Cannon, recently joined the team as SVP, Design, Architecture & Construction. Cannon joins ARG from Popeyes Louisiana Kitchen and will be responsible for achieving annual goals for company and franchise new restaurant and remodel growth and leading, planning and executing building design prototypes in collaboration with the Development team and Operations leadership. In addition, Ray Lauletti joined as Vice President of Real Estate. Lauletti joins most recently from New Jersey-based fitness club chain Retro Fitness and will be responsible for leading the Real Estate team, overseeing real estate strategic planning, asset management and site selection for new restaurant openings for both ARG and franchisee development. Patrick Pons joined as Managing Director, Arby’s International. Pons joins most recently from Famous Brands International where he was VP of International Operations supporting 25 countries and over 400 locations globally. Pons will lead international franchise recruitment and operations for ARG.
Arby’s launched a new franchise development website at DiscoverArbys.com, where prospective franchisees can get in-depth background information about the Brand, including available franchise markets and requirements. – Source: Arby’s.
Start to Finish: Paul Murphy, CEO of Del Taco, Talks About How His Leadership Helps to Define the Company’s Culture.
I was 27 years old and working for an independent casual-dining restaurant in Charlottesville, Virginia, when I realized that I enjoyed the high energy and challenge involved in this industry. I was drawn to the possibility of evolving business for the better, as well as the opportunity to develop meaningful relationships along the way. Combined with some hard work, my position at Del Taco is due to the wonderful, smart people I’ve met along the way. I’ve come to appreciate what everyone brings to the table in this industry. Whether it be creative, strategic, or passionate efforts to further the success of this brand, it’s always a motivating factor for me working with such a talented group. In 2015, Del Taco became a publicly traded company, which was a huge milestone for a 50-year-old company to achieve. This success is a direct reflection of a company-wide commitment, and I’m continuously inspired watching those around me grow and succeed with a brand we all believe in. When I get the opportunity to look back one day, I hope that my contribution not only created more opportunities for employees, franchisees, vendors, and investors, but ultimately helped bring the “Unfreshing Believable” experience to as many guests as possible across the country. I believe leadership defines culture, so it’s also important that I’m remembered as someone who genuinely cared for people and led by example. I think as much as I have a fiduciary responsibility, I have a moral one to acknowledge and respect the lives of those I work side by side with. Del Taco is constantly evolving to meet our guests’ tastes and demands. In recent years, we launched healthier menu options, such as turkey tacos, Fresca Bowls, fresh-sliced avocado, and Handcrafted Ensaladas. We still offer guests the best value and variety in the industry with our Buck & Under menu, but we’ve struck this perfect balance that allows us to serve the fast casual–quality food our guests demand at a quick-serve price point and convenience. Source: qsrmagazine.com.
Applebee’s Names Cammie Spillyards-Schaefer Executive Chef
Cammie Spillyards-Schaefer has been named executive chef and vice president for culinary and menu strategy at casual-dining chainApplebee’s, the operator said. Most recently vice president of research anddevelopment and innovation forOutback Steakhouse parent Bloomin’ Brands Inc.,Spillyards-Schaeffer graduated with honors from the Culinary Institute of America in Hyde Park, N.Y., owned two restaurants and wasalso director of product development for Chili’s Grill & Bar. A spokeswoman for the company said Spillyards-Schaefer was filling a role that had been vacant for some time, although the 2,020-unit chain has other members on its culinary team. The appointment comes shortly after Julia Stewart, CEO of parent company DineEquity Inc., announced plans to streamline Appelbee’s menu and introduce new items. “This is a pivotal moment for the Applebee’s brand as we look to make important enhancements, and Cammie is essential to driving menu innovation,” Applebee’s senior vice president for marketing and culinary Darin Dugansaid in a press release. “With her creativity and deep understanding of consumer palates, she will ensure we are delivering incredible food prepared with care to our current guests and creating a reason for new guests to give us a try.” “Joining the Applebee’s family is a tremendous opportunity,” Spillyards-Schaefer said in the release. “One of the most amazing things about this brand is the ability to cook for and serve millions of people — we are feeding America! We not only have an opportunity to change the way guests feel about dining at Applebee’s, but we also have the opportunity to influence the palate of the entire country. Knowing our work can impact so many people on that level is a huge motivation for me to ensure we’re delivering the best food we can, from our culinary center to every Applebee’s kitchen around the world.” – Source: NRN.
Popeyes Louisiana Kitchen, Inc. Chief Brand Officer Adopts 10b5-1 Trading Plan
Popeyes Louisiana Kitchen, Inc. announced that Richard H. Lynch, Chief Brand Officer, has established a trading plan in accordance with Rule 10b5-1 of the Securities Exchange Act. Rule 10b5-1 permits individuals who are not then in possession of material non-public information to establish pre-arranged plans to buy or sell stock. The rule allows individuals to buy or sell shares of stock at a specific price in the future, regardless of any subsequent material non-public information. This plan was adopted to enable Mr. Lynch to exercise and sell a portion of his PLKI stock options as part of Mr. Lynch’s long-term tax and asset diversification strategy. Utilizing this type of plan, Mr. Lynch can diversify his investment portfolio, spreading stock trades out over an extended period of time, reducing market impact. If all sales in this plan are transacted, Mr. Lynch’s holdings will continue to remain in excess of three times his base salary. Under the plan, Mr. Lynch intends to exercise up to 8,300 stock options, subject to the market price of the company’s common stock, which were granted in August of 2009 and are set to expire in August of 2016, all as set forth in his trading plan. The trading plan goes into effect March 29, 2016 and will expire on April 15, 2016. – Source: Popeyes Louisiana Kitchen, Inc.
Red Robin Buys More than Half of its Texas Restaurants
Red Robin Gourmets Inc. said it’s bought 13 of its 24 franchised restaurants in Texas.
The Greenwood Village-based chain didn’t reveal the price it paid for the restaurants, which are located in Houston (seven), Dallas (two), Lubbock, Austin, Abilene and Amarillo.
The restaurants were owned by Cowboy Red L.C., Cowgirl Red LLC, Texas Red Real Estate Ltd. and its affiliates, and Robert Reynolds and Carolyn Frost Keenan. “This acquisition supports our strategy to expand in markets such as Texas which provide us strong growth prospects,” said Steve Carley, Red Robin CEO, in a statement, who added that 800 Texas employees now will work for the corporation. In 2014, Red obin made a similar purchase, buying 32 of its franchised restaurants in the U.S. and Canada for about $40 million. – Source: Denver Business Journal/Red Robin Gourmet Hamburgers Inc.
Thomas Keller Strikes Cruise Ship Restaurant Deal
Operators of Seattle-based Seabourn, which bills itself as the world’s finest ultra-luxury cruise line, are planning to debut a new restaurant, The Grill by Thomas Keller, in May on board the Seabourn Quest. The restaurant will eventually be on all of Seabourn’s vessels, including the new Seabourn Encore, scheduled to launch in December and another ship to come in 2018. Existing ships Seabourn Sojourn and Seabourn Odyssey will undergo restaurant renovations this year to convert to The Grill, according to the cruise line operator. The Grill is a collaboration between Keller and restaurant designer Adam Tihany. Seabourn president Richard Meadows says the concept will “take our already award-winning cuisine to new heights.” The restaurant will serve dinner only and, because Seabourn is an all-inclusive cruise line, there will be no additional charge to dine there.More details on the menu will be revealed later, say officials with Thomas Keller Restaurant Group. But the chef has been working with Seabourn for about a year and has already introduced a line of dishes served on the ships, including a duck foie gras terrine with truffle pain de gênes, compressed Asian pear and Sicilian pistachios; buckwheat gnocchi with tamari-glazed shiitake mushrooms, golden beets, savoy cabbage and yuzu; and Sonoma duck breast poêle with crispy rillettes, glazed Harukei turnips, pickled blueberries and red cabbage puree. For dessert: a ginger and yogurt semifreddo with whipped green tea and lemon meringue; and a Champagne and granny smith apple trifle with crème Chantilly, vanilla custard and champagne jelly. Keller has also brought in some classic comfort foods reflecting his childhood, such barbecue ribs served family style, a signature Napa Burger served poolside, and artisanal “Yountwurst,” paying tribute to the location of his signature restaurant The French Laundry. Keller has shared some of his purveyors, and the ships have brought in the same same white porcelain dinnerware used by Keller group restaurants. Seabourn has also brought in mixologist Brian Van Flandern, who has been asked to upgrade bar offerings and cocktail menus for the entire fleet. The Food Network dubbed Van Flandern “America’s Top Mixologist,” and in 2004 he was part of the opening team for Keller’s New York restaurant Per Se as head barman. Cruise lines are increasingly battling to win hot chefs with which to align their brands. The Carnival cruise line boasts a concept called Guy’s Burger Joint by Food Network star Guy Fieri. Chef Curtis Stone has developed a restaurant and menu items for Princess Cruises. Nobuyuki Matsuhisa of the Nobu chain has worked with Crystal Cruises, and Jacques Pépin is executive culinary director at Oceana Cruises. – Source: Restaurant Hospitality
Saladworks Names Patrick Sugrue CEO
Patrick Sugrue has been named CEO of Saladworks, a 100-unit salad chain that was purchased out of bankruptcy last year, the company told Nation’s Restaurant News. Sugrue replaces Paul Steck, who was promoted from president to president and CEO when Centre Lane Partners bought the Conshohocken, Pa.-based chain last June. Sugrue is also a director of Imvescor Restaurant Group Inc., franchisor of Pizza Delight, Mikes Trattoria, Scores and Baton Rouge concepts. Steck had been with the company since 2002, according to his LinkedIn profile. Sugrue will be working with the chief financial officer RichPalladino, a 14-year company veteran, and vice president of brand services Jena Henderson, who has been with the chain for 10 years, to revitalize the company, a spokeswoman said. Sheaddedthat plans call for new restaurant designs that include a more open, farm-to-table style, along with free Wi-Fi and power sources. Source: NRN. Correction: March 22, 2016 An earlier version of this story misstated Saladworks’ unit count. The chain has 100 locations. A spokesperson also corrected her earlier comments on Sugrue’s previous affiliation; he is a director of Imvescor Restaurant Concepts.
Donatos Signs Three-Unit Deal in Erie County, Pennsylvania
Donatos Pizza, one of the premier regional pizza chains in the United States, signed a franchise agreement for three restaurants in Erie County, Pennsylvania. The stores will be developed over the next three to five years, with the first scheduled to open in Erie proper within the next six months. Company plans call for opening as many as five restaurants in the area over the next several years. “Having been in the industry for years, I quickly recognized Donatos’ strong commitment to delivering excellence in everything that they do,” says Christina Vogel, a local entrepreneur who signed the franchise agreement. “At Donatos, it’s bigger than the pizza. The company promotes goodwill through its products, principles, service, and people. It’s something I feel deeply aligned with.” Vogel developed her passion for pizza while working for Monical’s Pizza in Illinois for 10 years. Years later, she found herself yearning to open her own pizza restaurant and found Donatos as the perfect fit. “We are extremely thrilled to be working with Christina and to be able to tap into Erie County’s vibrant and dynamic market,” says Donatos COO Tom Pendrey. “This franchise agreement is the latest example of our continued expansion efforts in Pennsylvania.” Donatos Pizza was founded in 1963 in Columbus, Ohio, by 19-year-old Jim Grote. In 1999, McDonald’s purchased the chain, by then considered a gold standard in the pizza delivery. But in 2003, when the company later decided to refocus on burgers, Jim and his daughter, Jane, bought back Donatos. Donatos has remained a favorite in Ohio and beyond. The restaurant serves strombolis, wings, oven-baked subs, salads, and desserts in addition to its Edge-to-Edge pizza, Donatos’ trademark, which comes with more than 100 pieces of pepperoni on it. Along with the dine-in experience, Donatos also offers delivery and catering services, along with 26 toppings for customizable and signature pizzas. – Source: www.qsrmagazine.com.
The Manitowoc Company, Inc. Announces Actions to Further Right-Size the Business and Increase Efficiencies
The Manitowoc Company, Inc. announced that it will implement further actions during 2016 to right-size, the now independent, Cranes business and increase operating efficiencies to meet current demand levels. These activities will include headcount reductions in the company’s Shady Grove, PA and Manitowoc, WI facilities, plant rationalizations, and other cost optimization initiatives, and are in addition to those activities announced in late-2015. “As we have communicated, this cycle has proven to be different from any other in recent past. Since joining the company in late December, I have continued to outline a strategy that centers on our key stakeholders – customers, employees and shareholders. My goal is to create a culture that is driven by innovation and velocity at the core of every aspect of our business,” commented Barry L. Pennypacker, president and chief executive officer of The Manitowoc Company. “Our business has great potential for growth and improved profitability. However, there are clear opportunities to improve near-term performance, while at the same time positioning the company to extend its industry leadership. The activities we are announcing today will further improve our margin profile, while ensuring agility in our response to customers’ needs. We will provide greater clarity on expected costs and savings as a result of these actions during our first quarter 2016 earnings call,” concluded Pennypacker. – Source: The Manitowoc Company, Inc.
Chipotle Gets Mixed News in Latest QSR Survey
In last year’s Market Force Information survey ranking fast-food customers’ favorite brands, Chipotle Mexican Grill and Qdoba Mexican Grill tied for overall first place in the Mexican category, based on the research firm’s composite loyalty index. This year, Chipotle and Qdoba were bumped out of first place by Taco Bueno, which grabbed #1 on the strength of its top score on one attribute: “value for the money.” (Last year, Taco Bueno didn’t make the rankings at all.) However, the good news for Chipotle, given its string of highly visible food contamination crises during 2015, is that it still managed to come in second overall in the Mexican category, with a 53% loyalty score to Taco Bueno’s 57%. The survey, which also ranks pizza, chicken and sandwich QSRs, was conducted in January among 10,477 respondents representing a cross-section of the four U.S. census regions. Also good news for Chipotle: While it lost its #1 ranking in cleanliness to Rubio’s this year, it kept its #1 rankings both for “quality food” and “healthy food.” It also grabbed the #1 ranking for fast service this year. Chipotle’s strong performance after all its troubles might strike some as surprising. However, Cheryl Flink, chief strategy officer for Market Force, points out that it’s important to keep it in mind that the research is conducted among people prescreened as having dined in QSRs in the past 30 days, and for ranking purposes, as having visited the specific chain being ranked. The respondents are people who chose to visit Chipotle despite the food-borne illness instances—people “who are very loyal to Chipotle, and rated it high in food-related attributes, as well as in other attributes,” observes Flink. Also, she says, “food quality is a very different metric than food safety. Those who visited Chipotle still trusted the brand and still found it delivered high quality and healthful food.” Providing another perspective, financial writer Michael Brush recently made the admittedly “audacious” argument in Market Watch that consumer response to Chipotle’s freebie offers indicates that, despite double-digit drops in comparable-store sales in recent months, “people aren’t really that concerned about the health issues.” One case in point: When Chipotle shut down during the lunch period for an internal meeting on February 8, it offered a mobile-delivered rain check for a free lunch to those who said they’d visited a Chipotle during the brief shutdown. Instead of the company’s expected 2.5 million requests for rain checks, there were 5.3 million within five hours. If people were “seriously worried about Chipotle’s health risks, they wouldn’t abandon their concerns for a mere $8-$10 dollars—the value of the free food offer,” asserts Brush, who adds that restaurant chains typically recover fully from “food scares” within about a year. Putting the unique Chipotle scenario aside, Rubio’s Fresh Mexican Grill (which didn’t make the rankings last year) took the overall #3 ranking in the Mexican category this year, with Qdoba in a virtual tie for that ranking (both scored 51% on the loyalty index). El Pollo Loco rounded out the top five, followed by Moe’s Southwest Grill, Del Taco, Baja Fresh, Taco John’s, Taco Cabana and Taco Bell. Interestingly, while 18% of respondents reported having visited a Mexican chain at least five times in the previous 90 days, that was significantly down from 2015, when 14% reported visiting such a restaurant at least 10 times every 90 days. Taco Bell ranked low on nearly every attribute except value (where it ranked #5), but its mobile app had the greatest awareness (35% of respondents). Overall, 45% of respondents reported having downloaded an app from a Mexican food chain. Papa Murphy’s Again #1 in Pizza: In the competitive, $40-billion pizza category, Papa Murphy’s ranked #1 for the third consecutive year. Pizza Ranch again took the #2 slot. Marco’s Pizza (which didn’t make the rankings last year) ranks #3 this year, followed by Papa John’s, Domino’s, CiCi’s, Little Caesar’s and Pizza Hut. Papa Murphy’s ranked #1 for food quality, healthy options, fast service and cleanliness. Little Caesars ranked top for value, and Pizza Ranch for friendly service and atmosphere. More than a quarter (28%) of respondents said they’d visited a pizza chain at least five times in the previous 90 days. Half (53%) said they’d downloaded a pizza-chain app, and 60% were aware of Domino’s’ app. Chick-fil-A Leads the Pecking Order: Chick-fil-A led the chicken QSR category for the second year, followed by Raising Cane’s, Zaxby’s, Bojangles’, El Pollo Loco, Buffalo Wild Wings, Wingstop, Boston Market, Popeyes and KFC. Chick-fil-A captured the top spot in all but two attributes. EL Pollo Loco was #1 in healthy options, and Raising Cane’s in value. KFC scored last in four of the seven attributes. Nearly half (48%) of respondents reported having visited a chicken chain at least five times in the previous 90 days, with 22% visiting at least 10 times. Chicken chain apps have been downloaded by 40%, with Wingstop’s leading awareness (24%). McAlister’s, Firehouse Top Sandwiches: This year, McAlister’s Deli leads the overall sandwich category rankings, followed by Firehouse Subs, Jersey Mike’s, Panera Bread, Jason’s Deli (which was #1 in 2015), Jimmy John’s, Wawa, Subway and Arby’s. No one brand dominated the attributes in the sandwich category. Jason’s Deli was rated tops for quality, Panera for healthfulness, and Firehouse for friendly service and cleanliness. Convenience-store chain Wawa ranked highest for value, and Jimmy John’s for speed of service. Thirty-nine percent of respondents had visited a sandwich chain at least five times in the previous 90 days, and 50% have downloaded a sandwich chain’s app (with awareness of Panera’s highest, at 36%). Survey respondents’ ages ranged from 18 to over 65; 68% were women and 32% were men; and 51% reported household incomes of more than $50,000 a year. – Source: Marketing Daily.
Krispy Kreme Looks to Expand Franchising
Krispy Kreme Doughnuts Inc. believes it would be better off if someone else built and operated its shops. The Winston Salem, N.C.-based doughnut chain plans to focus more exclusively on franchising in the coming years, executives said during the company’s earnings call. Their reason is simple: Franchisees have been doing a better job than the company at operating the chain’s locations. “Domestically, our franchisees continue to outperform our company shops,” Krispy Kreme CEO Tony Thompson said during the call. “Thus, we believe that by focusing more on franchising, we will be in a greater position to maximize the value of the brand for the long term.” Consider the fourth quarter ended Jan. 31. Company-operated locations in the U.S. reported same-store sales growth of 0.2 percent. But franchisee same-store sales rose 2.5 percent. Krispy Kreme has 297 domestic locations. Franchisees operate 181 of those locations after adding a net 14 units. The company, by contrast, opened a net five locations over the past fiscal year, after factoring in five closed company units. Franchisees operate all 824 of the chain’s international locations. To focus more on franchising, however, the company has to make several investments and changes to help operators build more profitable locations and generate higher sales from those units. Krispy Kreme has several initiatives in place to reduce the investment cost for new stores by “several hundred thousand dollars,” Thompson said. That includes lower costs for construction, site location, equipment and pre-opening. The company also wants to improve the flow within the shops to improve the customer ordering process and help boost revenue. Krispy Kreme has long wanted to drive more coffee sales. The company opened a new location in Clemmons, N.C., outside of Winston-Salem, with a new ordering design specifically to improve beverage sales. Coffee represents only 5 percent of the chain’s sales, and the company’s ultimate goal is to increase that percentage. Thompson said during the earnings call that the design has improved beverage sales at that location, and the company plans to retrofit more locations this year to drive beverage sales. “Everything we’re doing to our new shop model is geared toward driving franchisees’ return and profitability,” Thompson said. But it’s not just profitability. Thompson said the entire company culture has to change to focus more on supporting and improving franchisee operations. “We will begin a cultural change inside our organization domestically to become more franchise-support focused,” he said, noting that the company will work to improve support for technology, finance, development and real estate. “This is an area we need to be not merely good, but great.” Krispy Kreme wants to become more of a marketing-driven company and work on customer engagement efforts such as a loyalty program and its mobile platform. The chain is currently searching for a chief marketing officer. Company executives said they are making investments to improve the franchising business in the coming years. Thompson said they will provide more details later this year. Krispy Kreme revenues in the fourth quarter rose 4 percent, to $130.4 million, from $125.4 million the previous year, while total domestic same-store sales rose 1.6 percent in the fourth quarter. Those numbers fell below Wall Street expectations, and the stock price slipped 5 percent on Wednesday. The stock, which had been up slightly entering Wednesday trading, is now down for the year. Besides the franchising efforts, company executives also discussed ways to improve unit operations. The company plans to use more full-time staff at its restaurants. The move will result in higher health care costs for Krispy Kreme, but executives suggested that it would result in better service. “The shift, which our industry saw a few years ago, toward higher numbers of part-time employees has, we believe, adversely impacted the quality of the talent that we are able to recruit to our shops,” Thompson said. In addition, the company is using incentives at the unit level to help improve beverage sales and unit-level margins. “We are already seeing a few percentage points of increase in our beverage attachment rate,” Thompson said. That comes in advance of the chain’s relaunch of its drip coffee program, expected this spring. – Source: NRN.
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