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After McDonald’s Deal, Krispy Kreme Seeks other Partners Executives of Krispy Kreme, Inc. expect partnerships, such as a recent one with McDonald’s, and international expansion to keep increasing global points of access, which reflect all locations where the company’s fresh donuts and cookies can be purchased.

Charlotte-based Krispy Kreme in October said its donuts will be available in six-packs or individually at nine McDonald’s restaurants in Louisville, Ky., and surrounding areas.

“Obviously, this is a small test to partner with a global company, but we think this represents the type of opportunity that shows why we remain very confident in our long-term goal of achieving more than 50,000 points of access globally,” said Michael J. Tattersfield, president and chief executive officer, in a Nov. 15 earnings call to discuss third-quarter financial results. “We believe that strong global partners could be a great fit to significantly grow our DFD (delivered-fresh-daily) business. We continue to look for new partners and channels across the globe as we build out our hub-and-spoke model to increase access to customers, and we look forward to updating you on this journey.”

Joshua Charlesworth, chief operating officer, and chief financial officer, added, “I mean, we do have clearly excess capacity across the US to build out the DFD door network, whether it’s Walmart, McDonald’s or others.”

Global points of access in the quarter increased by 17% when compared to a year ago. Consumers now have access to Krispy Kreme products in more than 11,700 locations globally. International expansion played a role.

“As you know, our goal is to open in at least three new countries per year going forward,” Mr. Tattersfield said. “So far, in 2022, we’ve signed development deals in seven international countries, including announcing Jamaica this morning as well as a recently announced joint venture in France for 2023, which together represent more than 5,000 points of access or nearly 50% of our existing points of access.”

A loss attributable to Krispy Kreme was $13.1 million in the quarter, compared with a loss of $5.7 million in the previous year’s third quarter. A negative impact of $5 million came from impairment charges related to planned shop closures, Mr. Tattersfield said. Adjusted EBITDA slipped 7% to $38.5 million from $41.4 million. Negative impacts came from higher promotional activity through Labor Day (Sept. 5) and increased labor and commodity costs.

“But since September, we’ve significantly reduced our promotional activity without any impact on revenue, which has led to significantly improved gross profit trends,” Mr. Tattersfield said.

Krispy Kreme began raising prices for the first time this fiscal year in the third quarter.

“I would definitely say that was the beginning of a catch-up,” Mr. Charlesworth said. “We certainly didn’t anticipate the level of food inflation in the US or the UK at the beginning of the year as we saw, and we’re pleased with the success of those pricing initiatives. We’ve then taken further pricing in October in both UK and the US. We do find that, in this environment of price increases, we can almost instantaneously increase the pricing on retail, but obviously, we need to work with our partners on DFD. So that does lag a little bit behind.”

Third-quarter net revenue increased 10% to $377.5 million from $342.8 million. Foreign currency translation had a negative impact of 3.3% on net revenue because of a strong UD dollar. Organic revenue increased 12%.

In the United States and Canada, net revenue in the third quarter increased 12% to $252.6 million from $225.8 million. Adjusted EBITDA increased 10% to $21.9 million. In International, net revenue increased 5.4% to $91.9 million from $87.3 million. Organic revenue grew by 16%.

“In our international market, all of our international countries, including those in Market Development, had positive organic growth in the third quarter, led by robust performances in Mexico, Australia and Japan,” Mr. Tattersfield said.

Adjusted EBITDA in International fell 16% to $18.3 million due to a $2.4 million negative impact from the higher US dollar and a challenging environment in the United Kingdom.

In Market Development, which is made up of franchise businesses around the world, net revenue increased 11% to $33 million from $29.7 million driven by a 33% increase in points of access. Adjusted EBITDA increased 15% to $10.4 million.

Over the first three quarters, a loss attributable to Krispy Kreme of $12.9 million compared with a loss of $25.8 million in the same time of the previous year. Net revenue increased 11% to $1.13 billion from $1.01 billion. – Source: Food Business News.

 

Subway is expanding its non-traditional business segment with a platform focused on convenient locations and offerings . . . .

Subway Focuses on off-Premises, on-the-go Concepts Through the first three quarters of 2022, the company’s existing 5,900 non-traditional North American locations had an average of 13% growth in same-store sales compared to the same period of 2021. Despite being hit the hardest by pandemic restrictions, there was an especially large growth in locations like airports, college campuses, and hospitals, increasing by an average of 22% compared to 2021.

“As more of our guests search for dining experiences to meet their ‘in-the-moment’ needs, the brand’s non-traditional locations and platforms can serve them wherever and whenever they are craving Subway,” said Taylor Bennett, vice president of non-traditional development at Subway. “As Subway focuses on strategic and profitable growth, there is a significant opportunity to expand our footprint in non-traditional locations and for franchisees to generate incremental revenue for their business.”

As part of the strategy, Subway will expand its brick-and-mortar presence in non-traditional locations like convenience stores, casinos, hospitals and airports, through its Grab & Go platform that launched in 2020. The platform offers fresh daily sandwiches to over 400 locations in North America and is expected to be the basis for further off-premises concepts.

Subway is also exploring unattended smart fridges as a growth concept, debuting its first fridge at the University of California San Diego in September. The fridge, stocked with Grab & Go products, features an interactive artificial intelligence capable of answering customers’ questions about products contained inside.

The flexible strategy also aims to enable international franchisees to introduce non-traditional concepts across the globe, taking advantage of locations like kiosks, ghost kitchens and drive-thrus. Source: Food Business News.

 

Taco Bell has brought back the Enchirito for the first time in nearly 10 years, while also introducing 7-layer Nacho Fries and testing grilled cheese Nacho Fries . . . .

Taco Bell Experiments with More Nacho Fries Variations Taco Bell seems to have figured out the right cadence for product launches to generate strong sales and traffic. For Q3, that launch was the beloved Mexican Pizza.

This quarter, it may very well be the Enchirito, which has officially made its return to menus nationwide for the first time in nearly 10 years. Taco Bell asked fans to vote on whether to bring back the Enchirito or the Double Decker Taco and the Enchirito prevailed. It will be available in stores until Nov. 30. The company said this democratic approach was the first time in brand history that fans had a direct impact on the menu. The chain brought back the Mexican Pizza after fans created a petition demanding its return.

The Enchirito has been around since 1970 and includes beef, beans, diced onions, red sauce, and melted cheddar cheese served on a soft flour tortilla. It is now available for $3.79.

Taco Bell has also introduced two new iterations of its popular Nacho Fries. The 7-layer Nacho Fries are now available nationwide, while the grilled cheese Nacho Fries are testing at select locations in the Sacramento, California, market.

The 7-layer Nacho Fries include black beans, tomatoes, reduced-fat sour cream, nacho cheese sauce, chipotle sauce, shredded cheese, seasoned beef, and guacamole. The guacamole is a “revamped” recipe for Taco Bell, with Hass avocados prepared daily and tomatoes and onions. The fries are available à la carte for $3.99 or in a burrito for $3.49.

The grilled cheese Nacho Fries are topped with grilled, marinated steak, nacho cheese sauce, chipotle sauce, mozzarella, cheddar, and pepper jack cheese. The price for the product test is $3.99, or $3.49 for beef.

These mark the latest round of innovations for Taco Bell’s Nacho Fries, first launched in 2018. In October, the company launched Loaded Truff Nacho Fries. It has also introduced variations such as Rattlesnake Fries and Reaper Ranch Fries. After the product’s launch, Nacho Fries quickly became the chain’s most successful product ever and they are now part of one in four orders at the chain.

During Taco Bell parent company Yum Brands’ Q3 earnings call in early November, CEO David Gibbs attributed the brand’s “creative innovation” to driving 8% system sales growth.

“Taco Bell is a brand is truly relevant, easy, and distinctive with the unique ability to stand for value with the current economic environment, you have a broad enough range to appeal to consumers across every demographic,” he said.  – Source: NRN.

 

 

Why you should learn to embrace robotics and AI in your restaurant . . . .

Restaurants and robots: Don’t be alarmed So much of the recent news about robots in restaurants has focused on the kitchen, where experts seek to engineer the perfect automated pizza maker or a robotic fry station attendant. While the jury’s still out on whether these devices could ever demonstrate the dexterity humans have for making food taste good, they seem more approachable for many restaurant operators than service robots. Even so, the launch of these tools is often marked with headlines like “Attack of the pizza-making robots” and “The robots are here,” as if we’re facing an alien invasion!

If you’ve ever been served by a robot in front of a restaurant, it can be rather surprising at first. For customers and staff alike, the presence of these automated workers can set off alarm bells. Customers might worry the lack of human interaction will ruin their experience or result in unnecessary mistakes. For employees, robots might incite fears of being replaced.

The ultimate helping hand, robots are uniquely positioned to support restaurants through the current wave of labor shortages and inflated food costs — that is, if they’re introduced and used correctly.

Relieve, not replace

To ensure robots become an ally to service staff, it’s important to set expectations about what these automated co-workers can and can’t do. They are best utilized to perform physical, repetitive, and manually straining tasks, thus relieving staff from these duties. For example, they can carry multiple hot pots out of the kitchen and bring them to guests, avoiding painful, costly spills along the way. They can help servers clear the entire dining room in one quick trip. They can even wash the floors before, after, and during a shift.

All these routine tasks, when handed off to a robot, free up front-of-house employees to do the more important tasks that require interaction with guests, like recommending the right dish, making memorable conversation or fulfilling a more specific ask. Servers have more time to engage with guests, check in on their tables, and generally ensure an exceptional dining experience when accompanied by a robot. The key word is accompanied. Make sure employees know the bot is there to support them, not replace them.

Not only will the robots work alongside servers, but in time, this collaboration will also result in servers on duty taking home a higher percentage in tips — robots don’t need to be paid. By delivering food, cleaning and serving, robots ensure workers are less overworked and less physically taxed while being paid the same, or perhaps even more than before.

Enhancing the experience

Robots can be a marketing tactic for many restaurants, as some diners will seek out this novel dining experience. However, for more particular customers expecting a traditional service, robots can seem like the end of the golden age of dining. It will be important for robots to follow the established rules of restaurant service and enhance the experience without taking anything, including familiarity, away.

Robots should avoid hitting guests. This may seem obvious but from a technical standpoint, it is actually one of the harder parts of introducing robotics. Advanced AI is required in order to realize intelligent delivery in restaurant scenarios. The positioning technology must be effective to navigate dining rooms with multiple walkways and several dozen guests. New vision-based robot localization and mapping technology allow some restaurant bots to find their way without markers, making them much easier to deploy, especially in high-ceiling environments. Adaptability in all scenarios, like recognizing and slowing down for elderly guests and children, is also critical to ensure customers feel comfortable around robots.

Not only does advanced positioning technology reduce the risk of collisions, but it also increases the likelihood of robots bringing the right food to the right table. Few things annoy a guest more than waiting for food only to have it be the wrong dish, or having it spill on the way out of the kitchen. Robots can build trust with guests by consistently performing as they are intended.

Bots come in all shapes and sizes with a unique variety of capabilities. For restaurants, it’s as important for the robots to be aesthetically pleasing as it is for the carefully designed dining room. A terminator-looking bot is probably not going to put guests at ease. But something cute and cleanly designed will make guests feel comfortable and entertained. Taking this a step further, advanced robots can also be engaging, welcoming customers with greetings, telling jokes, and providing voice or emoji feedback. While they’ll never replace a human in terms of engagement, robots can appear more approachable with these small touches.

To ensure an exceptional experience for both staff and diners, robots should always be accompanied by a human from their very first meeting until the end of the meal. Staff will feel empowered to do what they do best, lending a human touch to every customer’s experience while avoiding the more difficult aspects of the job. Meanwhile, customers will enjoy engaging with relaxed servers who have time to discuss the menu and go above and beyond to provide five-star service, no matter where we eat. – Source: NRN.

 

Jon Weber — former CEO of NPC International — has formed Convive Brands around the former Aurify-owned brands . . . .

Le Pain Quotidien and Little Beet Unite Under New Platform Le Pain Quotidien, Little Beet, and Little Beet Table — three emerging New York City concepts operated by Aurify Brands since 2020 — have now united under one umbrella platform: Convive Brands, led by former NPC International CEO Jon Weber.

Aurify — which currently has major investments in Fields Good Chicken, Melt Shop, and a Five Guys franchisee — will remain on as an investor in Convive Brands, though the day-to-day operations will be transferred over to Weber’s team.

“This transition of the brands from Aurify to Jon and the team at Convive is consistent with our vision of identifying and scaling brands with the potential to a certain stage and then having a talented team take them to the next level,” Andy Stern, co-CEO of Aurify Brands said in a statement. “We are confident that under Jon’s leadership and as part of the new Convive platform, the brands will achieve tremendous growth and success.”

Private investment firm Eldridge Industries, which helped facilitate the growth and acquisition of Little Beet and LPQ, was “instrumental” in the formation of the new operating platform. Convive Brands is focusing on scaling both brands nationally in new markets across the U.S. Currently, between all three brands, Convive concepts have 70+ restaurants across eight states and Washington, D.C.

“With the launch of Convive Brands, we are creating a new platform that will support meaningful growth, value creation, and opportunity for our team members,” Jon Weber said in a statement. “Le Pain Quotidien, Little Beet and Table by Little Beet are high-quality brands, and we are excited to help them flourish.”

Before starting Convive Brands, Weber held multiple leadership positions in the restaurant franchising, supply chain, and technology industries, including CEO and president of NPC International until 2021, when he joined Domino’s-owned technology company, Dragontail Systems, as a non-executive board director.

“I am incredibly proud of the dynamic leadership team that is forming at Convive and excited to build upon the opportunity that John and Andy created,” Weber said. – Source: NRN.

 

New Sheetz locations in Michigan to open in 2025 . . . .

Mid-Atlantic Chain’s Expansion will Begin in the Detroit Market Today Sheetz, a major Mid-Atlantic restaurant and convenience chain, announced it will expand into Michigan, with the first store location projected to open in 2025, starting in the Detroit market.

Named a Best Regional Fast Food Chain by USA TODAY’s 10Best Readers’ Choice travel awards, Sheetz’s locations will offer its award-winning Made-to-Order (MTO®) menu where local residents can order any of Sheetz’s customized specialty drinks or food items around the clock.

“We are thrilled to continue our growth into Michigan and bring the ultimate one-stop-shop to people across the state,” said Travis Sheetz, president, and CEO of Sheetz. “Sheetz is dedicated to being a great employer and neighbor and we cannot wait to put those values into action as we expand into our first new state in two decades.”

Each Sheetz location employs approximately 30 individuals. In 2022, Sheetz was ranked 33rd on the Fortune 100 Best Companies to Work For list. The recognition follows Sheetz’s recent investment of over $70 million in-store employee wages in 2021 as well as an investment doubling the tuition assistance offered to employees through the company’s College Tuition Reimbursement program. Additionally in 2022, Sheetz was ranked #3 as a Best Workplace in Retail by Fortune Magazine.

Sheetz offers competitive pay and benefits packages to all employees, including medical and dental insurance, a 401(k) retirement plan, an employee stock ownership plan, flexible schedules, opportunities for advancement, quarterly bonuses, vacation time, and more. Sheetz also offers 12 weeks of fully paid time off for new mothers and two weeks of fully paid time off for partners.

Selected as one of the “50 Companies That Care” in 2022 by PEOPLE Magazine and Great Place to Work®, Sheetz is also committed to supporting the local communities it serves through several charitable organizations and activities. This includes support for the Special Olympics, weekly food donations to local food banks and Sheetz For the Kidz®, an employee-driven non-profit organization that makes the holiday season brighter for nearly 10,000 children each year.

Sheetz operates 669 store locations across its six-state footprint, which includes Pennsylvania, North Carolina, Virginia, West Virginia, Ohio, and Maryland. All locations are open 24/7, 365 days a year. – Source: NRN/Sheetz, Inc.

 

 

Locali in Southern California is expanding through a licensing agreement with Local Kitchens . . . .

How one QSR Deli is Growing Through Food Halls Health and convenience used to be an oxymoron. That was something that Melissa Rosen, founder of Southern California-based Locali, wanted to change with her concept. Locali was supposed to be a healthful convenience store when it first opened 14 years ago — something like 7-Eleven meets Whole Foods.

At the last moment, the team decided to throw in a deli table, inspired by Wawa and the White Hen Pantry in Chicago. That deli table turned out to be the most important last-minute decision the team could have ever made.

“That ended up actually taking off and became like 85% of our business,” Rosen said.

She and her team shifted from a business that was focused on grab-and-go to a business centered around the deli, with items like sandwiches, smoothies, and burritos.

Soon her food developed a cult-like following.

“We have a lot of our loyal, every day, amazing customers that we’ve had that just love us for either the fact that we have an emphasis on health or the fact that our food just tastes really flavorful,” she said. “We also have a ton of influencers as customers, and celebrities as well.”

But the food is about more than celebrities.

“We just wanted to create a place where people could connect to their food in a more thoughtful way,” Rosen said.

The two-unit chain is known for its vegan deli food — that’s what’s given it the reputation among celebrities and fans alike — and every sandwich comes vegan by default. If one wants a sandwich with meat or cheese at Locali, they have to ask for it.

“Food is medicine for the mind, body, and spirit,” Rosen said.

The brand only uses the freshest ingredients it can find — as well as the freshest people.

“We’re just making the food, and we always say quality ingredients have lots of love,” she said. “And I think people can taste that the people who are working and making your food are happy.”

An early adopter of the ghost kitchen movement, Locali is now moving into licensing agreements rather than franchising to grow. The quick-service brand recently entered a deal with Local Kitchens to license the Locali brand across its food halls. It’s opening in two of the halls within the next few weeks.

This is not the only way Locali will expand moving forward, however. Rosen says the brand still has its eyes on other means of expansion, whether that’s the non-traditional route or other licensing agreements.

Part of that expansion is through the brand’s consumer-packaged goods line. Pre-packaged salads and bowls are sold at juice bars, cafes, and natural grocery stores across Southern California. – Source: NRN.

 

The brand promised to reach that total in 2018, and little is stopping it from getting there in 2023 . . . .

 

Dutch Bros’ 800-Unit Goal is Well Within Reach

Dutch Bros is now the third-largest coffee chain in the U.S., trailing only Starbucks and Dunkin’. In 2018, Dutch Bros—a little more than 300 shops at the time—threw out a massive goal. The coffee chain is expected to reach 800 shops nationwide by 2023.

The moment of truth is just around the corner. And from where Dutch Bros stands right now, it looks like that five-year promise will be kept.

The red-hot coffee chain debuted a record 38 stores in Q3, which almost eclipsed what it accomplished for all of 2019 (42 openings). At the end of the quarter, Dutch Bros had 641 locations systemwide after opening 103 units from Q1-Q3. The year-end projection is at least 130 shop openings, meaning at least 27 stores should open in Q4. If accomplished, that would put the brand around 670 to begin 2023. Next year, the goal is 150 stores, likely putting Dutch Bros over the 800-unit hump sometime in Q4 2023. In 10-15 years, the brand wants 4,000 outlets.

Dutch Bros is now the third-largest coffee chain in the U.S., trailing only Starbucks and Dunkin’. It has a presence in Arizona, California, Colorado, Idaho, Kansas, Missouri, New Mexico, Nevada, Oklahoma, Oregon, Tennessee, Texas, Utah, and Washington.

“As a 30-year-old company, we have the good fortune of our operating teams executing through many economic cycles,” CEO Joth Ricci told investors during the chain’s Q3 earnings call. “Throughout all the uncertainty of the past year, the fundamental strength of the Dutch Bros four-wall operating model has held firm.”

Since 2020, Dutch Bros has entered seven new states, including Tennessee earlier this year, and the brand keeps proving it will work anywhere. The concept is earning $1.8 million annualized AUV in the greater Nashville market, $2 million in Kansas City, and $1.8 million in Oklahoma City. Stores that opened in 2020 and 2021 produced trailing 12-month AUVs of $2.1 million in Q3, which is 10 percent higher than the system average. The company’s Oceanside, California, shop—its first in San Diego County—earned $123,000 in its first four days and $629,000 in its first month. Although labor and construction costs have escalated, Dutch Bros’ cash-on-cash returns are still in the 30-40 percent range for ground leases.

The brand implements a fortressing strategy in which it infills under-penetrated existing markets and rapidly grows into new trade areas. This helps spread demand across a market, thereby reducing customer wait times and improving guest satisfaction. In Q3, Dutch Bros experienced a 150-basis-point sales drag because of cannibalization, but that’s within expectations.

Sixty percent of openings in 2023 (roughly 92 outlets) will be between California and Texas. Dutch Bros also plans to hit new markets in Alabama, Tennessee, and Kentucky. So like Huntsville, Knoxville, and Lexington. The brand has finished filling its 2023 pipeline. Any new store additions will be for 2024 and 2025.

“Through proactive bulk purchasing of key materials, we’ve been able to sidestep many supply chain disruptions and keep our construction timelines stable,” Ricci said.

Of the 641-store footprint, 370 are company-operated and 271 are franchised. Dutch Bros is growing primarily through corporate stores, which are run by a deep bench of operators. The brand works with franchisees to identify crew members who can rise the growth ladder from barista to operator with multi-unit responsibilities, Ricci said. In the past 12 months, 45 employees have been promoted to operator positions. Dutch Bros sees virtually no turnover from these store leaders.

“In combination with our people-first culture, we believe our outstanding career opportunities drive our comparatively low turnover,” Ricci said. “People capability and availability are fundamental to realize in our growth potential.”

Dutch Bros’ same-store sales rose 1.7 percent in Q3 year-over-year and 11.4 percent above 2019 pre-pandemic comparisons.

It was a bounce back from negative 3.3 percent in the second quarter, which the company blamed on conservative pricing, faster inflation, deferred expenses related to maintenance, and new store inefficiency. In Q3, cost escalation and commodity inflation stabilized, and the company benefited from menu pricing. The chain took 4.4 percent pricing at the start of September, bringing the year-over-year total to 10.3 percent. The brand’s cold beverage business drove more than 90 percent of sales, fueled by the Rebel and Dutch Freeze categories.

The chain is being particularly dragged by its California markets. If it removed Sacramento, same-store sales would’ve increased by 4.1 percent in the third quarter. Although, matters are getting better. Sacramento’s comps dipped 9.7 percent in Q2, but that changed to negative 4.8 percent in Q3.

Cost of goods inflation was near 11 percent in the third quarter because of dairy (more than 25 percent) and coffee (high single digits). Wage inflation was just under 1 percent. Turnover remained below industry averages, although trailing 12-month numbers grew from 66 percent to 78 percent between Q2 and Q3. Ricci said this movement isn’t unexpected since turnover is typically higher when Dutch Bros enters new markets and staffs from scratch.

Ricci said the company is pricing carefully to cover costs, but not alienate the consumer.

“We want to continue to create a value position for our menu across just about most of the categories that we’re in,” Ricci said. “We want to be careful about how we do it. What we say is we want to earn price as we put that on our menu. There’s a taking price. So we’ve been careful about the impact of the consumer during this time, and we’ve also been careful about where we put price.”

“So we’ve done things on a lot of our products that you premium an item with,” he continued. “We’ve done that so that the customer is choosing an item that you would take a price on. We also look at other places in our menu where we feel like there’s a price opportunity there. We’ve also protected other parts of our menu against the customer base that may not be able to take price.”

Total revenue increased 53 percent to $198.6 million in the quarter. Company-operated shop gross profit was $34.7 million as compared to $23.1 million last year. Adjusted EBITDA increased 32.8 percent to $27.8 million. – Source: QSR/Fast Casual.

 

Seven Ways to Create Brand Recognition from Benihana . . . .

When you think of recognizable brands, companies like Coke, Apple, Amazon and McDonald’s come to mind. It’s hard to imagine there is anyone who wouldn’t recognize the brand name or logo of these companies. Some of my clients have said something like, “If we could just get a fraction of that kind of recognition, it would be a huge accomplishment.” Well, meet Benihana. Yes, the restaurant chain is known for chefs putting on amazing, entertaining cooking demonstrations at your table while they prepare your delicious meal.

Benihana is an American restaurant company founded by Hiroaki Aoki in New York City in 1964. Today, its 116 restaurants serve about 18 million guests each year, and according to CEO Tom Baldwin, Benihana has 90% brand recognition. That’s incredible. Think about this for a moment. McDonald’s, with almost 13,500 restaurants in the U.S. serving millions of people each day, has almost 100% brand recognition. Benihana, with just 116 restaurants, has 90% brand recognition.

How did they do it? The restaurant chain has never strayed from what brought its original success. It is not the neighborhood restaurant you go to every week. This “special occasion” restaurant is known for creating great guest memories, which is their motto.

 

At a recent meeting of general managers, Baldwin shared what has made the Benihana brand a success, and how it will continue to be even more successful in the future. These strategies are the “brand builders” that have helped make Benihana so recognizable and can do the same for you:

  1. A One-of-a-Kind Restaurant Platform. While there may be some competition in local markets, with 116 restaurants, it is the largest chain of its kind. If you’re not already, what could you do to become a one-of-a-kind brand? What makes you unique?

young and old. Families are there celebrating children’s and grandparents’ birthdays. There are couples, young and old, celebrating anniversaries. Companies host events for their employees and customers. There are no age boundaries at Benihana. While most companies don’t have such a wide customer base, you must understand who your customers are and create an experience that is both timely and timeless.

 

  1. Timeless Appeal that Transcends Generations. If you walk into a Benihana, you will see young and old. Families are there celebrating children’s and grandparents’ birthdays. There are couples, young and old, celebrating anniversaries. Companies host events for their employees and customers. There are no age boundaries at Benihana. While most companies don’t have such a wide customer base, you must understand who your customers are and create an experience that is both timely and timeless.
  2. An Exceptional Leadership Team, Culture and Infrastructure. Benihana has a system. They deliver a consistent and predictable experience. It doesn’t matter if you’re in a restaurant in New York, Los Angeles, Miami or any of the other 113 locations, you will have a similar experience. Its leadership team, from headquarters down to managers of each location, along with the culture and processes, ensures the same great memories are created regardless of location. With focused effort, any company can create a consistent experience that comes from a good system and the right culture.
  3. A Clean Environment. A guest can expect to have an excellent meal and a great experience in a spotless environment. This is an important point. While you may not want to eat off the floor of any restaurant, they do their best to make you feel as if you could. Cleanliness creates guest confidence. Anything less may send a negative message. For example, a dirty floor means the food might not be fresh. What’s your version of the dirty floor? What sends mixed or negative messages to your customers?
  4. The Kaizen Philosophy. It may not be a surprise that a Japanese restaurant chain embraces Kaizen, the Japanese business philosophy focused on continuous improvement. It is a strategy in which all employees work together to find new ways—large or small—to improve the process. The five principles of Kaizen include teamwork, personal discipline, improved morale, quality circles, and suggestions for improvement. The growth and innovations that Benihana has created come from its attention to Kaizen, a philosophy that can be embraced by any company.
  5. Engaging and Embracing the Community. Part of the Benihana company mission is to “engage and enhance the community.” How do you get involved with your community? More and more, customers are being drawn to companies that support what they believe in. It could be a cause in the local community or something as large as the sustainability of the environment. It’s about giving back.
  6. An Unparalleled Guest Experience. It’s all about the guest experience at Benihana. They relentlessly focus on creating great guest memories. They also recognize that the guest experience comes from the right employee experience. The strategy—and lesson—are simple. Focus on the employee and customer experiences. Create the experience that makes your customers say, “I’ll be back!” This is an appropriate strategy for every company—one you want all your customers to associate with your brand. – Source: Forbes.

 

Lezcano Most Recently Served as senior vice president of U.S. marketing at Church’s Texas Chicken . . . .

 

Fuku Taps Claudia Lezcano as its new CEO Claudia Lezcano has been named CEO of the fast-casual fried chicken concept Fuku. She most recently served as senior vice president of U.S. marketing at Church’s Texas Chicken.

Lezcano has more than 25 years of marketing experience, including for brands like Celebrity Cruises, Miami Dolphins, and Miami Marlins. She also spent eight years at Burger King Corporation leading strategy and marketing communications. For Fuku, Lezcano is charged with accelerating growth and expanding the brand’s footprint.

The concept was created in 2015 by Chef David Chang and Momofuku and now includes nearly 30 locations in traditional spaces, as well as stadiums and arenas. Fuku also recently started adding ghost kitchens to its mix. The concept’s menu is influenced by both Asian and American influences, according to the company, with chicken sandwich variations, sides, slushies, and four signature sauces.

“I am honored and excited to be leading Fuku’s next chapter of growth,” Lezcano said in a statement. “Chef David Chang created an unmatched chicken sandwich when he founded Momofuku → Fuku in 2015, and my vision is to continue building upon his original concept by offering approachable, tasty food that changes the way people think about fast casual. I look forward to working with the team to continue growing our footprint throughout the country so even more guests can delight in Fuku’s one-of-a-kind chicken sandwich.”

Fuku is a part of RSE Ventures’ portfolio, which also includes Bluestone Lane, Magnolia Bakery, Momofuku, Milk Bar, &pizza and more.

“Claudia is one of those dynamic executives who understand that the success of a restaurant brand starts with operational excellence and delivering on the promises you make to your customers and broader communities,” Matt Higgins, co-founder, and CEO of RSE Ventures, said in a statement. “She has deep QSR expertise and truly knows the hospitality space, including how essential it is to have a consistent and meaningful brand voice across all consumer touch points. Her ideal blend of marketing and operations experience makes Claudia uniquely suited for this role, and I’m confident that Fuku is well-positioned for continued success under her leadership.” – Source: NRN.

 

Rib & Chop House CEO Yaron Goldman is used to unsolicited offers about the steakhouse coming to a certain market. That’s music to the brand’s ears . . . .

 

Rib & Chop House Finds Strength in Smaller Market Expansion Rib & Chop House CEO Yaron Goldman is used to unsolicited offers about the steakhouse coming to a certain market. That’s music to the brand’s ears.

The company, offering Louisiana flavors for more than 20 years, wants to be the community restaurant in Mountain West towns of 50,000 to 100,000 people. Goldman sees an opportunity to capitalize on the lack of competition in these markets, but the primary downside is the geographical difficulties—these areas aren’t close together, and they don’t have major airports. That’s where franchising comes in. A well-seasoned operator who’s familiar with the market can take the reins and become the face of the brand.

So now, Goldman and his company are listening to those unsolicited offers. Rib & Chop House officially announced its first franchise program at the start of November.

“As we grow the franchising program, as we get people signing on, we feel like if we can show them our system, show them what works, show them how to execute that, they will dominate in these small towns because that is our growth plan, at least in the foreseeable future,” Goldman says. “We want to be a big fish in small ponds. We’re not going to go to larger markets for the foreseeable future.”

“ … For us to drive between locations three or four hours, especially in the winter time in the Mountain West, that can be hard to execute,” he adds. “So if you have someone local there that has ownership, has pride in the brand, feels like that’s a good recipe for success.”

To transform Rib & Chop House into a more franchisable chain, the brand reduced its prototype from the typical 7,000-8,000 square feet to freestanding locations between 6,000-7,000 square feet and endcap units with 5,000-plus square feet. The new box reduces kitchen size and keeps the dining room the same, which is crucial since seating capacity is one of the chain’s biggest sales factors. The steakhouse was able to shrink its back-of-house by examining the menu and deconstructing all of it. Rib & Chop House looked at what it’s not necessarily getting credit for and determined how much time it’s spending on those things from a prep, labor, space, and equipment standpoint. One example is having suppliers cut steaks to the restaurant’s specs and bring them in fresh as opposed to workers doing it in the kitchen.

Additionally, prior to the franchise launch, Rib & Chop House unveiled a new Royalty Card program—at $50 per month or $600 per year—that would provide guests with $600 in gift cards annually, priority seating, a complimentary set of branded steak knives, 10 percent off each check, and anytime reservation cancellation. The Royalty Card was released to a limited number of customers and eventually sold out systemwide.

Next year, Rib & Chop House will launch what Goldman calls “Royalty 2.0,” which will involve special dinners and events for members. The program will also split into two factions. Original members will be called “the founders.” New customers allowed in will receive all the same benefits as the founders, except for the priority seating. Currently, Royalty guests are spending 20 percent more and visit six to seven times per month on average. Rib & Chop House already has a Members Rewards program where customers can earn 5 percent back on all purchases and $10 back for every $200 spent, but the chain may do away with it to focus solely on the growing popularity of the Royalty Card.

Prospective franchisees have taken notice of the program’s success.

“I feel like there’s nothing like this in the industry at this level, and people are very excited about it,” Goldman says. “And the fact that we’re going to expand it so we can have more people be members and get the benefits and all those different things, it’s pretty exciting. But we’ve had some Royalty members just anecdotally who I know who say, ‘We should open one of these here or there.’ But to be fair, they haven’t gone through the full process, but the ones that have gone through the process, the handful, they all talk to us about Royalty, because they just think it’s a neat program. They want to understand the benefits, they want to understand the margins and all of those things.”

The brand has 12 units across Montana, Wyoming, Idaho, Utah, and Colorado. Future target markets include North and South Dakota, Nebraska, Colorado, Arizona, and Utah. Goldman says a couple of operators have asked about DMAs closer to the East, but Rib & Chop House already turned them down because it knows it doesn’t have the ability to properly service geographies that far away—at least not right now. The CEO says the steakhouse wants to be thoughtful about growth as opposed to “take a check and say, ‘Yeah, we’ll open anywhere.’”

Rib & Chop House’s goal is to sign deals for five to 10 restaurants in 2023. Next year will be dedicated to garnering interest, converting that into commitments, and going through training and real estate. Then starting in 2024, the brand hopes to open roughly three to five stores and each year afterward. Goldman and his team arrived at that number knowing that pace of opening can vary—someone may have a site that can open in three to four months while another project may take two years depending on land development and construction. After the slow ramp-up, Goldman envisions a future where Rib & Chop House can open more than 25 units per year.

In five years, the CEO says there will likely be a 50/50 split between corporate and franchise stores, with about one to two company-owned locations opening per year. If franchising goes the way Rib & Chop House thinks it will, then that footprint will become the larger of the two over time. As far as how corporately run stores will look, Goldman says the brand is putting its money where its mouth is. Its most recent opening was only 5,400 square feet. Next year, the company is opening two stores—one is 5,400 square feet and the other is 6,000.

“We were able to prove it out where it’s profitable,” Goldman says. “We can still do great sales, and we’re just running better numbers because we have found efficiencies that we didn’t have before. When we had these requirements of 7,000 square feet, it does limit where you can go and what markets you can go to and then also the numbers you have to do versus what you need to do with 5,000, 6,000 square feet. It really does change because the build-out complexity and investment changes and then operational cost changes.”

Rib & Chop House is looking for operators with casual to fine-dining experience and financial wherewithal. The chain will begin with agreements calling for one to two locations because of the operational complexity that comes with running a steakhouse; it’s why Goldman prefers not to go for quick-service and fast-casual backgrounds. Eventually, Rib & Chop House will get more systems in place to help with scaling, but for right now, it needs franchisees to act more as owner-operators. But that’s not to say they’re on their own. Rib & Chop House is already working on pairing some potential groups with district operators and general managers. “We want to be the growth engine for these franchises,” Goldman says. – Source: FSR.

 

THANKS TO UNWAVERING CONFIDENCE THROUGHOUT COVID, THE MIDWEST BRAND IS SCHEDULED TO GROW IN NEW AND EXISTING MARKETS, WITH AN OVERALL GOAL OF MORE THAN DOUBLING ITS FOOTPRINT . . . .

The Buffet Segment is Now Growing, Just Ask Pizza Ranch The first few weeks of the pandemic were “dicey for everybody,” says Mark Souba, chief development officer for buffet concept Pizza Ranch.

There was a fair amount of uncertainty, particularly with buffets and safety concerns, but Pizza Ranch drew confidence from its unique offering. For instance, before COVID, off-premises mixed 20 percent, a robust system that prepared them well when dining rooms shut down. And when customers were able to re-enter stores, the brand leveraged FunZone Arcade, a sister concept featuring games that fulfilled pent-up demand for social experiences. Pizza Ranch’s FunZone Arcade revenues were up 72 percent in the first half of 2022.

Souba also attributes Pizza Ranch’s staying power to its 97 percent franchised system being based in smaller, close-knit communities. In fact, 50 percent of the company’s 211 stores are in towns with under 15,000 people.

“Those towns did not want to see our franchisees suffer, and they wanted to keep their Pizza Ranch in their community, so they rallied around it, and we had an out-the-door business already established to fulfill against that market need,” Souba says. “So we’ve always had a lot of confidence there.”

As Pizza Ranch closes in 2022, Souba just doesn’t believe the buffet is stable; it’s actually “roaring back.” The concept is seeing buffet mix 75 percent, which isn’t too far off from its 80 percent grip before the pandemic arrived.

“I would describe it as back to normal, honestly,” Souba says. “We do not sense any hesitancy around our buffet … The consumers have been very accepting of it. No noticeable change from our perspective as we sit here today.”

Pizza Ranch is based in 14 states, primarily in Iowa, Minnesota, North Dakota, South Dakota, and Wisconsin, but the chain is now pushing into nearby states like Illinois, Arkansas, Tennessee, Kansas, Nebraska, Indiana, Oklahoma, Montana, Wyoming, and Missouri. In 2022, the brand will finish with four new restaurants. As of November, Pizza Ranch had signed nine new franchise agreements, but Souba says a few more are expected before the year is over. The pipeline contains 18 projects, which are either under construction or in the early stages of the development process in terms of site selection, design, and financing.

In 2023, Souba predicts the opening of seven to 12 restaurants, but he acknowledges the economy is a big variable, especially with more CEOs outwardly using the word “recession” when talking to media or investors. He describes franchisee confidence levels as moderate given interest rates and labor costs. Souba adds that operators are “slow playing” development to see how the environment shakes out.

“We haven’t seen any really drop out of our funnel, but the projects have slowed up largely due to supply chain,” Souba says. “Honestly, we’ve fought some supply chain issues throughout the year with various pieces of equipment. That’s probably been the bigger concern.” FunZone Arcade will be attached to 60 Pizza Ranch restaurants at the end of 2022, after opening 18 throughout the year. Of that figure, about 30 are retrofits or additions to existing stores. It’s a massive jump from 2018, when there were just seven FunZone Arcades. In 2023, there should be between 15-18 arcade debuts.

Going forward, all new Pizza Ranch stores will automatically include a FunZone Arcade. But there’s a lot of demand among franchisees to add games to current stores, too. Souba wouldn’t call it a tricky process to tack on a FunZone Arcade, but the company does consider a lot of variables. For the most part, Pizza Ranch is either constructing an addition to the building or taking adjacent leased space in a strip center. A typical situation is a Pizza Ranch with 5,000 square feet, folding in a FunZone Arcade at 1,500 square feet. Because of lower labor and overhead costs associated with amusement, margins are quite favorable, making it an attractive investment for franchisees, Souba says.

“It drives traffic not only to the arcade, so we’re picking up additional revenue there, but it’s also driving traffic to the restaurant,” he says. “So we’re seeing a nice lift in our overall business.”

In light of rising construction costs, Pizza Ranch is looking to rightsize its real estate footprint, but that doesn’t necessarily mean less square footage, Souba says. It could mean going with smaller dining rooms in favor of a larger arcade section.

The innovation is an example of what keeps Pizza Ranch growing, despite downward economic cycles. Adrie Groeneweg, who founded the concept in 1981 in Hull, Iowa, told FSR in April that he wants the company to reach 500 locations before he retires. That calls for a pace of about 25 annual net openings in the next decade, a mark Pizza Ranch would have to work its way up to.

But the foundation is being laid. Souba notes that Pizza Ranch opened its first location in Tennessee late in 2021, and the company is looking at several new projects in the state. In addition, the brand signed new franchise agreements in Oklahoma, which will be a new market for the chain.

“Growth is definitely on the horizon for us, and we’ll continue to be a growth concept,” Souba says. – Source: FSR.

 

 

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