To Our Valued Subscribers:

As I pen this cover note to accompany the latest edition of American Recruiters Global Foodservice News, it dawns on me that the signs of the Apocalypse are NOT COVID-19, the fires in the West, rioting, protesting, nor the American election process. It is the fact that the Cubs, White Sox, and the Bears are all in a position to win Championships. If that is not the sign of the end, then I don’t know what is!

As the pandemic continues and “the new normal” evolves, being “An Essential” company or team leader is still a front-line mandate. In a recent article, author of “How to Boost Your Leadership Impact” Naphtali Hoff offers some great tips on how to “revise that Old to-do list into a Success List”.  Here are a few that I (and I hope you) found to be key:

• Be Selective. Only assign tasks that are actionable and measurable.
• Set time on your calendar. Block out the time you need to get the highest priority work done.
• Share your plans.  We often do our best work when someone is holding us accountable so identify an accountability partner to keep you on track.

These are just a few of several tips that can assist you in staying an effective leader. Of course, having the right team in place is the key and to discuss how me and my American Recruiter colleagues can find you the talent you need, is only a phone call or e-mail away. As it cost you nothing to reach out, give us a try. Enjoy the beginning of October News and stay safe.  I’m off to see if my Chicago teams are still in first place and getting my shelter ready!!

FAT Brands completes acquisition of Johnny Rockets from Sun Capital Partners for $25 million

Global franchising company FAT Brands — global franchising company and owner of Fatburger, Hurricane Grill & Wings, and Ponderosa and Bonanza Steakhouses — has completed the acquisition of retro diner brand Johnny Rockets that was first announced in August. The acquisition, which was valued at $25 million, increasing the company’s securitization facility to $80 million. With the acquisition of the company will bring the total number of FAT Brands franchised and company-owned restaurants to 700 internationally, with annual sales of $700 million. As previously announced, former Johnny rockets CEO George Michel will not be continuing on with the company, and instead, FAT Brands CEO Andy Wiederhorn will be heading the brand. “We are thrilled to successfully complete the acquisition of Johnny Rockets, a transformative event for FAT Brands, and are eager to drive further growth for the brand,” Andy Wiederhorn, President and CEO of FAT Brands. “The expansion of our whole business securitization facility further enhances our liquidity and financial flexibility and demonstrates the confidence that institutional investors have in our platform. We continue to scale our business through strategic acquisitions that complement our current brands and are pursuing other attractive opportunities in this environment.” The company also has plans for Johnny Rockets, including a look at bringing the burger chain back to its ‘50s-themed roots that the brand was originally known for.  “We love the original look of the brand and we think there will be opportunities to bring that back,” Wiederhorn said in an August interview, adding that he thinks that the burger chain should be brought “back to its roots” of banquet booths, servers wearing paper hats, and customers playing jukebox tunes. This is not the only casual burger chain FAT Brands has acquired recently. In 2019, the company bought Fall Hills, VA – based ElevationBurger for $10 million. During the acquisition, Duff & Phelps served as financial advisor to Sun Capital Partners, Inc. and Morgan, Lewis & Bockius LLP acted as legal counsel to Sun Capital Partners, Inc., Loeb & Loeb LLP acted as legal counsel to FAT Brands and Andersen Tax LLC served as tax advisor to FAT Brands Inc. – Source: NRN.

Tropical Smoothie Cafe sold to Levine Leichtman Capital Partners

Levine Leichtman Capital Partners has agreed to purchase fast-casual chain Tropical Smoothie Cafe, the Los Angeles-based private equity firm said Tuesday. Management, led by CEO Charles Watson, will remain the same. “We are excited to partner with Charles and the rest of the management team who have led the tremendous growth of Tropical Smoothie Cafe. We look forward to working with them as they continue to increase system-wide sales, improve franchisee unit economics and expand unit count in the significant remaining whitespace,” LLCP managing partner Matthew Frankel said in the press release announcing the purchase, terms of which were not disclosed. Atlanta-based Tropical Smoothie Cafe franchises more than 870 fast-casual restaurants in 44 states, and has continued to perform well during the novel coronavirus pandemic, having reported same-store sales growth of 25% in July. The chain specializes in sandwiches and flatbreads as well as smoothies.  “My team and I are very excited to partner with LLCP as Tropical Smoothie Cafe seeks to enhance its market-leading position,” Watson said. “Having the opportunity to leverage LLCP’s extensive franchise expertise will be pivotal in driving further growth and supporting franchisees in inspiring better in our guests.” LLCP has previously invested in Bertucci’s, Cicis Pizza, Quiznos, and Wetzel’s Pretzels, although Tropical Smoothie is its only current restaurant investment. LLCP was advised in the deal by Kirkland & Ellis LLP. Debt financing was provided by Golub Capital. Management was advised by Jamieson and Peter Klein, P.A. Tropical Smoothie Cafe was advised by Robert W. Baird & Co. and Alston & Bird LLP. – Source: NRN.

Golden Gate Capital to sell Red Lobster Seafood Co. to a group led by Thai Union

A group of minority shareholders and current management of Red Lobster Seafood Co. is acquiring the casual-dining chain from Golden Gate Capital, the new controlling consortium said. The new owners are seafood supplier Thai Union PCL, which has been a Red Lobster shareholder since 2016 and trades on the Stock Exchange of Thailand under the TUI ticker, current Red Lobster management, and a new company called Seafood Alliance with key shareholders Paul Kenny and Rit Thirakomen. Guggenheim is serving as financial advisor and Kirkland & Ellis LLP and Nob Hill Law Group, P.C. are serving as legal advisors to Golden Gate Capital, which is selling its equity stake in the company. PJ Solomon is serving as financial advisor, with Allen & Overy serving as legal advisor to Thai Union. Thai Union first became financially involved with Red Lobster in 2016, when it invested $575 million in the company and was given two members of its board of directors. Thirakomen is the Chairman, CEO, and controlling shareholder of the Bangkok, Thailand-based MK Restaurant Group, which trades on the Thai Stock Exchange under the ticker M. It has more than 700 restaurants in five countries including MK, Yayoi, Miyasaki, and Hakata, specializing in hot pots and Japanese food, as well as Thai food concept Na Siam and quick-service concepts Le Petit and Bizzy Box. It also owns the biotech research firm Mark One Innovation Center, which specializes in functional food and beverages, and the logistics and warehouse business M. Senco. Kenny is the former CEO of Minor Food Group, which operates more than 2,000 casual-dining and quick-service restaurants in 27 countries under the names The Pizza Company, The Coffee Club, Riverside, Thai Express, Benihana, Bonchon, Swensen’s, Sizzler, Dairy Queen, and Burger King. Red Lobster CEO Kim Lopdrup said in a press release announcing the acquisition, “We are thrilled to deepen our relationship with Thai Union, a long-term strategic supplier to Red Lobster and an investment partner for the last four years. Our organization will also benefit from the tremendous international restaurant and hospitality expertise brought by Seafood Alliance. I want to thank Golden Gate Capital for their unwavering support over the past six years and particularly over the past five months.” Thai Union president and CEO Thiraphong Chansiri indicated that current management would stay in place. “As an anchor investor in Red Lobster since 2016, we are excited to confirm our commitment to the business, which reflects our utmost confidence in management and the company’s strategy of serving top quality seafood for a great value,” he said in the release. “The Red Lobster brand is strong, with unmatched awareness and millions of loyal guests, and we believe it has tremendous long-term potential. We look forward to capitalizing on that solid base, as well as leveraging Seafood Alliance’s restaurant expertise and international relationships, to continue to develop the brand domestically and internationally.” Golden Gate Capital managing director Josh Olshansky expressed satisfaction with his company’s involvement in the chain. “We have enjoyed a highly successful partnership with Red Lobster and are proud to have worked collaboratively alongside Kim Lopdrup and the management team since 2014, achieving strong returns for our investors,” he said. “With a strong liquidity position, we know the business is in great hands and look forward to cheering the team on under new ownership.” There are nearly 750 Red Lobster locations worldwide. According to Nation’s Restaurant News Top 200 data, Red Lobster operated 679 restaurants in the United States at the end of fiscal 2019 with $2.25 billion in sales. In the announcement of the acquisition by Seafood Alliance, it said that 99% of company-owned restaurants are currently open for business and 88% of dining rooms are open. – Source: NRN. Correction: August 31, 2020, This story has been corrected with clarification of the ownership of Seafood Alliance.

Report: Pizza Hut LLC Pressures NPC International to Delay Auction of 900 Pizza Hut Franchise Locations

Pizza Hut and Wendy’s franchisee NPC International, which filed for Chapter 11 bankruptcy in July, is delaying a plan to auction off 900 Pizza Hut outlets after getting push back from Pizza Hut LLC, according to the Wall Street Journal. Earlier this week, the Yum Brands division expressed concern that the sale would prompt a “group of credit-focused hedge funds” to buy the locations, the WSJ reported.  “NPC agreed to extend the deadline for bids for its 900 remaining Pizza Hut restaurants to Nov. 20 from Nov. 5 at a hearing in U.S. Bankruptcy Court in Houston on Wednesday. An auction will be held on Nov. 30 if multiple qualified bidders emerge,” the report states. The lawyer for NPC International and Pizza Hut representatives could not be reached for comment. Leawood, Kan.-based NPC International filed for bankruptcy protection on July 1. At the time, the company operated more than 1,600 Wendy’s and Pizza Hut restaurants. In August, NPC International began the process of selling a portion of its Pizza Hut business and the closure of up you 300 restaurants after coming to an agreement with Yum Brands Inc. NPC said the COVID-19 pandemic exacerbated the company’s existing challenges such as increased labor and commodities costs. The company is also highly leveraged. “These challenges have been magnified recently by the impact and uncertainty of COVID-19, and we believe it is necessary to take proactive steps to strengthen our capital structure, so we have the financial flexibility to continue to adapt to current industry trends,” Jon Weber, president, and CEO of NPC’s Pizza Hut division said in July. “We also intend to use this process to continue to evaluate and optimize our restaurant portfolio so that we are best positioned to meet the needs of consumers across the country.” – Source: NRN.

The Pappas family is Evaluating if they Want to Buy Luby’s Inc.

Luby’s board votes to liquidate, dissolve 73-year-old Texas institution, Fuddruckers.  The Texas restaurateurs behind Pappadeaux Seafood Kitchen and Pappasito’s Cantina could swoop in and save Luby’s, which earlier this month announced it would liquidate and dissolve the company. Christopher and Harris James Pappas entered a confidentiality agreement with Luby’s on Sept. 11 to obtain the company’s financial records as they decide whether or not to acquire the 73-year-old Texas institution, according to a document filed with the Securities and Exchange Commission. Luby’s Inc. owns Luby’s Cafeteria and Fuddruckers. The document states Christopher Pappas has served as the president and chief executive officer of Luby’s since 2001. Harris Pappas was the chief operating officer of Luby’s until he retired in 2011, and a member of the board of directors until January 2019, when he resigned. Both are owners of Houston-based Pappas Partners, L. P., and Pappas Restaurants Inc., which do not own Luby’s. That restaurant empire does own Pappadeaux Seafood Kitchen, Pappasito’s Cantina, Pappas Bros. Steakhouse, Pappas Burger, Pappas Seafood House, and Pappas Bar-B-Q. The Houston Chronicle was first to report the potential acquisition on Monday. The newspaper also reported the Chief Operating Officer Benjamin Coutee will receive a raise in his base salary, from $283,000 to $300,000. Days before the SEC filing, the board of directors of Luby’s Inc. announced it adopted a plan to liquidate and dissolve the company. The vote followed an announcement on June 3 that the company sought to sell its assets. Closing dates for several restaurants have yet to be announced, and as of recently, Luby’s promoted giveaways, online ordering, and free kids meals on social media. – Source: KSAT/San Antonio.

Melting Pot is Working on a Hybrid Concept

The Melting Pot fondue chain has begun the development of a new concept it describes as “flex-casual,” making it the latest full-service chain to try a blend of fast-casual and full-service elements. Called Melting Pot Social, the new venture will feature menu and service options that go beyond the typical offerings of a Melting Pot. Included will be what the chain calls “quick bites,” or items available for a less-leisurely lunch than a pot of fondue might allow. In addition to customizable chocolate and cheese fondues, the menu will include such items as melt-style sandwiches, flatbreads, and salads, according to the announcement from Melting Pot’s parent and franchisor, Front Burner.

The prototype will also feature brunch service.

The announcement suggests that the bar will be a showcased element of the new concept, with a selection of craft cocktails to facilitate what Front Burner calls “casual meetups,” or the social interaction that has long been part of the Melting Pot concept. The mother brand specializes in fondues shared by a party at a leisurely pace. The chain developed a Melting Pot To-Go menu earlier this year, which the franchisor says has been very successful. The new concept measures 3,500 square feet, compared with the 5,500 square feet of a typical Melting Pot unit, according to Technomic.  Melting Pot has been experimenting with a variety of designs in recent years to become more of an everyday destination. The Melting Pot Social riff is the latest example of a restaurant brand hoping to capture the best of two market sectors by melding casual-dining and fast-casual elements. Buffalo Wings & Rings, an 80-unit casual-dining chain, recently unveiled a new design that features a Beer Me self-service bar area where customers can help themselves to tap beers. Patrons can also opt for traditional table service or self-ordering from a table via digital devices. A valet station outside provides curbside pickup for both consumers and third-party delivery drivers. Steak ‘n Shake is converting its full-service restaurants into counter-service outlets, and Buffalo Wild Wings is testing a scaled-down variation called Buffalo Wild Wings Go, with limited seating and an emphasis on takeout and delivery. Outback Steakhouse is developing a new drive-thru variation called Aussie Grill by Outback. Source: Restaurant Business.

Florida Lifts Covid Restrictions on Restaurants

Restaurants in Florida can resume dine-in service at pre-pandemic levels under an executive order drafted Friday by Gov. Ron DeSantis. Virtually all other COVID-related operating restrictions on restaurants and bars in the state are also lifted. The changes take effect upon DeSantis’ signing of the executive order, which he promised during a press conference. DeSantis took the additional step of forbidding county and local governments within Florida from setting their own caps on dine-in capacities should those areas see a spike in new COVID cases. Under the executive order, other restrictions cannot be imposed on eating and drinking places without a formal justification based on health or economic concerns.  Even with that justification, indoor dining cannot be dropped below 50% of restaurants’ capacities.  The governor also specified that no business can be closed by a local or county government because of coronavirus concerns. Florida, which is home to more restaurants than any other state except California and Texas, follows Indiana in eliminating dine-in capacity caps put in place to slow the spread of coronavirus. Indiana’s limits will be lifted on Saturday. Restaurants in Florida were formerly limited to 50% of their indoor dining space, with a social-distancing requirement often frustrating their efforts to use as many seats as possible within that cap. Source: Restaurant Business.

Pollo Campero Seeks its Piece of the Chicken Empire

Sam Wong remembers hearing about the chicken concept Pollo Campero nearly 20 years ago. He was told that customers were waiting hours just to get into the restaurant. At first, Wong wasn’t buying the hype. So he drove 65 miles to Los Angeles to get a firsthand impression. As it turns out, the hyperbole was reality. “I drove up there and I looked at the line, and I was just amazed,” Wong says. “And I talked to the customers. I said, ‘Why are you guys waiting four to six hours to get into the store?’ They said ‘Sam, you don’t understand, this is like going home for us. It’s like you going to Disneyland.’” He says the multi-million-dollar store is still in operation. And Wong knows this because he’s now the director of franchising for the chain, which has more than 350 locations worldwide. Only 77 of those units are in the U.S., but the Pollo Campero team brought on Wong in February to change that. The industry veteran, who’s helped grow brands such as Dairy Queen, Popeyes, and Sonic Drive-In, plans to help Pollo Campero open more than 250 restaurants in the next five years. The restaurant, known for its Fried Chicken, Citrus Grilled Chicken, and Extra Crunchy Chicken, will target major metro markets in the Southeast, including Tennessee, Florida, Georgia, North Carolina, and South Carolina. Wong says now is the best time for Pollo Campero to aggressively expand because it has a proven business model based on five key pillars—building a distinctive brand, running great restaurants, growing profit, constructing a best-in-class support system, and fostering a familial culture. “That’s how we decided this is the right time because all the pillars in our business model are working,” Wong says. “It’s working based on our performance and based on franchisee feedback because every single one of our franchisees is thinking about growth. My experience when I talk to potential franchisees is, ‘Hey, your paper and press release looks good, but what about your franchisees? Are your franchisees thinking about growth? Are they investing in the franchise system.’ And they are.” The brand’s growth aspirations are backed by consistent sales growth, even though the COVID crisis. Mother’s Day was Pollo Campero’s best sales day yet. July was the highest selling month of all time until the record was broken again in August. And even more recently, the chain experienced its best sales week ever. Wong believes Pollo Campero will become a 300-unit chain by the end of 2025. Wong says the record-breaking marks were accomplished through innovation and convenience, two aspects the company emphasized prior to COVID. In 2019, Pollo Campero overhauled its entire digital sales platform to provide better service through its mobile app, website, delivery partnerships, integrations with the POS, and loyalty system. The brand launched drive-thru pickup, curbside pickup, and expanded its last-mile delivery partnerships. “It was a learning experience particularly for us in the restaurant sector,” Wong says. “The key thing is, people are responding from an investment standpoint. They’re pivoting in terms of, in the next three to five years, what are the best ways to deploy capital? So it’s going to be interesting in the next couple of years, but so far for us, challenging year, but we’ve got some pretty nice numbers and performance that we can learn from.” The industry veteran says that from his experience, growth works best when it’s supported by teamwork. The point of view makes sense for Pollo Campero, which started as a family business in Guatemala in 1971. Having the right team leads to informed and effective decision-making, Wong says. He recalls traveling to shows every year and seeing concepts—both ionic and new—fall short of consistency.,“They’ll do a big press release, ‘Oh we signed a 200-store deal’ in let’s say Washington, D.C.,” Wong says. “… They say ‘We did a 200-store deal two years ago, but it’s not going anywhere and we decided to pull that deal.’ So it’s all about consistency. The biggest differentiator from a franchising standpoint for our brand is we’re going to be able to make the right decisions because we have the right team. The executive team is very diverse in terms of our experience, our background, our culture, how we grew up. It’s a group that has a lot of dynamics.” Wong emphasizes that this relationship is not only important in the C-suite, but also between corporate and the franchisee base. That means attracting the right franchisees to ensure expansion moves forward efficiently. His definition of the right franchisee candidate falls into four buckets—adequate liquidity, operational knowledge, development experience, and cultural fit. The restaurateur says a candidate doesn’t necessarily need prior restaurant experience, but the job does require someone who is comfortable with leadership, mentorship, and creating an environment with high standards. “We want franchisees to join us with the mindset of being active—being involved in the community, be a leader in the community,” Wong says. “… At the end of the day, this is a sales-based business. You need to have the leadership skills and have the mindset to thrive at growing and running a sales-based business. It’s really a combination of ability, capability and the right mindset that aligns with the Pollo Campero culture.” Wong says a question he’s asked often is whether the company is investing or just looking for franchisee money to grow the system. To that, he says the company will take the same risks and grow alongside franchisees. He believes Pollo Campero will become a 300-unit chain by the end of 2025, but he refers to it as a conservative prediction. His expectation is that the restaurant will rise well beyond that figure. “But let’s just use the 300 as a milestone,” Wong says. “I think we’re going to exceed that prior to the year 2025. Ultimately, I think this can be a 1,000-store brand. We want this to be a $1 billion business. A contender. In the next three to five years, we want Pollo Campero to be a hot concept of the year.” – Source: QSR.

Report: Corner Bakery Café Exploring Strategic Alternatives

Corner Bakery Café was founded in 1991. With a heightened number of office closures due to COVID-19 sagging traffic, Corner Bakery Café tapped DLA Piper as restructuring counsel, Debtwire, citing two sources familiar with the situation, reported. The fast-casual engaged Stifel as its investment banker to explore strategic alternatives, one of the sources added. This could include a sale as Corner Bakery Café contemplates a workout. Per Debtwire, Corner Bakery Café, backed by Roark Capital—the same fund behind Inspire Brands and FOCUS—recorded slightly less than $18 million in LTM (last 12 months) adjusted EBITDA and just under $350 million in LTM revenue through February 2020. Both figures slid dramatically since due to depressed traffic as a well as a pandemic-fueled catering hit, Debtwire said. Two of the sources noted office closures proved especially problematic for Corner Bakery Café, “as a large part of its revenue is derived from catering for workplaces, as well as breakfast and lunch for commuters.” Corner Bakery Café, founded in 1991, boasts corporate and franchised units in 23 states and Washington, D.C. QSR reached out to Corner Bakery Café, but the company declined to comment. According to FoodserviceResults, Corner Bakery Café recorded $350 million in revenue in 2019, down 2.8 percent from $360 million in 2018. Its domestic unit count slipped to 174 from 180 and average-unit volumes inched forward to $1.977 million from $1.973 million. Roark acquired Corner Bakery Café in 2011 when it was part of Il Fornaio Corp (it also brought sister concept Il Fornaio into its portfolio then as well). There were 119 locations at the sale. DLA Piper advised Roark in that deal, as well as previous acquisitions of Arby’s, Carl’s Jr./Hardees, and Auntie Anne’s. The company tapped the capital markets in 2017 to issue a senior secured term loan of undisclosed size, with participation from Kayne Anderson Capital Advisors, according to the Debtwire Primary Issuance Database. Roark sold the Il Fornaio portion of its business to Create Restaurants in 2019—a sale that valued the Italian chain at $74 million. Proceeds from the deal went in part to pay down debt, a source told Debtwire. – Source: fast casual.

Why Curbside Pickup Is Here To Stay—Even After the Pandemic Ends

Casual dining giants like Applebee’s and Outback Steakhouse have been squeezing quite a bit of juice out of this channel since the early 2000s. No doubt the casual dining segment has had the curbside market cornered, offering a convenient and speedy occasion for fast food-fatigued consumers. However, Covid-19 has changed that. Curbside is now everywhere as restaurants, including those with drive-thrus, sprint to find more points of access to make up for closed dining rooms.  Will curbside stick around after things go back to normal and dine-in picks up again? Probably. – Source: Forbes.

Do these 4 things to Improve Employee Retention During the Pandemic

The uncertainty about when the economy and life will get “back to normal” weighs heavily on everyone. When might ‘normal’ happen? One US public health expert expects it will take until fall 2021 — after the majority of the population is vaccinated and protected — for life to return to pre-COVID normalcy. A Fall 2019 study — before the pandemic — by Robert Half International found that 81% of senior leaders were worried about their company’s ability to retain valued employees. It is highly likely that, given the impact of the shutdowns these past six months, the number of senior leaders concerned about retention is even higher today. Here are four things business leaders can do to retain talented, engaged employees. First, communicate openly and frequently. Honest communication is vital. A weekly “state of the business” update will help people feel valued. The news may not always be positive – don’t hide it, share it. You may not have answers; say so. Communicate what you can, especially bright spots. Second, listen to and validate concerns. Be open to questions from team leaders and team members. Provide a variety of channels for people to connect with caring leaders and colleagues, including small-group video calls with the CEO, a chat feature for one-on-one conversations, calls with trained professionals to address increased demands (like working from home while kids are in school online), etc. Third, model and demand respect. Treat others with respect in every interaction. Don’t demean, discount, or dismiss others’ concerns or hopes. Be kind and civil to everyone, individually, in groups, everywhere. By modeling respectful treatment day in and day out, you earn the right to demand that everyone else treat others with respect. Fourth, celebrate efforts, ideas, and accomplishments. All of our best bosses were great at this. In today’s three-minute episode of my Culture Leadership Charge video series for SmartBrief, I provide details about how bosses can build skills and embrace a recognition mindset daily. – Source: Smart Briefs.

Innovation is not Cancelled

Despite economic challenges, hundreds of thousands of startups are launching across the country. The number of business applications filed in the United States in the week ended Aug. 29 exceeded 101,600, up 62% over the prior-year period, according to US Census Bureau data. Drexel Food Lab, product development and culinary innovation center at Philadelphia-based Drexel University, has received “more inquiries than ever” since the pandemic began in early spring, said its director, Jonathan Deutsch, Ph.D. “I think that it’s a combination of retail really booming right now and a lot of chefs and hospitality professionals are rethinking the longevity of their hospitality career and looking to pivot into manufactured foods, CPG or foodservice ideas,” Dr. Deutsch said. “And people are gaining more time working remotely. There’s been a lot of backburner projects from someone who has a 9-to-5 job, and now instead of leaving the house at 7 to get to their 9-to-5 job, they have two hours in the morning to work on their side business or a few hours in the evening to work on things, so I’m seeing a lot more of that kind of client as well.” Startups created during times of crisis often are scrappy. Those that succeed in the current environment will come through much stronger. Premium packaged food and beverage represents an especially promising opportunity as consumers travel and dine out less due to the pandemic but continue to seek convenience, health, and affordable luxury. Successful food brands that emerged a decade ago from the Great Recession include Chobani, Purely Elizabeth, Beyond Meat, and Zevia. “A lot of the small companies and brands that we saw in 2010 are here and powerful today,” said Larry Levin, executive vice president, market and shopper intelligence at Information Resources, Inc. “They positioned themselves well for continued survival or acquisition, and I think that is a light at the end of the tunnel for some of these small manufacturers who might be worried right now. They can look back and see what others did during the last recession. They were able to survive and come through relatively well.” The past few months have seen several innovative food brands come to market. Gregory Struck, a serial entrepreneur with a sweet tooth, is setting out to disrupt the refrigerated desserts category with the launch of Noops, a plant-based pudding formulated with organic oats, sunflower seed protein, and organic dates. “We’ve had to be very nimble and move into a digital realm where we can conduct Zoom meetings, send samples, take the sales process from offline to the digital world,” Mr. Struck said. “There was a slight delay in terms of the sales cycle, but the good news is retailers have been incredibly receptive to the idea of a plant-based indulgent oat milk pudding. We’re very lucky our sales process was reinvigorated in June, and we’re actively being courted by best-in-class accounts across the Northeast.” No cows were milked in the making of Brave Robot, a new brand of ice cream formulated with animal-free dairy protein that was launched recently by Los Angeles startup The Urgent Co. The products feature the taste and texture of dairy-based ice cream but are lactose-free, cholesterol-free, and vegan, said Paul Kollesoff, co-founder and general manager of The Urgent Co. The brand was developed in partnership with Perfect Day, a food technology company that produces milk proteins based on plants instead of animals. “We find retailers are looking for innovation,” Mr. Kollesoff said. “Ice cream specifically is skyrocketing in terms of sales during the pandemic. The numbers are up phenomenally, and I think retailers are saying, ‘How do we keep that going?’ They’re asking and looking for innovation.” – Source: Food Entrepreneur/Food Business News.

NYC Dining Rooms are Still Closed. That’s Squeezing Olive Garden’s Best Restaurant

Before the pandemic, New York City’s Times Square was bustling with office workers, theatergoers, and tourists. But pandemic restrictions have FORCED Bradway to go dark and dining rooms to remain closed. New York City has banned indoor dining since March and plans to start allowing indoor dining at up to only 25 percent capacity at the end of the month. The changes have been disastrous for the Times Square Olive Garden, which is located on West 47th Street, between Broadway and 7th Avenue. The restaurant, which opened in 1994, is three stories tall, has two kitchens, and can seat about 500 guests. In years past, it has sold New Year’s Eve packages for hundreds of dollars per person. The restaurant used to bring in over $15 million in sales per year on average before the pandemic, or about $300,000 per week, the company said on an analyst call discussing the company’s quarterly results on Thursday. Now, the restaurant is making about $17,500 per week in sales. “That’s our best restaurant in the Olive Garden system,” said Eugene Lee, CEO of Darden Restaurants, which owns Olive Garden, during the call. He added that the weekly shortfall “can probably be hard for you to believe.” Casual dining restaurants, which have long advertised as places to visit in person, have been suffering during the pandemic. Sizzler USA, one of the country’s first casual restaurant chains, filed for bankruptcy this week. Chuck E. Cheese’s parent company, CEC Entertainment, filed for bankruptcy in June, blaming the financial strain caused by Covid-19 and the prolonged closures of its entertainment centers from stay-at-home orders. Darden (DRI), which also owns Longhorn Steakhouse, Cheddar’s Scratch Kitchen, and other brands, has also struggled. In the three months that ended on August 30, sales at Olive Garden restaurants open at least a year fell about 28 percent compared to the same period last year, the company said Thursday. Darden’s total sales for the quarter fell about 28 percent to $1.53 billion for the quarter. The company is hoping that loosening indoor dining restrictions will help it bounce back, and not just at the Times Square location. “Capacity restrictions continue to limit [Olive Garden’s] top line sales, particularly in key high-volume markets like California and New Jersey, where dining rooms were closed for the majority of the quarter,” said Lee. “Getting California back is going to be huge,” he added. “California is a big market for us with high volumes.” In California, some counties have restricted indoor dining, while others are allowing it in limited capacities. – Source: CNN Business.

U.S. Representatives ask Federal Trade Commission to Probe Third-Party Delivery Operators, Franchisors

U.S. Representatives from three states also ask the FTC to take a closer look at franchisor/franchisee relationships; Grubhub says their mission is to drive orders to restaurants. Congressional leaders from Washington state, Illinois, and Pennsylvania took aim at third-party delivery operators this week, calling for the Federal Trade Commission to investigate the companies for alleged unfair practices tied to fee structures amid consolidation in the sector. “COVID-19 has made restaurants increasingly reliant on food delivery platforms as measures to reduce the spread of the virus continue to limit in-person dining,” according to the Sept. 22 letter signed by U.S. Representatives Jan Schakowsky, D-Ill., Mary Gay Scanlon, D-Pa., and Pramila Jayapal, D-Wash. The leaders said the FTC needs to scrutinize the “harmful impact” these companies have on small businesses and consumers. The call for a probe comes as COVID-19 has been a double edge sword for restaurant delivery operators. The crisis has triggered a high demand for their marketplace and the last-mile delivery services. But the pandemic has also highlighted how the use of their services erodes profits for restaurants, who can ill-afford such losses while operating under restricted conditions in most jurisdictions for the past six months. Third-party delivery fees can run as high as 30-35%. “While restaurants struggle to survive, these delivery platforms’ fee structures and questionable practices have made it hard or impossible for restaurants to remain profitable, prompting multiple cities to cap these fees as an emergency measure to support local restaurants,” the letter states. The leaders said independent restaurants are especially vulnerable amid recent consolidation in the delivery sector. Grubhub plans to merge with Europea-based Just Eat Takeaway and Uber Technologies, the parent company of Uber Eats, is buying Postmates. “Restaurants can only choose whether to participate with the services and terms set by the dominant firm in their market,” the letter states. “The platforms have used this leverage to set excessive fees and commissions,  and to undertake multiple coercive and potentially deceptive marketing actions such as creating fake phone numbers and websites for restaurants and offering delivery services without restaurants’ consent.” The latter statement is referring to a tactic common among delivery operators, where they promote “non-partner” restaurants on their apps to gain market share and give consumers more options. In Grubhub’s fiscal 2019 fourth-quarter, the company doubled its restaurant inventory as the result of adding non-partner restaurants to its app last year. DoorDash and Uber Eats, both named in the letter, could not be reached for comment. Grubhub, also named in the letter, said the company’s mission has always been to drive more demand and orders to local independent restaurants through its network of more than 27 million diners. “To further help during this difficult time, we have deployed over $100 million on programs to stimulate more sales for restaurants and to protect our community of restaurants, drivers, and diners,” the company said in a statement. “While we look forward to working with Representatives Schakowsky, Scanlon, and Jaypal on our shared goal of supporting independent restaurants, we take issue with their claims.” Restaurant delivery companies argue that commission fees pay for a combination of fixed costs, and tailored marketing that helps drive order volume. Caps, they maintain, result in fewer orders for restaurants and higher prices for consumers. During the pandemic, cities have tried to provide the industry relief by temporarily capping commission fees. Cities and counties with caps include New York City, Los Angeles, Seattle, San Francisco, Washington D.C., Philadelphia, and Clark County, which includes Las Vegas. In their letter, the U.S. representatives argued that these high fees cast a “doubt on the long-term validity of the platforms’ business models.” Separately, the representatives also asked the FTC to take a closer look at the franchisor/franchisee relationship, which they said was “underinvestigated” by the agency and “deserves careful scrutiny, including when applied to food services.” “By investigating the impacts of food delivery apps and by more thoroughly investigating claims brought by restaurants and other food-related franchises, the FTC will better comply with the agency’s statutory mandate and better protect the small restaurants and foodservice businesses that employ thousands, allow for a diversity of entrepreneurship, and add vibrance to our communities,” according to the letter. – Source: Restaurant Hospitality.

Searching for the “Just Right” Leadership Approach in this Era

For hundreds of years, individuals known as alchemists searched in vain for the mythical Philosopher’s Stone, a substance that was imagined to have the properties essential for turning basic medals into gold or generating the elixir of immortal life. Today’s equivalent search is for that one leadership style capable of turning crisis into survival and then prosperity. Much like the alchemist’s search, finding the “just right” leadership style in today’s maelstrom of issues and wicked problems is elusive. Yet, for those striving to lead successfully, there is hope, and it comes in the form of a blended, adaptive model of leading. When mixed in the right proportions for the situation, the properties of leading we describe as wartime, servant, and resilient prove capable of transmuting crisis into hope and progress.

Consider the leadership environment in our world

If you elevate your altitude and survey the environment, the variety and volume of problems are breathtaking in a negative way.

People are frightened about their health, lives, and their jobs.

Many businesses — large and small — face an existential threat and must adapt or die.

Everyone is learning to work, teach, govern, and engage in new ways.

The mirage of seamless, low-risk supply lines stretched across the globe has been exposed for everyone to see.

Frustration and disgust over inequitable and unconscionable practices in society and our organizations have reached a fevered pitch. The bill for these past practices is due.

The pursuit of shareholder wealth as the unimpeachable purpose of a business is being challenged with a shift to a broader stakeholder focus.

Add in the challenges posed by global terrorism, geopolitical fractures, the environment, and others, and you find a series of wicked problems where there are no single or even visible combinations of approaches that promise a positive outcome. Leading has been challenging enough over the past two decades as the macro forces, mainly driven by technological change and globalization, created tectonic shifts in how business was conducted around the world. Now, the stakes are raised, and it’s not clear what the leadership approach is that’s “just right” for this environment. It turns out; there’s no one-size-fits-all approach, but rather a blended, adaptive model that draws upon the strengths of at least three distinct leadership styles.

Exploring 3 styles of leading

1. The wartime leader

The wartime leader in our organizations is driven by the need to fend off existential threats. This leader generates a laser focus on the mission and draws upon the Commander’s intent to provide clarity and acting parameters. Short-term sacrifices are made to improve the odds of success for the whole, while communication, feedback, and learning operate at hyperspeed.

The wartime leader is working the clock and pushing people and teams to do the impossible with the resources available. This individual leads through purpose focused on a specific adversary.

2. The resilient leader

In my article “Toward a New  Style of Leadership – Leading for Resilience” in SmartBrief on Leadership, I defined leading for resilience as “making the strategic, structural, operational, and talent decisions that enable organizations to survive a shock and sustain their mission.” The resilient leader focuses on a longer time horizon than the wartime leader and is continually working to see around corners and identify emerging opportunities and threats.

This leader inspires individuals to think differently and experiment to find “next” for the business.

3. The servant-leader

The servant-leader is all about vanquishing fear and reducing the organizational friction that gets in the way of people doing their jobs. The focus is on eliminating bureaucratic bottlenecks and streamlining decision-making in pursuit of a better future. The servant leader’s hallmark is empathy, focused on meeting people where they are, and offering them the support of a healthy working environment where they are motivated to chase their potential. While the term “servant” might connote weak leader to some, the reality is this leader is the strongest of the three types, striving to lift the organization through and with people constantly. What’s the right leadership approach for this era? We’re fighting a multi-front war in our organizations as we strive to keep our workforces engaged, make sense out of situations, reinvent and survive. Many leaders have adopted a wartime posture, which makes sense. However, it’s not sustainable and not enough for what’s in front of us. As some new definition of normal emerges — hopefully, driven by a vaccine — the wartime footing must give way to the effort of designing our organizations for “next.” The resilient leader is looking for new opportunities in a re-emerging but different world while simultaneously rethinking and investing in creating business models that hedge against future disruptions. And then there are the people: the caregivers, medical providers, and everyone else in every organization who are shell-shocked from the sudden, adverse changes from the familiar world to one that is, on a good day, frightening. The same leader above, who is already leading the wartime charge and designing the organization for resilience against future challenges, must do the most important job of all: regain the creativity and ingenuity of the people. Enter the servant leader.

3 styles, 1 leader: Is this possible?

My answer to whether this blended, adaptive leadership style is possible is a qualified “Yes, but it’s not easy.” I’ve seen examples in my community: with small-business owners who transformed their businesses, as well as organizational leaders doing the same in various private and public institutions. Their success in leading during the crisis while building for the future and keeping their colleagues engaged and inspired gives me hope. However, we need to manifest this blended, adaptive leadership approach at scale across all sectors of society.

Bottom line

We’re playing a complex game of tridimensional chess, where pieces move horizontally and vertically on multiple levels in our world. The leaders who bring the emotional intelligence and mental acuity to adjust and adapt their style on the fly, based on the needs of the people and organization, are people we desperately need. Unfortunately, there is no Philosopher’s Stone for developing leaders or turning crises into prosperity. This is going to be hard. – Source: Smart Brief/Leadership.

Fogo de Chão’s CEO Barry McGowan on how to Transition from Fine Dining to off-Premise in the Middle of a Pandemic

Barry McGowan has been CEO at Fogo de Chão since December 2018 and was a big part of the steakhouse chain’s effort to market to Millennials, but fine dining has taken a huge hit during COVID-19, and Fogo de Chão is no exception. The Plano, Texas-based fine-dining chain focused around churrascaria currently has 57 units and was eligible for a Paycheck Protection Program loan of $20 million which it did not accept. Despite the challenges of furloughs and a loss of business, McGowan and his staff fed first responders, transitioned to an off-premise strategy, and are still looking to the future. Here’s his story: “I have worked in the restaurant industry for my entire professional career – nearly 40 years, in fact. I started working behind the counter at a fast-food restaurant as a teenager, studied hotel and restaurant management as an undergraduate, and received a graduate certificate in finance. Restaurants have been and continue to be my life ever since.  The pandemic has been a challenging and trying moment in history for us all. My main concern – and I speak for the whole leadership team here at Fogo – is the health and safety of our teams and our guests. As we started to understand the gravity of the situation, we mobilized to continue business in every capacity we could, while still helping others and our own. People in the restaurant profession are resilient, entrepreneurial, and hospitable, and I continue to be amazed by how urgently and selflessly our teams activated to help others amid the pandemic. For example, we committed to feeding all Fogo employees hot meals every day after we had to close dine-in seating and temporarily adjust staffing. Also, we contributed a portion of sales from our newly launched Fogo To-Go platform to longtime partner No Kid Hungry. We knew that as the country began to shut down, children and families would lose access to nutritious meals through their schools. Through this initiative, our guests helped us provide more than 2.6 million meals to kids in need. I’m so proud of our team given the tireless work they have put in over the last four months, even while working through the challenges of COVID. They delivered hot meals to first responders and medical providers on a weekly basis for months. They continue to work just as hard.  We have always been committed to providing a safe environment for guests and team members. When the pandemic began, we amplified our efforts with our 12 Safety Promises. These promises, which we display on our website and in a number of highly visible areas around our restaurants, detail the stringent cleaning and service protocols our teams are practicing. Additionally, we launched across all locations Fogo To-Go and Catering to provide ways for people to enjoy a delicious meal comfortably in their homes. Restaurant people are incredibly resilient. We’ll have to be flexible and continue adapting, but we are hopeful for a brighter future. The Fogo family has been through challenges in our 40-plus years, but we believe we will see this through with drive and ingenuity just as we have the others. We have aggressive expansion plans both domestically and abroad, and while that growth will continue in 2021 and beyond – albeit a bit differently in a post-pandemic world – I’m confident that we’ll be able to hire the best talent and successfully open new restaurants in the best locations, and that the restaurant industry as a whole will emerge stronger than ever. While this time has been challenging, it is exciting to see the entrepreneurial spirit, dedication, and innovative drive for which the restaurant industry is known. For example, we continue to see new developments with ghost kitchens, blockchain traceability, contactless delivery and pick-up, and technologies that simplify and enhance the safety of dining out for staff and guests alike.” – Source: NRN.

Measures aimed at ensuring food and other essential products reach the consumers in the most efficient manner possible

The US Food and Drug Administration on Sept. 18 announced the latest in a series of initiatives aimed at providing temporary relief from enforcement of certain regulations and deadlines to food manufacturers struggling to adjust operations and procedures to ensure food is directed safely and in the quantities and forms required during the coronavirus (COVID-19) pandemic. In its latest announcement, the FDA said it will provide additional flexibility for manufacturers who need to comply with updated Nutrition and Supplement Facts label requirements by Jan. 1, 2021. The upcoming compliance date applies to manufacturers with less than $10 million in annual food sales. The FDA said although the compliance date will remain in place, the agency will not focus on enforcement actions during 2021 for these smaller food manufacturers. The FDA noted it provided the same flexibility to manufacturers with $10 million or more in annual sales, who were required to comply with the Nutrition and Supplement Facts label requirements by Jan. 1, 2020, by indicating it would not focus on enforcement actions during 2020. The eruption of the COVID-19 pandemic in the United States upended a finely honed food production and distribution system, throwing food manufacturers and distributors and entire sectors, such as foodservice, off-balance. The FDA, the US Department of Agriculture’s Food Safety and Inspection Service, and several other federal agencies have introduced temporary measures aimed at ensuring food and other essential products reach the consumers in the most efficient manner possible while not compromising food or employee safety. In the last few months, the FDA has announced regulatory changes that will be in effect for the duration of the pandemic. It has suspended routine food facility inspections. It has allowed food initially packaged to supply the foodservice sector to be redirected to the retail sector, which was crucial when most of the nation went into lockdown and consumers depended on the food they could prepare at home. It has allowed minor formulation changes in the event food manufacturers found they were not able to procure the specific ingredients they required, without making labeling changes. These and other temporary changes have allowed the food industry to successfully respond to the crisis. “What was appreciated by industry was not only what FDA did, but what other regulatory agencies did as well,” Betsy Booren, Ph.D., senior vice president, regulatory and technical affairs, Consumer Brands Association, told Food Business News. “The flexibilities they announced allowed consumer products, whatever they might be, to get to consumers sooner.” Dr. Booren provided a couple of examples. She pointed out the pandemic emerged just as baseball season was set to begin, and a lot of extra food was being directed to the foodservice sector. She credited the FDA and the FSIS for providing, within parameters, the flexibility the food industry required to reposition that food and direct it into retail marketing channels. “The food industry was able to provide a lot of good food to retailers and consumers and prevent wastage,” she said. She also discussed the FDA’s temporary flexibility that allowed food manufacturers to substitute similar minor ingredients for original ingredients that could not be accessed because of disrupted supply lines, as long as there was not an allergen or other food safety issue. “The example given by FDA was if you used unbleached flour, but you couldn’t get it, you could use bleached flour,” Dr. Booren said. “Typically, that would require labeling changes. This flexibility allowed core products to continue to be produced and shipped.” Dr. Booren said some of the temporary policies put into place for COVID-19 may stimulate discussion on what in them might be worth retaining or at the least what might be learned from the experience. For instance, with regard to food production facility inspections and audits, in-person inspections are necessary and will continue, Dr. Booren said, “but can we streamline unnecessary in-person interaction” by employing new technologies. Temporary is the keyword in the FDA’s announced flexibilities, and it is important to keep that in mind, David Acheson, president, and chief executive officer, The Acheson Group, told Food Business News. “The FDA has been flexible on routine work but is chasing for-cause work and follow-ups on prior investigations and outbreaks,” Mr. Acheson said. “Domestically, they will likely ramp up routine inspections slowly and eventually have to get back to the congressionally mandated level of inspections — but that may take a while.” Mr. Acheson noted there also has been flexibility in some aspects of the FDA’s Foreign Supplier Verification Program. “Yet, there have been plenty of warning letters around FSVP to importers,” he said. “I think their (the FDA’s) routine foreign inspections will come back, but not until COVID-19 is much more under control. “So, there have been some short-term changes, but I don’t see these going long term.” – Source: Food Business News.

Thank you for reading The Global Foodservice E-newsletter from American Recruiters!

Craig S. Wilson

President

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