To Our Valued Subscribers:
I hope you all had a safe and fun Fourth of July. Here it is the middle of July. My Cubs are in First Place in the Central Division, and Chicago (like many other locations) is headed for a nice run of 80 degree plus temperature days! What’s not to love?? It is also the time to really begin refining your 2020 plans. As my team and I were reviewing our 2020 goals and objectives, one item that always makes the list is Corporate Culture. With the influence of the Millennial workforce, culture has become an important topic for all organizations. In a recent study by the MIT Leadership Center, Professor Deborah Ancona, list three signs you as a leader should look for to make sure you don’t have or will not create a “Toxic Culture”. Here ae the signs:
- The first is narcissism, defined as an excessive interest in or admiration of one’s self. Narcissistic people, Ancona said, often have trouble connecting to the organization’s values and adopting a cooperative, team-focused mindset because they’re overly focused on their own needs and ambitions.
- Next is Machiavellianism, the power-hungry and ethically dubious mindset made famous by Niccolo Machiavelli’s 16thcentury work “The Prince.” These people often keep to themselves valuable information that could help others in the organization, pit different groups against each other, and build an “in group” of friends while excluding others from their orbit. And finally
- Psychopathy— specifically, Ancona said, an inability to appropriately deal with one’s negative emotions and impulses. “When you get angry, you get You lash out at people. So [with these people] you might see bouts of anger, yelling, and aggressiveness.”
Knowing what to look for makes changing the culture a lot easier. If you see employees exhibiting one or more signs, be the leader, and make some changes. It really will pay off in the long run. Another tool to use in planning is American Recruiters Global Foodservice News. Bringing you the latest in our industry, it can really assist you and your team in keeping abreast of our industry. Enjoy our latest edition!
Brinker to Buy 116 Chili’s from 14-Year Franchisee
Dallas-based Brinker International Inc. plans to buy 116 Chili’s Grill & Bar restaurants from franchisee ERJ Dining, according to a regulatory document filed Wednesday afternoon. The parent of Chili’s did not disclose the value of the deal, only stating that the restaurants generate revenue of about $300 million a year. Most of the casual-dining restaurants are in the Midwest.
EJR is based in Louisville, Ky., and has been a Chili’s franchisee for 14 years. The transaction, funded by an existing line of credit, is expected to close in the first quarter of 2020, Brinker said. “This acquisition is a compelling opportunity to further invest in our brand, broaden our scale and create growth in earnings and cash flow,” said Joe Taylor, Brinker’s chief financial officer, in a statement. “We appreciate the relationship we developed with ERJ over the years and view these well-established restaurants as a solid foundation for further growth in these markets.”
Other restaurant brands have been buying back franchised units. In December, for example, Applebee’s, a division of Glendale, Calif.-based Dine Brands, took a step back into restaurant ownership with the purchase of 69 locations from Raleigh, N.C.-based franchisee Apple Gold Group. For the third quarter ended March 27, Brinker’s net income was up 6.2% to $49.8 million, or $1.31 a share, from $46.9 million, or $1.02 a share, in the prior-year period. Revenues increased 3.3% to $839.3 million from $812.5 million in the same quarter last year. Same-store sales at Chili’s company-owned restaurants increased 2.9% in the quarter. Same-store sales at U.S. franchised restaurant sales increased 2%. For the recent Nation’s Restaurant News Top 200 census, ERJ reported U.S. sales of $325 million for the fiscal year ended in December 2018 from 123 franchised Chili’s locations. Those fiscal-year 2018 sales were up 3.2% from $315 million in 2017, when EJR ended the year with 125 Chili’s restaurants. Brinker, the parent of Chili’s and Maggiano’s Little Italy, has about 1,700 restaurants. – Source: NRN.
Staying Power: White Horse Tavern
When the White Horse Tavern first opened in Newport, Rhode Island in 1673, the colony of Rhode Island had been founded only a few decades prior, the United States was still more than a century away from becoming an independent country, and the idea of the modern restaurant had not yet been invented. The nearly 350-year-old historic tavern in Newport may not be the only famous White Horse Tavern in America — the white horse was once a popular symbol that indicated that an inn had food and lodging — but it is the oldest. Over the course of three and a half centuries, the tavern has been passed down to just seven to nine owners (historians disagree on exactly how many).
Francis Brinley, an English immigrant, originally constructed the building as a private residence, and William Mayes Sr. then bought the building in 1673 and converted it into a tavern. His son, William Mayes Jr. — who was a mariner and part-time notorious pirate — took over in in 1702. Prior to his new tenure, an extension was put onto the building, giving the tavern its famous red, barn-like façade. “I’m guessing it was really more of a drinking tavern back then than an actual restaurant,” Dominick Lepore, head waiter and one of the longest tenured employees at White Horse said. “When it was a traditional tavern, there wasn’t a bar people sat at; it was more tables and chairs. Bars that you could belly up to didn’t exist back then.” In 1730, the tavern passed from the Mayes family to Mayes Jr.’s in-laws, the Nichols family, who gave the White Horse Tavern its name and kept it in their family until 1895. During the Revolutionary War, the tavern — along with the rest of Newport — became occupied by the British. From 1776-1779, the British soldiers forced owner Walter Nichols to leave town while soldiers — likely German mercenaries known as Hessians — occupied the area. In 1780, George Washington famously stayed at an inn just two blocks from the tavern and rumor has it that he and some of his soldiers planned part of the Battle of Yorktown in one of the tavern’s dining rooms. Over the next century, the Nichols family used the White Horse Tavern mainly as a private residence. In 1895, the family sold the tavern to the Preece family. Over the next century, the White Horse Tavern fell into disrepair and during the 1930s, the building was condemned. In 1954, thanks to a donation from the philanthropic Van Beuren family, the tavern was acquired and restored by the Preservation Society of Newport County and in 1972, the tavern building was designated as a national landmark.
Throughout most of the White Horse Tavern’s history, it had a license to operate as an inn or public house and was mainly used as a public gathering space. Although the inn most certainly served food to its guests, it wasn’t until after it was restored that it truly became known as a fine-dining destination, according to the Newport Historical Society. In 1957, the restaurant reopened on the first floor and a museum — which has since closed — was housed on the second floor, and in 1970, alcohol started to flow freely inside the White Horse Tavern when the restaurant was granted a new liquor license. In 2014, the building was sold to its latest owner, a Rhode Island real estate broker firm called Hogan Associates.
Although the building looks quite different today than it did during the 17th Century — the original tavern stood in the corner of the restaurant by the bar — there are still nods to the past. The kitchen has an original beehive oven in the chimney that was used by the original tavern. “We have oil lamps on the tables too,” Lepore said. “We used to do hurricane lamps and colonial candles but now we use smaller [less hazardous] oil-burning candles.” Of course, like all great historic buildings, the White Horse Tavern is allegedly haunted. Lepore said the spirit of a man who died of polio in the 17th century roams the halls upstairs, though he has never personally experienced any spectral disturbances. Today, the White Horse Tavern — an American fine-dining restaurant known for its beef Wellington and rum-based cocktails — has an average entrée price of $32. – Source: Restaurant Hospitality.
Perkins Franchisee Files for Chapter 11 Bankruptcy
A franchisee of 27 Perkins Restaurant & Bakery locations filed for Chapter 11 bankruptcy protection after losing the right to use the parent company’s name. The franchisee, 5171 Campbells Land Co., based in Rankin, Pa., said in the U.S. District Court for the Western District of Pennsylvania filing that it had assets of between $1 million and $10 million and liabilities in range of $10 million to $50 million. According to local reports, 5171 Campbells operates restaurants in Ohio, Pennsylvania and New York.
Earlier this month, a federal judge in Memphis, Tenn., granted franchisor Perkins & Marie Callender’s Inc. a restraining order that kept the franchisee from operating under the Perkins name and ordered it to stop using signs, flags, menus and anything else displaying any Perkins trademarks, and also to change the restaurants’ phone numbers. A June lawsuit said that 5171 Campbells had been in default of marketing contributions, royalty fees and transfer fees since April 2018 and had also failed to “uphold the standards set forth in the license agreements,” including carrying out required restaurant upgrades. The lawsuit said those fees amounted to $2.2 million. According to a report in the Pittsburgh Post-Gazette, Campbells had itself bought the 27 locations out of bankruptcy in January 2018 for $7.8 million and promised to spend $12 million in upgrades over the next two years. WKBN-TV of Youngstown, Ohio, reported that the bankruptcy filing occurred hours before a hearing in Tennessee on the permanent closure of the 27 locations.
Perkins & Marie Callender’s is itself up for sale and is considering filing for bankruptcy protection. In June 2011, the company filed for Chapter 11 bankruptcy protection and emerged from it six months later. According to Nation’s Restaurant News Top 200 data, Perkins had 356 locations at the end of 2018, with 239 of those franchised. – Source: NRN.
Mimi’s Café is Now Mimi’s Bistro + Bakery
After 41 years in business, Mimi’s kick-started a refresh project Monday it believes will strengthen the chain’s connection to France, and help accentuate differentiating traits amid a growing fast-casual category. The modernization also includes a new name: Mimi’s Café is now Mimi’s Bistro + Bakery. Philippe Jean, chief operating officer for Le Duff America, Inc., which bought the brand from Bob Evans in 2013 for $50 million, said creating a new name and face for Mimi’s was long overdue. While pushing the French positioning, it will also maintain the “heritage that made our guests fall in love with our brand in the first place,” he said. To get the change started, Mimi’s introduced a Bites + Beverages menu with Mimi’s House Wine developed specifically for the brand in Bordeaux, France. There are also new cocktails and appetizers. The House Red and House White Wine run $6 per glass and $22 per bottle. Some cocktail options include: the French 75, a twist on the classic, the French Mule, and a martini selection. Appetizers on the menu feature Hummus & Crudités, Brochette Trio, and Flatbreads. Mimi’s, founded in 1978, has 77 U.S. locations across 16 states. It plans to complete 10 renovations by fall, with new interiors, furniture, bar areas, and innovations in technology. Le Duff runs Brioche Dorée, Ristorante Del Arte, Fournil Pierre, and La Madeline, among others. Last February, the company sold Timothy’s World Coffee and muffins to focus on launching Brioche Dorée in the U.S. The company also previously dealt Bruegger’s Bagels to Caribou Coffee to spur growth of its French-heritage brands, including La Madeleine, Brioche Dorée and Mimi’s. At the time, Le Duff said, “The sale of Timothy’s and muffins is another important step in sharpening our focus as a French company.” The Mimi’s refresh will do just that on the brand level.
Tiffany McClain, Mimi’s head of marketing, took some time to chat with FSR about the changes, what it means for the brand, and what’s still to come. What was the driving force behind the name change? And how do you think it better aligns Mimi’s message with its guest experience? After 40 years it was clear that we needed to reinstate the culture, vision and North Star of the brand. As a French-inspired concept we wanted to strengthen the connection to our heritage and where it all begin—our cuisine. We felt it was of the upmost importance that our namesake should reflect that connection and our commitment to great food, a welcoming atmosphere and the best of bakery. Talk about the connection with France and how that sets Mimi’s apart, and why it was so important to emphasize with this change. At Mimi’s we’re focused on our heritage and strengthening our connection with France. We have the privilege as a French-inspired brand, to be owned by a renowned French restaurant company, Groupe LeDuff and we are led by president who began his restaurant success in France and now lives in the United States. With these connections to France and the authenticity it rewards us, it was important to that we have integrity in the food we were presenting, the beverage options and the environment our guests enjoy.
How does the new Bites + Beverages menu fit into the strategy? And how does it really reinforce the family and social gathering strength of the brand The core of our brand’s value is celebration of life around friends, food and family. This new menu allows us a vehicle to communicate those celebrations year-round in a way that can refresh seasonally, satisfy guest cravings and bring them the best of French-inspired shareable appetizers, desserts and beverages. Something that will really bring people together to encourage laughter and making memories around the table.
What are some design changes guests can expect to see? You’ll begin to notice right away a ‘refinement’ of our menu and décor. Our heritage and connection to France was weakened and left a lot of guests wondering what kind of restaurant we were. Our goal in this refinement is to create something that truly points our guest toward the embodiment of what French-inspired means. Whether that is in a fine wine from our own Mimi’s collection from Bordeaux, our craveable French Pot-Roast, or the always comforting Croissant and Muffin collection along with our specialty coffees in a cozy atmosphere liken to a bistro in Paris. In the 10 locations that will receive an update before years end, you will see a cohesive art collection of photographs from the streets and shops of Paris, the rolling vineyards in France and the beautiful gardens throughout the countryside. Additionally, we aim to bring the process of patisserie and our cooking techniques to the forefront. Holistically, our goal is to open up the floor plans to allow for larger seating in the bar area, an easily accessible to-go area with a showcase bakery and patisserie and an open, theatrical kitchen showing our team members artistry with your selections. You’ll also note that our environment and design changes will include comfortable seating, in both the waiting, bar and dining areas – encouraging guests to invest their time and relax in their destination for dining.
What are some technology innovations on deck? For the past two years, we have invested in vendor partnerships that allow us the ability to rebuild our technical stack the ground up. With that, we know a strong digital strategy is a must as we focus on our guest experience. We have discovered that even the latest and greatest tools and platforms lack the basic necessities for a multi-unit brand such as managing pricing tiers, varied hours of operation and data backups. Our marketing and IT teams worked together seamlessly with hand-selected vendors to cohesively generate a plan that has worked for Mimi’s. To date, our IT teams have successfully updated all locations with a SD-WAN platform network that includes dual auto-failover Internet connections, dual switches with 24-7 monitoring and security management. Our team has also strengthened our tech stack with MetTel’s platform to eliminate points of failure in Internet, network and WiFi services as well as a POS update to Aloha’s newest platform. These mandatory tech updates allow our teams a runway to achieve full integrations in reservation platforms, third-party, more functionality and better experiences with our off-premises programs. – Source: fsrmagazine.
U.S.D.A. Raises Ending Stocks Forecasts for this and Next Year
The U.S. Department of Agriculture, in its July 11 World Agricultural Supply and Demand Estimates report, forecast the carryover of U.S. sugar on Oct. 1, 2019, (2018-19 ending stocks) at 1,761,000 short tons, raw value, up 235,818 tons, or 15%, from its June forecast based on higher tariff rate quota imports and higher imports from Mexico. The U.S.D.A. forecast the 2018-19 ending stocks-to-use ratio at 14.3%, up sharply from 12.4% forecast in June. A bump in ending stocks and in the S.-T.-U. ratio was expected after the U.S.D.A. acted in June to increase the U.S. sugar supply by about 150,000 tons through a T.R.Q. reallocation and an increase in Mexico’s export limit. U.S. beet sugar production was forecast at 4,920,000 tons in 2018-19, unchanged from June, with cane sugar outturn forecast at 4,028,000 tons, down 1,000 tons due to a like decrease in Texas. Imports were forecast at 3,091,000 tons, up 216,138 tons, or 7.5%, from June based on T.R.Q. imports at 1,604,000 tons, up 66,138 tons, other program imports at 400,000 tons, up 50,000 tons, and imports from Mexico at 997,000 tons, up 100,000 tons.
High-tier imports were left unchanged from June at 90,000 tons. Forecast domestic deliveries were forecast at 12,250,000 tons, down 20,000 tons from June based on a like decrease in the “other” category, forecast at 125,000 tons. Deliveries for food were unchanged at 12,125,000 tons (up 0.6% from 2017-18). Exports also were unchanged at 35,000 tons. U.S. sugar ending stocks for 2019-20 were forecast at 1,663,000 tons, up 135,000 tons, or 9%, from the June forecast but down 98,000 tons, or 6%, from 2018-19. The ending S.-T.-U. ratio was projected at 13.5%, up from 12.4% as the June projection. U.S. sugar production in 2019-20 was forecast at 9,260,000 tons, up 121,080 tons from the June forecast and up 313,000 tons, or 3.5%, from 2018-19. Beet sugar production for 2019-20 (from the 2019 crop) was projected at 5,175,000 tons, up 21,000 tons from June, with cane sugar at 4,085,000 tons, up 100,000 tons due to a like increase in Louisiana’s production. Total imports in 2019-20 were forecast at 2,957,000 tons, down 261,872 tons, or 8%, from the June forecast, as a 449,263-ton reduction in imports from Mexico, forecast at 969,000 tons, more than offset a 187,393-ton increase in T.R.Q. imports, based on the announcement of the specialty sugar T.R.Q. Total T.R.Q. imports were projected at 1,568,000 tons for 2019-20. Total supply in 2019-20 was forecast at 13,978,000 tons, up 95,027 tons from June but down 68,000 tons from 2018-19. The U.S.D.A. forecast domestic deliveries of sugar in 2019-20 at 12,280,000 tons, including deliveries for food at 12,175,000 tons, unchanged from June but up 0.4% from 2018-19, and “other” at 105,000 tons, down 40,000 tons from June. Exports were unchanged at 35,000 tons. The U.S.D.A raised its Mexican sugar production forecasts for both this year and next year. Production in 2018-19 was forecast at 6,425,000 tons, actual weight, up 25,000 tonnes from June, and 2019-20 production was projected at 6,248,000 tonnes, up 65,000 tonnes from June but down 177,000 tons from the current year. – Source: FoodBusiness News.
Government Shutdown Leads to Fewer Food Recalls
Food and beverage recalls initiated by the Food and Drug Administration during the first quarter of 2019 fell 36.5% to 99, the second lowest quarter since the third quarter of 2015 and the third lowest total since at least 2010, according to Stericycle Expert Solutions’ Recall Index. Stericycle Expert Solutions attributed the decline primarily to reduced oversight as a result of the government shutdown earlier this year, which stopped or limited many government safety inspections for food and beverages. “While it’s usually good news for consumers when recall rates decline, the Q1 2019 numbers are misleading,” said Chris Harvey, director of recall solutions at Stericycle Expert Solutions. “Fewer inspections mean more potentially dangerous products entered the market unnoticed during this period, which could also have an impact in the months ahead. Having a recall plan in place could never be more important as we track the repercussions.”
During the quarter, 30.8% of F.D.A. recalls based on units were due to undeclared allergens, the second consecutive month that undeclared allergens have been the top cause of F.D.A. food recalls and recalled F.D.A. food units. Foreign material accounted for 30.8% of F.D.A. recalls, and no inspection was 17.9%. The top food categories based on recalls was prepared foods, at 24, followed by produce (12), baked foods (11) and dairy (9). The top U.S. Department of Agriculture category based on recalls was poultry, at 41%. It was followed by pork, at 23.1%; seafood, 15.4%; beef, 10.3%; and multiple, 10.3%. According to Stericycle Expert Solutions, 17.2% of the F.D.A. food recalls were of products that had been distributed nationwide, which marks the second highest percentage since the fourth quarter of 2016. – Source: FoodBusiness News.
The Benefits of Outsourcing Sanitation Services
Operators of processing facilities might encounter any number of reasons for not tackling the sanitation shift in-house. Whether the reasons stem from environmental issues, microbiological, staffing, leadership or otherwise, the benefits of outsourcing sanitation services are many. Packers Sanitation Services Inc. (PSSI) provides contract sanitation services to processing plants facing issues which keep them from using in-house staff or hiring for sanitation purposes, and a recent rebranding campaign suggests a trend in the industry that has positioned PSSI as a multi-dimensional food safety partner rather than just a sanitation contractor. PSSI employs many different teams to handle and monitor any given situation. These teams transcend simple sanitation crews tasked to clean facilities.
Regarding the brand relaunch, Tim Miller, director of corporate accounts, said, “Along with that, we’ve bolstered our teams. So, we have a dedicated food safety team with microbiologists. A dedicated safety team that believes in our company culture of safety not being a trade secret.” PSSI conducts webinars and publishes thought pieces concerning safety in the workplace intended to benefit the industry as a whole, not just the company and its subsidiaries. “We also have an open safety summit every year where we bring in industry experts from outside PSSI as well as internal people and provide a very robust program around building safety programs at a facility,” Mr. Miller said. Most recently, PSSI launched Realtime Performance Metrics (RPM). The tablet-based program provides real-time data on key metrics related to sanitation. “Maybe you lose water pressure during the course of the evening,” Mr. Miller said. “We’re able to track that and send updates to the facility via tablets and say, ‘we’re having water pressure issues.’ We’re able to correlate all these metrics at the end of the shift back to the problem and suggest strategies to alleviate those problems on the next sanitation cycle or the next day or night. It’s a unique tool to the industry.” PSSI’s Field Audit Support Team (FAST) is another value-added service outside of the company’s deployment of sanitation crews. The FAST team focuses on regulatory issues, which sometimes change daily and make it difficult for processors to stay up to date on. The FAST team will micro sample and analyze around what the nature of sanitation is at any given facility and guide the sanitation crews for that facility. “And the FAST team is deployed to customer locations to help provide mitigation strategies if a problem does occur,” Mr. Miller said.
Every processing facility will differ from another in some way. Even facilities owned by the same company, processing the same products from the same species using the same equipment will vary. The age of the building, the size of the building or weather factors can potentially change from one facility to the next. “Whether it be a microbiological issue or an environmental sanitation issue, or it could be related to labor problems or leadership problems,” Mr. Miller said. “Every facility you walk into is going to be a little bit different from the last.” Additional variables dictate customized programs for each customer and situation. A plant might lack enough hot water or have no hot water at all. It might not create enough water pressure to fulfill the sanitation needs. There could also be an issue of time management within the time available to clean. Miller says so many factors go into putting together a program that customization is the only way. “There really isn’t a menu,” he said. “The program that we offer is very comprehensive in that we’re providing the labor, materials and management dedicated to each facility. So, they are there on a daily or nightly basis.”
The roadmap to a solid sanitation strategy for any processing plant starts with an understanding of the plant’s needs and goals. It’s important for plant operators to be a part of creating that roadmap. Plant operations lay out the directives they want PSSI to accomplish, such as areas to look at and areas to leave out. “We develop a plan based on how much labor we’re going to need, how much supervision we’re going to need, the type of tools and chemistry we’re going to need to get the job done safely with high integrity and correctly,” Mr. Miller said. Once plant operations and PSSI collaborate on a plan, PSSI sends in a team of experts in multiple disciplines to assess the overall cleaning/sanitation situation of potential customers’ plants. The team will spend one to three days on the assessment, maybe more depending on the size and scope of the project. The average team would consist of operations people who have experience in the implementation of programs, technical services personnel and food and worker safety experts. “These all fall under what we call our technical services management,” Mr. Miller said. All personnel are PSSI employees. The company does not use sub-contractors. “We have in-house safety experts, food safety experts, microbiologists, continuous improvement management, or continuous improvement representatives, and we also bring in chemical representatives,” Mr. Miller said. Well equipped PSSI’s ability to tackle the multitude of different problems usually occurring in processing facilities is linked to its experience-based preparedness. The company has cleaned and sanitized plants since 1972 and currently services more than 500 facilities in the U.S. and Canada with approximately 17,000 employees. Along the way, it has obtained and developed departments and teams to address issues encountered over the years. “We are pretty well equipped,” Mr. Miller said. “We have our chemical manufacturer, which is wholly owned by PSSI and we have an engineering group that designs and builds equipment to fit the needs of the facility. So, if they need additional high pressure, or we’ll just say additional water pressure, we’re able to bring in the equipment or build the equipment to solve that issue.” While an in-house chemical supply and engineering and fabrication team can’t help in situations that call for the cutting of concrete or the relocation of drains, it’s still and advantage when addressing those issues. Those types of constraints at a facility need a different type of contractor, but the resources PSSI brings to the table do allow options. “Those are the sort of things you run into,” Mr. Miller said. “To provide solutions around that, we have to get creative. If we’re having trouble with water, for example, drains taking water to the wastewater system or drains flooding or collapsed drains, the first mitigation step is reducing water use and finding ways to reduce water use. The second is trying to contain or working to contain the water so it eventually does drain and doesn’t flood a facility.” The company has pumped water from a non-functioning drain to a functioning one. There are also situations, especially in older facilities, that simply require a repair or rebuild from a specialized contractor. “We work around it,” Mr. Miller said. “We do make those recommendations, absolutely. But we do work around it. I’ve been in a number of facilities where drain work, that type of work is required. For example, when you get into some of these older facilities there might be a wall that has gaps in it that can harbor microbiological growth. We make recommendations to fix those areas, but in the interim we find novel ways of cleaning to make sure that we can keep the issues at bay or mitigate.” – Source: FoodBusiness News.
How MOD Pizza Built the Nation’s Fastest-Growing Brand
Scott and Ally Svenson knew what they were getting into when they created MOD Pizza. The Seattle natives had found their knack for the food business when they started London-based Seattle Coffee Company (eventually acquired by Starbucks) and honed it while helping to build the Italian brand Carluccio’s. Their itch to create MOD Pizza back home in Seattle came just as the fast-casual industry started to gain traction. And now, with more than 400 locations across 28 states and the U.K., Scott and Ally are the leaders behind the nation’s fastest-growing fast-casual brand. The Svensons imparted the crucial business skills they learned along the way on the latest episode of QSR’s podcast, “Fast Forward.”
When Ally moved to join Scott in London in the early ’90s, she was less than impressed with the U.K. She started a list of things that she missed from the U.S., and on the top of the list was high-quality, Seattle-style coffee. The Svensons spent four years debating what to do with their dilemma, including reaching out to Starbucks about helping it open in the U.K. “We just wanted to get a great cup of coffee, and we called them. They ended up going to Japan first,” Ally says. Starting a business in a well-established market like London was intimidating. But the Svensons took the leap after a friend proposed an ultimatum to either start a business or leave London. So the pair opened the Seattle Coffee Company in 1995. Even then, they had trouble finding the proper supplies for high-quality coffee—not to mention an audience. A line scribbled on a sticky note helped to keep the business centered as it grew. “It simply said, ‘Our goal is to create a Seattle-style coffee bar that would fool a Seattleite,’” Ally says. Keeping a brand message has been a staple for their business practices ever since.
Pizza with purpose
The Seattle Coffee Company grew to 70 locations in the U.K., along with several international locations, by the time the Svensons sold to Starbucks. They’d looked up to Starbucks as a role model for their own business and were excited to see the inner workings of an established machine. But after working alongside the Starbucks team for a short period, the Svensons opted to leave the coffee business behind. “After being inside a Starbucks for a while managing a bigger business, we realized we wanted to get back to building,” Scott says. The Svensons then spent 11 years building a U.K.-based Italian concept called Carluccio’s alongside its founders. Along the way they learned Italian food trends, and realized it was one of the largest restaurant categories in the U.S. but had virtually no innovation in a generation. “Meanwhile, you’ve had the rise of the fast-casual service model that has really brought different food categories to consumers in a new, accessible, more relevant way for today’s lifestyles,” Scott says. “We started this exploration of what it would look like to bring the fast-casual model to pizza.” Like their first business, the Svensons developed MOD when they realized there was a hole in the market that could be filled. “Sometimes, like coffee in the U.K., it’s the simple insights that matter,” Scott says.
Outside the box
Ally and Scott pride themselves on MOD’s dedication to great service and quality. When the first restaurant opened in downtown Seattle during the recession, in 2008, great service and quality were desperately needed. “It needed to be a welcoming, friendly, affordable place. And we needed to be giving people secured, reliable jobs at a time when people are job insecure and financially insecure,” Ally says. Part of that mission includes hiring individuals who typically have barriers to employment, particularly second-chance hires. The Svensons also strive to guarantee that customers will enjoy their pizza by whatever means necessary. In fact, in its first five years, MOD only grew to 12 locations because the team was busy tweaking the concept to prepare it for expansion. The Svensons say their drive to grow MOD is rooted in a desire to have a social impact. The brand’s unusual aim to use pizza as a means rather than an end signals the company’s commitment to its mission. “The importance of authenticity cannot be understated,” Ally says. “Because if things are being created and done from an authentic place, there’s just more of a conviction—it’s something that’s meant to be.” – Source: QSR magazine.
Olive Garden Has No Interest in Delivery
Some of the most successful brands in casual dining, namely Olive Garden and Texas Roadhouse, have emphatically resisted third-party delivery during its surge into the restaurant marketplace. Darden chief executive officer Gene Lee chief among them. During the company’s June 20 fiscal 2019 review, Lee called the space “an immature business,” and one that’s far more margin destructive than incremental “That’s just my opinion,” he said. “We’ve got some [delivery] tests going on and the results aren’t compelling enough that we’re running out and doing something with it.”
Even without any direct proof, Lee’s opinion would carry significant weight. But he’s got that as well. The Italian giant’s off-premises sales increased 9 percent in the fourth quarter, providing a two-year stack of about 18 percent, to represent 15 percent of total sales. Olive Garden is generating growth without engaging aggregators. Instead, Olive Garden let its in-restaurant experience drive a compelling off-premises proposition. One where the consumer wants to come and pick up because the value and quality is appealing. “I think when you do that it helps create the demand for the off-premises visit,” Lee said. Where Olive Garden refuses to negotiate considers the cost to consumers. Lee said third-party delivery burdens are being shifted from the company to the guest. Brands are moving away shouldering that added cost in-house, as they did in the early days of delivery, to expecting diners to pay more for the benefit of convenience. And, in many cases and for many brands, this is an effective strategy. But is it sustainable? Darden hasn’t seen the proof yet, Lee said. “At this point, I’m just a little uncomfortable with that,” he said. “That [being] what percentage is the consumer long term willing to pay of their overall check to have that convenience? That has to be proven out to me over time [before] that’s something that we want to do.”
Olive Garden’s current approach to off-premises pays more attention to improving capabilities and offerings. Olive Garden’s No. 1 selling point centers on the value proposition. Asking customers to pay more for delivery just doesn’t jive with the message. “I’m watching what everybody’s doing,” Lee said. “We continue to believe, especially in Olive Garden, that it’s much better for us to focus on the catering and [the self] delivery party of this.” Olive Garden is putting its operational strength behind that particular off-premises avenue. The chain moved the dollar size of orders down from $100 to $75. And it changed from requiring 24-hour notice to 5 p.m. the day before. Even so, Olive Garden’s average catering order is clocking well over $300, Lee said. “It’s a highly rated, from a satisfaction standpoint, event,” he said. “And so, again, we’re watching what’s happening. We don’t think that the economic burden [of third-party delivery] has changed that much. We think it’s just been shifted from the restaurant to the consumer.” Olive Garden’s current approach pays more attention to improving capabilities and offerings.
The chain recently opened a new prototype in Orlando that features a full dedicated off-premises area. Lee said it has “tremendous upside for our higher-volume off-premises restaurants.” There are units in Olive Garden’s 866-unit system pushing north of $1 million in off-premises sales. “A lot of this business comes in and is out the door before 11:30,” he says. “And a lot of the catering that we’re starting to do now is really—it’s pre the big-meal period. So that’s really helpful.” With these units, Olive Garden can ask itself, are there attachment opportunities? Can it attach additional sales to the normal off-premises experience? Lee provided an example: As the brand starts building these dedicated spaces, it can get more beverage sales. “We’re still in the infancy of thinking about that, but we think it’s a fairly big idea, which could grow that overall percentage over time,” he said. Put simply, Olive Garden believes it can grow off-premises sales without sacrificing what it does within the four walls, “which is create a great in-restaurant experience,” Lee said. It’s too early to estimate the rollout of these new spaces, he added. It needs to be added in a specific location where the restaurant can staff it during downtimes without adding a lot of labor. It has to be close to the kitchen and have the right heating and holding areas. “I don’t want to put a price tag on it just yet,” he said. “I don’t think we’re missing out on anything,” Lee added of third-party delivery. Olive Garden continues to drive top-line gains.
The big picture
Once again, Olive Garden posted a stellar quarter. Same-store sales increased 2.4 percent in Q4, marking 19 consecutive periods of growth. This was offset somewhat with a guest count drop of 0.4 percent. Average check upped 2.8 percent, comprised of 1.6 percent pricing and 1.2 percent menu mix. This kind of comp breakdown has been the story for Olive Garden lately. The chain continues to cut incentives in favor of everyday value. Lee said, adjusting for the lack of promotions, guest counts would have tracked positive in Q4. Also, even with the pullback, Olive Garden’s traffic gap to the industry expanded throughout the period. A positive trend, he added, has been all-time guest satisfaction ratings. The brand recorded its highest Mother’s Day sales ever this year. Olive Garden’s investments in embedded, sticky value are paying off. The company refreshed its 5 for $5 value drink platform in Q4 and increased awareness on everyday deals through secondary TV advertising. Instead of LTOs, Olive Garden pushed constructs like its Lunch Duos at $6.99, every day Early Dinner Duos at $8.99 and Cucina Mia! Starting at $9.99. Lee said the industry as a whole has shifted toward everyday value over pulsed discounts. “We’ve been saying for a while that the consumer didn’t want to be told what they had to do, what they had to buy to get that value,” Lee said. Overall, the industry is facing volatile traffic trends, he added. Olive Garden’s solution is to keep adding value to the consumer proposition to inspire loyalty and repeat visits over deal-driven barrages. And, right now, that means withdrawing incentives based on the environment. “There’s no doubt,” Lee said, “we’ve taken a lot of currency out of the marketplace. And we do have that available to put back in if we think that’s the right thing to do.” It’s one benefit of having scale. Olive Garden doesn’t need to make short-term decisions to drive a few extra guests here and there that aren’t really profitable. Darden propelled its top line in the quarter with the contribution of 39 net new restaurants among its eight brands. Blended same-stores upped 1.6 percent: LongHorn rose 3.3 percent; Capital Grilled lifted 2.9 percent; Eddie V’s was up 2 percent; Cheddar’s declined 3.2 percent; Yard House dropped 1.4 percent; Seasons 52 decreased 2.1 percent; and Bahama Breeze fell 1.9 percent. Operating margin dipped about 50 basis points to 10.3 percent. Darden’s total sales increased 4.5 percent to $2.23 billion. For the full fiscal year, sales rose 5.4 percent to $8.51 billion. Lee said Olive Garden still had opportunity ahead to capitalize on operations. Notably, improving throughput so it can capitalize on peak times driven by advertising spend. “We have long waits in our restaurants,” he said. “We talk a lot about convenience. That’s not very convenient. And, consequently, we’ve got to get better tat making that experience more convenient for the consumer and we have to get more people and guests throughout our restaurant each hour and shorten up those dining experiences. So we’re going to continue to focus on this and we think it has big upside.” – Source: Sapore Magazine.
8 Up-and-Coming Plant-Based Restaurant Concepts
The meat-free niche keeps growing as trend evolves. Only a decade ago, vegetarian and vegan restaurants were unique dining categories that catered toward a specific — and somewhat limited — clientele. Today’s consumer, however, is trying to eat less meat, though they might not consider themselves vegan or vegetarian. To meet that demand, plant-based proteins have evolved. With the rise of meatless burgers from Impossible Foods and Beyond Meat, restaurant sales of meat-alternative products jumped 268% from 2018 to 2019, according to data from group purchasing organization the Dining Alliance. Now, plant-based restaurants have expanded their formerly narrow customer reach to include omnivorous eaters who are vegan curious. And the plant-based space is growing ever more crowded. Here are eight new and expanding plant-based restaurants to watch, from meat-free burger joints to a vegan food hall. – Source: Restaurant Hospitality.
Subway Plans to Remodel 10,500 Locations
Subway and its vendors are expected to provide franchisees with more than $100 million in grants to help fund remodels to about 40% of the chain’s units over the next year and a half, the company said. The Milford, Conn.-based sandwich giant, along with its vendors, is providing operators with $10,000 grants to help spur remodels. The grants fund about 25% of the cost of the remodel, the company said. Subway said that 10,500 of its nearly 25,000 U.S. locations expect to take advantage of the program and get a new look by the end of 2020. The company has remodeled 1,400 locations worldwide, with another 900 underway, the company said. Add it all up, and Subway, its vendors and its franchisees are investing a total of $400 million into remodels over the next 18 months. “By signing up for the remodel program, the franchise owners are making an investment, and showing their trust in the brand,” Chief Development Officer Don Fertman said in a statement. Subway is undertaking a significant effort to transform its image and its stores as the company looks to recover from a six-year sales slump. System sales declined 3.6% in the U.S. last year to $10.4 billion, according to data from Technomic’s Top 500 Chain Restaurant Report. Unit count declined by 4.3%. The chain has shed more than 2,300 locations domestically since it hit a peak of 27,103 locations in 2015. The company is also fending off controversies inside its franchise operations. The New York Post detailed how Subway will put operators out of business over small violations of the franchise agreement, and the New York Times revealed that development agents will determine operators and take over their stores themselves. Subway is investing heavily behind its improvement efforts, however. In addition to the grant program, the company spent $800 million last year to enable operators to add new beverage stations and sauce options. The company has also made numerous innovations on its menu, adding new wrap sandwiches and Cheesy Garlic Bread. It is also testing sandwiches made with King’s Hawaiian bread and milkshakes made with Halo Top ice cream. The company is also aggressively adding delivery at its U.S. restaurants as it works to compete with smaller sandwich shops Jimmy John’s, Jersey Mike’s and Firehouse Subs, all of which have taken market share in recent years. Source: Restaurant Business on-line.
Bonchon Names Flynn Dekker CEO
Bonchon has appointed Wingstop veteran Flynn Dekker as its CEO, the Korean fried chicken chain’s board said. Dekker replaces Bonchon founder Jinduk Seo, who remains a shareholder and will continue to be a member of the board of directors. VIG Partners, a private-equity firm based in Seoul, South Korea, acquired majority control of the company in December 2018. “The board and I are confident that Flynn is the right person to build on the growth and momentum Bonchon has built in the United States and worldwide,” said BM Park, a managing partner at VIG. “He is a seasoned leader with significant experience working with multi-unit restaurant concepts on operational efficiencies, revenue generation and delivering value to franchisees and equity holders,” Park said. “We are thrilled to have him as our new CEO.”
Dekker most recently was chief marketing officer of Dallas-based Wingstop Inc., a position he’d held from 2014 until his departure in 2018. He also worked at Rave Restaurant Group, Metromedia Restaurant Group, Fogo de Chão, FedEx Office, EMI Music, Pizza Hut and Blockbuster. He owned an upscale restaurant, Horne & Dekker, in Dallas from 2010 to 2012. Dekker in a statement said he had long been a fan of the fried chicken chain, which now operates 345 locations worldwide, including 92 restaurants in the United States. “My passion for Bonchon began many years ago when I discovered the brand on a trip to New York City,” he said. “Bonchon’s commitment to serving a unique, quality product combined with its loyal, worldwide fan base and talented team are just some of the reasons I am excited to be leading the brand.” Dekker added that he sees a lot of room for the chain to expand. “There is a lot of white space for Bonchon to grow as we introduce our signature fried chicken to more franchisees and consumers in markets across the world,” he said. “Our goal is to have one of the best investment ratios in the business driven by our continued commitment to our passionate base of fans.” Bonchon opened its first U.S. restaurant in 2006, featuring Korean-style fried chicken, which is dusted in cornstarch and double-fried. – Source: NRN.
Wingstop Names New Marketing Chief
Wingstop Restaurants Inc. has named Maurice Cooper as chief marketing officer, the fast-casual brand announced. Cooper most recently served as global vice president for Holiday Inn, a division of the InterContinental Hotels Group PLC. He succeeds Flynn Dekker, who retired from Dallas-based Wingstop in March. Cooper (left) will oversee the chicken wing chain’s global marketing strategy and execution, and he will report to Charlie Morrison, Wingstop CEO and chairman. “Maurice has a strong track record of success as an award-winning marketer, as well as a business leader dedicated to consumer and franchisee satisfaction,” said Morrison in a statement. “As we continue to rapidly expand our footprint, Maurice will have an instrumental role in building and promoting the Wingstop brand globally.” Prior to Holiday Inn, Cooper worked with The Coca-Cola Co., where he worked on such emerging brands as Honest Tea, Illy Coffee and Zico. “I am thrilled to be joining the Wingstop team at a pivotal time in the company’s growth and to focus on a brand that is well respected for quality, service and flavor around the world,” Cooper said. “I look forward to collaborating with our leadership, partners and dedicated customer base.” Wingstop, founded in 1994, owns and franchises more than 1,100 locations across the United States as well in Colombia, Indonesia, Malaysia, Mexico, the Philippines, Saudi Arabia and Singapore. – Source: NRN.
Boston Market Shutters 10% of Stores
Boston Market said that it has closed 45 stores, or about 10% of its 454-unit system, due to store underperformance, according to a letter circulated by CEO Frances Allen to employees. The Golden, Colo.-based chain owned by Sun Capital Partners Inc., closed six restaurants on June 30, while the remaining 39 closed on July 7. “We must take steps to ensure our operational structure will support long-term sustainability,” Frances Allen said in the letter. “Part of that effort involves continuously analyzing our geographic footprint and real estate portfolio to assess the ongoing viability of locations. The dynamics of geographic areas can change dramatically over time, sometimes impacting the performance of a location.”
The Boston Market system had reported U.S. sales of $557.8 million from 454 U.S. units, including 435 company restaurants, for the fiscal year ended in December 2018, which was down 1.3% from $565.3 million in system sales and 461 locations, including 443 company units, in fiscal 2017. In terms of the parent company’s estimated U.S. revenue from company-restaurant sales, initial franchise fees and franchisee sales royalties, Boston Market had fiscal 2018 revenue of $546.5 million, which was down 1.7% from fiscal 2017’s estimated U.S. revenue of $555.7 million. The news comes shortly after Boston Market announced a new menu direction in June in an effort to shake up summer sales, including four different summer rotisserie chicken sandwiches. The menu change was part of a “multi-faceted transformation plan” that was meant to improve the chain’s competitive edge in the market and improve “brand relevance through re-energized marketing efforts.” Another Sun Capital Partners division, Restaurants Unlimited Inc., a 35-unit, Seattle-based restaurant company that owns brands including Kincaid’s, Palomino and Henry’s Tavern, filed for bankruptcy protection on July 8. At Boston Market, Allen said that all displaced employees would either receive employment opportunities from other stores or would receive a severance package. “Our success is not going to be measured by the number of stores; it’s going to be driven by and measured by our ability to execute on our agenda,” Allen concluded in her letter to employees. – Source: NRN.
McDonald’s Veteran Jim Norberg Named to Position
Papa John’s International Inc. has appointed Jim Norberg as the company’s first chief restaurant operations officer, the company said. Norberg, who had served as chief operating officer at McDonald’s USA until 2015, will oversee the operations of corporate and franchise stores for the Louisville, Ky.-based quick-service pizza brand. “Jim has an impressive growth track record, as well as deep-rooted QSR industry knowledge and expertise, making him a welcome addition to our talented leadership team,” said Steve Richie, Papa John’s president and CEO, in a statement. “Jim is a seasoned expert whose depth and understanding of restaurant operations and the guest experience will help propel our brand forward and position us for continued success.” In his previous role with McDonald’s, Norberg worked to unify franchise and company store operations and helped to simplify systemwide menus and operations. Under his new role, Papa John’s said Norberg will work to deliver increases in sales, customer satisfaction and profit margins for both corporate and franchise stores. “I am thrilled to be joining such a strong and talented leadership team and the Papa John’s family,” Norberg said in a statement. Norberg will join two other notable company appointments, including Marvin Boakye, who was named as the company’s first chief people officer in January, in efforts to improve company culture following the controversy concerning former Papa John’s CEO John Schnatter. Former NBA star and entrepreneur Shaquille O’Neal also joined the company earlier in 2019 as an executive board member with a three-year product endorsement deal. – Source: NRN.
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