Panera Competitor Objects to JAB Sale

A Montana-based bakery-café chain filed a Federal Trade Commission objection this week that questions the potential “anticompetitive effects” of the sale of Panera Bread Co. to JAB Holding Co. Dillon, Mont.-based Great Harvest Bread Co., which has 196 units nationwide, claims the proposed merger puts its franchisees at competitive risk, especially in coffee programs, and could also be affected by a pending trademark infringement lawsuit that began in March 2016. JAB Holding, owner of coffee and breakfast concepts, agreed in April to pay $7.5 billion for St. Louis-based Panera Bread Co., which has 2,042 bakery-cafés in the United States and Canada. A closing date on the deal has not been announced. A Panera Bread spokesman said Wednesday that the company does not comment on legal matters. Eric Keshin, president of Great Harvest, told Nation’s Restaurant News on Tuesday that his company filed for a “Bread. The Way It Ought to Be” trademark in October 2014, and Panera Bread launched an advertising campaign in June 2015 with the tag, “Panera Bread, Food the Way It Should Be.” “I spent 30 years in the advertising industry, and the rule of thumb in trademark infringement from the consumers’ perspective is: Is it confusingly similar?” Keshin said. “We believe it was, so we asked for a cease and desist and didn’t get a response.” Great Harvest filed a federal trademark infringement lawsuit in March 2016, in the Western District of North Carolina. “It’s been making its way through the legal process,” Keshin said. Depositions have been requested, but no rulings have been issued and required mediation is approaching, he said. Great Harvest filed the Federal Trade Commission claim under the Hart-Scott-Rodino Antitrust Improvement Act’s pre-merger notification program. The FTC complaint notes that JAB owns Peet’s Coffee & Tea, a product used by “a significant number of Great Harvest’s franchisees.” “We are concerned that after the proposed merger, the benefit of being a Peet’s coffee partner will be eliminated,” wrote Charles Monk II, lawyer for Great Harvest, in the complaint. “JAB will have the opportunity to remove the benefit of that relationship from Great Harvest stores so that its competing Panera stores get the benefit of that trade.” The Peet’s brewed coffee program is highly selective, Keshin said. Given that JAB owns Peet’s, Keshin said Great Harvest’s competitive advantage could be at risk. “They could turn around and tell us they would no longer offer the Peet’s program because they own Panera,” Keshin said. In the complaint, Great Harvest also references its history with Panera and the trademark infringement suit. “Great Harvest is concerned with the detrimental impact on competition if this merger proceeds; and, that it is even more unfair given the prior conduct of Panera in using the registered intellectual property rights taken from Great Harvest. …” Keshin said it is up the FTC and the Justice Department to examine the proposed sale. – Source: NRN

NYC’s Iconic Papaya King Preps for Explosive Growth

The concept, which was founded in 1932, is ready to bring ‘the best hot dog in the world’ to the masses through franchising. Naturally, Wayne Rosenbaum is a bit biased. But, unlike many Big Apple natives, he’s not territorial. “There’s no reason only New Yorkers should have the best hot dog,” says Rosenbaum, president of Papaya King. It’s only taken 85 years for the big city to start sharing. Papaya King, once called the best hot dog in New York by Julia Child, recently linked up with one of the franchising industry’s most recognizable names as it targets explosive growth. Fransmart, the development company behind Five Guys and Qdoba, is directing the future of the legacy brand, which was founded in 1932 by Gus Poulos on the corner of 86th and 3rd as a juice bar. Dan Rowe, the CEO of Fransmart, says 500 locations across North America is a realistic goal. After that, they will start looking across the ocean and truly pop the lid off Papaya King’s potential. The plan is to go after the 40 biggest media markets in North America (Canada included) and drop franchisees in each one. New York, meanwhile, will continue to grow corporately. Currently in its home state, there are two Manhattan spots along with one unit on Flatbush Avenue in Brooklyn. One thing that impressed Rowe and Fransmart, however, was that Papaya King already proved its mettle as a scalable brand. In November 2016, a franchised location opened on Paradise Road in Las Vegas, and another store—this one on the Strip, complete with full bar—is coming. The franchisee is a large, multi-unit Checkers Drive-In operator. “That was a big deal for us because that’s usually the kind of franchises we sell,” Rowe says. “We don’t normally do mom-and-pops.” Papaya King might be small but it wields a mighty fanbase. Anthony Bourdain and Andrew Zimmern have been spotted there on numerous occasions and Emril Lagasse once even manned the grill. The Beatles stopped by before their legendary Ed Sullivan performance and The New York Times labeled Papaya King “the best hot dog in the world.” “Basically, we decided to start franchising because we want America to realize that we are the No. 1 frankfurter around and we have been around for a reason,” Rosenbaum says. Not to mention the tropical drinks, such as Strawberry Fields and Coconut Champagne, as well as fresh smoothies and fresh juices. “I’ve been having those for 20 years,” Rowe says. Papaya King figured Vegas was a good market to test the waters. The brand was approached by the franchisee, who happened to be from New York, and a deal was struck. “We figured that it would be a good market to break into it because a lot of people vacation, tourists, locals, everybody has to eat. And what do they have to eat? There’s a lot of over-priced stuff in Vegas. We figured that Las Vegas needed a Papaya King to have something for the everyday guy and the tourist alike. And who doesn’t like a great American hot dog?” Rosenbaum says. The idea to franchise, he adds, has been seven years in the making. It was driven by the notion that “everybody in America wants a piece of New York. Whether they’ve been here or not.” But it’s also keyed, especially from Rowe’s perspective, by Papaya King’s footprint and its ability to drive massive volume from a compact model. “They’re not complicated. They’re not expensive to build. His store in New York, for example, does $1.5 million out of 400-square feet and, even during the busy, busy period you never see more than three or four people in the store,” Rowe says. In other words, you’re talking about Five Guys volume with basically a quarter of the staff. Also, while this topic has been breached before, hot dogs are definitely the bride’s maid to hamburgers in this business. There are some concepts—Nathan’s and Wienerschnitzel come to mind—as well as fast casual Dog Haus, featuring frankfurters in a starring role. From a nationally branded perch, however, it’s not exactly a common sight. “If you go to airports, you go to food courts, you just don’t see a consistent, high-quality branded hot dog player,” Rowe says. “So we think we can do that. We think there is room. There are some older ones, but they’ve kind of gone through their growth trajectory already. These guys have not. I think there is something new in that it is just now going to be growing with us around the country.” Rowe pictures airports, colleges, and pretty much any busy, urban mass gathering area as a prime target. He doesn’t see many roadblocks, either. “The most important thing in restaurant marketing is real estate,” Rowe says. “You’ve got to have great locations. You’ve got to be where people are.” Not only does Papaya King require a small footprint, but also its ingredient and recipe list is easily repeatable, and at a high level. There isn’t a lot of venting or equipment needed. Most of the food operation can be set in a kit and given to a franchisee on day one. Papaya King is going to move aggressively, Rowe adds. “If these sites pop up we’re going to take them first and put a franchisee in them second. We’re never going to let great sites go,” he says. “If a great site pops up we’re going to snatch it up and then find a great local partner. It’s important because we want good local operators. We want people to be in their stores on a regular basis. So you have to have great local franchisees.” That’s a similar approach to how Fransmart grew Five Guys. And also in a familiar vein, Papaya King is promoting a product that isn’t trendy or unique. “It’s harder to launch a brand-new way of eating,” Rowe says. “But people already like hot dogs. People are so brand conscious now that you just don’t see hip, trend, cool hot dog concepts, and we’re going to change that here.” Rosenbaum says their role as an operating company will be “to make sure that we have the exact same restaurant as we have in New York.” That means all the same ingredients. All the same recipes. Most will have a similar look, with murals, logos, and brandings. And every franchisee will be required to train in New York. “The ingredient list is not huge. It’s all made fresh. Literally you could roll it out and it’s not going to cost a lot of money. So it’s going to be good for qualified individuals who know what they’re doing,” he says, adding that they’re looking for clusters and territories from willing operators. “The excitement has been built,” Rosenbaum adds. “Everybody involved is saying it’s time to make this push to make this a national brand. We’re ready for it.” – Source: www.qsrmagazine.com.

The Melting Pot Lifts the Financial Burden Off Franchisees

The Melting Pot is removing the financial burden off potential franchisees with a program that allows them to invest as little as 5 percent into the purchase of a restaurant. Called “Path to Grow,” the program allows the franchisor to provide up to 95 percent of the financing in the form of a loan to the franchise partner to allow them to acquire the location. “[The program] casts a wider net of potential buyers for an existing franchisee that is looking to sell,” says Dan Stone, chief business and people development officer at The Melting Pot. “There are many great candidates out there who have been operating or managing a Melting Pot or another casual-dining restaurant brand, but they may not have the funds, net worth, or credit score to qualify for financing through traditional means.” Stone says The Melting Pot closely evaluates a restaurant’s performance in determining whether it will qualify for the Path to Grow program, and locations that may experience some challenges in obtaining financing are given priority. “If a particular restaurant’s sales have declined year over year—regardless of the reason—this is often a nonstarter for most banks,” he says. “We have the benefit of analyzing why sales have gone down, and are less averse to risk than an underwriter from a lending institution who is not intimately [familiar] with our brand or the location.” The program gave long-time employee Lucinda Hollis the financial resources to purchase a location in Destin, Florida. Hollis started at The Melting Pot 12 years ago as a server, working her way up to several positions, including general manager and area manager. “Hopefully, this Path to Grow will keep some talent within our system that we might otherwise lose if they felt there was no place for them to grow or advance beyond the four walls of the unit they work at,” Stone says. “Some of our best franchise owners started out as servers or managers within The Melting Pot.” – Source: fsrmagazine.com

TGI Fridays Names Aslam Khan CEO

TGI Fridays has named industry veteran Aslam Khan as CEO, the company said. Khan, who founded and most recently served as chairman of multi-brand franchise company Falcon Holdings LLC, in Westlake, Texas, succeeds John Antioco in the role at the Dallas-based casual-dining brand. “I believe this is an iconic brand,” Khan said in an interview at TGI Fridays headquarters. “It has a lot of legs in its history and heritage.” Khan founded Falcon Holdings in 1999, in partnership with Sentinel Capital Partners, which is the majority shareholder in TGI Fridays. Falcon grew to become Church’s Chicken largest franchisee and also operates Hardee’s, Carl’s Jr., Long John Silver’s and Piccadilly Cafeterias. Khan remains an owner of Falcon, which has 350 restaurants and manages another 150 units. Khan said a seasoned executive team has taken over at Falcon. He brought Giovanna Koning, chief financial officer at Falcon, to assume the same role at TGI Fridays. “Our strategy will be people first,” Khan said when asked about challenges in the casual-dining segment. “That’s No. 1.” Khan said his background as a franchisee will help as he takes on the role as a franchisor executive. About 80 percent of TGI Fridays’ 470 domestic restaurants are now franchised, the result of a refranchising program started after the chain was sold in 2014. “I manage by consent,” Kahn said. “I talk to the franchisees and sell the ideas to them. My job is to help them understand where we are coming from.” TGI Fridays has 900 restaurants, with about 430 locations abroad. “Overseas, American food is very popular,” Khan said, which gives TGI Fridays, a pioneer in taking its brand international, an advantage. He said he will work with Stephanie Perdue, who joined TGI Fridays as chief marketing officer from Taco Bell in February, to hone the menu and marketing message. “I think Fridays has great food. It could be better,” Khan said. “Stephanie has already come in with some new food products. We can upgrade the food quality. My focus will be on quality of food and quality of service. Service is everywhere a problem, whether you are fast food or casual dining.” With Khan’s arrival, Antioco returns to his position on TGI Fridays’ board of directors. “Aslam brings to Fridays more than three decades of enormously successful and highly relevant restaurant operations and franchising experience,” Antioco said in a statement. Antioco had served as interim CEO before and after Robert Palleschi, who left late last year. Khan said the move to a franchisor role means he will be required to listen more. “I’ve been on the other side as the franchisee,” he said. “I know their pain.” He said he is setting up franchisee committees to work on all aspects of the business, from marketing to purchasing. Khan has received a number of awards as a franchisee, including the International Franchise Association’s Ronald E. Harrison award for his commitment to diversity in his operations in 2011, and IFA Entrepreneur of the Year in 2014. John McCormack, co-founder and senior partner for Sentinel Capital partners, added in a statement that he had worked with Khan for more than 20 years and was confident because he had “successfully managed and grown branded franchise systems and has a deep understanding of how to work with private-equity ownership.” – Source: NRN.

Buffalo Wild Wings to Cut $40 Million to $50 Million in Costs to Improve Profitability

As a showdown with an activist investor looms, Buffalo Wild Wings on Wednesday reported another quarterly drop in profits and a plan to slash $40 million to $50 million in costs over the next two years. The Golden Valley-based chain already has begun implementing some of the cuts, such as eliminating the guest experience captain position at most of its stores earlier this month, and streamlining some of its management structure in the field. Other cost savings executives outlined to analysts on a conference call include more efficiently scheduling employee hours and reducing waste in sides and condiments. The new cost-cutting program, devised with the help of a major consulting firm that conducted a review of the business, comes as Buffalo Wild Wings is preparing for a showdown at its annual meeting in June. Activist investor Mick McGuire of Marcato Capital Management has proposed that shareholders add him to the board after he criticized the current management team for becoming too complacent while the company’s once eye-popping growth leveled off. He has also suggested that Sally Smith, the chain’s CEO, should step down. Meanwhile, the company has been encouraging shareholders to stick with Smith and its slate of eight board members, two of whom would be new to the board and three of whom joined last year. “The Buffalo Wild Wings board and management team continue to innovate and pursue cost-savings initiatives in the face of challenging market conditions in order to remain a distinct experience and stay ahead of the competition,” Smith told analysts on the Wednesday conference call. Executives also said the company plans to sell 80, or 13 percent, of its company-owned restaurants to franchisees, instead of 60 as initially announced earlier this year. McGuire has been pushing the company to sell most of its locations to franchisees in order to cut own on corporate costs. Buffalo Wild Wings continues to face a number of challenges including a slowing restaurant and casual dining industry, higher costs for chicken wings and labor, and trends such as consumers being more interested in promotions and delivery. Executives said Wednesday recent promotions such as half-priced wings on Tuesday have helped drive traffic and sales while pressuring the bottom line. The chain announced its earnings after the markets closed on Wednesday. Its stock ended the day down 40 cents to $162.40 a share. In the first quarter ended March 26, Buffalo Wild Wings’ net earnings dropped 34 percent to $21.5 million, or $1.25 a share, down from $32.8 million, or $1.73 a share, in the same quarter a year ago. Traditional wings were 4 percent more expensive than the same quarter a year ago, the company said. Total revenue rose 5.2 percent to $534.8 million, up from $508.3 million, with same-store sales growing about 0.5 percent. For the upcoming year, executives said they expect same-store sales growth to be about 1 percent. This year, executives said they plan to have delivery options from more locations through third-party partners. At the same time, the company will test later this year ordering delivery directly through the chain’s app or website. The chain also is looking for growth internationally. Franchisees recently opened locations in Mexico and Saudi Arabia, and there are plans for other new locations in India and Vietnam later this year, Smith said. The company plans to open 20 new locations abroad this year, she added. – Source: Star Tribune, MN.

Amherst Food-Service Supplier Buys New York City Distributor

BHS Foodservice Solutions, a fourth-generation business that sells equipment and supplies to the food-service industry, has acquired a New York City-based distributor as part of its push into the downstate market. A portfolio company of the private-equity firm Lorraine Capital, the former Buffalo Hotel Supply Co., acquired H. Weiss Inc. in a deal that closed last week. The acquisition creates one of the country’s largest distributors of food-service equipment and supplies, with combined annual revenues of $75 million and 120 employees, said Lorraine founder and managing principal, Richard F. Gioia. BHS had 72 employees on its own, although its employment fluctuates seasonally. “It gives us the size and scale to continue to be a competitive company,” Gioia said. The Amherst-based company has been making inroads into downstate New York and a deal with H. Weiss was a natural fit, Gioia said. “H. Weiss is a market leader downstate and, given BHS’ historical focus in upstate, this acquisition expands our footprint across important market segments so that we can better serve our customers,” BHS President Donald M. Harvey said in a statement. “It is an exciting time for both companies.” The selling shareholders of H. Weiss will remain with the company in leadership roles, Lorraine said, and all H. Weiss employees will remain with the company. Terms of the transaction were not disclosed. BHS has grown significantly since Lorraine Capital purchased Buffalo Hotel Supply Co. in December 2014, Gioia said. BHS in January 2016 acquired Innovative Restaurant Supply, a distributor based in a Rochester suburb. BHS was the first acquisition for the Buffalo private equity firm, which seeks to buy companies that might otherwise have trouble raising capital and that may not have a succession plan in place to survive past the current generation of leadership. Lorraine has made six acquisitions in total now, including the two made through its portfolio company BHS. In addition to Gioia, the other Lorraine partners are William J. Maggio Jr., Justin Reich and Tony Rider. – Source: The Buffalo News.

Daniel Boulud to Open Massive Restaurant Next to Grand Central

Bonjour, 42nd Street! Marking a culinary and commercial-property coup, Daniel Boulud will launch a large restaurant at One Vanderbilt, SL Green’s 1,400-foot-tall skyscraper now rising next to Grand Central Terminal. The planned, 11,000 square-foot venue adds instant additional cachet to the 1.7 million-square-foot office tower that’s scheduled to open by 2020. Thus far, just one tenant, TD Bank, has signed for 200,000 square feet on the Midtown tower. Boulud’s name lends the KPF-designed project the glamour of a famed, New York-based super-chef as SL Green talks to firms that are considering moving there — JP Morgan Chase among them. One Vanderbilt is the latest Midtown office tower to sign up an A-list restaurateur. For example: * The Four Seasons, uprooted from Aby Rosen’s Seagram Building, will reopen soon at SL Green’s 280 Park Ave. The Mario Carbone-Rich Torrisi-Jeff Zalaznick team is debuting its Pool and Grill venues at Seagram. * Eleven Madison Park’s Will Guidara and Daniel Humm are coming to L&L Holding Company’s all-new 425 Park Ave. Boulud’s restaurant will be on One Vanderbilt’s second floor and overlook the corner of Vanderbilt Avenue and East 42d Street. “It’s a unique space,” Boulud said, that will boast a 110-foot-high ceiling at the ground-floor entrance and a bar that will seem to be “floating in space.” The ground-floor area will feature a branch of Epicerie Boulud, the high-end grab-and-go spot that Boulud has at the World Trade Center and near Lincoln Center. The deal is not a conventional lease but a partnership in which Boulud will invest, according to both Boulud and SL Green CEO Marc Holliday. “We have many top restaurants in our portfolio, including Eleven Madison Park at 11 Madison Avenue,” Holliday said. “But if there’s a departure here, it’s that we are actually partnering with Daniel — something we haven’t done before.” The new Four Seasons, for example, has a straight lease at 280 Park Ave. The Boulud restaurant buildout cost isn’t known, but any price will be peanuts compared with One Vanderbilt’s $3.14 billion development cost. “We will put up the majority of the money for the project, but Daniel will put in some of his own as well,” Holliday said. “Daniel’s company, Dinex Group, will manage and run the restaurant,” he added. “We” means the tower’s owners — SL Green and South Korea Pension Services, which bought a 27 percent interest last year, and Hines, which has 1.4 percent. Boulud has restaurants in hotels but not previously in an office tower. “Marc Holliday has been wonderful,” Boulud said. “We talked to them for a long time. We feel good together and I’m excited about this.” A designer has yet to be chosen. The eatery will have 100-plus seats in the dining room plus 50 more for private events, Boulud said. Will it be French or French inspired, like his other New York places? “It will be a fine restaurant,” Boulud said but declined to discuss it beyond that — other than to say with a laugh, “It will not be Italian.” – Source: The New York Post.

Buffalo Wild Wings Announces Retirement of Judith A. Shoulak as EVP and President, North America

Buffalo Wild Wings, Inc. announced that Judith A. Shoulak will retire as EVP and President, North America, effective June 30, 2017. “On behalf of the entire management team, I would like to thank Judy for her nearly 16 years of tireless service at Buffalo Wild Wings,” said Sally Smith, Chief Executive Officer and President of Buffalo Wild Wings. “Judy has played a key role in a wide variety of executive capacities and her intimate knowledge of the restaurant business has enabled her to be an agent of positive change throughout the Company. We are very grateful to Judy for her dedication and leadership and wish her the best in the future.” Ms. Shoulak commented, “I am proud of the Company’s accomplishments during my tenure and the recent progress we have made in implementing our strategic plan. Buffalo Wild Wings is an extraordinary company and it has been an honor to come to work here every day. While I will miss working with a great leadership team, talented team members and dedicated franchisees, I am confident that Buffalo Wild Wings is on track to achieve its objectives as it becomes an even stronger, more profitable restaurant company.” The Company intends to eliminate the President, North America position upon Ms. Shoulak’s retirement. Ms. Shoulak’s team will report to our Chief Operating Officer upon Ms. Shoulak’s retirement. —Source: Buffalo Wild Wings, Inc.

Christina Tosi is Planning to Open Two more Locations of Milk Bar in Washington

Christina Tosi opened the first Washington location of Milk Bar about a year and a half ago. Now, she’s ready to expand the bakery that she started in New York and has grown to 11 stores around the country and Canada. The pastry chef and judge on Fox’s “MasterChef” and “MasterChef Junior,” famous for such creations as Crack Pie, Compost Cookies and Cereal Milk, said she’s been getting a consistent message from the eager-to-expand team at the CityCenterDC shop: “We’re hungry. We’re ready. Let’s go.” Tosi agrees. She’s in the process of scouting for additional Milk Bar locations in Washington — likely two, which could open by the end of the year. Tosi expects one of the new spots to be large enough to incorporate space for baking classes. “We’re not trying to put a Milk Bar on every block,” Tosi said. Instead, she’s pinpointing locations where people want to live and play, and the shop can help build “an even larger sense of community,” whether that be with music events, a farmer’s market or outdoor movies. Neighborhood possibilities include Logan Circle, 14th Street NW, Georgetown, around Nationals Park and the Wharf. Tosi, who grew up in Springfield, said her ideal location would be somewhere that would be easy for people like her family and friends to zip in and out of from Virginia, or a place that would be a destination where they’d be willing to make a special trip. Meanwhile, Milk Bar is expanding its local footprint more modestly through a collaboration with & pizza. The chain will sell Cereal Milk cream soda and Cereal Milk cream soda cookies beginning next week. Milk Bar is also ramping up production on its LIFE line of foods, which includes juices and yogurt parfaits, one of which is a granola riff on the everything-goes-in Compost Cookie. Gluten- and dairy-free cookies (more like power bars) are still to come at the bakeries. – Source: The Washington Post.

Jack in the Box Inc. Promotes Carol DiRaimo to Chief Investor Relations and Corporate Communications Officer

Jack in the Box Inc. announced that Carol DiRaimo has been promoted to Chief Investor Relations and Corporate Communications Officer. DiRaimo has served as Vice President of Investor Relations & Corporate Communications since joining the company in 2008. Lenny Comma, Chairman and Chief Executive Officer, said, “Carol has been a trusted partner amongst our executive leadership team and board of directors. Her unique perspective, out-of-the-box thinking and unwavering passion for our business make her one of the most respected executives at the table.” “Carol is highly respected by analysts, investors and her peers in the investor relations community, as evidenced by the numerous awards she has received over her career,” added Jerry Rebel, Executive Vice President and Chief Financial Officer. Most recently, Jack in the Box won three awards at the IR Magazine U.S. Awards held in March 2017: Best Investor Relations Officer (small & mid-cap); Best Overall Investor Relations (mid-cap); and Best in Sector: Consumer Discretionary. Jack in the Box jumped 62 places to take third place in the overall rankings of IR performance in the U.S. across all sectors and market caps. In addition, Jack in the Box was recognized in March for the third consecutive year as one of America’s Most Honored Companies by Institutional Investor. The awards celebrate the U.S. companies who ranked at the top of the All-America Executive Team rankings. DiRaimo has more than 25 years of experience in the restaurant industry and six years of public accounting experience at Deloitte. Prior to joining Jack in the Box Inc., she was Vice President of Investor Relations for Applebee’s International, Inc., where she served in a variety of capacities over 14 years, including financial planning & reporting, treasury and corporate analysis, before heading the investor relations function. – Source: Jack in the Box Inc.

Panera to Add 10,000 Jobs by the End of 2017 as it Expands Delivery

Panera Bread is going full-steam ahead to expand delivery services to more of its cafes. The sandwich shop said it intends to hire 10,000 new employees by the end of the year to assist with this initiative. Some 75 percent of the new hires will be delivery drivers, while the remaining 25 percent will be in-cafe jobs, according to Blaine Hurst, president Panera. Panera has already rolled out delivery to 15 percent of its system, including 20 percent of its company-owned locations. By the end of 2017, it hopes to expand delivery to 35 percent to 40 percent of system-wide locations. Hurst expects each cafe to hire seven to 12 drivers and staff members. He said it would cost about $25,000 per cafe to add delivery capabilities, the majority of which goes toward hiring and training labor. Panera is in the process of being acquired by privately held JAB Holding in a deal valued at about $7.5 billion. Drivers will be vetted by the company, said Hurst. Their insurance, driving records and car will all be inspected in order for the drivers to be hired and certified to work. Hurst said drivers’ cars will be inspected on a regular basis and drivers will be compensated for their mileage. By using this Uber-style method, Panera does not have to invest in its own fleet of vehicles. But by screening the drivers itself, it has more control over the guest experience. The restaurant has also created a new order tracking system that allows customers to see their meals’ expected arrival time, a map of the driver’s progress and a photograph of their driver. The minimum menu purchase is $5 and the typical delivery fee will be $3, according to the company. Hurst told CNBC that the average check is about $22. Panera initially tested delivery by using third parties to bring its food to customers, however, it was not satisfied with the results. Instead, the company is using internal team members so that it could offer a reliable and accurate service to customers, Hurst told CNBC. Hurst said the company wasn’t able to find a delivery partner that “could cover [Panera] at the scale that [it’s] currently at.” Not to mention, third-party delivery services can charge fees of 5 percent to 30 percent to companies, according to David Tarantino, an analyst at Baird. After the initial financial investment and about three to six months of transition, most cafes are about to garner about $5,000 a week. Delivery, Hurst said, is about 10 percent of sales in these cafes. Panera operates in a restaurant category that is well positioned to succeed in the delivery space, Tarantino said. “Our instinct is that fast-casual chains should have the best opportunity to capture share within the delivery channel based on the quality of food offerings and the segment’s moderate price points,” Tarantino wrote in a research note Friday, ahead of Panera’s announcement. “We suspect price points could limit the potential for quick service chains (possibly too low in relation to delivery fees) and casual dining (possibly too high for a non-service oriented occasion).” Panera forecasts delivery will add $250,000 per year to each store’s annual revenue of $2.6 million. – Source: CNBC.

NYC Restaurateur Started Language School for His Kitchen Staff

With restaurants being the second-largest employer of immigrants in the United States, language can become a barrier in kitchens. Sensing an opportunity to improve both his restaurant business and test out a new linguistic school concept, Latin vegan restaurant VSPOT owner Danny Carabano has been teaching his Spanish-speaking kitchen staff English through a language computer program he built from scratch. Carabano taught himself Spanish through immersion techniques, and he is now applying that experience — combined with his own research on linguistics and this computer program he built from scratch — to teach others, starting with testing it on his Spanish-speaking kitchen staff and using their feedback to improve the program. Providing English lessons for his staff makes business sense for Carabano — it’s a win-win for him in that his employees can better navigate the world they work in by learning English, and he has a testing ground to build a program that he hopes to turn into a full-fledged language school. “I did free classes for my employees with a standard ‘chalk and talk’ ESL teacher, but I dislike that approach,” Carabano told Eater. “So I’ve focused on building this program on the side, studying linguistics, listening to professors, and building a system. My guys work so much that they feel overwhelmed, so I’m trying to create a version they can do at home.” The restaurateur has larger intentions for this program, which includes other languages. Eventually Carabano plans to open the program — called The Cyrano Language School — up to paying customers, but for now, the Vspot staff is benefitting. – Source: Eater NY.

Some Shoney’s Stores Face Credit Card Breach

Shoney’s is the latest restaurant chain to face a credit card breach. Best American Hospitality Corp., a group that manages a handful of Shoney’s corporate-owned stores, released a statement detailing an investigation into stolen payment card information at 37 locations spread out throughout South Carolina, Tennessee, Louisiana, Georgia, Alabama, Mississippi, Virginia, Missouri, Florida, and Arkansas. The company’s investigation found that malware was installed remotely on point of sale equipment that processes payment cards used at some of the restaurants. The malware searched for track data (cardholder name, card number, expiration date, and internal verification code) read from the magnetic stripe of a payment card as it was being routed through the affected computer, the statement explains. Best American Hospitality Corp. hired Kroll Cyber Security to conduct the investigation. The company found that some of the units were subject to an initial data breach from December 27, 2017 until the malware was contained on March 6, 2017. The date of the first breach varies by location, the statement adds. “In some instances, the malware appears to have identified data from the card’s magnetic stripe that included the cardholder name and number and in other instances the card data identified by the malware did not appear to include the cardholder name. It is possible that not every cardholder name was identified,” the statement reads. The breach was first reported by Krebs on Security. Hundreds of franchised Wendy’s restaurants were breached last year and Arby’s just released an update on a similar security incident Friday, saying that company-owned stores affected began no earlier than October 20, 2016 and ended no later than January 12, 2017. – Source: fsrmagazine.com.

Detroit’s Last Big Boy Restaurant Prepares to Close

Tips are big and smiles wide at the Big Boy Restaurant on East Jefferson Avenue, where “business is the best it’s been in years,” says Kenya Berryhill, a 25-year employee. Both are indicators of the affection and gratitude among staff and customers of the Detroit restaurant that soon would have celebrated its 50th year in business. But the Big Boy – the last remnant of the Metro Detroit-based chain in the city – closes for good after serving dinner on Easter Sunday. “It’s time to come to an end,” said second-generation owner Michael Curis. Curis will be selling the property to fellow Detroit developers The Platform, which is planning redevelopment of property it owns in the neighborhood. The restaurant site – near the entrance to Belle Isle – eventually will become a high-profile building that will convey upgrades to the blocks just east of popular West Village. As The Platform considers what it will put on the property, it’s seeking advice of neighbors so that they feel their area is enhanced, not changed. That philosophy appealed to Curis, who started his career in the Big Boy and moved on to start a development company that includes several neighborhood shopping centers in Detroit, including Riverbend on East Jefferson. “We could have sold to another (buyer),” Curis said. But fast food or a liquor store didn’t fit his vision for what should replace a restaurant that for decades hosted a loyal clientele and staff. Curis told the 50 employees in late March that the restaurant would be closing as of April 16. He kept it open that long for several reasons: “It allowed us to help them find other jobs while they’re still working. It allowed them to keep earning some income while looking for a job. And it allowed our customers to get some closure.” He continued: “We’ve had so many customers come back in and thank the employees … A lot of customers are very, very emotional.” The crowd at the staff meeting included people like Berryhill, who raised her family while working there – and then welcomed two of her daughters onto the staff. “I was sad at first,” she said this week. “I felt like I was losing my second home.” Even as they’re comfortable with the decision, that sentiment comes from other employees, too, including former workers who have organized a reunion gathering on Saturday evening at the restaurant. It’s also expressed by customers, who are happy that they’ve had the past few weeks to stop back at the place that, in many cases, they’ve visited for decades. Willie Moore, 83, was drinking coffee late Friday morning in a booth near the checkout counter. He drove from Utica, as he’s done many times over the 52 years he’s been a customer – two years before Curis’ father, George, bought the former Howard Johnson restaurant when the previous owners walked away from it in 1967. “It’s a family thing, almost,” Moore said. He described the staff as friendly, and noted that he’s known one waitress for 30 years. Will he miss Big Boy? “Oh yeah,” he said. The camaraderie is a part of it for Moore; so is the food. “Very few places have a breakfast bar,” he said, “or self-serve, with home cooking.” Moore’s many visits to Belle Isle over the years for fishing, hiking and bicycling would end with a stop for food at Big Boy. Walking over to a corner display of marathon and walking clubs dating back to the 1970s on an atrium wall, he tried to find himself in a frame. “The joggers would come in every Saturday,” Berryhill said, joining him. “They’re coming Saturday to take down the pictures.” The stories from customers make the staff happy. On Friday, Rovenie Harris, of Detroit, chatted with manager Norman Ina at the front counter, thanking him for all the service over the years. Harris said she was there the day Big Boy opened.  She also said will miss the place that was always her mother’s favorite spot to go to on Mother’s Day. Ina, a cousin of Curis, started there in 1972. Leslie Jordan, another manager, clocked 45 years there. Many employees have 20-plus years, Curis said with some pride. Each employee will get a bonus based on their years of service, and each is getting any help needed to find a new job. Berryhill, in fact, has been doing double-duty: Her regular job, and acting as an employee assistance liaison to make sure that each person feels a connection to that job-search help. So far, she said, everyone who wants a job immediately has one. Some, like herself, will work through Sunday, and then decide among some options. – Source: The Detroit News.

The ONE Group Hospitality Announces Management Changes

The ONE Group Hospitality, Inc. announced that Alejandro Munoz-Suarez (Alex), Chief Operating Officer (COO), and Samuel (Sam) Goldfinger, Chief Financial Officer (CFO), will be leaving the Company to pursue other opportunities. Following the appointment of Manny Hilario to the board of directors last week, board member Richard Perlman notified the Company that he has stepped down from the board. The Company has commenced a search for a new CFO. Mr. Goldfinger has entered into a separation agreement with the Company pursuant to which he has agreed to assist the Company with its transition to a new CFO. Following Mr. Munoz-Suarez’s departure, the board of directors has determined that the COO role will be temporarily eliminated as part of the Company’s increased emphasis on licensing growth opportunities. This move will further enhance the Company’s continuing reductions in general and administrative expenses. “As our growth strategy continues around an asset-light business model focused on management and licensing opportunities, we remain motivated to drive efficiencies that are aligned with that growth strategy,” said Jonathan Segal, CEO of the ONE Group. “On behalf of the entire team at the ONE Group and our board of directors, I would like to thank Richard, Sam and Alejandro for their contributions to the Company.” – Source: The ONE Group Hospitality, Inc.

Pollo Tropical Closing 30 More Stores; Parent Company Plans Brand Relaunch

The parent company of Taco Cabana and Pollo Tropical is shuttering 30 company-owned restaurants as it prepares to “relaunch” both brands. Fiesta Restaurant Group announced that it plans to close 30 Pollo Tropical restaurants in North Texas, Austin and Nashville. The closures will happen Monday, and where possible, impacted employees will be offered jobs at nearby Fiesta restaurants. Five of the locations in Texas could be rebranded as Taco Cabana units. With the closures, Fiesta will own 19 Pollo Tropicals outside of Florida, including 13 in Atlanta and six in South Texas. “(These restaurants will be used) to apply and prove successful regional strategies for future Pollo Tropical expansion beyond Florida,” Fiesta said in a prepared statement. Closing the restaurants is expected to incur non-cash impairment charges between $33 million and $37 million during the first quarter, and another $9 million to $12 million in lease and other charges during the second quarter. “Fiesta’s recent growth initiatives diverted resources from our core markets and some amount of renewal is required to restore momentum in these markets,” Fiesta’s president and CEO Richard Stockinger said in a prepared statement. “While the decision to close restaurants is never easy, we believe it is vital to focus the company’s resources and efforts on markets and locations that have proven successful for our brands.” This isn’t Pollo Tropical’s first round of closures in the past year. In November, the brand announced plans to shutter 10 units in Texas, Georgia and Tennessee expecting to incur total charges between $20 million and $24 million. As a result, the company’s stock tumbled, and Craig Weichmann, founder of Fort Worth-based Weichmann & Associates, an investment banking consultancy specializing in restaurants, said Fiesta had landed itself in what he terms Wall Street’s “penalty box. He predicted it would be a hard slog for the company to regain investor confidence and share price. “They set the bar too high, so Wall Street came back with a resounding selling off of the stock,” Weichmann added. “It takes a long time of getting back to the basics of performance, performance, performance before Wall Street will trust you again.” John Gordon, principal and founder of restaurant consulting firm Pacific Management Consulting Group, attributed Pollo’s latest round of closings to overexpansion and misaligning with customers’ tastes. “Pollo’s challenge in DFW isn’t confined to just that brand,” Gordon said. “DFW has become the chain restaurant headquarters focal point in the U.S., and DFW is a major US market for chains moving either west or east. As a result, too many restaurants, especially fast casual brands have been built over the last ten years, and the demand is simply spread around too many stores, making the store sales levels too low.” “In addition, restaurants that have a unique flavor profile like Pollo that work in some home markets have to be carefully introduced to new, expansion markets,” he added. “While the U.S. is becoming more diverse culturally, consumer’s buying circles and economic activity tend to cluster in influence groups. It is really important for restaurants to tap into the right clusters from a site selection standpoint.” But the company also announced Monday a “renewal plan” it says will aim to drive long-term value for both concepts. Among its initiatives will be relaunching the Pollo Tropical brand in September and the Taco Cabana brand later in the year. The relaunches will include differentiating the brands with new positioning, marketing and digital strategies; improving catering, delivery and online ordering capabilities; enhancing food quality and service; repositioning each brand for future growth outside core markets; and refining restaurant prototypes to maximize cash returns and appeal to more customers. Also in the plan are initiatives like implementing operational efficiencies and digital platforms, looking at pricing across Fiesta’s restaurant portfolio and curtailing new restaurant development until after the relaunch. “Our strategic renewal plan is based on our comprehensive review of all aspects of our business to improve the guest experience and drive our results,” Stockinger added. “We are … concentrating on being a leader in comp store transaction growth and margins, growing intelligently both organically and through other avenues while enhancing shareholder value.” In its Monday announcement, Fiesta reported comparable restaurant sales declined 6.7 percent at Pollo Tropical and 4.5 percent at Taco Cabana during first quarter 2017. The company blamed industrywide headwinds and sales cannibalization. News of Fiesta’s renewal plan comes after the company has been urged to look at options to increase value. In February, concerned by Fiesta’s “massive decline in value,” activist investor JCP Investment Management nominated three candidates to shake up the company’s board of directors.  At the time, JCP, which owns 8.7 percent of Fiesta stock and is its third-largest institutional shareholder, said the company “refused to engage meaningfully” on the composition of its board and other corporate governance matters, adding that Fiesta’s current board has minimal ownership in the company and little restaurant experience. “JCP strongly believes that the board must be reconstituted with direct stockholder representatives and experienced restaurant operators,” the firm stated in documents filed with the U.S. Securities and Exchange Commission. “JCP’s director candidates collectively bring not only significant operating experience in the restaurant industry, but a strong track record of creating shareholder value.” JCP has also criticized the board for allocating $70 million to expand Pollo Tropical in Texas, an effort that was suspended in September. And the firm said Fiesta has failed to recognize, or at least capitalize on, the value of Taco Cabana. In September, Fiesta scrapped plans to spin off Taco Cabana into its own publicly-traded company. Since then, Fiesta has added Paul Twohig to its board. Twohig, who joined in February, currently serves as president of Dunkin’ Donuts U.S. and Canada, and has experience at Starbucks and Panera Bread. The company has also said it will consider adding one of JCP’s board candidates and another member to be chosen by the board at a later date. However, JCP continues to push for the addition of two “highly-qualified director candidates,” it said in a letter to the board. “We believe adding such individuals to the board would remedy the board’s apparent lack of restaurant expertise and avoid a seemingly unnecessary election contest, which we believe could only benefit the entrenched directors who we do not believe belong on the board,” the letter states. – Source: Dallas Business Journal.

Black Bear Diner Announces Key Addition to Executive Leadership Team

Black Bear Diner, the rapidly expanding family dining concept headquartered in Redding, California, announced the addition of restaurant industry veteran Anita Adams as chief financial officer. Adams, formerly chief financial officer for American Blue Ribbon Holdings, is responsible for driving Black Bear Diner’s financial performance across operations and shared services as the concept expands nationally. Adams is a member of the executive leadership team.  “Our national expansion is moving swiftly and Anita’s leadership, experience and financial savvy will ensure we mitigate any financial risks as we continue down this exciting path,” said Bruce Dean, chief executive officer of Black Bear Diner. “She is a key addition and asset to our Black Bear Diner family and we are thrilled to have her on board.” Black Bear Diner has experienced increased same-store-sales over the last 24 quarters, and also experienced a 15.3 percent increase in system wide net sales from 2015 to 2016. The brand growth is being fueled by a mix of new and existing franchisees in existing markets, as well as corporate stores in newer markets. This year, Black Bear is on track to open up 21 new units, including their 100th restaurant in the second quarter. “Black Bear Diner is a strong performer with a unique positioning in the family dining segment,” said Adams. ““I’m excited to join an incredible leadership team focused on driving results and ensuring the continued positive momentum Black Bear Diner has experienced.” The executive leadership team of Black Bear Diner includes Bruce Dean, chief executive officer; Anita Adams, chief financial officer; Timothy Kaliher, chief operating officer; Robin Yoshimura, chief franchise officer; and David Doty, chief marketing officer. – Source: Black Bear Diner.
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