To Our Loyal Readers:
Here it is ONE Week prior to Thanksgiving and on behalf on all of us at American Recruiters we would like to be the first to wish you and your family a Happy Thanksgiving. To anyone who has a family member currently serving in the Armed Forces our thoughts and prayers are with you and your patriot as well. In addition, a belated THANK YOU to all our Veterans from November 11. Observance of Veterans’ Day dates back to 1926 when Congress first passed the observance legislation. That got me to thinking about longevity in general and business longevity in particular. According to a study by the Korn- Ferry Institute, CEO’s on average last only eight years. (About 2 years more than an average NFL Career!) Why then do 30 CEO’s of Fortunate 500 companies have over 20 years running the companies? According to research conducted by 247 WallStreet, these leaders have three things in common and here they are:
- Character: Values & Beliefs
- Competence: Earned by experience, exceeding expectations and inspiration, and finally:
- Consistency: Behavior, temperament and integrity
May sound simple; however, trying to live a business life with these characteristics for many has not existed. I hope you and your leaders all share these three C’s. Another thing I hope you all share, is the latest edition of the American Recruiters Global Foodservice News. If you don’t have an opportunity to read it prior to eating your Thanksgiving dinner, then as you come out of your food comma it is an ideal read. Again, have a great Thanksgiving. Oh yeah, did I mention my Northwestern Wildcats are in the Big Ten Championship for the first time. Now that is something I am really THANKFUL about!!
President, American Recruiters
California Restaurant Association Ready to Help Displaced Workers
Fires in California raged on Monday leaving devastated communities in their path, as they destroyed hundreds of homes and businesses including locations of several quick-service chains in Northern California. As of Monday, the Woolsey fire near the posh community of Malibu, Calif., had scorched 91,572 acres and was only 20 percent contained, according to state authorities. Two people were killed in the blaze, officials said. The fire has destroyed an estimated 370 structures. An additional 57,000 structures are threatened by the fire, which started last week. In vNorthern California, the Camp fire has burned 113,000 acres over four days and destroyed 6,453 homes and 260 commercial buildings, state authorities reported. Fourty-two fatalities were confirmed as of Tuesday morning. Much of the destruction has occurred in Paradise, a small community of 26,000 residents nestled in the foothills of California’s Sierra Nevada mountains.
The fire, which is only 25 percent contained, barreled its way through the town incinerating hospitals, elementary schools, grocery stores and restaurants. A KFC, a Burger King, a Jack in the Box and a McDonald’s were gobbled up by flames in Paradise leaving nothing but rubble, according to details confirmed by Nation’s Restaurant News, as well information cited in various Bay Area news sites. It remains early to gauge the full scope of the fires’ damage, but the California Restaurant Association, said it is “ready and eager” to help impacted workers. The foundation’s Restaurants Care program provides basic living expenses to help restaurant workers who face unforeseen hardships, illnesses or natural disasters. “If anyone wants to help, donations will go a long way as people recover and rebuild,” Alycia Harshfield, executive director for CRA foundation, said. The foundation will work with restaurants in unaffected areas to raise funding for the program. Anyone wanting to help, or seeking help, can visit the group’s website. Here’s a list of known restaurants damaged by the California fires, as well as restaurants and celebrities helping first responders. Information was confirmed by either NRN or obtained from various media outlets including the San Francisco Chronicle and SF Gate.
A KFC on Clark Road in Paradise was destroyed when the Camp Fire ripped through the area. The company said the franchise unit was “a complete structural loss.” “We have made contact with the franchisee of this restaurant and confirmed there were no reported injuries to KFC team members,” the company told NRN. “The KFC Foundation is working to provide emergency support to restaurant team members in the affected area through its KFC Family Fund.”
A McDonald’s burned down in Paradise. The only thing left untouched was the restaurant’s famed “Golden Arches” sign, which remained upright near the restaurant, as seen in a dramatic photo on the SF Gate’s website.
A Jack in the Box spokesman said a franchise unit in Paradise was destroyed. One Jack in the Box in Malibu remained close as of Monday. “We’ve had four other restaurants in the state that were temporarily closed, but all have re-opened,” spokesman Brian Luscomb said. The Jack in the Box Foundation is making a $10,000 donation to the American Red Cross.
Two Taco Bell franchise restaurants, one in Calabasas and one in Paradise, were closed due to the California fires, spokesman Rob Poetsch said. The Oroville, Ca. Taco Bell restaurants are open and “team members are helping out feeding evacuees at the Salvation Army,” he said. The Irvine, Calif.-based chain plans to send its Taco Bell Truck to feed first responders and residents impacted by the fires.
Black Bear Diner was engulfed and burned to the ground. A wooden Bear mascot sign remained untouched. The bear is holding a sign, saying: “Welcome to Bearadise.” The company told NRN: “We are sad to report that our Paradise location was destroyed by the fire, and we are currently estimating the financial cost of the damage. Fortunately, all of our approximately 40 employees are safe and accounted for.” It added that it would assist any relocated employees in their job searches, had been in touch with the California Restaurant Association about its disaster grant process and employee assistance program.
Darlene’s Fine Candy & Ice Cream in Paradise was destroyed, according to media outlets.
A Jersey Mike’s representative said “fortunately no stores have been damaged due to the fires,” though five locations in the Los Angeles area were closed temporarily on Friday. They have since reopened. Since Thursday, Nov. 8, Jersey Mike’s has been feeding first responders in Southern California. The company first began feeding local authorities and volunteers after the Thousand Oaks shooting and providing free sub cards to those donating blood. It continued to feed first responders battling the fires.
Food Network personality Guy Fieri, who lives about three hours south of Paradise, cooked pulled pork over the weekend for first responders in Northern California. “Guy Fieri made a surprise visit to serve dinner to everyone at the law enforcement staging area at Butte College. Thank you so much Guy for filling our bellies and lifting our spirits,” according to the Butte County Sheriff’s official Twitter page.
Chipotle Mexican Grill had closed one restaurant in Malibu; however, as of Monday, that restaurant is fully functional, a company spokeswoman said. Panda Express restaurants have not been impacted. However, the chain said it is “working with the Red Cross to help provide warm meals to first responders.” Dunkin’ shops in California are also delivering food to first responders across the state, the company said.
Subway said a franchise owner lost two of his restaurants in the fast-moving Camp fire; eight other Subways are temporarily closed in areas impacted by the two California fires. “The company and the team in California have rallied together to donate food and water to first responders and disaster relief teams,” the company said.
Two Chick-fil-A restaurants in Southern California have been impacted by the Woolsey fire.
The Westlake Village restaurant is only accepting carry-out and drive-thru orders; the patio is closed. The Moorpark Road restaurant was temporarily closed. It was slated to reopen Monday night. Both locations are giving first responders who visit the restaurant free meals, said a Chick-fil-A representative.
The franchise owner of a Mountain Mike’s restaurant in Paradise lost his home. The restaurant survived the wildfire. The franchisee is organizing pizza deliveries for those evacuated and first responders. – Source: NRN.
Pizza Hut May be Taking its Pie-Making Show on the Road
A new automated pizza-making robot prototype that cooks pizzas on the way to customers’ homes is set to be unveiled Tuesday at the Specialty Equipment Market Association’s annual automotive specialty products show in Las Vegas. The mobile pizza factory, residing in the bed of a zero-emission Toyota Tundra pickup, will get its debut during Toyota’s presentation at the SEMA show. Called “The Kitchen,” the operation includes a refrigerator, a pair of robotic arms and a portable conveyor oven – all of which run on the truck’s hydrogen fuel-cell electric powertrain. Pizza Hut has yet to test the mobile pizza factory on city streets but sees potential not only for its gee-whiz factor, but for delivering fresher pizzas to a wider delivery area. “We are always looking to find ways to bring the oven closer to the doors of our consumers,” said Nicolas Burquier, chief operations officer for Pizza Hut. “Our obsession is always the same: How do we reduce the gap between the moment when the pizza comes out of the oven and when the customer starts to enjoy eating our product?”
Futuristic food delivery is all the rage, typically with drones being tested as the delivery vehicle. Two years ago, Domino’s Pizza delivered pizzas using drones in New Zealand, and Alphabet, parent company of Google, teamed with Chipotle to deliver burritos via drones at Virginia Tech. Uber is reportedly looking into developing drones that can deliver food, too, based on a job posting last week that.caught the eye of several news outlets. Among its more traditional innovations, Pizza Hut last year introduced new pizza boxes and new pouches designed to deliver pizzas 15 degrees hotter than in the past. This new robotic prototype would bring even more futuristic twists to pizza delivery.
The automated pizza maker takes six to seven minutes to cook a pizza. After an order is placed, the first robotic arm opens the refrigerator, removes the proper pizza and places it on the oven conveyor, which sends it through a high-speed ventless oven. When it’s done cooking, the second robotic arm removes the pizza, places it on the cutting board, slices it into six slices and puts it in a pizza box. A driver would then deliver the pizza to the door. But in the future, the pizza pickup could even drive itself to the customer. Pizza Hut is working with Toyota on its E-Pallete Alliance, part of which is a fully self-driving concept vehicle the car maker revealed earlier this year at the Consumer Electronics Show. Issues to tackle will include how the robotic pizza maker handles twists and turns on roads, acceleration and braking, and different weather conditions. Pizza Hut will be doing experiments with the prototype in the coming months, Burquier said. “We’re going to play with this prototype and then figure out what we can learn in order to build the future of our processes and our systems.” – Source: USA TODAY
Casual-Dining Restaurant Targets Women who Instagram
Chicago-based Parker Restaurant Group is planning a national expansion of its female-focused concept The Hampton Social, a move designed to quadruple the group in size to 21 restaurants within the next three years. Currently with five units in Chicago — though one restaurant is closed temporarily for a relocation — Parker Restaurant Group operates three Hampton Social units, as well as the one-off Beach House Social, and a bluesy cocktail lounge called Basement.
In December, the group is scheduled to open the first Hampton Social outside Illinois, bringing the brand to Naples, Fla., as well as adding another Illinois location in Skokie. Next year, four more are planned with Hampton Social scheduled for opening in Nashville, Tenn.; Cleveland, Ohio; Orlando, Fla.; as well as South Barrington, Ill., said Brad Parker, Parker Restaurant Group’s founder and CEO. In Cleveland, the group also plans to open a second unit of Bassment, he said, and the group is looking at bringing Hampton Social to more markets by 2021. With the new openings, Parker projected the group’s revenue will nearly triple from $35 million by the end of 2018 to $90 million by the end of 2019. Parker said the Hampton Social concept fills a niche for quality mid-range dining marketed toward women. “When it comes to restaurants, there aren’t a whole lot of multi-units out there geared toward women,” Parker said. “Being a man with five sisters, I saw a void for a brand that was centered around women going out with their friends and having a good time,” he said. “Women are the ones posting pictures on social media, so we think that getting that formula right is really powerful from a business standpoint.”
A significant part of the group’s strategy to reach its target demographic is the social media-friendly atmosphere of Hampton Social. Each restaurant has a light and airy decor and is known for rosé — or frosé on warmer days — and photo-worthy, Eastern-Long Island-inspired cuisine, like lobster rolls and oysters. “The social media generation has changed the way you build a brand,” Parker said. “They like signs, sayings, cool chairs, swings, etc. These all give them chances to Instagram something.” The average check at The Hampton Social ranges in price from $28 per person for brunch or lunch to $38 per person at dinner with a typical square footage of about 7,000- to 9,000-square feet. Parker is optimistic that a robust social media presence and strong marketing have already built a fanbase of women who have heard of the brand but never stepped foot in a Hampton Social restaurant. Parker said the restaurants average about $7.5 million in annual sales with “20-percent plus” profitability at each location. So far, growth has been funded privately, along with investments from friends and family, initially using funds from the 2015 sale and closure of his first Chicago club/eatery, American Junkie. Parker emphasized that he is building a lifestyle brand, not just a chain of restaurants. “Our goal is for someone to say, ‘I had a great time — had so much fun with my friends, and I felt like I was on vacation,’” he said. – Source: Restaurant Hospitality
Real Mex Restaurants Rebrands After Acquisition by Z Capital
With the completion of an acquisition by an affiliate of Z Capital on Tuesday, Real Mex Restaurants is changing the brand’s identity. The restaurant group will now be known as Xperience XRG Restaurant group. FM Restaurants (FM Restaurants HoldCo, LLC), an affiliate of Z Capital (Z Capital Group, LLC) announced through a court-supervised auction it completed the acquisition of certain assets of Real Mex Restaurants. “We are excited to combine the best of well-established concepts with substantial industry talent throughout the Company to position it for continued growth and success,” Rahul Sawhney, senior managing director of Z Capital, said in a statement. “The rebranding of the Company to Xperience XRG speaks to an unfettered focus on the highest standards of everything that goes into the guest experience including high-quality food and drinks, an inviting ambiance and tremendous service.” Leading Xperience XRG is newly appointed chief executive officer Randy Sharpe and chief financial officer Ned Algeo. The new restaurant group’s portfolio is comprised of both fine dining and casual brands, including El Torito, La Brisas, Pink Taco, Acapulco, and Sinigual. “We are pleased to complete this acquisition and announce our new brand identity as we focus on our strategic growth priorities driven by best-in-class operational and organizational efficiencies,” Randy Sharpe, Xperience XRG’s chief executive officer, said in a statement. “These are strong brands with loyal customers, supporting thousands of jobs in the communities we serve. As the restaurant industry evolves, we are confident that Xperience XRG is well-positioned to capitalize on its hospitality-focused culture and continue providing guests with an unparalleled dining experience and innovative menu offerings.” Back in August, Real Mex filed for bankruptcy whilE announcing plans tosell the company to one of its largest shareholders, Z Capital, in a deal valued at $46.8 million. Despite rising same-store sales at Chevys Fresh Mex and El Torito, the company fell short on more than $230 million to two groups of lenders last spring. Additionally, Real Mex owed about $6.5 million to vendors and had another loan of about $54 million owed to a to a lender group that included Z Capital affiliates. The company first saw trouble in 2011 when it first filed for debt protection. At the time, it had around 128 restaurants when it sold to affiliates of Tennebaum Capital Partners and Z Capital in March 2012. Since 2012, the brand has continued to weed out under performing locations bringing the number of locations to 68. Under the new Xperience XRG leadership, the group is looking to expand and capitalize on new locations in the future. “Randy and Ned have a deep understanding of consumer trends and have had a great deal of success cultivating premier restaurant brands, and we are excited to partner with them,” James Zenni, Z Capital’s president and chief executive officer, said in a statement. “We look forward to this next chapter with Xperience XRG as we pursue organic growth opportunities to expand our national footprint and simultaneously enhance the portfolio through strategic acquisitions to drive value for our stakeholders. – Source: fsrmagazine.
CraftWorks Acquires Logan’s Roadhouse, Forms New Company
CraftWorks Restaurants & Breweries announced that it has completed a deal to acquire Logan’s Roadhouse. The new multi-brand restaurant group has been rebranded as “CraftWorks Holdings.” Logan’s current chief executive officer, Hazem Ouf, will take the reins of the new platform, which is made up of 393 restaurants across 40 U.S. states and the District of Columbia. Logan’s, which opened in 1991, filed for bankruptcy in August 2016. To bring down its debt from $400 million to $100 million, the 27-year-old brand initially closed 34 restaurants of its 256 locations. Today, Logan’s has 204 corporate and franchise restaurants in 22 states. Ouf, who is a turnaround expert and industry veteran with more than 35 years of experience, joined the company as CEO in January 2017. The company also brought on David Catalano as chief operating officer last summer to help further efforts to put the brand back on a positive track. “I am excited to lead the new combined enterprise under the umbrella of Craftworks Holdings, and I look forward to leveraging our combined capabilities to deliver unique and memorable dining experiences,” Hazem Ouf, chairman and chief executive officer of CraftWorks Holdings, said in a statement. “Our name ‘CraftWorks’ reflects the spirit and high quality of ‘Crafted Signature Food & Beverage’ and our passion for serving our brands, guests, team members and our communities. We believe that our cumulative restaurant industry experience, the company’s extensive infrastructure, and the financial strength of our investors will allow us to drive excellence in service and quality within a scalable full-service dining platform.” “By creating CraftWorks Holdings, we have laid the foundation for a premiere restaurant & brewery holding company to provide long-term growth opportunities for our brands, team members and franchise partners and established a platform that is well positioned for future growth and acquisitions,” added Ouf.
The acquisition from CraftWorks is another step in the right direction for the brand. By combining the two companies, the new platform will have a hand in full-service dining, craft beer, and restaurant-brewery industries. CraftWorks Holdings will be comprised of Old Chicago Pizza & Taproom, Rock Bottom Restaurants and Breweries, Gordon Biersch Brewery Restaurants, and Logan’s. “We are delighted to partner with Hazem Ouf as the Chairman and CEO of CraftWorks Holdings and welcome Logan’s Roadhouse and all of their associates to the CraftWorks family,” Matt Kabaker, senior managing director of Centerbridge Partners, L.P., which, through investment funds affiliated with it, controls CraftWorks Holdings, said in a statement. “Hazem is an accomplished hospitality industry leader with extensive experience spanning multiple concepts and restaurant segments. He has an impressive track record of driving brand revitalization while delivering strong financial performance, including the recent comprehensive turnaround of Logan’s. Hazem’s unique skill set and passion for the business make him an ideal partner for the next stage of growth and development at CraftWorks.” – Source: fsrmagazine.
Coke Creates Global Ventures Group to Handle Recent Acquisitions
The Coca-Cola Co. has made acquisitions and investments in several continents this year. One could say the Atlanta-based company has taken on global ventures, which might explain why Coca-Cola launched a Global Ventures group in October. “To ensure we properly connect and globally scale key acquisitions, investments and partnerships, we have created a new group, Global Ventures, to be led by Jennifer Mann,” said James Robert B. Quincey, president and chief executive officer, in an Oct. 30 earnings call to discuss third-quarter financial results. “In this newly created position, Jennifer and her team will focus on ensuring we get the maximum value from acquisitions and investments, like Costa, our partnership with Monster Beverages, etc. This group will also partner with colleagues around the world to identify and nurture the next series of fast-growing opportunities.” Ms. Mann, the company’s chief people officer, has taken on additional duties as president of Global Ventures. She previously was vice-president and general manager of Coca-Cola Freestyle from 2012 to 2015 and was chief of staff from May 2015 to May 2017. In North America this year, Coca-Cola agreed to acquire a minority stake in BodyArmor, a premium sports performance and hydration brand. In Australia, the company purchased Organic & Raw Trading Co., including its Mojo kombucha brand. In Europe, Coca-Cola plans to acquire London-based Costa Ltd., which includes 4,000 retail outlets, a coffee vending business and a coffee roastery. “We’ve had acquisitions in parts of the world,” Mr. Quincey said. “We have venturing and emerging brands units in different parts of the world. What we had not been so successful at is tying that together across regions, across the groups, if you like, and I think that’s what this represents in terms of the global ventures. So rather than letting something be successful in one group and then taking forever to get to another group, this unit here will be there to help push and drive the agenda for greater speed going forward.” Behind double-digit volume growth for Coca-Cola Zero Sugar, Coca-Cola posted net income of $1,880 million, or 44c per share on the common stock, in the quarter ended Sept. 28, which was up 30% from $1,447 million, or 34c per share, in the third quarter of the previous year. Net revenues declined 9% to $8,245 million from $9,078 million in the previous year’s third quarter as a 13-point headwind came from the refranchising of company-owned bottling operations. Organic revenues grew 6%, driven by concentrate sales growth of 4% and price/mix growth of 2%. United case volume grew 2% behind 2% growth in sparkling soft drinks and 5% growth in water, enhanced water and sports drinks. Unit case volume dropped 3% in juice, dairy and plant-based beverages and 2% in tea and coffee. “We’ve been capturing more than our fair share of growth as we continue to execute on our transformation as a total beverage company, and notably the industry has seen better performance within the global sparkling soft drink category, delivering both volume and value growth year to date,” Mr. Quincey said. In North America, net revenues grew 12% to $3,127 million from $2,781 million with organic revenues increasing 2% and unit case volume up 1%. Coca-Cola Zero Sugar and Powerade Zero both experienced double-digit volume growth in North America. The Sprite brand performed well as did premium waters, including Topo Chico and smartwater. Volume declined in juice, largely because of package downsizing. Operating income in North America increased 8% to $698 million from $648 million. In Europe, Middle East and Africa in the third quarter, operating income increased 1% to $944 million and net operating revenues also rose 1%, to $1,972 million. In Latin America, operating income rose 14% to $642 million, but net operating revenues slipped 3% to $1,003 million. In Asia Pacific, operating income rose 7% to $615 million while net operating revenues slipped 1% to $1,423 million. “Industry growth has improved from last year, driven by better results across both developed and emerging markets,” Mr. Quincey said. “Some large emerging markets, like China, India and Brazil, are clearly doing better. Others, like Argentina, South Africa and the Middle East, are not doing so well, but collectively we are seeing solid results.” Coca-Cola companywide over the nine months ended Sept. 28 reported net income of $5,564 million, or $1.31 per share on the common stock, which was up 39% from $4,000 million, or 94c per share, in the same time of the previous year. Nine-month net operating revenues declined 11% to $24,798 million from $27,898 million. – Source: Food Business News.
PepsiCo acquires Health Warrior
PepsiCo, Inc. has acquired Health Warrior, Inc., the maker of plant-based nutrition bars and other products. Financial terms of the transaction were not disclosed. “We’re thrilled to welcome the innovative Health Warrior brand to the PepsiCo family,” said Albert P. Carey, chief executive officer of PepsiCo North America. “We continue to position ourselves at the forefront of changing consumer preferences and trends. This acquisition helps us increase our presence in the nutrition bar category, which is an attractive growth space.” Founded in 2011 by three college athletes and friends, Health Warrior’s flagship product is a chia seed-based snack bar. The company has since followed with pumpkin seed-based bars, superfoods protein powder featuring probiotics, and protein mug muffins made with sorghum flour and fava bean protein. All of the products are gluten-free. “We’re fired up to join PepsiCo and continue to put nutritious options within reach of significantly more people,” said Shane Emmett, co-founder and CEO. “With a shared mission to help create healthy relationships between people and food, PepsiCo is the ideal partner to bring our nutrient-dense, plant-forward offerings to even more consumers and considerably accelerate Health Warrior’s growth. This is the whole reason we started the company.” Mr. Emmett will continue to lead the business from its current headquarters in Richmond, Va. This is PepsiCo’s first investment as part of The PepsiCo Hive, a newly-created entity focused on emerging brands. “This will enable us to continue building the Health Warrior brand at a deliberate and sustainable pace and to leverage its entrepreneurial expertise and talent to benefit our broader portfolio,” said Seth Kaufman, president of PepsiCo North America Nutrition, who oversees The HIVE. “Health Warrior is a nutrition-forward trailblazer that can provide great insight into high value categories and consumers while benefitting from our expertise and resources to bring plant-based nutrition to more people.” – Source:
The Cheesecake Factory Appears Ready to Buy another Chain
While The Cheesecake Factory works to regain sales momentum, the company’s investments are heating up. Matthew Clark, EVP and chief financial officer, outlined the brand’s plans Tuesday afternoon to possibly acquire 14-unit North Italia. Clark said the company is also in the processing of reviewing The Cheesecake Factory’s other concepts, Grand Lux Café and RockSugar “to ensure that we have the best levers in place to drive companywide ROIC and earnings growth in the future.” North Italia, currently under restaurateur Sam Fox’s multi-concept umbrella, already counts The Cheesecake Factory as a minority stakeholder. In a November 2016 deal, it bought into North Italia and Fox’s fast casual Flower Child. Per the agreement, The Cheesecake Factory had the opportunity to acquire both at a later date. Clark said the company was beginning to “prepare for the potential North Italia acquisition in the second half of 2019.” Since the 2016 investment, The Cheesecake Factory has offered growth capital contributions to the Fox Restaurant brands, but has let Fox’s operation run them. Clark said The Cheesecake Factory expects cash capital expenditures to range between $100 million and $110 million in 2018, with $20 million to $25 million going toward Flower Child and the potential purchase of North Italia. In addition to the 14 open restaurants, North Italia’s website calls for six more units opening soon. Two in Virginia are fresh markets. There are current stores in Texas, Pennsylvania, Nevada, Kansas, Florida, Washington, D.C., Colorado, California, and Arizona. It specializes in handmade pastas and pizzas. As for 14-unit RockSugar and two-unit Grand Lux Café, Clark said the review isn’t about closing locations. “It’s mostly about capital allocation,” Clark said. “I don’t think that it’s a conversion either, as we have a broader portfolio to choose from and we look to drive long-term returns, we just want to make sure that we use that lens to evaluate future opportunities with each of our brands.”
The Cheesecake Factory also announced that its highly anticipated fast casual, Social Monk Kitchen, was delayed due to permitting, and is now expected to debut first quarter 2019. The news came during a third-quarter review that beat Wall Street expectations. The Cheesecake Factory posted quarterly earnings of 62 cents per share, topping the Zacks Consensus Estimate of 58 cents per share. The company posted revenues of $580.88 million versus last year’s $555.39 million. Same-store sales climbed 1.5 percent. THE CHEESECAKE FACTORY. The Cheesecake Factory ran a Halloween delivery deal this year with free slices. More on the results headed into the summer of 2017, The Cheesecake Factory reeled off 29 consecutive quarters of positive gains, proving its standing as one of the most consistent high-performers in casual dining. The chain’s comps then turned negative at 0.5 percent in Q2 of that year and dropped 2.3 percent (hurricane effect), and 0.9 percent in the ensuing periods. It got back in the green to start fiscal 2018 with a 2.1 percent hike, and then reported a 1.4 percent lift in Q2 2018 before this past quarter’s positive 1.5 percent result. In many ways, these low-single digit gains might just be the new normal for The Cheesecake Factory. In the brand’s five-year plan, it calls for comps growth of 1–2 percent and unit growth of 5 percent. The restaurants are still running a casual-dining leading $10.6 million in average-unit volume with average checks of $22. The traffic landscape and cost picture have simply shifted dramatically from the days when The Cheesecake Factory was putting together robust comp-sales calendars, stacked one after another, year after year. David Overton, chairman and CEO, said, “within the four walls, our operators drove year-over-year improvements in food efficiency and labor productivity.” age inflation moderated from the second quarter and group medical insurance costs normalized. The Cheesecake Factory also ended the quarter with lower overtime year-over-year as it continues to focus on fully staffing restaurants, Overton added. This past quarter broke down with pricing 2.9 percent, a positive mix of 0.6 percent, and traffic down 2 percent. In Q2, labor took a major bite of the company. Labor costs were up to 35.8 percent, and group medical costs lifted $4.5 million compared to the previous year, which in turn decreased profits by 7 cents. In Q3, labor was 35.2 percent of revenues, an increase of about 30 basis points from the same period last year. This is primarily attributable to hourly labor, specifically higher wages, Clark said. “With our history of continuous improvement, we will seek additional efficiencies in our restaurants to help offset pressure on the labor line and we will also further enhance our market based pricing strategy in higher wage geographies to support our objective of maintaining flat restaurant level margins,” he said. The labor inflation rate was about 6 percent in the quarter, and Clark said The Cheesecake Factory is expecting much of the same in Q4. Digital lift Off-premises comprised 13.5 percent of The Cheesecake Factory’s sales during Q3. This time last year, it was 12 percent. Chain president David Gordon said the company still believes 60–70 percent incrementality is the target for delivery business. Broken down:
The Cheesecake Factory’s delivery accounts for 25 percent; take-out, phone-in ordering two-thirds; and new online ordering through the platform launched earlier in the year around 10–12 percent. “With regard to our guests that opt to pick up their order, we’re seeing good initial traction with our online ordering platform available through our website for all Cheesecake Factory restaurants nationwide. We will continue to focus on raising awareness of this new channel via in restaurant and to go marketing supported by some local search advertising,” Gordon said. During the third quarter, The Cheesecake Factor transitioned to an exclusive national delivery partnership with DoorDash. “This agreement also augments our collaborative marketing opportunities throughout the year,” Gordon added. Growth on the horizon. The Cheesecake Factory continues to expand. It expects to open five restaurants in fiscal 2019, including The Cheesecake Factory in Lynnwood, Washington, a suburb of Seattle and Grand Lux Cafe in Atlanta, which both opened during the third quarter. It expects to open three additional Cheesecake Factory restaurants during the remainder of the year as well. Internationally, the company plans a licensed unit for Monterrey, Mexico, in Q1 2019. “Including this restaurant, we expect as many as five to six locations to open under licensing agreements in 2019. Domestically, we continue to believe there is potential for 300 Cheesecake Factory locations and I feel good about the real estate opportunities lining up for 2019,” Overton said. There are currently 199 domestic Cheesecake Factory stores. Internationally, there are 21 operating under licensing agreements. – Source: fsrmagazine.
The Deal Has Been in the Works for Several Months
In June, Jacksonville, Fla.-based Arc reached a complicated deal with Tilted Kilt and SDA Holding, a company owned by one of Arc’s board members, Fred Alexander. SDA acquired Tilted Kilt, receiving a loan from Arc CFO and Chairman Seenu Kasturi. Arc said at the time that it was trying to arrange financing to make the acquisition. Under the new agreement, Arc will buy Tilted Kilt for $10 plus the assumption of debt. Arc is one of several companies trying to acquire underperforming brands at low prices to pair them with other concepts in a bid to generate scale during a competitive period in the restaurant industry. “The Tilted Kilt acquisition is in line with our strategy of targeting undervalued/underperforming restaurant chains with immediate cash flow potential, where we have the ability to leverage our franchising, marketing, operational, logistics and financial expertise across brands,” Kasturi said in a statement. This was the second acquisition by Arc Group this year, following its purchase in August of the four-unit Fat Patty’s, for $12.3 million. The addition of Fat Patty’s and Tilted Kilt to the Arc Group portfolio gives the company an additional $25 million in revenue. Dick’s Wings operates 22 locations and generates $22 million in system sales. – Source: Restaurant Business.
KFC Names Lowings as New Leader
Tony Lowings has been promoted to chief executive officer of the KFC division at Yum! Brands, Inc., effective Jan. 1, 2019. Mr. Lowings currently is president and chief operating officer for the KFC division. In his new role, Mr. responsible for driving KFC’s brand strategy and performance of the chain’s more than 21,000 restaurants around the world. As of year-end 2017, KFC operates restaurants in more than 130 countries and territories and has global system sales in surplus of $24 billion. Mr. Lowings is a 24-year veteran of Yum! Brands, holding a variety of leadership positions across finance, operations and general management in the company. Before becoming president and COO of the KFC division earlier this year, he was managing director of Asia-Pacific for KFC. Prior to that, he was managing director of KFC SOPAC (Australia and New Zealand). Earlier in his career, Mr. Lowings was COO of Yum! Restaurants International; managing director of Latin America and the Caribbean for KFC, Pizza Hut and Taco Bell; and general manager of KFC and Pizza Hut in Australia and New Zealand. “Tony Lowings is an outstanding leader with deep knowledge of our business and a strong track record of growing KFC’s presence and strengthening the brand’s competitive position with our franchise partners in markets around the world,” said Greg Creed, CEO of Yum! Brands. “As a proven and highly respected strategic brand builder, high impact operations leader and people grower, Tony is the perfect person to continue elevating KFC into a distinctive, relevant and easy global brand that people trust and champion. I’m extremely confident Tony and his management team will establish a seamless transition and continue to successfully execute KFC’s long-term global growth strategies in partnership with our franchisees.”Mr. Lowings succeeds Roger Eaton, who plans to retire from his role as CEO of Yum! Brands’ KFC division at the end of the year. Mr. Eaton has been with Yum! Brands and KFC for more than 20 years, leading the KFC brand globally since 2014. During his time with the company, he also was chief operations officer of Yum! Brands, CEO of KFC U.S., COO and chief development officer of Yum! Brands and senior vice-president and managing director of Yum! Restaurants International South Pacific. “I want to thank Roger Eaton, a dear colleague and friend to many, for his tremendous service, dedication and significant contributions to our business over the past two decades,” Mr. Creed said. “Roger’s imprint on our culture, people and the KFC brand is vast, and his legacy is lasting.” – Source: Food Business News.
Taco Bell Opens First Restaurant in China
Yum China Holdings, Inc., and Taco Bell Corp. have opened the first Taco Bell restaurant in China. Taco Bell’s first restaurant in China is part of the brand’s global growth strategy of reaching 1,000 restaurants internationally by 2022. Currently, Taco Bell operates more than 7,000 restaurants in the world with more than 300 in 26 countries outside the United States. Building restaurants in new international markets is a key component to the overall growth and evolution of Taco Bell, and we’ve just scratched the surface of our global unit expansion potential,” said Brian Niccol, chief executive officer of Taco Bell Corp. “The opening of this Taco Bell restaurant in China is an exciting milestone for the brand as this market holds tremendous growth potential. We look forward to supporting Yum China as it builds Taco Bell’s presence in the country.” Taco Bell’s new China location features classic Taco Bell offerings adapted to local tastes, Yum China said. The Crunchy Taco Supreme is loaded with Taco Bell’s signature nacho cheese sauce in China, and the Volcano Chicken Burrito features spicy sriracha sauce. The menu also offers new items unique to Taco Bell restaurants in China such as the Shrimp and Avocado Burrito.
Additionally, customers may order shared plates featuring seasoned nacho chips, spicy fried chicken and Mexican fries. The Shanghai location also offers a variety of alcoholic beverages, including beer on draft and specialty cocktails such as margaritas and mojitos. Technology also plays a key role in Taco Bell’s new Shanghai restaurant, Yum China said. The location boasts free Wi-Fi, digital ordering kiosks, digital menu boards and a range of payment options. The restaurant also emphasizes transparency with its open kitchen where customers may see their food being made. “Leveraging our deep insights into Chinese consumer preferences, developed from close to 30 years operating in this market, we thoroughly researched and fine-tuned the Taco Bell menu for China, and the initial response from customers is very encouraging,” said Micky Pant, chief executive officer of Yum China. “Taco Bell is an innovative brand with a strong heritage that we believe will resonate well with Chinese millennials. Built around the concept of ‘Live Mas’ – literally meaning ‘Live More’ – Taco Bell encourages its customers to try things they’ve never tried before. I look forward to creating experiences that surprise and delight people as we expand the Taco Bell brand in China.” – Source: Food Business News.
Starbucks Delivered to the Homes
The Starbucks experience in China is different. Perhaps the biggest difference: Chinese customers can get their Frappucinos delivered to their homes. The delivery option is possible because of a partnership with e-commerce platform Alibaba that rolled out in August, connecting it with the company’s online marketplace, delivery and logistics networks and on-site mobile apps and mobile payment tools. “This partnership is not just about delivery,” said John Culver, group president, Starbucks International, channel development and global coffee and tea, during the company’s fourth-quarter earnings call. “This partnership will be the rocket fuel for our holistic digital flywheel strategy in China.” To scale in China, Starbucks is putting into practice Alibaba’s “new retail” concept, which combines e-commerce, digital-first touch points like mobile shopping and mobile payments with traditional storefronts.
Starbucks is growing its store imprint in China; between September 2017 and September 2018, the company surpassed its plan to open 585 net new stores, and it entered 17 new cities during this period. In addition, in Alibaba’s Amazon Go-style cashier-less Hema supermarkets, Starbucks orders will be fulfilled in stores through on-site kitchens. Starbucks’ China strategy mirrors the one large retailers are taking in other markets, through integration with third-party delivery platforms, mobile ordering platforms and digitally-enabled experiences in physical stores. Starbucks’ tie-up with Alibaba includes integrations with online food delivery platform Ele.me that Alibaba acquired in April. Customers who don’t want to go to stores can use online marketplaces like Tmall or peer-to-peer marketplace Taobao. The retailer is also using its 3,500 cafes as delivery hubs. “Consumers in China are very big on mobile, and they’re further ahead on mobile shopping and mobile commerce compared to the U.S.; if you’re a U.S. brand and looking to expand to the Chinese market, it’s a huge growth opportunity,” said Corey Pierson, CEO of Custora, a predictive analytics platform for online retailers.
China is Starbucks’ second-largest market and fastest-growing market. Customers’ demand for delivery is growing, According to Cainiao (a logistics firm acquired by Alibaba in 2017) data cited by retail think tank Coresight Research, express package deliveries in China grew 42.1 percent between 2014 and 2017. etailers are rushing to meet expectations, both for digitally-initiated transactions and those which start in physical stores. “Surging online sales translate into soaring demand for deliveries, and Chinese consumers are expecting those deliveries faster than ever,” said Deborah Weinswig, CEO of Coresight Research. Over half of television network, studio production and publisher executives say that buyer demands of exclusivity cause video licensing deals to fail. Starbucks’ delivery push in China offers some hints for what may be on offer in the U.S. On the company’s fourth-quarter earnings call, chief operating officer Rosalind Brewer said the company has been testing delivery in the Miami area since the summer, the results from which have been “promising.” Starbucks, like other retailers, is testing delivery with third-party providers to assess efficiency and cost-effectiveness, said Moody’s senior credit officer Bill Fahy. Risks include damage to the brand if external delivery providers don’t meet customer expectations and increasing competition from other Western brands and local competitors. Though the Chinese market has in recent years become more saturated with Western brands, Starbucks has maintained a cachet and a uniqueness that has staying power, he added. A physical store network will also be an important asset to compete with local players. “They’re trying to be as convenient as possible for the consumer, whether it’s mobile pay, loyalty programs, order ahead, with the least level of friction,” said Fahy. – Source: Digiday/CNBC.
Papa John’s Closed a Net of 51 Locations
The domestic results were “slightly” ahead of the Louisville, Ky.-based pizza chain’s expectations. Speaking on the company’s third-quarter earnings call Tuesday afternoon, executives said that same-store sales improved in September from the decline of 10.5% in July and into August. Steve Ritchie, Papa John’s CEO, said that the comparable store sale and traffic improved after the chain launched its “Voices of Papa John’s” campaign in September. “The strategy to move into a more modern and inclusive marketing direction was a good one,” Ritchie said. The better-than-feared performance sent the company’s shares 3% higher in after-hours trading on Tuesday. Analysts and investors were paying close attention to Papa John’s results.
The company’s sales have struggled for the past year, since founder John Schnatter appeared to blame NFL player protests for the chain’s weakening same-store sales. They worsened further in July, after Schnatter acknowledged using a racial slur during a conference call and resigned. The sales results “reflect the brand challenges exacerbated by the negative impact of media coverage” beginning July 11,” Ritchie said, vowing that the events are “not going to define the future of Papa John’s.” Papa John’s reported a net loss of $13 million, or 41 cents a share, driven mostly by nearly $25 million in “special charges.” Those charges include $3.6 million in reimaging costs at nearly all of its domestic locations and $9.9 million in financial assistance to operators. The company also said it spent $11.3 million on various legal and other costs associated with an audit of the company’s policies and procedures following the departure of founder John Schnatter as chairman and primary spokesman in July. Papa John’s has 3,356 restaurants in North America, down from 3,407 at the beginning of the quarter following 68 closures and 17 openings. Papa John’s also sold 31 restaurants to franchisees in the period. Year to date, Papa John’s has closed 151 locations and opened 66, for a net unit count reduction of 85. Including international locations, Papa John’s operates 5,247 locations worldwide. Including international locations, Papa John’s operates 5,247 locations worldwide. – Source: Restaurant Business.
Carrier Transicold Northern Ireland Retains Network Service Partner of the Year Award
For the second year running, County Down-based Carrier Transicold Northern Ireland was named Network Service Partner of the Year at Carrier Transicold UK’s Performance Assessment and Competitive Excellence (PACE) awards. Carrier Transicold, which operates in the UK as Carrier Transicold (UK) Limited, is a part of UTC Climate, Controls & Security, a unit of United Technologies Corp. Carrier Transicold Northern Ireland secured the top spot within the company’s service partner network with an impressive score of 97 per cent – the highest in the history of the PACE programme – beating its 2017 result of 95 per cent. Scores are based on 29 key performance indicators (KPIs) across 39 service standards, which include breakdown response times and spare parts availability to ‘first-time fix’ rates and planned maintenance completion figures. “Carrier Transicold Northern Ireland has maintained a fantastic level of service throughout the last 12 months,” said Scott Dargan, managing director, Carrier Transicold, Northern Europe and Service EMEAR. Recording a score of 97 per cent is an outstanding achievement and proof of the team’s commitment to continuous improvement and providing the best possible customer service. The team is a true asset to the Carrier Transicold network and I congratulate them for their consistency and dedication.” Vincent Marmion, manager, Carrier Transicold Northern Ireland, dedicated the award to the late Gerry Callaghan, a former sales and service representative who helped to set up Carrier Transicold Northern Ireland in 2003, and played an instrumental role in the business receiving its first PACE award in 2017. Two service partners owned by Lynton Refrigeration Ltd rounded out the top three PACE award winners. Carrier Transicold Northern (Stockton) placed second, also a repeat of its 2017 achievement, while Carrier Transicold Manchester placed third. “This is a fantastic achievement and really shows the dedication and hard work that both teams have put in over the past 12 months,” said Scott Walsh, operations director, Lynton Refrigeration Ltd.
The PACE Recognition Award went to Carrier Transicold Cornwall for its commitment to excellence, having recently invested in a new depot and demonstrating dedication to consistently developing the skills of its seven engineers. Carrier Transicold’s network service partners, based in 22 key locations across the UK, are independent companies that provide support to customers operating Carrier Transicold equipment on their light commercials, trucks and trailers. They collectively employ more than 160 mobile service engineers. For more information on Carrier Transicold and its products and services, visit www.carriertransicold.co.uk. – Source: Carrier Transicold/HVACNEWS.
2019 AHR Expo Education Program Offers First-look at What’s Ahead for HVACR in the Coming Year
The 2019 AHR Expo announced its full lineup for the 2019 Education Program, including more than 120 sessions of free seminars, professional certifications and continuing education courses. The Education Program continues to grow each year and is the most comprehensive, all-inclusive opportunity to hear directly from industry leaders about trends and best practices in HVACR. The 2019 AHR Expo will be held Jan. 14-16 at the Georgia World Congress Center in Atlanta. “The AHR Expo aims to deliver the most extensive access into the HVACR industry,” said Clay Stevens, manager of AHR Expo. “Each year we host exhibitors from all facets of the industry, and we add value to the attendee experience through our ever-growing Education Program. Our seminars, courses, and certification opportunities provide visitors with the tools needed to move forward as professionals.” EDUCATIONAL SESSIONS. This year’s Show features nearly 75 free sessions presented by industry experts from leading organizations. The sessions, ranging from one to two hours, provide attendees with potential solutions to the most pressing challenges facing the industry. Attendees can listen in on general HVACR industry subjects, as well as sessions specific to their own line of practice. “The AHR Expo packs all the industry knowledge under one roof,” said Bob “Hot Rod” Rohr of Caleffi North America and a featured speaker at the 2019 Show. “This is the one big event that all in the HVAC industry need to attend. It’s the one place where you can see, meet and touch all the latest cutting-edge technology, equipment and training available today.” – Source: HVACNEWS.