To Our Valued Subscribers:

On behalf of myself and my American Recruiter Colleagues, Happy 244 Birthday. I hope this July 4, 2020, finds you and your families safe and well. A special THANK YOU to the individuals and families who are currently protecting our freedoms at home and around the world and to the many veterans and their family members who have proceeded our current heroes. As with other 2020 summer celebrations, (Mother’s Day, Father’s Day etc.), this Independence Day will be unlike previous celebrations. Back in the 1800’s Benjamin Disraeli said, “Change is Inevitable. Change is Consistent.”.  About one hundred years later, Peter Drucker, (father of modern management), added to the Disraeli quote with a third ending making the quote, “Change is Inevitable. Change is Consistent, GROWTH is Optional”.  As we recover and reopen from the Covid-19 Pandemic, know that all of us at American Recruiters are committed to helping you and your organization grow in the days and months ahead. As you enjoy your hot dog and cold beverage on this holiday, take a moment to review the latest edition of American Recruiters’ Global Foodservice News. It is consistent in bringing you the latest industry updates. There may be limited fireworks this year but still an abundance of FREEDOM to celebrate our Independence Day!! Stay Safe.

Craig Wilson

President

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Smith & Wollensky’s Parent is Looking for Growth Through Acquisition, said New President Oliver Munday

Smith & Wollensky parent Danu Partners is on the hunt for potential acquisitions as the steakhouse brand gradually rebuilds its business after the coronavirus shutdown, said recently appointed president Oliver Munday. Munday was named president of the eight-unit Smith & Wollensky chain in March, replacing Michael Feighery, who had been with the company for 35 years and left to pursue another opportunity. Munday has been with the steakhouse chain for four years working on international development before he was promoted. His past experience includes development work with other restaurant companies, including Earl Enterprises and Hard Rock Cafe. Founded by TGI Friday’s creator Alan Stillman, who separately still owns the original Smith & Wollensky restaurant in New York City that opened in 1977, the Smith & Wollensky chain was acquired by Ireland-based Danu Partners in 22016. In January this year, Danu Partners acquired the Boston-based Strega Group and created PPX Hospitality Brands, based in Medford, Mass., to operate the two brands. Munday is also president of PPX. Just as Munday, left, stepped into his new role, however, the pandemic forced all six U.S. locations to close temporarily. But Munday said now all U.S. units are open for dine-in again — with a Chicago location just opening Friday — though with limited capacity and social distancing protocols in place. Munday said he expects it will take Smith & Wollensky about 18 months to recover. “We know it’s going to be difficult,” he said. “We’ve still got restaurants that are off more than 60%. Our goal at the end of this year from a budget perspective is to be about 40% where we were last year.” But with many competitors not likely to reopen at all, Munday and the newly formed PPX sees huge opportunities, he said. With access to foreign and domestic capital, the company is “in a position to help a number of landlords that are wrestling with restaurant tenants who are not going to make it back,” he said. Smith & Wollensky, meanwhile, is a high-end steakhouse brand with an average check “well over $100,” said Munday. Such brands depend heavily on business travelers, who will be in short supply this year. As a result, Munday said the company has focused marketing energies locally around the restaurants. “We did alter the way we marketed a little bit. We focused on reaching out to local customer bases, [asking] how could we do that more effectively. We even went back and dusted off the old marketing playbooks and did some old school, old fashioned local marketing, telephoned people, that kind of thing, to reconnect in a meaningful way,” he said. Over the past few weeks, the restaurants have also added an online delivery and takeout menu, including grill-at-home options. Munday said officials initially created a new comfort food menu, but when they brought it to the field, chefs and managers in the restaurants pushed back. “They said ‘What are you talking about? Guests don’t want this. They want the full S&W experience’ and pushed very hard,” he said. The company also has a licensed location in Taipei, which never closed through the crisis. Because the coronavirus hit there earlier, the company was able to pull best practices for managing operation during the pandemic, including protocols like taking employee temperatures before a shift, requiring workers to wear both face masks and gloves and observing social distance. Munday said Smith & Wollensky restaurants have the advantage of being big — most are more than 20,000-square feet — with patios and terraces that offer outdoor options. A smaller Wollensky’s Grill variation could also grow overseas, he said. For example, the company is working on a potential deal to bring a grill version to Japan, said Munday. In the U.S., however, the focus will be on recovery and building PPX as a multiconcept group with national reach. “We’re looking for synergies and bolt-on acquisitions we can plug into under the PPX umbrella,” he said. – Source: Restaurant Hospitality.

Chuck E. Cheese Parent Files to Reject Leases for 45 Closed and Underperforming Restaurants

Chuck E. Cheese parent CEC Entertainment Inc. on Thursday filed plans to abandon the leases of 45 restaurants in plans for Chapter 11 Bankruptcy reorganization, according to court documents. The Irving, Texas-based company said it plans to reopen some restaurants that were closed due to the COVID-19 pandemic and continue operations at 266 Chuck E. Cheese and Peter Piper Pizza locations that have already opened. But CEC filed a motion to reject certain leases because they were closed or underperforming locations. The leases they plan to abandon include 27 restaurants that were closed due to coronavirus, four that were closed due to lock outs, three with expiring leases and 11 that were permanently closed before the pandemic hit. The restaurants to be abandoned are located in 25 states, with clusters in California, Florida and Massachusetts. As of the end of December, CEC operated 555 venues and had another 186 franchise locations for a systemwide total of 741 across 47 states and 16 foreign countries and territories. Franchised units are not part of the bankruptcy proceedings. The company reported a $28.9 million net loss in fiscal 2019 and $912.9 million in revenue. James Howell, CEC’s chief financial officer, noted in court documents that the company’s brands were hit particularly hard by the pandemic. “In ordinary times, the company would be financially sound,” he said in one filing. The suspension of on-premise business eliminated 90% of year-over-year revenue during each week of the shutdown. And though the company made drastic cuts in expenses, sought concessions from landlords and ramped up delivery and takeout, those efforts couldn’t compensate for the impact of the pandemic, Howell said. He also noted nearly all of the company’s landlords are owed several months’ worth of past-due rent, and more than 50 lawsuits have been filed by landlords. Bankruptcy was filed in part to stop those actions. – Source: NRN.

Table Service Returns to Chicago While Earlier-to-Open States Grapple with Rising Coronavirus Cases and more Restaurants Voluntarily Close Dining Rooms

Restaurants in Chicago are preparing for limited indoor dining starting Friday as concern about a second shutdown in other states is growing, along with a reported spike in coronavirus cases. Several states are reportedly showing signs of becoming hot stops for the virus. The governors of New York, New Jersey and Connecticut jointly announced a travel advisory that requires a 14-day quarantine for those traveling from nine states with “significant community spread,” a list that as of Wednesday included Alabama, Arkansas, Arizona, Florida, North Carolina, South Carolina, Washington, Utah and Texas. In California and Texas, the governors reportedly hinted of a retrenchment of reopening plans, threatening to take action against restaurants not willing to follow safety protocols. As the coronavirus case load surpassed 5,000, Texas Gov. Greg Abbott urged residents to stay home and said the state would crack down on overcrowding in some restaurants and bars. On Thursday, Abbott announced the phased-in reopening plan would be paused temporarily, and he asked residents to do their part by wearing masks, washing hands and keeping socially distant. “The last thing we want to do as a state is go backwards and close down businesses. This temporary pause will help our state corral the spread until we can safely enter the next phase of opening our state for business,” Abbott said in a statement. California’s Gov. Gavin Newsom on Monday urged residents to report to local authorities businesses that aren’t following safety protocols, noting that alcohol permits could be pulled for enforcement.  Some California counties are applying civil penalties. Last week Monterey County’s District Attorney announced The Tuck Box restaurant in Carmel-by-the-Sea has agreed to pay up to $35,000 in a settlement as a result of violations that included opening for dine-in service before it was allowed, lack of social distancing and employees failing to wear masks.

A growing number of restaurants across the country are now “reclosing” for dine-in service — including temporary restaurant closures because an employee tested positive, and closures as a proactive step to avoid that scenario. The Katy, Texas-based chain Kolache Factory, for example, said Wednesday it would immediately shut down its dining rooms and restrooms at its 27 corporate-owned locations in Texas, Kansas and Indiana, shifting back to takeout, curbside or drive-thru service only. The dining rooms had closed on March 16 for dine-in and reopened June 12 at 50% capacity. “With the surge we are seeing right now in our country, we are taking the pre-emptive step of shutting down dining rooms at all corporate-owned locations, so we can protect our customers and employees as much as possible, encourage social distance and continue serving our communities fresh-made kolaches,” said Dawn Nielson, the chain’s chief operating officer, in a statement. “We understand this is a scary time, but we are committed to doing our part to protect one another and our economy.” The Texas Restaurant Association this week attempted to address growing concern about restaurant safety by launching the Texas Restaurant Promise Certification Program. Restaurants and bars that “have gone above and beyond” the minimum state guidelines for safety are asked to post a verified decal as an indicator to guests. To earn a decal, at least five employees must complete training programs and the restaurant must undergo a third-party evaluation, as well as submitting to a mystery shopper to ensure protocols are being followed. A similar program was launched this week in South Carolina, where Gov. Henry McMaster said he has been disappointed with lack of compliance with regulations, in particular wearing masks and social distancing — though some cities, like Greenville, have mandated mask wearing in public. To reward restaurants that promise to follow safety protocols, McMaster unveiled the Palmetto Priority Seal, a decal for restaurants to display in their window. Restaurants that make the promise undergo either a virtual food safety check or inspection, and they commit to meeting certain minimum standards, such as all employees wearing face masks, sanitation and social distancing. There are still a number of states and jurisdictions where dine-in service is only just starting to come back. Washington, D.C. and Massachusetts restaurants reopened for dine-in service this week, and Seattle began a gradual reopening last week. New York City opened for outdoor dining only. But in Boston, for example, the city Licensing Board reportedly called a mandatory virtual meeting on Wednesday for business in the North End after receiving numerous complaints about safety and other violations while the city was in the outdoor-dining-only phase. The board warned that it would conduct random inspections and threatened to take disciplinary action against violators. New York’s Gov. Andrew Cuomo last week threatened to pull liquor licenses after complaints of violations from New York City restaurants and bars came flooding in before outdoor dining was allowed.

In Chicago, the Phase 4 of recovery scheduled to begin June 26 will allow restaurants to resume indoor dining at 25% capacity, or no more than 50 diners at a time. Parties are limited to no more than 10 per table, and counter or bar seating is only allowed if six-foot distancing can be maintained, or plexiglass can be used between customers and bartenders. At cafeterias, buffets or self-serve outlets, food must be served by an employee wearing protective gear. Among the guidelines is the requirement that both employees and guests (while not seated) wear face masks. Illinois is among a growing number of states that have adopted stricter face mask mandates, including Washington state, California and New York.

The face mask issue has become increasingly political, despite the fact that health officials say face coverings are crucial to preventing spread of the virus. Masks are recommended in restaurant reopening guidance from the Centers for Disease Control and Prevention. Attorneys, however, note that — even without a law or government mandate — restaurants can require guests and employees to wear masks as a matter of policy. There are some grey areas, notes Arif Virji, managing partner of the law firm Kaufman Dolowich & Voluck in San Francisco. Restaurants should accommodate guests with a disability, for example, such as a breathing difficulty or if someone is prone to panic attacks. Those situations should be handled on a case-by-case basis, he said. Some guests, however, may see not wearing a mask as a First Amendment right but Virji said that’s the weakest argument. People are not free to yell “fire” in a theater because it could cause harm, he noted, and restaurants could argue that a guest not wearing a mask also creates an unreasonable risk of harm to other guests and employees. It’s a health issue, he said. “The First Amendment doesn’t give you the right to be an idiot.” – Source: Restaurant Hospitality.

Illinois Court Rules Chicago Restaurant is excused from Paying Full Rent During Pandemic, Citing Force Majeure Clause

The Northern District of Illinois U.S. Bankruptcy Court has ruled to excuse Giglio’s Street Tavern in Chicago from paying 75% of its rent during the coronavirus crisis, citing the Force Majeure or “Act of God” clause in the restaurant’s contract with its landlord. The restaurant — under the restaurant group Hitz Restaurant Group — previously filed for bankruptcy on February 24, before nationwide COVID-19-related lockdowns were put in place. According to the memorandum filed by the court on June 3, the restaurant’s contract with its landlord specifically stated that, “the landlord and tenant shall each be excused from performing its obligations or undertakings provided in this lease […] so long as the performance of any of its obligations are prevented or delayed, retarded or hindered by. . . laws, governmental action or inaction, orders of government…” Although the Force Majeure clause specifically states that it does not apply if the landlord is pleading exemption due to “lack of money,” Hitz Restaurant Group said it was not making the claim of not having enough money to pay the rent, but argued that the Act of God defense was put into place on March 16, when Gov. Pritzker issued an executive order shutting down the state, including restaurants. While the court judge ruled that Force Majeure applied in this instance, Giglio’s Street Tavern was not let off the hook entirely. The judge ruled that while the executive order “hindered” the restaurant’s ability to do business, it did not inhibit it entirely because the restaurant could have instituted takeout, curbside pickup and/or delivery services instead of relying on in-house dining. Additionally, even though Hitz Restaurant Group argued that they were disallowed from using 75% of their property since March (the dining room and bar areas), they still would have been able to use 25% of their property (the kitchen area) to prepare food for delivery and takeout customers. “The court preliminarily interprets the debtor’s estimation as an admission that it owes at least 25 percent of the rental payments for April, May, and June 2020,” the memorandum states. “Monthly rental payments due thereafter are likely to increase as the government’s shut-down restrictions are gradually lifted. Therefore, the court concludes that debtor still owes at least 25% of the rent amount to Creditor even after the Force Majeure clause.” Giglio’s Street Tavern and Kaas Management Services — the defendant — did not respond in time to request for further comment on the court decision. Throughout the pandemic, the Act of God clause has been cited by lawyers as a possible defense for business owners to make insurance claims if their restaurants were shut down during the pandemic. It has not been yet made clear if Force Majeure can be applied in the many pending lawsuits restaurants have filed against insurance companies. – Source: Restaurant Hospitality.

What to Expect from the Post-Pandemic Foodservice Landscape

Sales declines are expected to moderate, improving from a 50% decline at the peak of the pandemic to a 12% to 14% decline over the next 12 months. Sales are expected to return to pre-pandemic levels by mid- to late- 2022, assuming no COVID-19 relapse this fall. “Full foodservice sales recovery took approximately seven quarters during the Great Recession,” said Amit Sharma, senior consumer foods analyst at Rabobank. “We expect recovery to take 8 to 10 quarters during the current crisis.” The pace and slope of recovery will be uneven across different segments, he added, with limited-service, off-premises and chain restaurants emerging as winners. Other long-term impacts include greater M&A opportunities, faster ramp-up of digital capabilities beyond online ordering and delivery, and a deeper focus on automation and ghost kitchens.

Winners and losers

Limited-service restaurant sales, including QSRs, have increased at a 6.9% CAGR over the last three years, nearly two times faster than the 3.6% CAGR for full-service restaurants. The growth gap could widen more, Rabobank said, with limited-service restaurant sales growing at a 3.5% CAGR over the next three years, compared to a -2.5% CAGR for full-service restaurants. “A bigger and better digital presence, online ordering, personalized offerings and promotions, improving nutritional profiles and a trade-down to value-oriented offerings were key drivers of limited-service growth,” Mr. Sharma said. “We expect many of these drivers to be accelerated in the post-pandemic environment.” Lingering dine-in constraints and health and wellness concerns, particularly among older cohorts over-indexed to full-service restaurants, will contribute to the growth gap, he added. Off-premises sales, which already were growing four times faster than dine-in sales, will be the biggest winner. Delivery, drive-thru and takeout orders have doubled and even tripled from pre-COVID-19 levels and are expected to account for more than 100% of restaurants sales growth over the next three years.

Digital capabilities

The rise of off-premises ordering has forced brands to expand their definition of a successful digital strategy. “Just making the menu available online for ordering is not going to be enough in the post-pandemic world,” Mr. Sharma said. Areas of focus included added capabilities for customer loyalty and rewards, personalized promotional offers, one-click-reorder, multiple delivery options and strong feedback mechanisms. Consumer data will be increasingly important, too. “Having access to high-quality customer data on ordering and eating preferences and patterns will become vital in all aspects of restaurant operations — not just in planning menu changes or pricing decisions but also in geographical expansion or potential M&A,” Mr. Sharma said.

New restaurant opening

COVID-19 may impair a long-running expansion cycle that saw the number of US restaurants increasing at a 2.2% CAGR over the last three years. New consumer habits and regulatory requirements will likely discourage potential new entrants. “While it’s too early to identify all of the post-COVID-19 changes, it will clearly lead to heightened safety concerns about public gatherings, more telecommuting, less corporate travel, a greater shift to off-premise consumptions, and many additional state- and city-wide rules and regulations, pressuring potential new operators and making it harder for many current operations to reopen, even as restrictions are eased or lifted,” Mr. Sharma said.  Lower contributions from new unit openings and pricing will likely shave off 50 to 100 basis points for foodservice growth over the next five years, according to Rabobank.

Industry consolidation

M&A opportunities are poised to accelerate as the number of closings and bankruptcies grows. The pace already has picked up, with nearly a dozen relatively high-profile closings and bankruptcies since mid-March, according to Rabobank. At the same time, aggregate cash holdings by 25 of the largest publicly traded restaurant companies have more than doubled from $9.4 billion pre-COVID-19 to $20 billion by mid-May. “This recent cash build-up is not just a defensive move to improve liquidity and project balance-sheet strength, but also to signal — at least in some cases — a more aggressive M&A stance,” Mr. Sharma said. Source: Food Business News.

Bravo! and Brio Restaurants Change Hands Again

Earl Enterprises, parent company of Buca di Beppo and Bertucci’s, has acquired Brio Italian Grille and Bravo! Italian Kitchen from FoodFirst Global Restaurants, Inc. Financial terms of the transaction were not disclosed. FoodFirst filed for Chapter 11 bankruptcy protection in early April after struggling for months due to elevated food costs, labor pressure, unprofitable locations and the coronavirus (COVID-19) outbreak, according to the filing. “In order to save jobs and the viable restaurants, it will be necessary to pursue a company sale and an accompanying management services agreement,” the company said in the April 11 filing. FoodFirst brought aboard Steve Layt as chief executive officer in late January to help fix the brands after the company closed 10 of its restaurants.

Once the United States began ordering dining room closings in late March due to COVID-19, FoodFirst closed 71 of its 92 locations. “We have experienced nothing short of devastating sales declines,” Mr. Layt said at the time of the bankruptcy filing. “The COVID-19 outbreak truly could not have come at a worse time for our business.” The bankruptcy and sale of Bravo! and Brio restaurants comes two years after the brands were acquired by Food First, a restaurant company formed by restaurateur Bradley D. Blum and investment firm GP Investments, Ltd. FoodFirst’s goal was to refresh the brands and be a “progressive, relevant, diverse and highly successful restaurant company for the 21st century,” the company said. Brio Italian Grille is an Italian restaurant that serves dishes such as Pasta Alla Vodka, Chicken Limone and Gorgonzola Salmon Fresca. Brio (meaning “lively” or “full of life”) operates under the philosophy that “to eat well is to live well.” Brio has locations in 12 states, including Arizona, California, Delaware, Florida, Kentucky, Michigan, Missouri, Nevada, New Jersey, Ohio, Texas, and Utah. Bravo! Italian Kitchen offers made-to-order Italian cuisine such as Chicken Marsala, Chicken Parmesan, and Pasta Woozie featuring grilled chicken, fettuccine and alfredo. Bravo! restaurants operate across 12 states, including Alabama, Florida, Kentucky, Michigan, Missouri, North Carolina, New Mexico, Ohio, Pennsylvania, Tennessee, Virginia, and Wisconsin. Bravo! and Brio join Earl Enterprises’ collection of restaurants that includes Planet Hollywood, Buca di Beppo, Earl of Sandwich, Bertucci’s, Chicken Guy!, Seaside on the Pier, Café Hollywood, Mixology 101 and Tequila Taqueria. “We’re very excited about adding these restaurants to our group and look forward to not only investing in the future of Brio and Bravo!, but also the employees who are the backbone of these two restaurants,” said Robert Earl, chairman of Earl Enterprises. “As a bright light in this challenging time, once all locations are fully operational, we look forward to welcoming back more than 4,000 employees who have been in limbo since FoodFirst filed for bankruptcy.” Source: Earl Enterprises/Food Business News

Investment group acquires Krystal Restaurants

Affiliates of Fortress Investment Group LLC and its operating partner, Golden Child Holdings, have acquired Krystal Restaurants LLC. Krystal filed for bankruptcy in January and was put up for sale as part of the reorganization process. Fortress emerged as the successful bidder of the business. Thomas Stager was named president of Krystal, effective immediately. He replaces Tim Ward, former president and chief operating officer. Mr. Ward, along with former chief financial officer Bruce Vermilyea, are no longer with Krystal. Additional company plans will be announced soon, the company said. Mr. Stager is a long-time leader in the restaurant industry and an operator who has led successful turnaround assignments in both franchisee and franchiser sectors with large brands including Pizza Hut and Arby’s, Krystal said. “The new partnership is excited to continue growing the brand, maintaining an overriding focus on enhancing customer experience,” said Angela Johnson, vice president of marketing for Krystal Restaurants. “Even during this unusual time, our iconic brand continues to perform well, and we see exceptional opportunities for growth looking ahead.” Krystal Restaurants is known for serving hamburgers on a square bun at 300 restaurants in 10 states. Krystal’s Atlanta-based Restaurant Support Center serves more than 6,000 employees. Fortress Investment Group is a global investment manager with offices in Atlanta and approximately $43.5 billion of assets under management as of Dec. 31, 2019. Golden Child is an active investor and manager in the restaurant sector and has extensive turnaround experience. Source: Food Business News.

PepsiCo Dropping Aunt Jemima’s Name, Removing Imagery ‘Based on Racial Stereotype’

The image of a black woman will be removed from the brand’s pancake mixes, syrups and other products, the company said. A new name will be announced following the first phase of packaging changes, which will begin appearing throughout the fourth quarter. The 130-year-old Aunt Jemima brand and imagery originally were based on the minstrel show song “Old Aunt Jemima.” The brand was sold to Quaker Oats in 1926 and became part of the PepsiCo portfolio in 2001. Its imagery has evolved in recent years, with PepsiCo removing a “mammy” kerchief from the character. “As we work to make progress toward racial equality through several initiatives, we also must take a hard look at our portfolio of brands and ensure they reflect our values and meet our consumers’ expectations,” said Kristin Kroepfl, vice president and chief marketing officer, Quaker Foods North America. “We recognize Aunt Jemima’s origins are based on a racial stereotype. While work has been done over the years to update the brand in a manner intended to be appropriate and respectful, we realize those changes are not enough. We acknowledge the brand has not progressed enough to appropriately reflect the confidence, warmth and dignity that we would like it to stand for today.”

The Aunt Jemima brand will donate $5 million over the next five years to support the black community, a commitment that builds on PepsiCo’s previously announced $400 million initiative to increase black representation at the company. “We are starting by removing the image and changing the name,” Ms. Kroepfl said. “We will continue the conversation by gathering diverse perspectives from both our organization and the black community to further evolve the brand and make it one everyone can be proud to have in their pantry.” PepsiCo’s decision to retire the Aunt Jemima brand follows a similar decision by Land O’ Lakes to remove imagery featuring a Native American woman from its butter products packaging. The imagery was replaced with messaging that highlights the cooperative’s farmer-owners earlier this year. Source: PepsiCo, Inc.

Yum! Unveils $100 Million Plan to Combat Inequality

Yum! Brands announced that it’s pledging $100 million in the next five years to fight inequality. The global mission, referred to as the Unlocking Opportunity initiative, will combat discrimination across KFC, Pizza Hut, Taco Bell, and The Habit Burger Grill by focusing on equity and inclusion, education, and entrepreneurship. As part of these efforts, Yum! will make a $50 million contribution to the Yum! Brands Foundation. “The events of 2020 have made it even clearer that one of the most pressing issues we face together in society is inequality and the lack of access and opportunity that goes with it,” CEO David Gibbs said in a statement. “Around the world, this unfortunate reality has many faces, and it pressures the lives of too many individuals, families, and communities. Though addressing inequality is challenging and complex and there is no easy fix, as the world’s largest restaurant company, we’re at an inflection point where our actions can, and should, make real and lasting change.” These efforts will begin in the U.S., which represents 40 percent of Yum!’s global sales and half of its franchisees. Primary objectives include increasing representation of minorities and women among executives and management, franchisees, and suppliers, continuing to roll out inclusive leadership and anti-racism training across the system, ensuring diverse representation in leadership and account teams at U.S. agencies, and investing in entrepreneurship, education, and social justice in marginalized communities. The initiative comes a month after George Floyd, a Black man in Minneapolis, was killed by then Minneapolis police officer Derek Chauvin. The officer, since fired and charged with murder, pressed his knee against Floyd’s neck for 8 minutes and 46 seconds despite Floyd pleading, “I can’t breathe.”  Three other officers—Thomas Lane, Tou Thao, and J. Alexander Kueng—were also fired and subsequently charged for their involvement. The tragic killing led to a wave of protests across the country and calls for action against social injustice. Gibbs said that events in recent weeks show that measures must be taken immediately, and that conversations with many employees “have opened my eyes to the resolve we will need in order to grow through our collective discomfort and arrive squarely on the side of history that uplifts Black communities and others in crisis along with everyone else.” “While the road ahead will not be easy, I’m more confident and convicted than ever that with the strength of our culture, we will meet the challenges head-on,” Gibbs said. “I am proud to see our company courageously coming together to shape a future with more equality, fairness and opportunity for all. We simply can’t miss this historic moment to do our part to unlock opportunities that improve the lives of the people who run our restaurants and serve our local communities.” Source: QSR.

Social-Distancing Rules Constrain Olive Garden’s Capacity, CEO Gene Lee Says

Social-distancing limits for dining rooms are constraining Darden Restaurants Inc.’s units more than local coronavirus capacity restrictions, the Olive Garden parent’s CEO said, but the company is installing temporary plastic barriers to provide seating expansion. The Orlando, Fla.-based casual-dining company, which owns LongHorn Steakhouse, Cheddar’s Scratch Kitchen and other full-service concepts, said 91% of its 1,700 restaurants have reopened with at least limited dine-in capacity after shutdowns imposed in March by states and cities to stem the spread of COVID-19. Because of restaurant seating inefficiencies — ranging from booths to large tables — once jurisdictions allow more than 25% occupancy the six-foot social-distancing requirement plays a larger role in capacity, said Gene Lee, Darden CEO, in a fourth-quarter earnings call. “There’s always significant inefficiencies in your seating capacity,” he explained. “We’ve always got twos and fours, fours and sixes. We’ve got tables for large parties. Our average party size is 2.3 [people].” To make seating layouts more efficient as capacity restrictions ease, Lee said Darden’s concepts are working to install Plexiglass barriers in some locations. “We will be installing temporary barriers in approximately 100 restaurants in the next two weeks to try to improve this efficiency, especially in Olive Garden, and we want to do that while maintaining the social-distancing requirements,” Lee said. “We’ll analyze the sales growth after we’ve installed those barriers and decide how many more restaurants we want to add it to,” Lee said. “We have to remember that once you’re past 25% occupancy, the six-foot restriction on social distancing trumps any other restriction there is because you can’t get to 50%.” Lee said Darden has brought back 60,000 furloughed restaurant team members and expects to return another 40,000 as business improves. “I’ve been really impressed with the resiliency of the consumer and how important full-service casual dining has been in the everyday life of our guests,” he said. “I think the industry gets back to where it was. I think it’s important.” Lee said Darden’s scale gives it an advantage as some rival restaurants close permanently and competition eases. “I think that’s a great opportunity for us,” he said. “I think scale is going to matter more than ever. I think that we believe that we can get back to 2% to 3% unit growth pretty quickly. We’re going to continue to open restaurants. We’re going to continue to do new deals. We think the economics are going forward here and the short-term should get better for us on new restaurant development.” The company delayed 17 openings from the fourth quarter into fiscal 2021, he said. He noted that real estate and construction costs declined in the 2009-2011 period during and after the Great Recession, and he expects the pandemic to make those favorable going forward.“ The best restaurant deals we did were after the recession in 2009 and 2010, especially for our specialty brands,” Lee said. “So we’ll push hard on that to get favorable economics where possible.” Lee and Ricardo Cardenas, Darden’s chief financial officer, said labor productivity had improved during the pandemic, partially through streamlined menus. “We also think that off-premise will play a bigger role as we move forward,” he said. “We think our capabilities in that have improved dramatically over the last 14 weeks. And we — and I think a lot of consumers had the opportunity to maybe use our service off-premise that hadn’t used it before.” Cardenas said Darden canceled its loyalty program test during the fourth quarter as part of the streamlining and significantly cut marketing expenses. Darden’s executive team said to-go sales remained elevated as dining rooms reopened. “Olive Garden to-go sales are approximately double their pre-COVID averages, and LongHorn has more than tripled their pre-COVID averages in these restaurants,” Cardenas said. Those off-premise sales should produce first-quarter sales levels at about 70% of the same period last year, he said. Lee said that, during the pandemic closures, Olive Garden tested lower price thresholds for delivery. “I think where we’re settling in right now is $50 minimum. It’s still the 5 o‘clock call the day before. We find that to be the sweet spot,” he said. “We didn’t see any benefit of going below that threshold.” Darden also tested its own delivery during the pandemic and found it inefficient. “We’ve had third-party delivery in some of our restaurants, even before the pandemic started, including some Olive Gardens, a lot of Yard House,” Lee said, adding that it didn’t grow faster than its own delivery and curbside pickup. “We are not anticipating launching a third-party delivery model.”

Lee added that off-premise business helped the company reach positive same-store sales at about 10% to 15% of its restaurants. For the fourth quarter ended May 31, Darden swung to a net loss of $480 million, or $3.86 a share, from a profit of $208 million, or $1.67 a share, in the same period a year ago. Sales fell 43% to $1.27 billion from $2.2 billion in the prior-year quarter. Fourth quarter same-stores sales and units by brand included:

Olive Garden, down 39.2%, with 868 units

LongHorn Steakhouse, down 45.3%, with 522 units

Cheddar’s Scratch Kitchen, down 58.5%, with 165 units

Yard House, down 70.7%, with 81 units

Capital Grille, down 62.5%, with 60 units

Seasons 52, down 69.9%, with 44 units

Bahama Breeze, down 66.1%, with 41 units

Eddie V’s, down 65.2%, with 23 units

Lee also announced that Dave George, left, the company’s chief operating officer, would be retiring on Aug. 2. George will turn 65 later this year, Lee said, “and we’ve been discussing this transition for some time.” George has been with Darden and its predecessor companies for 23 years and has led three of the company’s brands — Capital Grille, LongHorn Steakhouse and Olive Garden. He has served as COO since January 2918. “He built great teams and became a mentor to many operators and executives,” Lee said. “His can-do approach and attitude permeates throughout Darden and each of our brands today.” Darden owns and operates more than 1,700 casual-dining restaurants in North America. – Source: Darden.

Jersey Mike’s CEO Peter Cancro Finances New Stores through Special Ownership Program

In 1975, 17-year-old Peter Cancro bought Mike’s Subs with the financial help of his football coach, Rod Smith, who was also an executive at the local town bank.

Cancro had worked at the New Jersey sub shop for three years. The handshake deal would lead to Cancro building an empire of sandwich stores under the new name Jersey Mike’s Subs. Now, as the nation faces an unprecedented pandemic, Cancro is giving back in a big way. He is giving managers and assistant managers in his system the chance of a lifetime to own their own Jersey Mike’s Sub shop. We recently talked to Cancro, as part of an upcoming Extra Serving podcast. Here’s a Zoom chat excerpt, where Cancro talks about the Coach Rod Smith Ownership program. – Source: NRN.

Excellence in Customer Service in the New Normal

In my coaching and consulting sessions with executives during the pandemic, we’ve discussed critical issues such as speed, agility, resilience, pivoting, adaptability, prioritizing, change, strategy, scenario planning, transformation, rebuilding, rethinking and much more.

Excellence in customer service

As we enter the new normal, excellence in customer service will be an imperative! In an era where customers demand high-speed information; the role of the customer service function and the employees who deliver this service are pivotal. Customer service is communication central for day-to-day information on customer satisfaction, customer relations and customer intentions. The customer service frontline is both your first line of defense and, increasingly, your vital early-warning system. Today’s customer service managers must be experts not only in customer relations, problem-solving, and core products and services, but also in gathering, synthesizing, assessing and distributing data. Every customer contact is a critical data point — a chance to learn something important about a valued customer. It’s safe to say the pandemic has taught us many lessons. For companies, a major lesson is that today’s customer service function is a profit center with a huge impact on customer retention and future plans. We all need to learn new ways to listen to our customers and expand the parameters of what we listen for. Customers with strong feelings, positive or negative, are the customers who are most likely and least likely to do business with us again. Service quality is recognized as the marketing edge that can differentiate one commodity from another. The service imperative means that we must pay increasing attention to whatever it takes, one-on-one and one-by-one, to earn the love, loyalty and respect of our customers. Effective customer service starts with a comprehensive definition of customer service. Current definitions are based on meeting or exceeding customer expectations, satisfying or delighting customers, or delivering in full and on time. While these are necessary conditions, they are insufficient to guarantee success.

Customer trust

I define customer service in our new world as the process of building customer trust in the delivery of selected goods and services. Trust forms a partnership. Satisfaction at a transactional level is insufficient. Trustworthiness is needed in order to become a partner and remain a partner. Without trust, no customer would enter into such a relationship. I view customer service as a series of well-defined tasks that focus on building the customer’s trust. To execute this process, every person needs to be trained until behavior that builds trust becomes habitual. There needs to be a reward system in place that is directed toward developing and reinforcing the habit to ensure that it is sustained over time. The psychology of buying is the psychology of trust. So, use every opportunity to build trust. Fine-tune the customer service process to build trust. Do this continually to ensure success. Trust is a function of competence and character. Competence is understanding needs and arriving at solutions that work in the customer’s context and constraints. Character is using the competence to propose a solution that is in the customer’s best interest. Customers need to believe that you have the character to use your competence while keeping their best interests at the forefront. While initial perceptions of character and competence help land new customers, keeping customers is a function of their expectations. A critical element in retaining today’s customer is actual service delivery performance, as well as what organizations do to close gaps between expectations and outcomes. Train your people to use the gaps as a way to build trust. The question to ask is, “Where can I invest the next dollar to build the most trust?” The most effective way to build trust is to focus on delivering those services where there is vibrant synergy between the organization’s core competencies and the customers’ needs.

An exercise to evaluate trust: How well do you know your customers?

Select one of your major customers. List all of the major services you provide to maintain the trust of that customer. Include benefits you consider over and above the norm. Include pricing, quality, quantity discounts, delivery, problem-solving — list everything. In a separate column, write how well or how poorly your main competitor provides the same services for that account. If you’re unaware of what services your chief competitor offers, especially extra benefits over and above the norm, you’re at a decided competitive disadvantage. When times get rough like they are now and customers cut back on orders, yours may be the first to go or get cut. Add to the list any services your main competitor has that you don’t. You shouldn’t be surprised at what they are, but you might be. Now, rethink what you need to stay or become that customer’s favored supplier. Think in terms of reinvigorating the relationship. Always remember that trust is the keyword. When your customer trusts you, they have faith in you, and that’s the most crucial benefit you can provide. – Source: Smart Brief/Jeff Wolf.

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