Global Foodservice News – July 1, 2022 Edition

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In addition to double-digit sales growth, the eatermtainment chain set new marks for revenue, adjusted EBITDA, and net income . . .

Dave & Buster’s Comeback Reaches Record Level

In the summer of 2020, it seemed as if the eatertainment industry was headed for disaster.

With dining rooms closed and no one heading out to play games, brands like Dave & Buster’s were put in dire straits. The chain warned of laying off 1,300 workers across seven states and foreshadowed a potential bankruptcy.

Flash forward two years, vaccinations have widely been implemented and restrictions have been lifted almost everywhere. The open economy, combined with an eagerness to socialize with consumers, has fueled a strong comeback for Dave & Buster’s.

“There’s a lot happening at Dave & Buster’s, and we are extremely excited about the meaningful upside potential for this company and our stakeholders,” said interim CEO Kevin Sheehan on the company’s Q1 earnings call.

In Q1, Dave & Buster’s set multiple financial marks. Revenue increased 24.1 percent to a record $451.1 million, compared to $265.3 million last year and $363.6 million in 2019. The company also set new highs for net income ($67 million versus $19.6 million in 2021 and $42.2 million in 2019) and adjusted EBITDA ($143.2 million compared to $76.7 million in 2021 and $98.2 million in 2019).

Comp sales grew 10.9 percent compared to Q1 2019, and walk-in sales increased 14.7 percent versus the same period. Dave & Buster’s loyalty program saw 800,000 additional downloads in the first quarter, a 23.9 percent increase year-over-year. That gives the chain 3.65 million user profiles; of that number, 1.9 million have been active in the past six months.

Special events business declined 34.6 percent from three years ago, but that’s still a sequential improvement from Q4.

“We have this great proposition that would be super for corporate accounts to come and have their events in our stores,” Sheehan said. “And it’s a heck of a lot better than going to a smug hotel where you’re paying up the nose to have their event room and you buy a bottle of water, it’s $8 kind of thing, to coming in and having a joyful event and coming to Dave & Buster’s and having the meeting and having food and then having everybody share in having a lot of fun in our case. So we think there’s a huge opportunity there, too.”

Dave & Buster’s posted an adjusted EBITDA margin of 31.8 percent, 480 basis points higher than 2019. That performance was attributed to a higher amusement mix (66 percent compared to 59 percent in 2019) and a more efficient labor model.

Dine-in customers are now able to order and pay through xDine, an online ordering platform. It allows servers to handle more tables, meaning a smaller headcount in the front of house.

“We are already seeing the benefits of our now fully implemented service model that allows our guests to choose their service experience. The data pulled from our guest satisfaction tool showed our overall guest satisfaction and Net Promoter Scores hit a new high watermark in May,” COO Margo Manning said.

Key promotions also boosted sales. During April, Dave & Buster’s brought back its limited-time Eat and Play Combo. Manning said it allowed the brand to capitalize on “pent-up demand” from value-oriented guests. Because of the promotion, same-store sales rose 21.5 percent in April, much higher than February (flat) and March (12.5 percent).

With record-breaking sales in the background, Dave & Buster’s is keeping innovation at the forefront to ensure its recovery remains intact.

For the late-night daypart, which has lagged during COVID, the company is leveraging a value menu and an “enhanced late-night vibe” with live streaming DJ sets and exclusive visuals broadcasted throughout stores. The initiatives proved worthwhile in Q1, with late-night walk-in comp sales growing 9 percent versus 2019.

In addition to those enhanced activities, Dave and Buster’s will launch 10 new arcade games and two virtual reality titles based on Transformers and Top Gun: Maverick and roll out new food and beverage items this summer. Also, a new website will go live in Q3, bringing new special event capabilities, e-commerce, and programming content. The platform was built in way that Dave & Buster’s can regularly fold in new capabilities.

Sports betting is still on the horizon as well. CFO Michael Quartieri said Dave & Buster’s has an announcement coming with “three or four different agreements that together I believe drives a really fantastic opportunity for this company.” The brand is spending millions to make sure its audio is correct in all of the sports sections.

“Once you get these people in for sports betting, they’re going to stay longer,” Quartieri said. “… They’ll have another drink or two, they’ll have an appetizer. And so, the spending behavior will be exactly what we’re hoping for.”

The chain ended Q1 with 147 units, including three openings this year in Sioux Falls, South Dakota; Brooklyn; and Modesto, California. The plan is to have eight openings in fiscal 2022. As Dave & Buster’s engages in new store development, it’s moving through a refresh/remodel program and evaluating relocations in some legacy markets.

The company showcased its strong balance sheet in April with the announcement that it would purchase fellow eatertainment chain Main Event for $835 million from Ardent Leisure Group Limited and RedBird Capital Partners. The transaction should close in the next several weeks. When the acquisition finalizes, Chris Morris, who serves as Main Event’s CEO, will lead both brands.

“He is an experienced leader and is excited to engage with our shareholders in the months ahead,” Sheehan said. “Under Chris’ leadership, I anticipate that our positive momentum will continue as we continue to make progress toward realizing our ultimate potential. I think he’s just going to do tremendous things with this brand.” Source: FSR.

 

Food safety became table stakes during the pandemic, and that won’t change any time soon . . . .

Keeping Your Restaurant Safe and Sanitary with Tech Advancements

Over the last year, safety and sanitation have been primary focuses within the restaurant industry. A new dedication to these practices emerged as a direct result of the COVID-19 pandemic, with patrons more concerned than ever about the quality and cleanliness of where they are getting their food.

In the drive to create comfortable and safe experiences for guests, restaurants are increasingly turning to tech that can help them easily and conveniently manage a higher standard of safety. Fortunately, the options out there for restaurants include everything from data analytics platforms to sensors built to monitor temperatures.

Keeping a restaurant safe and sanitary through tech advancements like these can be both a simple exercise and a worthwhile investment. By understanding the available tools and implementing an effective strategy for ongoing safety standards, restaurants can drive growth through a commitment to safety and quality.

Understanding the Tech

Advancements in technology are happening all the time. Without a constant awareness of innovations happening in the world of hardware and software, it can be easy to miss out on the valuable opportunities that technology presents to businesses of all kinds. For restaurants, the availability of data, sensory equipment, and inventory tracking systems means a revolutionized ability to ensure restaurant sanitization.

Understanding these tools is then key for restaurant owners and managers looking to guarantee a better experience for guests. With 73 percent of patrons and 95 percent of restaurateurs agreeing that tech makes for a better dining and business experience, integrating these high-tech advancements can be a valuable investment opportunity for those in the restaurant business. Below are the tools to pay attention to:

Big Data and Analytics

Big data now powers all kinds of industries, as analytics experts assess millions of data points to generate actionable insights into business processes. Restaurants, too, are adopting these tools to boost success. For example, Applebee’s made use of tabletop devices to conduct customer surveys that generated feedback. With this information, the franchise retooled its mobile application and marketing direction to double the brand’s revenue.

The same tools can be used to generate feedback about restaurant cleanliness. Garnering employee and customer data surrounding sanitation processes can help restaurateurs understand where gaps might exist in their practices, leading to actionable strategies for improving policies.

IoT Sensors

The ability to connect monitoring systems through the Internet of Things (IoT) is helping restaurants achieve these improvements. IoT devices can do everything from keeping track of inventory via scanners implemented in pantries and refrigerators to monitoring the safety of food products through real-time temperature scanning. With the help of IoT sensors, restaurants can catch food safety problems as they occur and remove spoiled food to ensure the safety of guests.

Blockchain Tracking

An outbreak of foodborne illnesses from a restaurant can be enough to derail a business’s revenue for a long time. Just look at Chipotle’s struggle to recover from the 2015 e. Coli outbreak. Blockchain is the most promising tech restaurants have in ensuring that disasters like this don’t happen to them, through the ability of a blockchain system to track food products through their lifecycle from farm to table all on a decentralized database.

With the help of blockchain, restaurants are better equipped to catch problems before they affect the public and damage the reputation of the business. Because blockchain data tracking adds transparency to food inventory, restaurants can be alerted of a potentially polluted product as soon as possible.

Implementing a Plan

In the aftermath of the COVID-19 pandemic, food safety will remain a priority whose outcomes can be improved by advancing technology. No amount of tech, however, can guarantee a safe and sanitary restaurant experience without the proper approach to implementing it. To ensure best practices, businesses must assess problem areas and design specific tech solutions to meet their needs.

Here are some tips for implementing a tech-focused plan for avoiding all health code violations, like poor kitchen sanitation or improper utensil storage:

  • Use data analytics—from surveys, industry info, data services,  etc.—to understand failings in hygiene or sanitation.
  • Install IoT sensors to monitor the temperature of food products wherever they are stored.
  • Track inventory of all products—including cleaning chemicals—in a smart database that runs an error if improperly stored.
  • Consider innovating with IoT sensors that can monitor handwashing compliance, like those being adopted in healthcare facilities.
  • Make use of data networks and systems like blockchain to keep abreast of health concerns and inventory issues.

By securing a restaurant’s ability to approach sanitation with care, tech has the potential to improve the lives and livelihoods of everyone in the business while keeping customers safe and healthy. These tech-based strategies can be utilized by a restaurant of any size by working with the right collaborators and implementing effective use of data. But restauranteurs should never assume their work is done. While tech can make monitoring for safety easier, businesses still need to frequently assess their strategy to ensure its success.

Securing a Sanitary Restaurant

In the wake of the COVID-19 pandemic, advanced restaurant tech for safety and sanitation is here to stay. This is because these tools offer health benefits as well as waste reduction by enhancing the safety of food storage. As a result, restaurants cut down on costs while securing their reputation as a safe places to eat. In today’s world, little is more valuable to restaurant-goers than this.

Assess your gaps in your ability to monitor and respond to health and safety concerns, and consider implementing these tech advancements. In doing so, you can build a thriving restaurant where guests of all demographics feel safe to visit. Source: FSR.

Quick-service and fast-casual restaurant chains continue to offer up prototypes that don’t feature indoor seating. Here’s why this is such a huge trend . . . .

 

Quick-service and fast-casual restaurant chains continue to offer up prototypes that don’t feature indoor seating. Here’s why this is such a huge trend.

This isn’t a good week for customers who enjoy eating inside fast-food restaurants.

Earlier this week, Taco Bell debuted its newest prototype, which it calls “Defy.” It is a two-story purple palace devoted almost entirely to the automobile. There is a kitchen on the second floor that delivers food to waiting cars below through a unique lift system.

Inside, however, it does not have any seating. And that’s an increasingly common scenario in the limited-service sector. Numerous concepts, including traditional quick-service chains and fast-casual brands, are testing or planning prototypes that do not have any seats and devote most of their energy to the drive-thru.

The kinds of companies taking these steps include those traditionally known for their large, dine-in-centric indoor palaces, like Portillo’s, which is getting strong early results from its drive-thru-only location in Joliet, Ill. The location is half the size of its traditional restaurant. “We think we might have found something very, very special that would help us with fortressing in Chicago and elsewhere,” CEO Michael Osanloo said in February on an episode of the Restaurant Business podcast A Deeper Dive.

It’s not just Taco Bell and Portillo’s. Consider:

 

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In fact, the coffee business in which Tim Hortons competes has been roiled in recent years with the spread of drive-thru coffee huts. Dutch Bros, which went public last year, rocketed to become the third-largest coffee chain with a model that features no seating. The fifth-largest is Scooters Coffee, which is also a drive-thru-only concept. The fourth-largest, Minneapolis-based Caribou, is focusing all its attention on growing drive-thru-only locations.

Market leader Starbucks, which has rapidly shifted to the drive-thru game, has opened numerous locations targeted at takeout-only customers.

Beyond these chains, companies like McDonald’s and Del Taco were planning drive-thru-only versions of their restaurants.

Various reasons are pushing restaurants toward these kinds of prototypes. One of them is an inevitability.

Drive-thru demand had been steadily increasing at fast-food restaurants long before the pandemic. Many of them already generated more than two-thirds of their business through that window amid the growing demand for convenience. It was only a matter of time, in other words, that more restaurants would develop versions that ditched seats altogether.

The pandemic only sped that up. Suddenly, that 70% became 90% or more. What’s more, customers rapidly gravitated toward other takeout channels like mobile orders. All this put pressure on brands to devote more of their space toward these takeout-focused options.

The problem? Costs for real estate and building new locations aren’t exactly coming down. That drove a need to develop more efficient models that would use space more effectively toward the order channels that generate the most business.

 

Schlotzsky’s traditional locations were 3,300 square feet. So, the company introduced new, smaller prototypes, including one that is just 1,000 square feet with no seats. “As we saw consumer behavior changing toward speed, convenience and variety, new order channels became more and more prominent,” Shelley Harris, chief brand officer for the sandwich chain Schlotzsky’s, said in an interview late last month.

“We knew we needed to be a bit more cutting edge, with a smaller footprint and maximum off-premise needs. Then 2020 hit and all that got dramatically accelerated.”

Labor is another element that is driving much of this. A number of fast-food restaurants with dining rooms have yet to reopen their indoor seating largely because they do not have enough people to staff them—and sales have remained fine through the drive-thru, anyway.

The simple fact is, that restaurants without dining rooms don’t need to have people cleaning tables. “With the limited amount of labor, they’ll be able to deploy labor to the kitchen,” Harris said. “That’s helpful with the speed of service and gives relief to the kitchen staff.” – Source: Restaurant Business.

The operator has added more than 100 units in the past year.
Focus Brands’ largest franchisee is on the cusp of becoming a lot bigger.

The Miami-based Fresh Dining Concepts, which owns approximately 160 Auntie Anne’s, Carvel, Cinnabon, and Jamba locations in 17 states and Washington, D.C., received a $44 million capital injection from Franchise Equity Partners, a relatively new private investment firm looking to provide finances to growing franchise businesses. True to the company’s philosophy, the multi-million-dollar investment is a minority stake and permanent in nature.

The $44 million will be used to continue M&A and supplement new store development.

“This new funding is a major milestone in furthering our aggressive growth strategy. In the last year, we’ve pursued our plans and added more than 100 units to our portfolio. We feel like the team at Franchise Equity Partners and our organization shares a lot of the same perspective, making this a perfect fit,” Fresh Dining Concepts CEO Luis San Miguel said in a statement. “The fresh line of funding provides a pathway to build our franchise collection with additional high-performing concepts while diversifying even further.”

Since April 2021, Fresh Dining Concepts has expanded from 50 to 160 locations primarily through six acquisitions, including the purchase of 73 Auntie Anne’s units on the West Coast and nine Auntie Anne’s stores throughout the Washington, D.C. market. In terms of organic development, in late 2021, the operator agreed to develop 10 co-branded Auntie Anne’s and Cinnabon locations in New York City over the next four years. More recently it opened an Auntie Anne’s/Jamba co-brand restaurant in Palm Beach, Florida, and debuted a Long Island-based Cinnabon location. The operator holds a presence in roughly a dozen DMAs across the East Coast, Midwest, West Coast, and Texas, and its stores are based in streetside outlets, malls and other nontraditional environments, and inline shopping centers.

Franchise Equity Partners announced its official launch in November, with aspirations of a $1 billion portfolio. The firm is led by co-founders and managing partners Michael Esposito and Scott Romanoff, who both spent nearly 30 years at Goldman Sachs in the investment banking division. In addition to chain restaurants, the company is looking to partner with auto dealerships, beverage distribution, consumer and business services, and heavy equipment dealers. Each investment will be between 20 percent to 49.9 percent.

Fresh Dining Concepts is Franchise Equity Partners’ second investment since rolling out last year.

“Our goal at Franchise Equity Partners is to identify the best of the best when it comes to owner-operators in franchising, and Fresh Dining Concepts hits the mark,” Esposito said in a statement. “Luis and his team have been able to build a great portfolio and we are excited to partner with them to continue growing Fresh Dining Concepts.” – Source QSR.

The CPI for meals prepared outside the home topped the year-earlier level by 7.4%, the highest jump in 41 years . . . .

Menu Prices Rose at an Accelerating Rate in May

Menu prices rose at an accelerating rate in May, with customers typically paying 7.4% more for an item than they did a year ago, according to new government figures.

The year-over-year increase was the sharpest upswing in restaurant prices since 1981, the U.S. Bureau of Labor Statistics (BLS) noted in updating the Consumer Price Index (CPI).

The rise was particularly sharp for full-service establishments, with charges running 9% above year-ago levels. Prices at limited-service restaurants, where labor expenses are usually lower, increased year to year by 7.3%.

The CPI for food prepared away from home ticked upward by 0.7% in May, an acceleration from the 0.6% clocked in April. Consumers had not seen a rise that sharp since January. In February and March, menu prices rose month-to-month by 0.4% and 0.3%, respectively.

The uptick was particularly pronounced for the limited-service sector, whose prices rose 0.7% after 0.3% in April.

Yet the upswing was less pronounced than it was for full-service restaurants, which raised prices by 0.8%.

As steep as the increases were for restaurant customers, they were far less dramatic than the price hikes consumers encountered in grocery stores. The CPI for food prepared at home rose 1.4% in May, marking the fifth straight month of at least a 1% jump.

The rise pushed supermarket prices 11.9% above the levels of a year ago. The BLS noted that the year-over-year increase is the largest jump since April 1979.

An even greater increase came at the gasoline pump, according to the new CPI data. It shows that gas prices leaped 4.1% between April and May, pushing the typical charge 48.7% above the level of a year ago.

President Biden reaffirmed that countering inflation is currently his administration’s Number One priority.

‘Prices at the pump are a major part of the inflation, and the war in Ukraine is a major cause of that,” the president said in a statement.  “But it is also important that the oil and gas and refining industries in this country not use the challenge created by the war in Ukraine as a reason to make things worse for families with excessive profit taking or price hikes.”

Across all the categories measured by BLS, prices in May topped the year-ago figure by 8.6%. The government agency noted that the country hasn’t seen inflation at that level since December 1981.

Source: Restaurant Business

The culinary team worked to perfect the beef blend, cooking technique, and execution to bring the chain’s premium Wagyu Steakhouse Burger to the menu . . . .

Arby’s Does not Have Grills at its 3,500 Locations. Nor Does it Want Them

But the sandwich chain has long wanted to add a burger to the menu without adding extra equipment or capital expense.

“At Arby’s, we like to innovate around products that exist in the category but people are settling for billions instead of the best,” said CMO Patrick Schwing. “We saw an opportunity to create a bigger, better burger so customers don’t have to settle.”

Two years later, the Wagyu Steakhouse Burger made its debut, launching last week nationwide as an LTO.

The R&D journey

During the pandemic, Arby’s six-member culinary team, led by Associate Manager of Culinary Innovation Jason Truelove, began researching and developing a way to deliver a premium burger with a juicy interior and crusty exterior—no flipping on a grill required.

Sous vide turned out to be the solution.

Arby’s had previously used the cooking technique to bring its duck sandwich to the menu, but “people don’t usually sous vide ground beef,” said Truelove. “We spent a lot of time in the kitchen sous viding before we got it right. The texture was the biggest hurdle.”

Truelove discovered that the fat-to-meat ratio in the beef was key to achieving the desired texture. He and the team worked with a supplier to pinpoint the blend that would preserve the marbling and juiciness of the beef during the sous vide process.

They worked on a number of iterations, he said, ending with a blend that incorporates highly marbled beef from American Wagyu cattle. The final burger is 52% American Wagyu beef and 48% ground beef from other high-quality cattle breeds; 100% Wagyu ground beef does not produce as good a result.

Arby’s supplier delivers the beef blend formed into 6.4-ounce patties and already prepared sous vide-style. At each location, the patties are then reheated in the fryer for less than 2 minutes. “The fryer gives them a nice crispy edge and retains the flavor and juiciness of the beef,” said Truelove. It also achieves the right internal temperature and pink interior.

“We cracked the code through lots of trial and error,” Truelove said.

Plus, the execution doesn’t put extra strain on the back-of-house crew—a priority during the R&D journey. “It was a little serendipitous that sous vide is the perfect process to retain the burger’s quality and is easily replicable across all our locations,” said Schwing.

Perfecting the build

The Deluxe Wagyu Steakhouse Burger is served on a brioche bun, topped with American cheese, shredded lettuce, tomato, pickles, red onion and a special burger sauce. The sauce is the only new ingredient to Arby’s.

“The burger sauce is a mix of ketchup, mustard, mayo, relish, and a little Sriracha to give it some heat. It really highlights the Wagyu,” said Truelove.

Customers can also opt for the Bacon Ranch Wagyu Steakhouse Burger, a variation topped with bacon and Parmesan peppercorn ranch sauce. Those ingredients were also already in-house.

Marketing focuses on the quality hook. “We knew we wanted to talk about Wagyu, as it denotes a premium burger and market around the steakhouse platform,” said Schwing. “We’ve marketed other steakhouse items in the past.”

Photos are central to the campaign, he added—the visuals tell the story, and lots of words are unnecessary.

Put to the test

“When we put the burger in front of consumers we didn’t tell them where it was coming from,” said Truelove. “They thought it was from a steakhouse; it has that steakhouse bite.”

The size is also impressive, said Schwing. “It’s about 50% larger than McDonald’s Quarter Pounder.”

Arby’s Wagyu Steakhouse Burger is priced at $5.99, higher than its competitors in the fast-food burger space, but customers appreciate the value, said Schwing, “especially when you compare it to a real steakhouse, where a similar burger can cost $15-$20.

The burger has been out for just over a week, but so far, it’s a hit, said Schwing. “It’s running double what we forecasted,” he said. “And the burger is getting great reviews on social media.”

The Wagyu Steakhouse Burger will run as a limited-time offer through July 31.

Could it ever make it to the core menu and firmly position Arby’s as a fast-food burger concept? “We’d never rule that out,” said Schwing.

What he’s more definitive about is that Arby’s will continue to do more forms of steak on sandwiches. “Steakhouse and Smokehouse are two platforms that we’ll continue to innovate against,” he said.

 

 

The 65 – And Older Crowd is Limiting Frequency and spend in Light of Inflation, While millennials are Clamoring for More Technology Inside the Restaurant

Cracker Barrel Has Strategies for All its Guests, Young and Old

Cracker Barrel is feeling sales pressure from multiple angles as it heads toward the back half of 2022.

Topline figures in the brand’s fiscal third quarter were encouraging as February progressed, but higher-than-expected inflation and rises in COVID cases slowed recovery in March and April.

Restaurant costs of goods sold were 27.8 percent versus 24.3 percent last year, a 350-basis-point increase that was fueled by 18 percent commodity inflation. Labor costs were 31.6 percent compared to 28.8 percent in 2021, an 80-basis-point rise due to wage inflation and higher staffing at both managerial and hourly levels. While this happened, COVID cases have consistently moved upward since April, according to CDC data.

CEO Sandy Cochran pointed to three things in particular—customers 65 and older were slower to return to in-person dining, the higher-cost environment caused customers to limit their frequency and spending, and record-breaking gas prices disrupted traditional spring break travels.

Restaurant same-store sales lifted 10.9 percent year-over-year, driven mostly by dine-in traffic growth and 5.9 percent pricing, but still short of what Cracker Barrel projected. The same goes for total revenue, which increased to $790.2 million in Q3—10.8 percent above 2021 and 6.8 percent higher than 2019.

The 660-unit Cracker Barrel knows the road isn’t getting any easier. More price increases are planned for August and June, which will put the brand at 7 percent through the end of 2022. Commodity inflation is expected to be 16-18 percent in Q4 and wage inflation is projected to be 8-10 percent. That’s more moderate than Q3 but still higher than what Cracker Barrel anticipated.

“As we look to our fourth-quarter financial expectations, we anticipate the near-term pressures we faced on both our top and bottom lines in the third quarter to persist,” CEO Sandy Cochran said during the brand’s Q3 earnings call.

As the company continues to navigate the volatile macroeconomic environment, it’s working through a multi-pronged strategy to build long-term success. It starts with a recently finished six-month segmentation study that collected insight about which new customers Cracker Barrel can attract and for which core guests it can increase visitation.

Learning from that study, the chain is leaning into menu strength.

For individuals decreasing spending, Cracker Barrel is committed to protecting its everyday value across all dayparts. But to be clear, this doesn’t mean couponing or discounting, and the chain is confident it can maintain its value proposition with the upcoming menu price increases this summer. This priority is mostly for the 65-and-up consumer group. With economic concerns, CMO Jennifer Tate said older customers are more pessimistic and worried about their financial future, therefore they are spending less.

The brand is also aware of guests who are looking for a more indulgent experience, and it wants to make sure they’re catered to, as well. There are plans to add premium entrees, shareable starters, and alcoholic and nonalcoholic specialty beverages.

“We do see that there are a group of consumers who they may be cutting back on some more luxury items or trips or vacations,” Tate said. “And when they come to Cracker Barrel, they actually want to splurge a little bit.”

Along with new items and LTOs, the company will launch the first phase of its breakfast menu evolution, which is centered around consolidation and a build-your-own option. Tate said the menu will give Cracker Barrel room for new craveable items to feature in marketing and opportunities to offer premium products. Consumers should find the menu easier to navigate and servers should find it easier to learn. The company spent the past couple of years going through the same processes with its dinner menu.

The brand is also continuing its beer and wine program and making progress toward its goal of 2 percent dine-in mix. The lineup has grown through enhanced selling, in-store marketing, and new seasonal offerings.

As for Cracker Barrel’s weaknesses, guests told the brand it can do better with technology. The chain is hearing this from younger generations; roughly 30 percent of its guest base are millennials between 25 and 44.

So in April, the chain rolled out pay at the table via QR code, and later in Q4, it will launch Apple Pay and Google Pay. Additionally, the company is enhancing its digital store and revamping its app to streamline the ordering process and provide a more personalized experience.

There are even talks of releasing a loyalty program.

“With regard to loyalty, we believe this could be particularly impactful for our brand with our strong guest engagement, travel guest, and both restaurant and retail offerings, which will allow us to offer creative and unusually appealing rewards over and above new discounting. Given the investment here, we are approaching it prudently and thoughtfully,” Tate said. “And we’ll have more to share with you about this initiative in the future, but we’re optimistic about its potential to drive frequency and check growth.”

Off-premises will be a growth driver for newer customers, especially Gen Z and millennials. In Q3, sales outside the four walls remained significantly elevated compared to pre-COVID figures. Off-premises mixed 19 percent, fueled by year-over-year growth in catering and third-party delivery, offset by declines in to-go sales as guests returned to dine-in.

The chain now has multiple ghost kitchens, including one that recently opened in Atlanta, and two virtual brands, Chicken n’ Biscuits and The Pancake Kitchen by Cracker Barrel.

To best communicate all of these initiatives, Cracker Barrel will send targeted messages through digital and social channels.

“We are very bullish that we have a brand that stretches across generations and that we have the ability to do what we do well even better and to offer enhancements that both our core and other key guest groups want,” Tate said. – Source: FSR.

The company, which officially turns 50 on Sunday, will allow digital customers who spend $5 to buy two pieces of chicken for 59 cents next week. That’s the same price as in 1972 . . . .

Popeye’s Offering Cheap Chicken to Mark its 50th Birthday

Popeyes wants to give customers cheap chicken for its birthday.

The Miami-based chicken chain will sell two pieces of the chain’s bone-in chicken for 59 cents next week starting Sunday. The catch: Customers have to first buy $5 worth of food on the chain’s digital channels.

The price is the same one the company offered in 1972 when Al Copeland first opened a restaurant called “Chicken on the Run” in a New Orleans suburb.

In addition to the low-priced chicken, Popeyes created a new “anthem” video to mark its 50th birthday.

Popeyes has had something of an interesting history. Copeland initially sold Southern-fried chicken out of his first restaurant. But it struggled. Copeland changed the recipe to a spicier version and renamed the restaurant “Popeyes” after Popeye Doyle, the fictional character from “The French Connection.”

It worked. By 1985, the brand had 500 locations and was the country’s third-largest chicken chain. In 1992, America’s Favorite Chicken Company, or AFC Enterprises, acquired both Popeyes and the chicken chain Church’s. Twelve years later, however, AFC sold the struggling Church’s to focus on Popeyes. But Popeyes itself was struggling by 2007 when the company tapped former KFC President Cheryl Bachelder to be its CEO.

Popeyes largely thrived under Bachelder, earning the company a record valuation by 2017, when it was sold to Burger King owner Restaurant Brands International. Two years later, Popeyes recorded the strongest quarterly same-store sales result in industry history with the introduction of its chicken sandwich.

System sales have increased by 68% over the past five years, while unit count has increased by more than a third to 3,700 global locations, including about 2,700 in the U.S., according to Restaurant Business sister company Technomic. – Source: Restaurant Business.

Eleven Madison Park Alums Team Up to Open an Upscale Neighborhood Restaurant in NYC

The Noortwyck will serve seasonal fare with global influences in the West Village

After working inside the fine dining mecca once crowned the World’s Best Restaurant, a pair of Eleven Madison Park alums have decided to serve up more casual fare. This Tuesday, Andy Quinn and Cedric Nicaise will debut the Noortwyck, a New American restaurant tucked into New York’s West Village.

Quinn, who previously served as a chef at EMP, has turned his attention to the seasonal and local at the Noortwyck, which will feature in-house butchery, bread making and dry-aging. Working with farmers, producers and artisans in the New York area, he’s created a menu that will change according to whatever ingredients look good on any given day—utilizing local ingredients, but also incorporating global flavors. A few current samplings include a scallop crudo and grapefruit appetizer, bucatini with ramps and white pepper, and hangar steak smoked with spring onion and sherry. For dessert, diners can indulge in a warm chocolate tart or lemon posset with milk ice cream and rhubarb, among other offerings.

Bucatini with ramps. Evan

“Rather than getting tomatoes flown in from Mexico or carrots brought in from California, you can get some really good stuff right here on our doorstep,” Quinn told Robb Report. “I want the cooks to see the product, know where it’s coming from, have a respect for the ingredient because of that, and, in due course, then you’re taking much better care.”

The restaurant’s name is also a nod to New York. Back in the 17th century, the area around the West Village was a settlement called the North District, or Noortwyck, by the Dutch who tended to the Manhattan pastureland.

Nicaise, meanwhile, has created an outstanding wine list to pair with Quinn’s fare. The 250 bottles range from the more accessible (a $55 Grüner Veltliner, for example) to the luxe (a $1,390 Dom Pérignon). Cocktails hew to the classic end of the spectrum, but with seasonal ingredients that mirror the food, such as apricot, peach, and, once again, rhubarb.

 

Quinn is hoping that the Noortwyck, which seats 70, will become a quintessential neighborhood spot, but with the high standards, attention to detail, and finesse that he and Nicaise have upheld during their careers in Michelin-starred restaurants. The chef noted that he wants people to be able to stop in for both big, expensive birthday celebrations and a casual meal at the bar, with the same food, beverage, and service experience regardless. “We want all those things to feel as though they’ve been done thoughtfully and properly,” he said.

The Noortwyck is open for dinner Tuesday through Saturday from 5 p.m. to 10 p.m., with brunch service coming sometime this summer. – Source: Robb Report.

The Mexican-born chain not only had to stay true to its Hispanic customer base, it had to scale up the recipe for 481 locations . . . .

El Pollo Loco Nails Authenticity to Bring Birria to the Menu

Birria tacos have been trending on Instagram and TikTok for over a year, and El Pollo Loco, the Mexican-born, Los Angeles-based chain, has been watching.

“We’ve been following birria for some time, and the timing was right to for us to put it on the menu,” said Heather Gardea, El Pollo Loco’s VP of culinary development. With the chain’s 50-50 mix of Hispanic and non-Hispanic customers, “we knew our guests would embrace it,” Gardea said.

Birria originated in the Mexican state of Jalisco as a stew typically made with braised goat. When taco joints in Tijuana adapted the dish, they stuffed it in tortillas with cheese, dipped them in beef fat and fried it into crisp tacos.

Birria soon migrated to Los Angeles and rose in popularity when taco trucks and Mexican mom-and-pops started serving the creation made with braised beef. New York City became a hotbed of birria innovation about two years ago and the drippy, red tacos have legions of fans, thanks to social media.

In developing new menu items, El Pollo Loco strives for authenticity to stay true to its Mexican roots. So Gardea and her team used the taco truck version as a starting point but were tasked with figuring out how to scale it up to work at 481 locations.

Another challenge—the chicken-centric chain didn’t have beef on its menu.

“Birria was a departure for us,” said Gardea, but the chain was committed to working with a beef supplier to make it happen.

Getting down to R&D

In the U.S., birria is served in two parts: the braised beef taco and a separate cup of braising liquid or consommé for dipping. During recipe development, Gardea tackled each component separately.

“We started with the beef, experimenting with different cuts that have enough marbling to adapt well to braising,” she said. “We settled on the cushion, which allows for the hours-long, slow cooking required to make it tender.”

However, the time element was a roadblock to cooking the beef from scratch at the limited-service chain. So El Pollo Loco partnered with a supplier that does the braising and delivers the cooked meat to each location. In the units’ kitchens, the beef is shredded and simmered some more to blend the flavors, said Gardea.

Next up: the consommé. “We wanted to retain all the flavors of the braising liquid for the dip, without using the supplier’s batch,” said Gardea.

She and her team developed a consommé close to the original, seasoning it with Mexican oregano, garlic, guajillo peppers and lime. El Pollo Loco contracts with another supplier to batch it up, and fresh onions and cilantro are added at each restaurant. It has the characteristic red color that’s all the rage on social media.

El Pollo Loco’s Mexican Shredded Beef Birria is available as crunchy tacos, a stuffed quesadilla with cheese and avocado, and an overstuffed burrito. All come with an accompanying cup of consommé for dipping; pricing for the meal starts at $8.29.

“Aside from the beef and consommé, the only additional SKU we brought in was a special tortilla so we could create the authentic crunchy tacos,” said Gardea. “The tortilla can be fried crunchy but doesn’t absorb the cooking oil.”

As with any menu development project, there were some ideas that didn’t quite work in the R&D kitchen. “We tried different cuts of meat that weren’t as successful as the cushion,” she said. “We also experimented with a chicken birria, but it seemed too inauthentic.”

The team also played with roasted flavors when cooking the meat, but some turned too bitter, Gardea added.

Once the final product was ready to move onto the menu, every person on staff in every location had to learn how to cook it. “We closed the restaurants on a Saturday morning and trained the teams on the preparation steps and the history behind birria to assure that execution was smooth,” she said. “We felt we had a lot of risk … a chicken brand bringing a beef item to the menu.”

Marketing to a mass audience

El Pollo Loco worked with a packaging supplier to design a box for the birria items to use for both dine-in and to-go guests. The box is printed with colorful graphics and contains a special cup holder for the consommé.

The marketing team also created point-of-purchase materials to educate dine-in guests about birria and displayed videos on digital boards.

But social media was the most effective marketing tool.

“Birria has the added plus of already being very social-media friendly,” said Gardea. The chain capitalized on that popularity by creating a viral #DipNDrip TikTok activation that achieved 24 million impressions from the birria’s launch date in mid-March until the LTO completed its run on June 1. El Pollo Loco also partnered with 10 TikTok influencers to expand the reach.

And the chain created several videos that ran on YouTube, building more user-generated content and garnering thousands of views.

“Fans talked about the eating experience and how authentic the birria was,” Gardea said.

“El Pollo Loco’s systemwide sales increased 7.8% in the first quarter [of 2022],” CEO Larry Roberts said in a statement. “The launch of our Shredded Beef Birria limited-time offer … significantly accelerated our top line momentum, which has continued into the second quarter, with systemwide sales of 12.4% through April 27.”

The birria launch was the most successful LTO in the brand’s 40-year history, which led Gardea to say “we will most probably see it again on our menu as a limited-time offer. As a brand, we’re extremely proud to be the first—or one of the first—to bring birria to the public.” – Source: Restaurant Business.

The operators of Applebee’s and Carlos O’Kelly restaurants expand breakfast-lunch concept . .. .

Wichita-based Thrive Restaurant Group looks to HomeGrown as its next growth vehicle

Thrive Restaurant Group, a decades-old family-run business operating dozens of restaurants in multiple states, mostly in the Midwest, has long run traditional casual-dining concepts, but now they see potential in their breakfast, lunch and brunch concept, HomeGrown.

Founded about five years ago as HomeGrown Wichita, there are now three such restaurants in their hometown, plus a HomeGrown Brookside in Kansas City, Mo. A fifth location is slated to open in Liberty, Mo., at the end of June.

“Our family of restaurants was heavy into full service hours,” said CEO Joh Rolph, whose father David and uncle Darrel began their careers with a Pizza Hut franchise in the early 1970s. In 1981 they founded casual-dining Tex-Mex concept Carlos O’Kelly’s, now with 14 locations in Kansas, Nebraska, Iowa and Virginia, and went on to run dozens of Applebee’s Neighborhood Grill & Bar restaurants across multiple states, among other concepts.

Today, Thrive Restaurant Group has more than 5,000 employees and upwards of 100 restaurants in 12 states.

But HomeGrown is fairly new territory for them, with retail components, limited hours and a strong focus on local sourcing.

“We liked the schedule and sector of breakfast and the idea of catching people in the first half of their days,” Rolph said. “We also saw market growth inside of breakfast.”

 

HomeGrown restaurants aim to offer an affordable, premium customer experience, from pasture-raised eggs in the West Coast Wake Up omelet or scramble, and house-made Lemon “Pop Tarts” filled with lemon curd, to fresh-squeezed orange juice or handcrafted cocktails. Gluten-free options are available, too.

There’s an open kitchen in every HomeGrown restaurant and a full bar reflects a growing trend among restaurants serving breakfast, Rolph said. The in-house gift shop focuses on local suppliers and provides information about their businesses, plus offering HomeGrown swag.

The brand sources local items as much as possible, from breakfast ingredients to décor. “We work with seven or eight local suppliers at every restaurant, giving them greater visibility in the community,” Rolph said. “We really get excited about helping them do business and love the idea of turning money back into the local economy.”

That means purchasing local bacon and sausages, honey, and espresso. But bacon sourced in the Kansas City area is different from bacon sourced in Wichita. “So, things may taste a little different, but they still taste great,” Rolph said. “It’s part of the adventure of dining at HomeGrown.”

Much of the building and design for HomeGrown restaurants is locally sourced, too.

“My wife, Lauren, has been an important part of this story, too,” Rolph said. “She intersects a lot with interior design of our restaurants.

“We select an emerging local artist to do an art piece that speaks to [each location] and they’re all noticeable. In our downtown [Wichita] store there’s art across most of our entire back wall. In Brookside, the artist used wood crate material as ‘canvas,’ and it’s, maybe, four-by-four [feet].”

When choosing the right locale for the first HomeGrown restaurant outside of Wichita, Rolph and his team wanted to be able to drive there in a day. They wanted to create one great restaurant and see what the marketplace indicated from there.

“That first test out of your original market is a big test, especially during COVID, and the marketplace was really hard to read during COVID,” Rolph said. “This new urban location has done really well. From feedback we have been getting, Brookside fits our concept well, especially with the farmers’ market across the street.”

HomeGrown restaurants also aim to ‘Cultivate Kindness.’

“Anyone who comes to work with us is invited to make a difference,” Rolph said. “We talk a lot about it internally. You’re inviting team members to consider how they can cultivate kindness among fellow employees and customers, doing little things to help pour kindness into somebody else’s life.”

Supporting surrounding communities is another benchmark of Thrive Restaurant Group operations: The company has donated some $5 million to support a wide variety of community projects, from an Iowa prom to funding for children with cancer.

Rolph said it has been a lot of fun for him and Lauren to work together. “We also have six kids, from 2 to 13, and HomeGrown will be a part of their growing up story. In five years, it would be great to have 15-20 [HomeGrown] locations. And, by starting the day right, we hope to spur acts of kindness throughout the day, and the community.”  Source: Restaurant Hospitality.

The company is opening a location this month in Toronto, one of 100 planned for the country as the chicken wing chain pushes international growth more aggressively . . . .

Wingstop Opens Its First Restaurant in Canada

Wingstop is making a push in Canada.

The Dallas-based chicken wing chain is planning to open its first location in Toronto this month, with a planned grand opening set for June 29 that will feature a ribbon-cutting ceremony and beatboxing.

It will be the first of 100 locations planned for the country, making it a key element in Wingstop’s international push. “Our first restaurant opening in Canada is a proof point of Wingstop’s success and portability outside the United States,” Nicolas Boudet, Wingstop’s president of international, said in a statement.

The chicken wing chain has been one of the faster-growing large chains in recent years, with sales growing by an average of 19% over the past five years, according to data from Restaurant Business sister company Technomic.

The vast majority of the brand’s 1,800 locations are in the U.S., but a growing number of them are outside the country. Wingstop finished 2021 with just under 200 locations, up by 160% over the past five years, according to Technomic. The brand has found success in Mexico, Europe, Asia Pacific and the Middle East.

Chicken has proven to be popular in many international markets and wings may find a particular home in many countries, given the existing popularity of the product in many countries as is. The product is also flexible, thanks to the focus on sauces.

In Canada, for instance, Wingstop has created a flavor, Honey Garlic, exclusively for that country.

Wingstop is making a major event out of its first Canadian opening. The celebration will begin at 11 a.m. on June 29, giving the first 100 customers five free wings each week for a year. The ribbon-cutting ceremony will be followed by a performance by Scott Jackson, a beatboxer and winner of Canada’s Got Talent. – Source: Restaurant Business.

The specialty food industry is still growing and winning new startups, many of whom enthusiastically told their stories earlier this month at the Summer Fancy Food Show in New York City. The show was back in person for the first time since 2019, showing off the latest in new and innovative foods and beverages.

The specialty food category grew 25.4% from 2019 through 2021, according to a report from the Specialty Food Association, compared to a 17.6% increase for the overall food industry. Retail sales in the category are on track to hit about $91 billion this year, up from $87.2 billion last year and about $64.3 billion in 2017, and growth going forward is forecast to level off to 4.7% annually.

That said, the industry has faced the same sorts of challenges that other companies in the food world have had to navigate since the start of the pandemic.

“Almost everything has become harder or more expensive.”  David Lockwood, industry consultant and co-principal of the Specialty Food Association’s State of the Specialty Food Industry Report. Lockwood presented the results of the report in a session at the show.

The entire specialty food market, including all retail and foodservice channels, grew 7.4% in 2021 from the previous year to $175 billion, but inflation rather than unit growth accounted for much of the increase, Lockwood said. The report forecasts 6.8% growth for this year, with just 1% or less coming from unit growth and the rest from price increases.

Fallout from the COVID-19 pandemic continued to affect the specialty food industry, including supply chain disruptions, rising shipping and fuel costs and shortages of everything from labor to packaging.

And, as inflation continues to hit consumers’ budgets, they’re making tougher calls at the supermarket, and shoppers who were buying specialty foods before are now looking for ways to save money by trading down to less-expensive options or, in some cases, opting out altogether, Lockwood said.

The top 10 specialty food categories ranked by retail sales were unchanged from last year, a sign that the industry is maturing, Lockwood said. Frozen and refrigerated meat, seafood and poultry topped the list, followed by cheese, both dairy and plant-based.

The report forecasts growth for this year and 2023, factoring in the uncertainties of the supply chain. Specialty food makers that depend on imported ingredients continue to be concerned about securing a steady supply and delays in shipments can throw off production schedules. Fluctuations in the availability and cost of ingredients also bring new challenges when it comes to pricing the finished products affordably while still making a profit.

In addition to the effects of supply chain challenges, the report and Lockwood’s presentation outlined some other trends expected to drive growth in the coming years.

Plant-based, the Next Generation   

Plant-based meat and dairy alternatives broke into the news in a big way in 2019 when Beyond Meat went public and the brand and its biggest rival, Impossible Foods, were suddenly everywhere, Lockwood said. Investors discovered the category and put billions into plant-based innovation and, in the years since, Beyond and Impossible have continued to roll out new products and spur the creation of an ever-growing roster of new players.

That said, the plant-based category is still relatively young. Growth in retail sales slowed to 6% last year from 26% in 2020, a sign that many consumers are still interested in the category but seeking new products with more of a “wow” factor, Lockwood said.

The products they’re seeking could be just on the horizon in a category Lockwood calls “new proteins.” New proteins include products made through fermentation processes, cell-cultured meat and mycoproteins, which are meat alternatives made from a fungus that’s similar to mushrooms.

A slew of companies are expected to release new protein products by year’s end, including Nature’s Fynd, Aleph Farms and Perfect Day, Lockwood said, and the new entrants in the category have the potential to rev up sales.

Good things come in small, sealed packages – and often via FedEx

The pandemic has fueled demand for smaller retail formats and convenience food options that consumers can shop and pay for with little or no human contact, the report says. Convenience stores are continuing to grow prepared food selections and traditional grocers are rethinking areas like salad bars, with smaller setups and more grab-and-go items.

E-commerce sales surged for specialty food brands and retailers along with the rise in overall online grocery shopping during the pandemic, and the trend is expected to continue over the next couple years. Online channels generated 4.5% of total specialty food retail sales in 2019 and that share grew to 9.4% by 2021 and is forecast to hit 11.6% by next year.

Diversifying the menu

Brands created and owned by women and people of color are increasingly in demand among specialty food consumers, and not just during February and March, the report found. “Retail buyers and foodservice operators are seeking out incubators, brokers, b2b wholesalers and distributors, and even sales consultancies that specialize in supporting and growing these brands. Showcasing these brands has moved far beyond seasonal features to align with observed months like Black History or Women’s History, and will continue to expand,” the report says. Source: Smart Brief

 

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