Arby’s to Acquire Buffalo Wild Wings for $2.8B in Restaurant Shakeup
Wings. Beer. And Arby’s. Fast-food chain Arby’s Restaurant Group said that it reached a deal to acquire Buffalo Wild Wings, which promotes the slogan “wings, beer, sports” in its advertisements, for $2.8 billion in cash.
The deal comes as the casual dining sector is ailing as Americans have rediscovered home meals amid low grocery prices and new food delivery options. Competition from fast-casual competitors and higher labor costs are also hurting. Buffalo Wild Wings also had been battered by a sharp increase in the cost of chicken wings, although the cost is down 20% from its high, according to analysts at investment bank UBS. The company has recently bolstered foot traffic with a half-price deal on wings and has gleaned benefits from investments in delivery. Buffalo Wild Wings had been a “star performer” in the sector for years but recently “lost their value proposition to families with kids,” NPD Group restaurant industry analyst Bonnie Riggs said. Arby’s, which has executed a deft turnaround by emphasizing its core identity as a fast-food chain with unique products, now has a chance to apply a similar formula to Buffalo Wild Wings. “What consumers are looking for is value,” Riggs said. “It’s getting what you paid for. They want quality products, they want fresh, but they want it to be reasonably priced.” The deal, which had been rumored for weeks, calls for Arby’s to pay $157 per share in Buffalo Wild Wings stock. Arby’s Restaurant Group also will assume the debt of Buffalo Wild Wings. “Buffalo Wild Wings is one of the most distinctive and successful entertainment and casual dining restaurant companies in America,” Arby’s CEO Paul Brown said in a statement. “We are excited to welcome a brand with such a rich heritage, led by an exceptionally talented team. We look forward to leveraging the combined strengths of both organizations into a truly differentiated and transformative multi-brand restaurant company.” Arby’s private equity owner Roark Capital Group is backing the deal. Activist investor Mick McGuire’s Marcato Capital Management, which had bashed Buffalo Wild Wing’s strategy and pushed for major changes, agreed to support the deal. Marcato’s criticism had culminated in a big shakeup in June when the restaurant chain’s long-time CEO, Sally Smith, announced her retirement. Minneapolis-based Buffalo Wild Wings has more than 1,250 locations in 10 countries. Arby’s has more than 3,300 in seven countries. Shares of Buffalo Wild Wings, known to many fans as BDubs, jumped 6.4% to $155.80 in morning trading. – Source: USAToday/The Wall Street journal.
Cracker Barrel to Expand off-Premise Platforms
Cracker Barrel Old Country Store Inc. plans to expand its off-premise platforms along with its new Crafted Coffee offerings in the year ahead, company executives said Tuesday after reporting a 4.1 percent decline in fiscal first-quarter profit. The Lebanon, Tenn.-based family dining chain said net income for the third quarter ended Oct. 27 declined 4.1 percent to $46.4 million, or $1.92 a share, from $48.4 million, or $2.01 a share, in the prior-year period. Revenue rose 0.1 percent to $710.4 million from $710 million in the same quarter last year.
Cracker Barrel’s per-share earnings exceeded the Earnings Whispers consensus of $1.86, but revenue fell short of the anticipated $720.1 million. At midday Tuesday, Cracker Barrel stock was down 4.5 percent, trading at about $150.19 a share, a decline from Monday’s close of $157.20 a share. Same-store sales in the first quarter were up 0.2 percent, including a traffic decline of 1.8 percent and an increase in check of 2 percent. Sandra Cochran, Cracker Barrel CEO and president, said the restaurant-retail brand would continue to focus on everyday value against a backdrop of industry discounting while enhancing convenience, especially in off-premise channels. “Throughout this year,” she said in an analyst conference call, “we plan to leverage our off-premise platform as we seek to grow market share through catering, individual to-go and the ‘heat and serve’ program.” The company also plans to test multiple delivery options this fiscal year, Cochran said. Cochran said the heat-and-serve program, which features full meals to go, has been especially popular at the Thanksgiving, Christmas and Easter holidays. Jill Golder, Cracker Barrel CFO, said that off-premise platforms last year produced 7 percent of the brand’s sales, and that continued in the first quarter. “Off-premise in the first quarter was up over prior year,” Golder said. Cochran said the results of a 100-store test in the first quarter of a new value platform was promising, which she said was a “prudent” move against a backdrop of heavy industry discounting. “Coupled with new product offerings, the test featured value messaging across four weeks of local television and in-store advertising,” Cochran said. “We plan to extend the test with additional markets and television weight January through March.”
Cochran said the new Crafted Coffee program, introduced earlier in the fall, was complementing the brand’s breakfast offerings and it would be introduced system wide by the end of the third quarter. “We’ve introduced the program in approximately 40 stores, and we’ve been pleased with the results,” Cochran said. “Through everyday feature offerings of iced and flavored lattes and mocha as well as limited time only offerings like a pumpkin latte in Q1 and a peppermint mocha during Q2, we expect the Crafted Coffee program to deliver favorable mix results this fiscal year.” In guidance for the full fiscal 2018, the company said it expected same-store-restaurant sales to rise between 2 percent and 3 percent and same-store retail sales to be flat. The economic environment for restaurants remains challenging, Cochran said. “We continue to believe that our guests are anxious,” she said. “They are anxious about a variety of things. It depends on where they live and how old they are and what the pressures are. So, whether it’s getting a job or keeping a job or affording their health care needs or affording retirement, they continue to struggle against a backdrop with a lot of uncertainty.” As of Oct. 27, Cracker Barrel had 647 Old Country Store locations in 44 states. The company added two new fast-casual Holler & Dash locations in the quarter, bringing the total for that brand to six. For fiscal 2018, the company forecast opening eight or nine Cracker Barrel stores and three new Holler & Dash units. – Source: NRN.
Not a Piece of Cake
When The Cheesecake Factory announced last spring that it was launching its first Canadian location at Yorkdale Shopping Centre, customers immediately wanted to know if they could make reservations – months in advance of the opening. The news went viral as Torontonians rejoiced that they would no longer have to drive south to experience the prominent U.S. restaurant chain’s 250-plus item menu. A number of American restaurants have entered the Canadian market in recent years, but none have been as highly anticipated as the arrival of The Cheesecake Factory, which has inspired a cult following from professional athletes to suburban moms. Even Drake is an unabashed fan.
For Yorkdale, the country’s busiest mall with 18 million visitors a year, the opening of The Cheesecake Factory this week is a major win. The chain, which has 210 locations in the United States and another 18 internationally, targets premium shopping centers, where it sends waiting diners off to shop with mobile buzzers that signal when their tables are ready. Yorkdale has had several Canadian “firsts” this year, including the launch of outlets for Britain’s Dyson appliance company and the British clothing brand Hunter, but the excitement over the new restaurant in unprecedented, said Claire Santamaria, the mall’s director. “With every opening we kept getting asked, ‘But when is The Cheesecake Factory opening?'” But even with all the buzz, the restaurant’s success is far from guaranteed. Numerous foreign chains, both food and retail, have tried to enter the Canadian market. Some, such as Five Guys, have succeeded, while others, such as P.F. Chang’s and, most notably, Target, have failed. Well-established domestic restaurant chains are already struggling, challenged by a rise in food-delivery services and trendier, smaller and more diverse restaurants. While Canadians are eating out as much as ever, their tastes are changing. Fast-food sales saw a jump last year to $26-billion and 4.5 billion visits, according to data from the NPD Group research firm. But sit-down casual restaurants saw a slight 2 per cent dip to $22-billion, and a 4 per cent drop in traffic to 1.3 billion visits. The Cheesecake Factory, like other leading U.S. chains such as Chili’s and BJ’s, has been battling a similar trend south of the border. After several years of growth, the California-based company saw its sales drop 2.3 per cent in the third quarter of fiscal 2017. Its stock tumbled 32 per cent since its high point in May. CEO David Overton blamed the drop in sales on poor weather, saying it hurt the restaurants’ patio traffic. But analysts pointed to broader trends, with a Bloomberg article declaring “Cheesecake Factory Inc.’s status as a bright spot in the gloomy casual-dining industry is beginning to fade.” “We like to open and see how it does before getting too ahead of ourselves,” Ms. Rowe said. “It’s sort of a slow, methodical approach. … We take the same approach with all of our openings in new countries.”
The Cheesecake Factory has licensed restaurants in Mexico, China and the United Arab Emirates, but its location in Toronto is the first corporate-owned store outside the United States. Opening a corporate store represents a concerted effort to establish a Canadian presence, according to Robert Carter, a retail and food analyst with NPD Group. “When you’ve got a corporate store, then you can have tighter controls and deeper pockets to run that store,” Mr. Carter said. “The risk is that they bring that U.S. corporate mentality to the Canadian market and might not understand the differences between the two markets.” Mr. Carter is cautious when it comes to the hype around the new opening. “They’re coming into the market where they’ve got a relative brand strength, so they may get trial,” said Mr. Carter, but he says customers giving it a try isn’t necessarily good enough when the casual dining market is as competitive as it is in Canada. – Source: The Globe and Mail (Toronto).
Apollo Global Management LLC is Nearing a Deal to Buy Qdoba Mexican Eats
Private equity firm Apollo Global Management LLC is nearing a deal to buy Qdoba Mexican Eats from restaurant chain Jack in the Box Inc. for more than $300 million, people familiar with the matter said. The deal would be the culmination of a strategic review that Jack in the Box initiated in May, after stating that the chain was not a good fit with the rest of the company’s dining portfolio. Apollo’s deal for Qdoba could come as early as next week, the sources said, cautioning that negotiations could still end without a deal. Apollo also owns children’s pizza and arcade chain Chuck E. Cheese, which it took private for $1.3 billion in 2014. The New York-based buyout firm does not plan to combine Chuck E. Cheese with Qdoba, the sources said. The sources asked not to be named because the matter is confidential. A spokesman for Apollo declined to comment, while a spokesman for Jack in the Box could not immediately be reached for comment.
Jack in the Box shares jumped 3 percent on the news and were up 1 percent at $103.57 in afternoon trading in New York, giving the company a market capitalization of around $3 billion. San Diego-based Jack in the Box acquired Qdoba for $45 million in 2003. The restaurant chain initially enjoyed fast revenue growth but has struggled in recent quarters, reporting only 1.4 percent comparable store sales growth in 2016. “It has become more apparent since then that the overall valuation of the company is being impacted by having two different business models,” Jack in the Box Chief Executive Lenny Comma said in May. Founded in 1951, Jack in the Box is known for its eponymous burger franchise, which operates 2,200 restaurants in 21 states and Guam. Qdoba is its only subsidiary. Activist hedge fund Jana Partners LLC disclosed a small stake in Jack in the Box earlier this month. Qdoba has more than 700 restaurants in 47 states and Canada. Dealmaking in the restaurant space has been active in recent months, as struggling food chains have been snapped up by competitors. Higher wages, including a higher minimum wage in many parts of the United States, has also put pressure on restaurant margins. Recent restaurant deals include Darden Restaurants Inc’s acquisition of Cheddars Scratch Kitchen, Restaurant Brands International Inc’s deal for Popeyes Louisiana Kitchen and JAB’s purchase of Panera Bread. – Source: Reuters.
Denny’s International Expansion Continues with First Guatemala Unit
Denny’s Corp. has expanded to Guatemala, its 13th country, the company said. This comes after announcing in October its first European location. The new restaurant, which opened Nov. 17, is located on Liberacion Boulevard in Guatemala City, near La Aura Airport. The move brings the South Carolina-based brand a bit closer to its goal of becoming what CEO John Miller described in a statement as the world’s largest network of restaurants. Denny’s international stable of stores now make up about 7.3 percent of its 1,725-location network, an increase from approximately 6.9 percent of the portfolio the same time last year, though the brand lost three restaurants over the 12-month stretch. Miller said in a recent interview with NRN that the international growth reflects the brand’s confidence in the strength of the supply chain it has built. He also credited the restaurant’s sixth consecutive year of positive growth with allowing Denny’s to get back on track and make international expansion possible. To own and operate the first Guatemalan location, Denny’s chose a franchise partner with experience in Central America. Led by Roberto Larach, Comidas Especializadas S. de R.L. currently operates five Denny’s restaurants in Honduras and one in El Salvador. It also operates 75 Yum Brands Inc. locations in Honduras with 60 Pizza Huts and 15 KFC restaurants. In a statement, Larach said that his company is drawn to Denny’s “great menu and business model” and that Guatemala is the “natural next step” for the brand in Central America. “Denny’s has been very well received by our guests in Central America, at our locations across Honduras and El Salvador,” Steve Dunn, Denny’s chief global development officer, told NRN in an emailed statement. “We have a very strong franchise partner for those locations, who has identified an opportunity to bring the brand to Guatemala for the first time. We believe Denny’s is a great fit for residents and guests here.” Last month, the family-dining brand entered what Miller described to NRN as “the last frontier,” as the company announced it would be opening its first European restaurant in Swansea, Wales, in the U.K. That location is scheduled to open shortly after Christmas. Nine other restaurants will be opened across the U.K. over the next several years. “Our expanding global footprint has attracted new interest from a number of franchisees and we continue to have an active pipeline for growth as we gain momentum beyond North America,” Miller said via a statement announcing the U.K. news last month. Denny’s international footprint also includes stores in Canada, Puerto Rico, Mexico, New Zealand, the Philippines, Costa Rica, Dominican Republic, the United Arab Emirates, Guam and Curaçao. – Source: NRN.
Fogo de Chão Opens Milestone 50th Location
Fogo de Chão announced that it has expanded its U.S. restaurant base by opening its first Michigan location in Troy, and its third Florida location in Jacksonville. The two openings mark the 49th and 50th locations, worldwide, for the international restaurant brand.
“I’m incredibly pleased by our steady growth in the U.S. market. This is a testament to the power of our unique concept, our award-winning experience, strong value proposition and rich Brazilian heritage,” says Larry Johnson, Chief Executive Officer of Fogo de Chão. “These attributes are the cornerstone of every Fogo location, showing that high quality hospitality coupled with thoughtful innovation, appeals to both new and loyal guests all around the world.” The Troy restaurant, located at 301 Big Beaver Road, is now open and part of the Big Beaver Corridor which features an array of shopping, restaurants and hotels that serve both the residential and corporate office spaces that anchor the area. The Jacksonville restaurant is now open at the booming Town Center Area at 4784 Town Center Parkway, and is surrounded by some of the city’s best entertainment, shopping and dining. Each restaurant features a ten foot tall bas relief rendition of O Laçador, a famous statue constructed in 1958 in Porto Alegre, Brazil, the home of the original Fogo de Chão. The statue pays homage to an influential leader of the gaucho culture named Paixão Côrtes. Additionally, there is a large glass viewing area of the kitchen showcasing the open-fire grill and allowing guests a view of Fogo’s gaucho chefs roasting high-quality cuts of meat in the centuries-old Brazilian tradition of churrasco. Both restaurants also have excellent group and private dining options. Like all Fogo de Chão restaurants, the new locations give guests a unique experience called espeto corrido, or continuous tableside service. The menu is anchored in a variety of fire-roasted meats expertly prepared and carved tableside by gaucho chefs. Guest favorites include a new Cowboy bone-in Ribeye, double-cut Lamb Chops, and house-specialty Picanha, the most prized Brazilian steak. In addition to the full churrasco experience, the restaurants offer many ways for guests to enjoy Fogo at a variety of prices and portion sizes including weekday lunch starting at $15, weekend Brazilian brunch, Bar Fogo as well as seafood and vegetarian options. – Source: FSRMagazine.com.
Corner Bakery, Newk’s, Saladworks Leaders on Making Data Make Money
For restaurateurs of all ilk today, the word “data” is both a four-letter word and a dream partner, capable of providing astonishing insights in a flash. But as participants at the most recent FastCasual Executive Summit in Nashville learned, diving into data generated by your brand can either leave you splashed with refreshing new insights, or drowning in a sea of numbers without any real idea how to make sense of it all.
An hour-long session around this very conundrum with three successful fast casual concepts provided some great takeaways about how to use data innovatively, effectively and profitably, regardless of your restaurant sector or brand. Below are some of the more profound pull-outs and lessons learned from that session’s participants, who answered questions from Fishbowl Professional Services Vice President Paula Carren. The three restaurant leaders on the panel, included: Corner Bakery Café CEO Donna Josephson; Newk’s Eatery CMO Stewart Slocum; Saladworks CEO Steve McMahon. These very different but successful brands each said they had approached their collection sources for data differently to meet individual chain goals. For instance, Saladworks CEO McMahon said his company commissioned research to identify and target attitudinal segments and customer groups. Corner Bakery’s Josephson, on the other hand, said the team combined data from its loyalty club with POS and customer data to both ultimately boost loyalty participation and identify other “success factors” for the brand. And finally, Newk’s Slocum said the chain took a more in-depth look at digital marketing data and the returns on their email loyalty club members because in Slocum’s words, “It’s the little data that matters.” Carren also asked the group how data was important to brand success. McMahon said that demographics aren’t exactly where it’s at. “Demographics explain only 1 to 2 percent of sales,” he said. “What explains it is their behavior in that (demographic) sector.” Josephson said that Corner Bakery monitors the long-term and day-to-day data and asks two questions: “How do I retain customers?” and “How do I do even better?” Since everyone in any organization is a marketer for the brand, Slocum said, it’s important not to just toss out seemingly off-the-wall ideas (from the rank and file), but to consider, instead, how you can take ideas that essentially “push the boulder up the hill” and convert them to ideas that “push that boulder down the hill.” – Source: FirstCasual.
How Restaurants Can Increase Sales with Social Media
By now you’ve heard how important social media is to your restaurant. You’ve probably created social media accounts and have attempted to create a strategy around them. Is it successful? What does it mean to be successful on social media? Focus on what matters to your restaurant. Understand the ROI of your social presence. You need to get more orders and traffic into your business. That’s the bottom line. Let’s take a look at how to use social media to boost sales for your restaurant.
Build Your Foundation. Before you do anything, you must have a solid platform to build from. There are so many social networks to choose from and so few resources to manage them all. The most important thing here is to start accounts you know you can manage. It never looks good when someone creates an account and fails to keep up with it. It’s better to have a great brand presence on one network than poor visibility on a variety of them. Facebook is a necessity these days. With more than 1.13 billion daily active users, this is a guaranteed way to put your restaurant in front of customers’ minds. No other network boasts the same user base as Facebook. According to Facebook, every user is connected to one another by an average of 3.57 degrees of separation. This is where word-of-mouth comes into play, and as you’ve heard, that’s the strongest form of advertising. Instagram is one of the fastest growing networks. It’s a visual network, perfect for restaurants. There are three things people will always take pictures of: themselves, a beautiful view, and food. Since Facebook’s takeover of Instagram, the network has vaulted to more than 700 million monthly users. Social media is more visual than ever. If you want to make in impact, use Instagram. Engage with Customers and Influencers Once you’ve built the foundation, go find your customers and influencers. An influencer is anyone your customer base listens to and trusts. Influencers are great for expanding your restaurant’s visibility and ultimately bringing customers through the door. There are a few ways to find these influencers. They may already be following you. Use a social media management system like Hootsuite, Sprout Social, or Buffer to monitor accounts for these folks. If they’re there, you’ll know. Another way is to do your research. Look up specific hashtags on Instagram and see who surfaces. Reach out to them directly. If they’re local, invite them in and create an opportunity for them to take pictures and do what they do best. Customer engagement is where you’ll create loyalty and community. Foster your existing relationships, engage with the people who already love your food, and spread their good word. This goes back to word-of-mouth. It’s a perfect chance to let your best advocates sell your restaurant for you. This may be the best organic way to drive foot traffic.
Contests are always good, too. If you’ve ever heard of crowdsourced content, this is how you’ll get it. Crowdsourced content is content developed and published by someone outside of you and your business. Chances are your customers are posting pictures and tagging themselves at one of your locations. Harness this trend and even expand it with a contest that generates more great posts about your restaurant. Drive Demand with Location-Based Advertising. Businesses used to get by without advertising on Facebook and Instagram. Now, unfortunately, the game has changed. Business pages on Facebook must pay to play. No, that doesn’t mean you have to pay for your account, but if you want to achieve ROI on social media you need to start advertising. Luckily, this doesn’t mean throwing money away. Facebook and Instagram are cheap. So, how should you spend your money? Facebook uses a wealth of user data to provide the most robust digital advertising platform for social media. Don’t get lost in the information. Here’s a step-by-step example of what your Facebook ad targeting should look like for your restaurant to reach new customers: Choose “Brand Awareness” for your objective. Narrow the location to your zip code and/or surrounding zip codes. If you have data to inform a customer’s age range, adjust the “Age” category. (optional) Browse “Detailed Targeting” to specify demographics, interests, or behaviors of your ideal customer. Leave this blank if you want to target all Facebook users within the selected location. Choose “Edit Placements” and select “Mobile Only” under device types. This keeps your cost per click down and still delivers your ad to the people most likely to see it. According to Ninth Decimal, advertisers see an 80 percent increase in store visits on the first day a mobile ad is viewed.
Finally, set your budget. The most common question around social media ads is “How much should I spend?” You can answer that by setting aside a small budget for an initial test campaign. Spend $20 and see what the results are. You could then try scaling those results based on increased spending. Here’s an example of what your targeting should look like for existing customers, or anyone who has visited your website or location. This is a good way to promote rewards, loyalty programs, contests, and drive reservations: Choose “Traffic” or “Conversions” for your objective. Traffic optimizes your ads for link clicks to your website. Conversions require additional steps like adding a Pixel to your site to track visitor activity. Add a “Custom Audience.” Here is where you can upload an email list or retarget previous website visitors. In this case, you don’t need additional targeting. What you’ve selected to this point is highly targeted. If Facebook tells you the potential reach is too low, you might consider creating a Lookalike Audience. A Lookalike Audience uses the data gathered from your existing list and finds other Facebook users that fit the same criteria. Set your budget. Now it’s time to get creative. Videos always have a higher engagement rate than still images. GIFs work well, too. Try some A/B testing to figure out what messages and visuals work best. A/B tests allow you to run parallel ads that have one difference between them. This way you can measure one against the other to determine what works best. One example might be to run one ad with a photo and the other ad with a video. You might discover a funnel you can use over and over again to bring in more people. Over time, these steps will win you more sales. Restaurants have a unique advantage on social media. People always need to eat, and you have an endless supply of visual content. It’s vital to your restaurant that you have a quality social media strategy directly tied to ROI. Lastly, don’t be afraid to reach out for help from partners that want you to succeed, such as your local chamber, restaurant trade associations, or restaurant publications, like FSR Magazine. – Source: Food NewsFeed/FSRMagazine.com.
Industry Veterans Share Career Lessons Learned
I once heard a wine director say to a group of hospitality students, “The restaurant industry is basically an island of misfits.” In many ways, he is correct. Restaurants draw people from all industry sectors. It’s not uncommon for one to work alongside a poet, a Broadway dancer or even an ex-con. The hospitality industry employs people from all walks of life, many just looking to make a paycheck. But I’ve also worked with some of the most driven and talented professionals I’ve ever known, whom I’d call anything but misfits. As we all know, it’s a challenging industry in which burnout can, and often does, occur. The good news is that after running beverage programs and providing hospitality to literally thousands of guests, many restaurant beverage professionals acquire a wide array of skills they can translate into careers in other industries. They may leave the restaurant floor, but they bring with them a work ethic and expertise that parlays into higher-paying positions with more manageable lifestyles. Many companies, especially those that service the hospitality industry, keep a close eye out for talented expatriates looking to leave the restaurant island.
Seattle-based Luke Wohlers, an advanced sommelier certified by the Court of Master Sommeliers, began working in restaurants in 1996. After a career at top spots including Eleven Madison Park in New York City, Formaggio Kitchen in Boston, and RN74 and Herbfarm in Seattle, Wohlers started his own wine import and distribution company, Walden Selections, in 2014. “I know what it’s like to be in a restaurant manager role, so I approach my relationships with respect for those positions,” Wohlers said. “And people tend to bond over shared experiences, so those interactions come from a place of mutual understanding.” In addition to gaining a deep understanding of the world of wine, the skills Wohlers learned as a restaurant manager have helped him immensely in his new career, he said. “I think the desire for efficiency and brevity rank at the top,” he said. “The essence of a good management culture is the ability to keep projects on track, all while bringing everyone along for a positive experience.” Those who have worked in the restaurant industry also tend to have a customer-focused mindset, according to Erik McLaughlin, managing partner at Metis, a mergers and acquisitions advisory firm serving the adult beverage and hospitality industries. “They tend to be able to see how the customer will see things, and this ability to anticipate another’s perspective and response is tremendously helpful in other professional endeavors,” he said. McLaughlin’s restaurant career ranged from sommelier to general manager, and he also owned four restaurants. “In restaurants, the job always has to get done,” he said. “This urgency and utter commitment to accomplishing the task is something I often find lacking in people who haven’t worked in the restaurant trade, so I always lean towards hiring the person with restaurant experience. I value the type of esprit de corps that comes with restaurant life that is too rare in corporate life.”
Running a successful beverage program requires not only extensive product knowledge, but also a keen financial understanding. “Being financially responsible for the health of a wine program requires some very role-specific practices,” said Jill Zimorski, a Chicago-based Champagne specialist for Strategic Group, a company that contracts with Moët Hennessy and focuses on education in sales and buying for beverage professionals. “Being organized, understanding what things like ‘cost’ and ‘contribution margin’ mean, and buying the right things for your program, are all requirements,” she said Zimorski spent more than a decade working as a sommelier and beverage director, including stints working with industry leaders like chef José Andrés and, most recently, as wine director for the Alinea Group in Chicago. “No one tells you how much math there is in the wine business,” she said. “And I’m routinely surprised how many sommeliers don’t know this stuff. In my current job, I do a fair amount of profit analysis [and] calculating for buyers who are contemplating pouring Champagnes, but not sure how to sell or mark them up. I spent my career in restaurants, so I can relate to just about everything a buyer is dealing with.” Master sommelier Brian Cronin, based in New York City, spent years working around the country for top chefs and operators, including Charlie Trotter in Chicago and Gary Danko in San Francisco, as well as stints at resorts like St. Regis Monarch Beach in Dana Point, Calif. He parlayed that experience into a role as director of education for Palm Bay International, whose portfolio includes beverage brands that span 16 countries. Cronin’s time in restaurants has not only landed him a coveted career off the floor, but also continually informs his work ethic. “For me, it’s about the pursuit of excellence in service; and service spans all aspects of your life, not just taking care of guests. It’s in communication, follow-through, and being welcoming. It’s loving your customer more than your ego.” Now in a role where he trains sales teams to work with restaurant buyers, his restaurant experience is invaluable. “In many ways, salespeople are sommeliers, just for wine buyers,” he said. “When I train our sales teams how to work with buyers, they need to understand their schedules so they can know when to serve them, know when to leave them alone, and how to anticipate their needs.” Working in restaurants can mean a lifestyle of long work hours and constant demands in an often stressful environment. But it’s also an incredibly rich learning environment where skilled employees can experience the endless nuances of human nature, learn to prioritize complex tasks and, in the process, build a skill set that can span many industries. Correction: November 20, 2017. This story has been updated with the correct year in which Luke Wohlers began his restaurant career. – Source: Restaurant Hospitality.
How Chefs Go from Restaurant Kitchen to Grocery Store Brand
Jeff Lotman has tried for years to get to Nobuyuki Matsuhisa to license his name. “I don’t believe in ‘no,’” the brand-licensing executive says. “I only believe in ‘No, right now.’ I have chased people for years before they’ve said yes. Chefs are often afraid they can’t get control. They can.” Where Matsuhisa, the world-renowned chef behind Nobu, has refrained, other household-name chefs have done the opposite, signing over their names to restaurant operators, manufacturers, and retailers, lending their image to everything from sauces (Bobby Flay) to spatulas (Alton Brown), chilled ready-made meals (Jamie Oliver) to pressure ovens (Wolfgang Puck), knife sets (Rachel Ray) to K-cups (Emeril Lagasse). Lotman, the founder and CEO of Global Icons, a Los Angeles-based licensing agency, has been consulting and acting as a middleman in the business of branded goods and services since the early aughts. His agency works more closely now with corporate rather than personal brands, but he remains an opportunistic observer of the market. The reasoning, as Lotman explains it, is simple: “Ribs I might not buy, but Bobby Flay ribs, yes, I would pick those up.” Flay is as good an archetype of the multi-interest celebrity chef as any, his empire comprising five restaurants — one of them, Bobby’s Burger Palace, is a nine-year-old chain — 11 cookbooks, and a line of sauces and rubs for meat. Flay has been in the eye of the American public since 1994, and a TV regular since 1996. “You need profile,” according to Lotman. “No matter how great the chef is, if I haven’t heard if him, I won’t buy. Once you have that profile, you, as the licensor or brand owner, are in the stronger position.” According to Lotman, one of the biggest growth areas for chefs and culinary personalities recently has been in restaurant licensing. “Restaurants have learned that consumers see this as a good thing,” he says. “It makes them feel good about a restaurant, it drives them back. Fifteen years ago, there were three restaurant brands bearing people’s names. Now, there are about 80.”
Delivered meal kits lately popularized by companies like Plated and Blue Apron represent another possible conduit for celebrity chefs’ brands, says Lotman, pointing out the logic behind an alliance that grants a chef custody over ingredients as well as recipe and instruction. Chefs like Dominique Crenn and Fabio Viviani have signed on to curate meals with Chef’d, a meal kit company based in Southern California, but straightforward name licenses where chefs have even less responsibility are also on the table. “There may be one or two such licensing deals being negotiated behind the scenes,” Lotman says. For other chefs, there is nothing wrong with more traditional formats, like frozen meals, condiments, and other non-perishables. Jet Tila, star chef of the Asian food world, was born into what he calls “the first family of Thai food in Los Angeles” — his parents opened East Hollywood’s Bangkok Market, a retail and wholesale store, in 1972. Because he grew up working there, Tila says he is at peace in a stockroom and enjoys thinking deeply about merchandising. “Licensing was always attractive to me, coming from a grocery store family. As a teenager, I managed about 5,000 SKUs, dealt with many importers. It’s in my blood,” he says. Tila takes particular pride in the development of different ranges and says he tries to maintain close relationships with his co-packers — the contract manufacturers responsible for the production of shelf-ready products. “I do all the benchwork, with final approval. I will not put my name on something without being involved at that stage, without knowing who the co-packer is. And there could be multiple co-packers, nationally,” Tila says. “I want to walk them all, to see the production from start to finish.” To date, Tila’s experiences have been positive. He says that Asian food wasn’t always a “comfortable” category for food manufacturers; it was trickier than other cuisines to do properly. “So there’s a lot for us to offer,” he says. “There’s no tweaking of existing formulas. You need a unique formulation.” Tila has an ongoing partnership with Schwan’s Home Service, one of the largest providers of frozen meals in the U.S. He dismisses any suggestion that, as a chef, he has sold out. “Creating seven or eight frozen meals from scratch on a bench in Minnesota and having those go to thousands and hundreds of thousands of homes is fulfilling from a chef’s standpoint, and from a cultural and scientific standpoint,” he says. “People from cities turn their noses up at frozen food but a lot of middle America doesn’t have access to this food,” Tila continues. “Middle America consumes different Asian foods than what’s consumed along the coasts. With packaged food and convenience food, I want to satisfy somebody who wants lo mein, but also somebody who wants something more advanced.” Tila has not come up against very many hurdles, but that may be due to his extensive experience in the business.
For most chefs that want to develop frozen foods, there will be tradeoffs, according to William Madden, founder of Right Brain Consulting, a Chicago-based company assisting in food industry contract negotiation and management. “Say a chef wants to make a circular moussaka,” says Madden, “with fresh sliced eggplant, and ground Australian veal as the base. That’s great in a restaurant, where the veal you end up grinding is a byproduct of chops, and so on. But manufacturers are not making these one at a time. The eggplants, for example, would be instant quick freeze — IQF in industry speak. Every piece of the eggplant will need to be used, not just the solid center. Then it has to be baked in a sheet pan, not a circle, to minimize waste. “In an industrial setting, it is cost-prohibitive to do the things a chef is accustomed to doing,” Madden says, noting that most chefs going into licensing deals “don’t understand the physics of a frozen sandwich.” Lettuce freezes, for example, but it doesn’t thaw well. “In a restaurant, a sous chef knows if he screws up because he won’t be the sous chef in the morning,” says Madden. “In co-packing, a chef won’t know something is wrong until a consumer complains.” Chefs have significantly less control over the final product when a co-packer is involved, and this can be frustrating if they aren’t familiar with the experience. Likewise, it can be frustrating for co-packers whose chief goal is to produce food at volume safely and efficiently. “Chefs don’t like being told ‘no,’” Madden says. “But if you explain that this is protection from damage to 30 years of a Michelin-rated reputation, some get it.” Others decide it’s not worth licensing their name or trusting a co-packer.
Another concern is profit. According to Lotman, food licensing, where margins are tight, doesn’t give chefs too sizable of a cut. “It’s not as though you’re selling a t-shirt,” he says. “Star Wars, for example, could get 12 to 14 percent from a t-shirt. In food, you’re looking at 3, 4, or 5 percent, and 5 percent is really high in food.” Licensing in the food business can be unattractive to other chefs for different reasons. “I have to own it,” says Robert Irvine, an English-born chef and TV personality whose LLC, Robert Irvine Foods, employs seven full-time staff. “The reason I want that is because I want the person I partner with to work as hard as I work.” With the introduction of his product line (dominated by pizza, cheesecake, and rapeseed oil), Irvine wanted to market to households as well as to hotels, casinos, schools, and the military, with which he has a particular affinity. Irvine’s CEO, David Longstaff, was hired in 2014 after 30 years in the army. The business is split 50/50, domestic retail to military. A portion of proceeds goes to an eponymous foundation that supports military personnel, first responders, and their families. In this respect, Irvine emphasizes the idea of patronizing an individual, and his mission, rather than a brand. “TV can work with you or against you,” Irvine says. “A brand can be successful with your photo and your name on it, or it can go the other way. Is it egotistical? Do I feel good that my picture is on everything? No. It’s about cutting through.” Irvine is preoccupied with his “legacy” and the idea of leaving something behind. He says he could have quite easily sat back with his TV money and “had quite a nice life.” The decision to start the business was not without careful deliberation. “Giordano’s, Papa John’s, Tyson Foods… you have to be able to play in that space. I’m not just giving my name to it for a cut; I want to become synonymous with quality. I do not want to rip people off.” The aim for Robert Irvine Foods is to have “touchstones” in every aisle of the grocery store, says Longstaff, its CEO. “It happens that we get licensing invitations and requests and I say no all the time,” Longstaff says. “Rarely does a month go by.” Away from Robert Irvine Foods, however, the licensing out of Robert Irvine’s own name is handled by a branding agency. Last September, coinciding with the debut of his talk show Irvine partnered with a New York City-based agency, the Brand Liaison. The agency goal was to, per its news release, “lock in partnerships for cookware, food preparation, storage, and other kitchen products, as well as healthy meals, snacks, and fitness products for the Irvine brand.” Certain cachet-heavy names crop up in rotation in conversations about personality-branded products: Ina Garten, Emeril Lagasse, and (“the king,” per Jet Tila) Austrian-born American, Wolfgang Puck. Joe Essa, the president of Wolfgang Puck Worldwide, has worked with Puck for 18 years. A team of six, including Essa and Puck, act as managing partners: three on food, three on business. The licensing aspect of the business takes up the majority of Essa’s working day, split 60/40 between restaurants and food and homeware. Essa manages inbound interest and plots new agreements and partnerships. In the casual dining space, airport locations are lately big business for Wolfgang Puck. Time is divided between existing partners’ demands and propositions and the pursuit of new contracts and opportunities. Puck generally tries to support his partners, Essa says, but that doesn’t mean that a Guadalajara restaurant logically follows one in Cancún — everything is meticulously assessed on its individual merit. “We end up having to say ‘no’ more than not,” he says. On the products side of the business, Essa explains the same relationship dynamic obliquely. Some partners have been around for a long time; Wolfgang Puck first put out a line of pizzas in 1987. Campbell’s is the licensed partner for its canned organic soup line; Woodway Beverages for its iced coffee; WP Productions for homeware, and so on. Each partner is capable of many more things; the possibilities are myriad. Essa estimated that 20 percent of opportunities assessed are pursued. “That’s probably the main reason we have remained relatively small,” says Essa. “We try to be thoughtful about where we go with a business Wolfgang Puck has built for himself and his family over 30 years. Fortunately, it’s very easy to look at people’s operational track record. A lot of people just want to lock up the name. To stick the name on something and have it sell.” – Source: Eater.
3 Ethnic Cuisines Perfect for the Snacking Craze
Three years ago in this very space, when we last discussed snacking, I talked about the “globalization” of snacks—the increasing tendency of consumer packaged goods companies, in particular, to appropriate and redeploy different ethnic flavor profiles in their snack foods. Three years is practically a lifetime in the snacking world, where consumer behaviors and preferences are in a constant flux. And yet, based on all available evidence, the global-snacking trend continues to gather steam. Credit goes to those ever-adventurous millennials and their younger Gen-Z counterparts, whose restless palates are constantly yearning for new, different, and memorable flavors. Three cuisines in particular—Moroccan, Ethiopian, and South American (not actually one cuisine, but many)—appear to be ripe for discovery and reinvention. I’ll take each in turn.
Moroccan • Can you imagine pulling up to your preferred fast-food drive-thru window and ordering food in which the flavor profile skews North African? Perhaps not today, but based on the buzz surrounding Moroccan cuisine these days, the prospect doesn’t seem that outlandish or far-fetched. Indeed, at this past summer’s Fancy Food Show, Moroccan food was billed as one of the top 10 food trends. Moroccans have historically favored fruits and vegetables, unrefined olive oil, rice, and couscous, along with a potent, flavorful mix of sweet and savory spices that includes saffron, cinnamon, fennel, anise, and cloves. Among the local delicacies are chebakia—strips of fried dough coated in a honey-rosewater syrup and topped with sesame seeds—and bastilla, which is a pastry-covered ground meat entrée that could be reconceived as a handheld snack suitable for any daypart. With a liberal dose of cinnamon contributing to the sweet-savory taste profile, bastilla—with a distinctly Western twist—could be a winner for the chain or concept that elects to develop interesting variations on the theme. Beyond meat and pastry, Moroccans also enjoy savory vegetables with interesting flavor profiles that can be turned into dips and spreads, like cauliflower with harissa or smoked eggplant sweetened with date sugar or date syrup. It’s not hard to envision a health-conscious chain offering snacks such as fried cauliflower florets with dipping sauces; baked or fried legume chips; or almond, cashew, and other nut butters on a pita.
Ethiopian • Ethiopia is the official home of the giant (often two feet in diameter) spongy sourdough pancakes known as injera, which serve as an all-purpose carrier for the thick, heavily spiced, often vegetarian signature stews that are the cuisine’s hallmarks. A mix of spices known as berbere is a staple of the Ethiopian table; it consists primarily of chile peppers, garlic, ginger, basil, and a host of other regional ingredients. It’s possible to envision a clever concept turning injera and stew into a kind of Ethiopian burrito or chimichanga. Also, teff—the trendy ancient grain high in minerals and protein that’s used to make injera— could be transformed into crispy chip snacks. The crafty menu-development pro could also take a traditional trail mix and give it a contemporary twist using a combination of Ethiopian spices, toasted barley, and mixed legumes.
South American • As noted above, an enormous continent comprising many different climates, cultures, and cuisines offers a vast array of possible snack inspirations. In the Andes region, staple ingredients include corn, potatoes, and other tubers, as well as tropical fruits such as guava, pineapple, and mango, all of which marry well with sweet potatoes and grains. On the other hand, in the southern lowlands region known as the Pampas, German and Italian influences abound, which explains the rampant local popularity of dulce de leche, pasta, and polenta. The continent is rife with local creations such as arepas—Venezuelan/Colombian cornmeal biscuits often used as sandwich bread or a carrier for fruits, vegetables, meats, cheeses, or other fresh ingredients—and empanadas, the popular crimped pastries that can be sealed around fruit for a delicious dessert or wrapped around meats or cheeses for a snack or meal accompaniment. El Porteño in San Francisco, for instance, offers a carne empanada filled with ground beef, onions, green olives, raisins, and hard-boiled eggs, as well as a vegetarian version made with sweet corn, onions, and basil. And Costas in New York favors a Venezuelan arepa made with queso, plantain, avocado, and tomatillo, as well as an Argentinian version featuring steak, caramelized onions, and chimichurri. Beyond the obvious snack appeal of both arepas and empanadas in a quick-serve environment, plantain fries or chips—a mainstay of South American snacking—could also offer sweet alternatives to the regular, potato-spawned variety. As quick serves continue competing with CPG companies for the U.S. consumer’s snacking dollars, they may wish to try some smaller-scale experiments with the potential to be category-defining or, at the very least, a welcome alternative to the fast-food norm. In my view, exploring different global flavor profiles is a relatively simple way to create distinct dishes that aren’t too far afield for their core consumers. – Source: qsrmagazine.com.
Steve Ells Stepping Down from Chipotle Mexican Grill, Inc.
Steve Ells, chairman, founder and chief executive officer of Chipotle Mexican Grill, Inc., will step down from his role and become executive chairman following the selection of a new CEO for the company. Mr. Ells founded Chipotle in 1993. “Steve is a visionary leader and one of the most successful restaurateurs in history, having grown Chipotle from a single restaurant in Colorado to more than 2,350 restaurants today,” said Neil W. Flanzraich, lead independent director of Chipotle.
“Steve made the decision, and the board agreed, that now is the right time to identify a new CEO who can reinvigorate the brand and help the company achieve its potential. We are committed to recruiting a world-class CEO for this incredible opportunity.” The board has formed a search committee — comprised of Robin Hickenlooper, Ali Nambar and Mr. Ells — to identify a new leader for the restaurant company who “demonstrates turnaround expertise to help address the challenges facing the company, improve execution, build consumer trust and drive sales,” Chipotle said. “I am incredibly proud of Chipotle and our people — and grateful to our loyal customers — and while we are continuing to make progress, it is clear that we need to move faster to make improvements,” Mr. Ells said. “Simply put, we need to execute better to ensure our future success. The board and I are committed to bringing in an experienced leader with a passion for driving excellence across every aspect of our business, including the customer experience, operations, marketing, technology, food safety and training. “Bringing in a new CEO is the right thing to do for all our stakeholders. It will allow me to focus on my strengths, which include bringing innovation to the way we source and prepare our food. It will ultimately improve our ability to provide our guests with delicious food that is prepared with high quality ingredients that are raised responsibly and served in a way that is accessible to everyone. I am confident that this will allow us to deliver value for our shareholders, and provide rewarding opportunities for our employees. Chipotle has vast unrealized potential. As we work hard to restore our brand, I believe we can capitalize on opportunities, including in areas such as the digital experience, menu innovation, delivery, catering, and domestic and international expansion, to deliver significant growth.”
Chipotle has struggled to recover from a foodborne illness outbreak in 2015 that included 55 cases of E. coli O26 across 11 states followed by a norovirus outbreak at a Boston-based restaurant that reportedly sickened 80 individuals. Shares of Chipotle opened at a 52-week low of $277 per share on Oct. 25 after company executives described a difficult operating environment that has prompted the company to scale back new restaurant openings. Chipotle’s share price was down 14.6% from the previous day’s close of $324.30. Reaction from the investment community came against a backdrop of financials that, while stronger than year-ago results, failed to meet analysts’ expectations. – Source: Food Business News.
Dunkin’ Brands President of International Steps Down
Dunkin’ Brands Group Inc. president of international Bill Mitchell will leave the company in March 2018, according to an SEC filing. The company’s international leadership team will report directly to Dunkin’ Brands CEO Nigel Travis. The company did not comment on whether it is an interim move. “Under Bill’s leadership, our international operations are firmly on a course of improving franchisee profitability by increasing ice cream sales for Baskin-Robbins and driving a coffee-forward strategy for Dunkin’,” the company said in a statement.
Canton, Mass.-based Dunkin’ Brands opened 41 net new Baskin-Robbins locations and 18 net new Dunkin’ Donuts units internationally during the third quarter ended Sept. 30. Systemwide sales at international locations rose 6.7 percent during the quarter, driven mainly by sales growth in Southeast Asia, the Middle East, South America, Europe and China. Results were hampered by performance in South Korea. Dunkin’ Brands said the decision to leave was Mitchell’s. He has agreed to stay with the company until mid-March. Mitchell joined Dunkin’ Brands in October 2010 as vice president of Baskin-Robbins U.S. The company credited him with overseeing the turnaround of Baskin-Robbins’ domestic performance before moving to his current role. Mitchell has been focusing on international operations for Dunkin’ Donuts and Baskin-Robbins for the past two years. Travis will soon oversee the international team, in addition to a $100 million refresh of the Dunkin’ Donuts brand. “Our focus is on opportunities that we believe, along with our franchisees’ investments, ignite the transformation of Dunkin’ Donuts into a beverage-led, on-the-go brand,” Travis said during a third-quarter earnings call. Those opportunities include enhancing the brand’s digital app, refreshing the layout of restaurants and expanding delivery. Curbside delivery became available to all franchisees this year as well. Dunkin’ Donuts has also made efforts recently to streamline its menu. David Hoffmann, brand president for the U.S. and Canada, told NRN in September that the company was looking to bring an “overarching reset” to its doughnut roster. “We’ve shrunk the amount of doughnut variety, and we’re seeing a lift in those markets instantly,” Hoffman said. The brand cut its doughnut variety from more than 30 options to 18 in some markets and 24 in others. Dunkin’ Brands has locations in more than 60 countries, with about 12,400 Dunkin’ Donuts units and approximately 7,900 Baskin-Robbins outlets worldwide. – Source: NRN.
Houston-Based Salad Chain Promotes Iris Campos
Salata Holdings LLC has promoted Iris Campos to be the salad chain’s first chief operating officer, the company said. Campos joined the Houston-based company in 2013, and most recently served as executive director of shared services and operations. “Iris is a seasoned and trusted member of our company, and has played an instrumental role in Salata’s success for the past four years,” said Tony Kyoumjian, Salata co-founder, in a statement. “Campos has shown her dedication to Salata through her willingness to jump in wherever she is needed. We are thrilled to have her join our executive team.” This year, Salata year entered several new markets, including its first restaurant in Oklahoma City. The brand’s 70 restaurants are also in California, Georgia, Illinois and Texas. As chief operating officer, Campos will oversee finance, operations, training and development, human resources, real estate and construction, manufacturing, purchasing, product development, vendor relations and information technology, the company said. Prior to joining Salata as director of human resources, Campos served in human resources roles at KBR, Staffmark and Flexi Compras. Berge Simonian, Salata CEO and co-founder, said, Campos’ experience “and dedication to the brand, along with her impressive track record of accomplishments, have primed her to lead Salata.” Salata was founded in 2005, in Houston. – Source: NRN.