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David Novak: Leaders Must Recognize and Praise their Teams

Recognition is the secret weapon to winning in the hospitality business, according to David Novak. The co-founder and former CEO of Yum! Brands Inc. is an evangelist for employee motivation through praise. He delivered a keynote speech at the recent MUFSO conference. “Every leader casts a shadow,” Novak said. “You set the tone for the company.” An essential element of that tone is creating positive energy, the by-product of a culture of recognition. “You have to take people with you to make big things happen,” said Novak, who retired from Yum in May 2016. “You have to get your ‘people capability’ right to give customers what they’re really looking for.” Novak outlined his three-pronged approach to leadership: Know thyself. Leaders need to know themselves, their strengths and weaknesses, and see themselves as a work in progress. Novak said that over the years he prompted members of his team at all levels to be honest when asked what they thought of him as a leader. He also asked what they would do if they had his job. “It’s amazing how much feedback I got,” he said. “I really feel that understanding who you are and seeking out feedback helps you become a better leader,” Novak said. View the business as a marketer. Novak, who began his career in marketing, said marketing skills come in handy to engage both internal audiences (employees) and external groups (consumers and franchisees). He provided several examples where marketing research and techniques helped turn around consumer or franchisee acceptance of products, for instance, Taco Bell’s introduction of a new quesadilla and stuffed burrito, and the rollout of breakfast. Create a team atmosphere. “If you want to connect with others, you need to create a team environment where everyone connects at every level of organization,” Novak said. He recalled when he first took over the KFC system and inherited a struggling system and poor morale. “It was the perfect opportunity to use recognition to fire up the organization,” Novak said. Looking for something more memorable than an employee or franchisee of the month plaque, he settled on a rubber chicken, which he presented to honorees along with $100. Photos of the winners cover the walls and ceiling of Novak’s office at the corporate headquarters. “It’s amazing how this little floppy chicken lit up the place,” Novak said. “People were crying tears of joy. The gesture, along with other business moves, such as working more closely with franchisees to develop new products, turned the brand around.” Novak later introduced similar kitschy awards — a giant cheese head for Pizza Hut and a set of walking dentures at Yum — ultimately doling out more than 42,000 awards over a 15-year span at Yum. The awards have inspired even more recognition worldwide across Yum’s divisions. “There’s no question in my mind that recognition is the soft stuff that drives hard results,” Novak said. – Source: NRN.

Construction Permit Issued for McDonald’s New West Loop Headquarters

Perhaps the single most important and potentially transformative developments to hit Chicago’s West Loop in a number of years, McDonald’s new corporate campus is ready to break ground at the site of Oprah’s demolished Harpo Studios. The nine-story, block-wide project from developer Sterling Bay and architect Gensler just received a permit to begin work on its foundation and two-level, 300-stall underground garage. As with many of Chicago’s larger developments, the issuance of a foundation permit allows work to begin while the remainder of the permitting is still under review. The Micky D’s project quickly made its way through the city approval process after its first public unveiling in June. Meanwhile, Oprah’s old TV studios at Randolph and Carpenter were torn down to make way for the $250 million project. McDonald’s has signed on to occupy the majority of the new building’s rentable space and will vacate its current campus in suburban Oak Brook in 2018. The move to Chicago proper is expected to draw a number of suppliers and other related businesses to the hot and rapidly-changing West Loop. – Source: NRN.

A Survival Plan for Bricks – and – Mortar Starbucks

Web sites, e-commerce and what he described as the Amazon effect could lead both large and small companies to close retail stores in the coming years, said Howard Schultz, chairman and chief executive officer for the Starbucks Coffee Co. “There is no doubt that over the next five years or so we are going to see a dramatic level of retailers not be able to sustain their level of core business as a traditional bricks-and-mortar retailer, and their omni-channel approach is not going to be sustainable to maintain their cost of their infrastructure, and as a result of that, there is going to be a tremendous amount of changes with regard to the retail landscape,” he said in a Nov. 3 earnings call. Mr. Schultz said Starbucks stores have an advantage in that they maintain a special place in terms of a sense of community, an environment where people go to seek out human interaction. Starbucks could be in a unique position 5 to 10 years from now. Other retail stores closing could mean fewer stores competing for Starbucks’ customers, he said. “I’m not talking about the coffee category, Mr. Schultz said. “I am talking overall, but we are in the very, very early stages of a tremendous change in the bricks-and-mortar footprint of retailers domestically and internationally as a result of the sea-change in how people are buying things, and that is going to have I think a negative effect on all of retail, but we believe that it is going to have ultimately a positive effect on the position that we occupy and the environment that we create in our stores.” New Starbucks roastery stores will be designed to enhance the consumer experience. The Seattle roastery, the only one in operation right now, delivered a comp sales increase of 24% in the fiscal year ended Oct. 2, Mr. Schultz said. A roastery in Shanghai, China, should begin operations next year. “Opening in late 2017 on Nanjing Road among the busiest shopping destinations in the world, the Starbucks Shanghai roastery will be a stunning two-level, 30,000-square-foot experiential destination showcasing the newest coffee brewing methods and offering customers the finest assortment of exclusive micro-lot coffees from around the world in an immersive all-sensory experience emblematic of our Seattle roastery, respectfully curated through a unique lens that will make it highly impactful and relevant to our Chinese customers,” he said. Starbucks plans to open roasteries in New York and Tokyo in 2018. A roastery should open in Europe in 2019, but Starbucks has yet to select a city. – Source: FoodBusinessNews.net

Panera Operator Buys 25 Chicago-Area Wendy’s Restaurants

An operator of Panera stores in greater Chicago has bought 25 area Wendy’s locations. Hamra Enterprises, a franchisee company based in Springfield, Mo., said Monday it completed the purchase of 25 Wendy’s restaurants in the Chicago market from the company. The sale of the restaurants is part of an ongoing effort by Wendy’s to pass on more of its company-owned restaurants to franchisees. When the deals are complete, Wendy’s corporate parent will own just 5 percent of its restaurants, or about 315 in total. McDonald’s, based in Oak Brook, is going through a similar process, called refranchising. Franchisees tend to run better restaurants than the corporations, producing far better sales margins and taking more risks that lead to increased profitability. The move also lessens a corporate owner’s liability. The acquisition brings Hamra’s total number of Wendy’s restaurants to 90. The company, which was founded in 1975, also operates Panera Bread in Lake, Kendall, Kane, DeKalb, McHenry and Will counties. Additionally, it operates Noodles & Co. in Missouri and New England. – Source: The Chicago Tribune.

FCPT Announces Acquisition of Sixteen KFC Restaurant Properties for $21.1 million

Four Corners Property Trust, a real estate investment trust engaged in the ownership of high-quality, net-leased restaurant properties, is pleased to announce the acquisition of sixteen KFC properties in Wisconsin, Indiana and Michigan for $21.1 million. The restaurants are occupied under new triple-net leases with 20-year terms, of which seven properties are under a master-lease and nine properties are under individual leases. The transaction closed at a going-in cash cap rate of 6.5%, exclusive of transaction costs. The tenant has a strong track record as a YUM! Brands operator, with over 130 KFC and Taco Bell units, in addition to units with other restaurant concepts. FCPT funded the acquisition with proceeds from its revolving line of credit and from an Internal Revenue Code Section 1031 like-kind exchange (“1031-Exchange”) sale of a Bahama Breeze property in Florida announced in October 2016. Bill Lenehan, with FCPT, commented, “We are pleased to announce our largest sale leaseback to date, in a transaction consistent with our stated acquisition program. Our newest operating partner is an experienced franchisee who is a strong credit tenant.” Source: FCPT.

Shake Shack Elects Josh Silverman to its Board of Directors

Shake Shack Inc. announced that it has elected Josh Silverman to its Board of Directors, effective November 17, 2016. An entrepreneurial executive with experience in media, marketplaces, communications and financial services, Mr. Silverman will become the eighth member of Shake Shack’s Board of Directors and will also serve on its Audit Committee. “Josh brings to our Board a wealth of consumer, technology and leadership experience, and he is passionate about delivering shareholder value while embracing Enlightened Hospitality,” said Danny Meyer, Chairman. “We are so honored to have Josh join our Board of Directors.” “I admire the passion that people have for Shake Shack, and I love the food and the brand,” said Silverman. “I’m ready to leverage my experience in helping fast growing brands unlock their full potential, and I look forward to being a part of Shake Shack’s continued growth and exciting future.” Silverman, 47, was most recently the President of Consumer Products and Services at American Express from June 2011 to December 2015, with overall responsibility for the flagship US consumer cards and global consumer travel businesses. During his tenure, he launched iconic new products, broadened the appeal of the brand, and evolved the product, marketing, mobile and software capabilities of the company. Prior to joining American Express, Silverman was the CEO of Skype, where during his tenure, Skype added more than 300 million users and became ubiquitous across mobile and consumer electronic devices, resulting in record revenues and profits. In recognition of his contributions, TechCrunch nominated Silverman as first runner-up for “CEO of the Year” in 2010. Prior to Skype, Silverman served as the CEO of Shopping.com, an eBay company, held various other senior executive roles at eBay, and was the co-founder and CEO of Evite, which he led from its inception through its sale to IAC in 2001. “Josh’s experience building and running some of the world’s most loved global consumer and technology brands will add a valuable perspective to our Board of Directors,” said Randy Garutti, Shake Shack CEO. “We are excited to welcome Josh to our Board.” Shake Shack.

Taco Bell to Create 100,000 Jobs

Taco Bell is rethinking hiring and retention amid a push to reach 9,000 locations globally by 2022. Over the next six years, the Irvine, Calif.-based quick-service chain expects to add 100,000 new jobs. An estimated 40,000 people are currently employed at company restaurants, and another 170,000 employees work at franchised locations. “Our planned growth over the next six years is going to help us reach $15 billion in global system sales by 2022. With that comes the need to attract and retain top talent so that we’re continuing to deliver the best customer experience possible,” Taco Bell CEO Brian Niccol said in a statement. Earlier this month, Taco Bell launched a “Start with Us, Stay with Us” platform designed to encourage employees to leverage the company’s career building and educational programs. For example, the Graduate For Más program rewards and supports younger workers who are completing high school. The program also helps those who don’t finish high school to prepare for the general equivalency test. Taco Bell has committed to hiring 1.5 million workers between 16 and 24 years old as part of the 100,000 Opportunities movement, a coalition begun by Starbucks in 2015 to hire 100,000 young people nationwide by 2018. Taco Bell said 600,000 workers have made the commitment to graduate high school, and more than 200 are in the GED certificate program, with 57 already graduated with their GED. At the college level, Taco Bell is working with Excelsior College to offer flexible online degree options at a discount to employees and their immediate family. About 194 team members are enrolled in the Excelsior program, and three have graduated so far, the company said. The company also offers tuition assistance of up to $5,250 per employee each year for shift leads and above, including those at headquarters. In the past year, Taco Bell has promoted more than 2,000 company-operated restaurant employees to management roles, the company said. In addition, Taco Bell’s Live Más Scholarship program rewards dreamers, innovators and creators who don’t fit into traditional academic or athletic scholarship programs. This year, 50 restaurant workers were awarded $275,000 in Live Más scholarship money. Frank Tucker, Taco Bell chief people officer, said in a statement that working at Taco Bell is a first job for many. “Whether they want to start with us for a year or stay with us for life, we feel it’s our responsibility to make sure we’re offering benefits and programs that create innovators and leaders for our communities inside and out of our restaurants,” Tucker said. – Source: NRN.

Noodles & Company Looks at Closing More Under-Performing Restaurants

Weighed down by another quarterly drop in same-store sales, Noodles & Company says it will consider closing some of its under-performing stores or converting company-owned restaurants to franchised properties where local operators may be better equipped to turn them around. Comparable restaurant sales fell for the fifth consecutive quarter, interim CEO Dave Boennighhausen said during the Broomfield-based restaurant chain’s quarterly earnings call — this time by 0.7 percent from the third quarter of 2015. While revenue rose 4.6 percent to $122.7 million for the 528-store fast-casual chain, Noodles reported an adjusted net loss of $1.1 million or 4 cents per diluted share. To turn its fortunes around, the restaurant will make several changes to its menu, Boennighausen explained. Last month, it eliminated sandwiches and “buff bowls” in which its signature pasta was replaced with rice. It’s begun testing new menu items including green curry and beef bolognese. And Noodles also is testing the addition of oven-roasted tomatoes, more flavorful sauces and higher-quality ingredients. But with the bottom 10 percent of the chain’s restaurants being responsible for a $2.6 million hit on the company’s EBITDA (earnings before interest, taxes, depreciation and amortization), Boennighausen said Noodles also will take steps to address its biggest under-performers. That could mean re-franchising some locations and closing others. The chain already closed 16 restaurants at the end of 2015. “We’re looking at a lot of different alternatives, and we know we’ll be able to move relatively quickly on them,” Boennighausen said during the earnings call with analysts and media. Company officials will consider several factors in determining the future of those stores, including cash flow versus occupancy costs, the trade areas in which they reside and the characteristics of each site, he said. Restaurants that would take too long or require too much investment to be made profitable likely would be closed. Those with better prospects for improvement would be prime candidates for franchising, he added. Noodles currently has locations in 35 states, Washington D.C. and Toronto, but Boennighausen did not estimate how many locations would be closed or where those locations might be. The company will slow growth to 10 or 15 new restaurants in 2017 and will concentrate those new stores in more established markets, such as Colorado, Minnesota, Wisconsin and Washington D.C., he said. Company officials have not yet spoken with existing franchisees — which account for 73 of Noodles’ 528 locations but which actually reported growth in same-store sales during the third quarter — about whether they would like to grow their territories, Boennighausen said. Noodles is working on operational changes as well. It is experimenting with letting guests bus their own tables in several markets in order to cut down on front-of-the-house labor costs, and it has introduced a pilot loyalty-rewards program in certain stores that will try to increase guest frequency while letting the chain know more about its customers, he said. “These initiatives could really propel the business trajectory for years to come,” Boennighausen added. “I remain confident in the future success of Noodles & Company. We have a unique, differentiated brand. And we are taking important, bold steps to increase the culinary relevancy of the brand.” – Source: Denver Business Journal.

Buffalo Wild Wings Targets Nashville for Taco Concept

Sports bar chain Buffalo Wild Wings is betting big on the fast-casual dining segment. The Minneapolis-based company announced plans to expand its street-style taco concept ®Taco, formerly Rusty Taco, to at least 10 new markets, including Nashville. Buffalo Wild Wings is seeking franchise and business partners for ®Taco after Buffalo Wild Wings became a majority investor in the taco concept in 2014. “We see an opportunity to grow ®Taco with partners who share our enthusiasm for the brand and want to bring this fresh and fun restaurant to more people in new markets,” Tom Berzinski, vice president and managing director of ®Taco, said in a statement. Emerging restaurant concepts are a relatively small but key component of Buffalo Wild Wings’ growth plan. Also in 2014, the company became a minority investor in Los Angeles-based PizzaRev, where customers can craft their own pizzas. It’s no surprise Buffalo Wild Wings wants a piece of the fast-casual segment. Traditional casual dining options continue to lose ground to fast-casual eateries, which typically offer counter service, higher-quality food than fast-food restaurants and amenities such as alcohol sales. The fast-casual segment has seen traffic grow an average of 7 percent to 9 percent every year since 2007 while casual dining traffic has dropped an average of 3 percent to 4 percent for the past several years, according to NPD Group. Millennial diners are the key drivers of growth in the fast-casual segment.

Buffalo Wild Wings wanted a scalable fast-casual concept to add to its portfolio. It rebranded Rusty Taco to ®Taco in 2015 as it continues to expand the concept outside Dallas. The original Rusty Taco opened in Dallas in 2010. “As founder Rusty Fenton always said, ‘Tacos are the most important meal of the day,’ and we believe providing guests with the freshest ingredients and authentic tasting street-style tacos at an affordable price in a friendly and fun atmosphere is a concept that works well regardless of geography,” ®Taco CEO Steve Dunn said in a statement. According to the ®Taco website, the restaurant offers “a variety of tasty tacos at an affordable price” for breakfast, lunch and dinner. The menu includes a choice of 13 tacos on corn or flour tortillas, including a roasted pork taco, a beef fajita taco, a brisket taco, a grilled poblano and mushroom taco, a black bean taco and a fried chicken taco. Breakfast tacos, chips, salsa, guacamole, craft beer and margaritas made with “cheap tequila and fresh lime juice” round out the menu. Prices vary by location, but the Minneapolis menu lists tacos for $2.50 and $3, chips and salsa for $2 and margaritas for $5. ®Taco restaurants are typically between 1,800 and 2,500 square feet with bold colors, an outdoor patio and an open kitchen. R Taco has 13 locations in four markets: Dallas; Denver; Omaha, Neb.; and Minneapolis/St. Paul. Buffalo Wild Wings plans to nearly double the amount of stores over the next six months with expansions into Indianapolis; Cincinnati and Cleveland, Ohio; Louisville and Lexington, Ky.; Nashville; Oklahoma City and Tulsa, Okla.; and St. Louis and Kansas City, Mo. Founded in 1982, Buffalo Wild Wings has more than 1,160 locations worldwide. – Source: The Tennesseean.

Panda Restaurant Group Brings Famed Ramen Shop to L.A.

The first branch of Japanese ramen restaurant Ippudo in Southern California is scheduled to open in Santa Monica next year. Panda Express owner Panda Restaurant Group, which generated $2.5 billion in sales last year, is working in partnership with Chikaranomoto Co., a Japanese company whose primary holding is Ippudo, and which had sales of over $103 million in 2013, to expand the brand on the West Coast. The two companies formed a joint company, I&P Runway, last year. The first Ippudo location outside of Japan opened in New York City in 2008. The first West Coast location is scheduled to open in Berkeley in January, according to a spokesperson. Another is planned to open in San Francisco next year. Ippudo, whose offerings include $15 bowls of ramen noodles, started in 1985. Panda Restaurant Group, which is based in Rosemead, is also acting as the American franchiser of Uncle Testsu, a Japanese cheesecake restaurant. Uncle Tetsu’s first location on the mainland United States opened in Arcadia in September. The Santa Monica location of Ippudo will be on 2nd Street and Santa Monica Boulevard, near the Third Street Promenade.—Source: Los Angeles Business Journal.

Tilman Fertitta Grows Empire in New York

Landry’s Inc. founder Tilman Fertitta is in the process of acquiring New York-based BR Guest Hospitality and its Bill’s Bar & Burger, Dos Caminos and Strip House restaurants, the Houston-based restaurateur said. Fertitta, who is also host of CNBC’s “Billion Dollar Buyer”” reality show, said the deal with BR Guest owner Starwood Capital Group will close in early December. Terms of the deal were not disclosed. “It’s 15 Manhattan restaurants that include the Dos Caminos, the Bill’s Burgers of Manhattan, the Atlantic Grills, Blue Water Grill and Isabella’s,” Fertitta said. “When you put those with our Chart House and Bubba Gump’s and Maestro’s and Morton’s, it will give us 21 restaurants in Manhattan, which will make us the largest independent operator in Manhattan.” Fertitta said he has long had an affinity for New York City. “I have a place in New York, and I like being there,” he said. “We’re excited. We like these brands. They’ve been around a long time, and they are successful.” BR Guest’s holdings include restaurants and bars in New York, New Jersey and Nevada, including two Atlantic Grill locations, five Bill’s Bar & Burger units, Blue Fin, Blue Water Grill, six Dos Caminos restaurants, Isabella’s, Izi, Speakeasy, two Strip House units, and Troy Liquor Bar. Fertitta serves as chairman and CEO of Landry’s Inc., which includes hospitality companies ranging from the Golden Nugget hotels and casinos to Claim Jumper, McCormick & Schmick’s Seafood & Steaks, Mitchell’s Fish Market and Saltgrass Steakhouse. Fertitta is acquiring BR Guest Hospitality from the Greenwich, Conn.-based Starwood Capital private-equity firm. Starwoodacquired 0 percent of BR Guest in 2007 from founder Stephen Hanson for a reported $150 million, and purchased the remainder of the company several years later. Fertitta said he intends to keep BR Guest’s New York-based management.  “We don’t expect to make any changes,” he said. Over the past few years, BR Guest has closed several of its concepts, including Ruby Foo’s and Ocean Grill. James Gersten, a veteran of the New York restaurant industry, stepped down as CEO in September 2015, after two years in the role. – Source: Restaurant Hospitality.

Bar Louie Continuing National Expansion

Bar Louie is still growing in 2016, announcing recent corporate openings in California, Maryland, New Jersey, Ohio, and franchise agreements in South Carolina and Kentucky. Bar Louie has expanded its collection of local gathering spots to more than 120 national locations, with 14 new locations opening in 2016 at least 20 more openings planned for 2017. Now in 28 states across America, Bar Louie recently opened in California at 9301 Tampa Avenue in Northridge and on 8860 Apollo Way in Downey. In addition, it set up shop in Anderson Town Center at 7480 Beechmont Avenue in Cincinnati—its second location in the Queen City—and has signed new franchise development agreements with groups in Charleston and Myrtle Beach, South Carolina, and a deal for three new locations in Louisville and Lexington, Kentucky. “The recent deals and openings are crowning achievements for the Bar Louie brand and we are setting up nicely to be a unique presence in neighborhoods across the country,” says Bar Louie CEO John Neitzel. “We have an aggressive national growth plan to bring our high quality food and drinks to everyone.” Bar Louie is expanding both through corporate locations and through qualified franchise partners. Two of Bar Louie’s 16 openings in 2016 were with franchisees, while the bar and eatery plans on opening five franchise locations in 2017. Each location will be approximately 7,000 square feet and create about 50 new jobs for communities.  In times when many restaurants are closing their doors, Bar Louie’s Green Initiative allows it to make any space conform to a Bar Louie and take advantage of re-purposing as much as possible. Every Bar Louie is different and takes on the local flavor and environment that it is in. “We are excited and honored to bring Bar Louie to the people of Lexington, Kentucky,” sasaysid Brandon Watson of the Jackson Group 8five9, which signed on for three locations in the Bluegrass State. “We have no doubt that our food and drinks will impress every neighborhood and become a mainstay in cities and towns for years to come.” The bar and eatery is still actively looking to attract local entrepreneurs and restaurateurs who are looking to expand their portfolio and Bar Louie will take a look at any restaurants that are seeking to close. To appeal to a broader consumer base, the concept offers four revenue streams with its four unique dayparts—lunch, happy hour, dinner, and late night. Founded in Chicago’s River North neighborhood in 1991, Bar Louie emerged from local restaurants and sandwich shops opened by its founders, local Chicago restaurateurs. When Bar Louie was first established, its two founders set out with a goal to continue the tradition of these shops while also giving local residents dining and beverage options for each part of the day. The “Louie” sandwich was a staple of the early restaurants and is still served at Bar Louie establishments across the country. – Source: fsrmagazine.com.

True Food Kitchen Names Christine Barone CEO

Fox Restaurant Concepts has named Christine Barone to the new position of CEO of its True Food Kitchen casual-dining brand, the company said. The Phoenix, Ariz.-based multi-concept concept said Barone, who most recently served as Starbucks’ senior vice president of food, evenings and licensed stores, would oversee the 13-unit True Food Kitchen’s transition to a stand-alone company under private-equity company Centerbridge Partners L.P.’s majority ownership. “Christine’s knowledge and experience in the food industry is exactly what we’ve been looking for to take True Food Kitchen to the next level,” said Sam Fox, founder of Fox Restaurant Concepts, in a statement. “Her passion for building and leading teams, along with her proven track record of operating complex businesses, will be instrumental in the transition of True Food Kitchen.” The company said Barone would lead True Food Kitchen’s growth strategy. The brand this year has opened new restaurants in Austin, Texas and Pasadena, Calif. Later this fall, openings are scheduled for Palo Alto, Calif., Walnut Creek, Calif., and Chicago. True Food openings planned for 2017 include: Bethesda, Md.; Boca Raton, Fla., King of Prussia, Pa., Naples, Fla.; Nashville, Tenn.; Plano, Texas; and San Diego, Calif. “I’m a big fan of True Food Kitchen’s unique approach to thoughtfully crafted, nutrition-focused food and look forward to bringing this concept to more people in new cities across the U.S.,” Barone said in the company statement. During her time at Starbucks, Barone led the rollout and launch of La Boulange bakery offerings to more than 12,000 Starbucks stores in the United States and Canada. Prior to Starbucks, she was a management consultant with Bain & Co. Fox Restaurant Concepts has 16 concepts with 47 restaurants spanning eight states. Besides True Food Kitchen, its brands include: The Arrogant Butcher, Blanco Tacos + Tequila, Culinary Dropout, Flower Child, The Greene House, The Henry, Juby True, Little Cleo’s Seafood Legend, North Italia, Olive & Ivy Restaurant & Marketplace, The Rocket, The Showcase Room, Wildflower American Cuisine, and Zinburger Wine & Burger Bar. – Source: NRN.

Burger King Looks to Grow in Canada

Look out, Mickey D’s: Burger King has ambitious plans for expansion in Canada. Two years have passed since Burger King’s blockbuster takeover of Tim Hortons, and the fast food giant is now setting its sights on growing its own brand in Canada as it continues to take Tims international, said new Burger King Canada president Eric Hirschhorn. “We as a company are now ready to take advantage of (and) to fulfil the potential of what Canada could be for our business,” he said in an interview. “And certainly, now that we’re so entrenched in Canada with Tim Hortons, we have a much deeper understanding of how big and how important Canada can be for us,” said Burger King’s former chief marketing officer. Both Tims and the burger chain have operated under the Restaurant Brands International banner — whose majority shareholder is Brazilian private equity firm 3G Capital Partners — since the $12.5-billion takeover deal was completed in December 2014. Though Burger King has just 281 locations in Canada, Hirschhorn said the company has the potential to be as big as McDonald’s is north of the border — where it’s the largest burger player by far with 1,400 restaurants. “It’s certainly not out of the question,” said Hirschhorn, who worked with Restaurant Brands’ chief executive Daniel Schwartz at 3G Capital Partners back when it acquired Burger King in 2010. “We’re pretty ambitious people and we’re not all that patient. Our goals and ambitions are very large. We believe this business can be as big as some of our peers,” he said. To that end, Hirschhorn says he has set up a team to work on the expansion and focus on the business in Canada, though he stayed mum on exactly where and how fast the chain’s growth would happen. He did say that a more modern store redesign similar to locations in the U.S. and in some Asian countries would roll out by the end of the year, and that Burger King will introduce more new products to the Canadian market like the Jalapeno Chicken Fries launched this week after runaway success in the U.S. There’s no word yet on whether Burger King hotdogs or the burger-burrito mash-up known as the Whopperrito will also migrate north. But he said there are plans for more breakfast food items in a market virtually owned by McDonald’s, Tims and Starbucks due to their popular coffees. After five years learning all aspects of the burger business at the company’s Miami headquarters, Hirschhorn says he jumped at the chance to run the chain in Canada. After all, Restaurant Brands International is headquartered in Oakville. “It was a no-brainer for me. It’s a gem of a market, of a country, of a business opportunity,” he said. He compared Canada to China, Russia, Brazil and India as “equally primed to take off and grow as a major market for us around the world.” And while he acknowledged stiff competition from bigger burger joints including A&W and Wendy’s, he said there’s still room for more. “People in Canada love fast food similarly, if not more, than people in the U.S. even,” Hirschhorn said, noting the demand for hamburgers has outpaced the growth overall in fast food in Canada. “We’re not fighting a headwind here,” he said. Doug Fisher, president of food consultancy FHG International in Toronto, doesn’t see it that way. “Burger King is not so Canadian. It’s not relevant except that it bought Tim Hortons,” he said. “There are much better quality products out there. Burger King is a second-rate player when compared to McDonald’s and A&W,” Fisher added. Indeed, as A&W and McDonald’s waded into the antibiotic-free meat market at a higher price point and self-serve kiosks, Burger King went after value-seeking customers with two-for-$5 sandwiches and 10 chicken nuggets for $1.99. “Their big innovation in the last year was hotdogs in the U.S. I don’t see anything great coming from them,” said Fisher. – Source: Toronto Star.

Texas Barbecue Chain Ready to Debut in Franklin County

A nationally known barbecue chain is making its way into Franklin County. Kelley Millikin, a franchisee for Highland Park, Texas-based Dickey’s Barbecue Restaurants Inc., expects to open this month, possibly by late next week, at 3915 Britton Parkway in Hilliard. It won’t be the first Dickey’s in Central Ohio. Another franchisee runs a pair of restaurants in Delaware County, but it will be the first in Franklin County. While it might be a new-ish name to many around Columbus, the family owned business started 75 years with a single barbecue shack and grew into a Dallas-area chain in the 1960s before starting to franchise in the 1990s. It stands at more than 560 restaurants in 43 states today. “I knew Dickey’s well because every time I’d fly into (Dallas/Fort Worth International Airport), I would stop and eat it,” Millikin told me. The 18-year resident of Hilliard is a former Walgreen Co. executive. As that drug store chain cut staff, Millikin took his severance and turned it into a Dickey’s franchise. “Did I want to go back into something corporate or do my own thing?” he said. “Now I’m working eight minutes from my home instead of traveling to Chicago every week.” Dickey’s Barbecue Pit is fast-casual barbecue. – Source: Columbus Business First.

The Cheesecake Factory Opens New California Location

The Cheesecake Factory announced the opening of its newest restaurant in Valencia, California. With more than 250 menu selections including nearly 50 lower calorie SkinnyLicious dishes and a new “Super” Foods section—handmade, in-house with fresh ingredients—and more than 50 signature cheesecakes and desserts, The Cheesecake Factory’s opening provides exciting new choices for shoppers and area residents. Featuring imported limestone floors and custom wood columns, hand painted murals and modern lighting, the new restaurant includes the distinctive and contemporary décor that is as creative and imaginative as The Cheesecake Factory’s extensive menu. The Cheesecake Factory of Valencia is located at 24250 Town Center Drive, # 110.  – Source: fsrmagazine.com.

Guy Fieri’s Times Square Restaurant Brought in $17 Million Last Year

Nearly four years after Pete Wells’ now infamous review blasting Guy Fieri’s eponymous Times Square eatery Guy’s American Kitchen & Bar ran in the New York Times, the restaurant is doing better than ever. According to a newly released analysis of the top 100 grossing independent restaurants (places with five or fewer locations), Fieri’s first New York City restaurant took in $17 million in 2015—making it the 39th top earning independent restaurant in the country. The survey, conducted by trade publication Restaurant Business, estimates that the Times Square eatery served 405,000 meals with an average check of just $42. That’s a lot of donkey sauce for a lot of people. Last year, the restaurant grossed about $16 million. Compare that to the country’s highest grossing restaurant– Tao Asian Bistro in Las Vegas—which served just over 22,700 meals with an average check of $96. Tao made $47.9 million in 2015. And despite being open for just 10 months out of the year, the original Joe’s Stone Crab in Miami Beach was the country’s second highest grossing restaurant with over $36.8 million in sales last year. Restaurant Business’ methodology utilized independent surveys and self-reported figures, not just sales data from the restaurant groups themselves. New York City boasts 30 of the country’s top grossing restaurants making it the most well represented city on the list. But Las Vegas, which has 15 eateries on the top 100, owns most of the highest checks. Carnevino, Mario Batali and Joe Bastianich’s Italian steakhouse in The Palazzo Hotel, had an average ticket of $180. The cost of a classic Florentine porterhouse at Carnevino is $170—the most expensive meat on the menu. The most budget-friendly top earner was Zehnder’s of Frankenmuth in Eastern Michigan with an average check of $15. They served well over 967,000 meals of fried chicken, Bavarian sausages and wiener schnitzel in 2015. Americans love steaks, seafood and Italian cuisine– and a variety of price points are well-represented in the top 100. But all of the top earners have one thing in common– they’re geared bigger crowds and built to accommodate hundreds of diners at a time. – Source: Fox News.

Yum China’s Ready to Export Mongolian Hotpot to the World

Yum China Holdings Inc., the fast-food spinoff that began trading in New York, is ready to step out of the shadow of its parent company. The newly minted business, which owns the KFC and Pizza Hut brands in China, has a carte blanche opportunity to pursue growth, Yum China Chief Executive Officer Micky Pant said in an interview Wednesday. The company will add 600 restaurants a year in China and plans to export its Mongolian hotpot chain that’s popular in the country around the world. “We really have no restrictions on us at all,” said Pant in Shanghai. “We have the flexibility to invest in anything we like. It’s a blank canvas for us.” The separation follows a tumultuous stretch for the company’s Asia operations — Yum has been losing Chinese market share lately after a food-safety scare, changing tastes and more local competition took a toll. Yum China may now win more customers over by being considered a local business, according to Yum! Brands CEO Greg Creed. “This is a Chinese brand; this is not a U.S. brand anymore,” Creed said in an interview with Bloomberg Television. The separation “reduces volatility and reduces risk.” Yum shares rose about 8 percent to close at $26.19 in its first day of trading in New York. At $9.5 billion, its market value compares with $22.3 billion for Yum! Brands Inc. Pant said the company plans to use successful local strategies to grow — rather than tactics that work in the U.S. That includes rapidly adding new restaurants to hit a goal of more than 20,000 outlets within 20 to 30 years, compared to the 15,000 restaurants in the U.S., he said. Yum China will also look outside of China for growth. The company plans to expand its Little Sheep hotpot outlets globally through franchises, adding to its 40 outlets in North America. “The place to sell Chinese food is outside China,” said Pant. The only restriction on the company,“a gentleman’s agreement with Yum Brands,” is that it won’t compete in the same areas, said Pant. It isn’t actively looking for new acquisitions, he said. Corvex Management founder Keith Meister, an activist investor, began advocating for the spinoff in mid-2015. He argued that the Chinese operations — which contribute about half of Yum’s sales — could generate an additional $16 a share in value for the Louisville, Kentucky-based company. Yum China has a tough task ahead of it. The company’s total share of the Chinese market for fast-food chains dropped to 30 percent last year, from 40 percent in 2012, according to data from Euromonitor International. It has suffered from consumers shifting to healthier options and domestic chains sprouting up with more variety. Unlike Yum’s U.S. operations, where most of the restaurants are run by franchisees, Yum China directly operates over 90 percent of its outlets and plans to triple the number to more than 20,000 in the long term. And Yum could be a model for other companies, said Shaun Rein, a Shanghai-based managing director of China Market Research Group. “When their China operations get so big and are clearly catering just to the China market, splitting off could unlock a lot of value for shareholders,” he said. “If I were an activist hedge fund investor, I would be looking at carving out brands within large conglomerates that are China plays.” – Source: Bloomberg News.

Luna Grill Secures $30M in Financing

Luna Grill’s brand of Mediterranean food seems to be appetizing to investors. The San Diego-based fast-casual food chain recently secured nearly $30 million in financing from private investment firm CapitalSpring, which will be used for expanding and updating restaurants. The most it had received in a funding period before this was roughly $4 million. The 12-year-old company has 30 restaurants and is constructing 18 more in the next year. Sean Pourteymour, founder and CEO of Luna Grill, said Wednesday that the company was “pleasantly surprised” by the amount of money it received. “It gives us a lot of breathing room to focus on our culture, and the opening of Luna Grills that we have in the pipeline,” he said. Pourteymour said the money will be used for research and development, upgrading infrastructure and building the 18  restaurants, which are mostly in Southern California and the Dallas-Forth Worth area. Luna Grill will move its headquarters to a new 10,500-square-foot office building in Carmel Mountain Ranch, more than double the size of its previous location. Food analyst John Gordon, founder and principal of Pacific Management Consulting, said Mediterranean food is popular right now with investors because it has a balanced draw of men and women. Also, it tends to have a consistent pull of customers at lunch and dinner. “Mediterranean is hot,” he said. “Daytime, when many restaurants are slower, Mediterranean is able to attract nice business.” Gordon said there are private equity firms that do nothing but scout restaurants’ chances for potential growth. “The restaurant space in the United States is very crowded, very busy,” he said. “But, there is always room for new brands, which take on a life of their own.” Pourteymour said by the time the new restaurants open, it will have added 400 to 500 new employees. It currently has more than 700 workers. He said the restaurant has aspirations to spread throughout the United States but will be careful about it. “We want to do this in a very methodical way,” Pourteymour said. “We are 12 years old and most of our growth has happened in the last three to four years . . . We want to be responsible, not just put up stores because we can. We want to be cautious but not complacent.” – Source: The San Diego Union Tribune.

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