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What does a McDonald’s comeback mean for competitors?

Nation's Restaurant News - Thu, 2017-05-25 20:35

Investors are betting that McDonald’s Corp. will regain the customers it has lost since 2012, which could be bad for the rest of the restaurant industry.

The Oak Brook, Ill.-based chain’s stock has risen 23 percent so far this year, and hit an all-time high of $149.99 per share this week. Investors are buying into the idea that McDonald’s will show strong sales as the year goes on, thanks to efforts to improve both the food and the experience in its restaurants.

But a reinvigorated McDonald’s could have a significant impact on the rest of the industry, and especially on quick-service restaurants, simply because of its immense size.

“It could be negative for the other players in the industry,” said Carla Norfleet Taylor, restaurant analyst for Fitch Ratings.

With 14,000 restaurants and average unit volumes in excess of $2.5 million, McDonald’s is by far the largest restaurant chain in the country. Despite losing 500 million transactions since 2012, the company remains more than twice the size of its next largest competitor in terms of system sales.

To put it another way, McDonald’s business is roughly the size of Starbucks, Subway and Taco Bell, combined. 

Even in the quick-service burger category, one of the largest and most established segments in the restaurant industry, McDonald’s market share is immense. It accounts for more than 46 percent of the share of the country’s largest burger chains, according to NRN Top 100 data.

McDonald’s has lost some share in recent years amid sales struggles, while competitors gained ground. Earlier this year, McDonald’s executives said much of the 500 million transactions it lost were to its more immediate competitors in the quick-service burger segment.

The company has worked feverishly to regain those transactions, and has generated some momentum under CEO Steve Easterbrook.

McDonald’s U.S. same-store sales grew 1.7 percent in the first three months of the year, an increase that surprised analysts who expected a pullback due to difficult comparisons from the previous year. Instead, McDonald’s was the strongest performer among limited-service burger chains during a difficult market.

What’s more, there’s a sense that the company can continue its momentum as the year goes on, thanks to easier comparisons and various strategies the chain is using to get customers in the door.

McDonald’s introduced its Signature Crafted line of sandwiches last month, to great fanfare. The company has gained some traffic by offering $1 drinks nationwide.

The company is rapidly expanding delivery, now offered in more than 1,000 locations, and plans to add mobile order and pay — as well as curbside service — in the remainder of the year. 

In the coming years, McDonald’s expects to add kiosks at restaurants across the country in what it calls the “Experience of the Future,” and next year it will start making Quarter Pounder burgers with fresh beef, made to order. The chain also wants to bolster its McCafé line. 

In a report on consumer business sectors on Thursday, Fitch Ratings said it views McDonald’s efforts positively. But the service also said it expects volatility in the chain’s same-store sales due to heightened competition. 

Still, Norfleet Taylor suggested that McDonald’s could boost its market share as Walmart is doing in the retail world — by flexing its considerable financial muscle.

 

“Conventional wisdom in the industry says that if you have a big share of the market, you’re bound to lose some share,” Norfleet Taylor said. “Yet Walmart is gaining share. They’re leveraging their financial strength by reducing prices to make themselves more attractive to consumers. McDonald’s has a lot of the same ability to do that.” 

Other analysts certainly appear to be on board. According to Nasdaq, 14 analysts have “Strong Buy” ratings on McDonald’s stock, and one has a “Buy” rating. By comparison, eight analysts have a “Hold” rating on McDonald’s stock, and none suggest that investors should sell the stock.

Sara Senatore, an analyst with Bernstein Research, is bullish on McDonald’s stock, and has a price target on it of $170 per share. She suggested that another McDonald’s strategy, an expected launch of a loyalty program in 2018, could generate further sales momentum by improving customer frequency.

“McDonald’s higher average frequency and lower average check make it better suited to loyalty than many other concepts,” Senatore wrote in a note this week.

To be sure, not everyone said McDonald’s success will result in poor results everywhere. That includes Wall Street. For instance, Wendy’s stock has risen 22 percent this year. And stock in Burger King owner Restaurant Brands International Inc. — which swallowed the chicken chain Popeyes Louisiana Kitchen this year — has increased 28 percent.

In an earnings call earlier this month, Wendy’s CEO Todd Penegor dismissed suggestions that McDonald’s fresh beef move next year will hurt the chain’s sales. In fact, he expects it to help Wendy’s sales.

“It does create more awareness,” Penegor said. “It adds some credibility to what we’ve been saying for almost 40 years.”

To be sure, McDonald’s has a long way to go to improve consumer views of its brand. The company is intent on changing that perception. It removed artificial ingredients from its Chicken McNuggets last year, and did the same with its ice cream this year, while also shifting to cage-free eggs.

But McDonald’s remains near the bottom of many consumer rankings of restaurant chains. To regain share, the company needs to strengthen its brand image with younger consumers, Norfleet Taylor said.

“That still hasn’t occurred,” she said. “And McDonald’s may have a more difficult shot at that. It’s more difficult for McDonald’s to do that than it is for Walmart.”

Contact Jonathan Maze at jonathan.maze@penton.com

Follow him on Twitter: @jonathanmaze

5 reasons independent restaurants are winning

Nation's Restaurant News - Thu, 2017-05-25 20:29

This post is part of the On the Margin blog.

Traffic at restaurant chains has been increasingly problematic in recent years, and has fallen at least 4.2 percent on a two-year basis in four of the past five months, according to MillerPulse. 

One reason for the decline is that consumers are broadening their spending, especially at dine-in concepts where prices are higher.

The beneficiary of this is the independent restaurant. As my colleague Lisa Jennings reported last week, independents are expected to gain market share in the coming years, and will grow at a higher rate.

To be sure, it’s difficult to truly get a handle on shifts in the independent market, and there’s some disagreement among experts as to whether independents are really gaining market share. 

But there are five reasons why I think independents can get a leg up on chains for the first time in many years:

1. Younger people like local. This cannot be emphasized enough. Large chains can tout their local ingredients all they want, but they will have only so much credibility with consumers. Independents have no such problem. “Millennials are the largest customer base out there,” small business advocate Rhonda Abrams said at the NRA Show, “and they like to shop local.”

2. Chain profit pressures. If chains are losing share, a lot of it is their own doing. Over the past decade, many chains have relied on discounts and lower-cost items to get customers in the door. But they’ve also faced higher food and labor costs in the process. So what to they do? Cut food quality, portion sizes or service. And the worst ones delay maintenance on buildings. Consumers notice these issues over time, and they opt to go elsewhere.

3. Television. I have a confession: My family loves watching "Diners, Drive-ins and Dives" on Food Network, so much so that we will routinely seek out restaurants in Minnesota that the show features. There are countless other shows on Food Network, Cooking Channel and other channels highlighting interesting local restaurants. Much like HGTV has impacted the way consumers buy houses, Food Network has impacted the way diners pick restaurants.

4. Delivery. Consumers clearly want food to be delivered directly to them. It’s the biggest single trend in the industry, and every decent executive in the business is at least studying the issue. But I still say that delivery favors the independent restaurant. Diners have demonstrated a willingness to pay higher prices for local cuisine. And delivery wipes out the convenience advantage that many chains enjoy, particularly in the casual-dining segment.

5. Social media. Ratings services and social media word-of-mouth advertising are erasing the messaging advantage that chains have historically boasted. Reviews on Google and Yelp remove the risk factor associated with picking an unknown local restaurant. Social media spreads the word about these restaurants more efficiently. Abrams highlighted a number of strategies innovative local concepts have used to get nearby customers to come to in their doors using Facebook.

None of this is to say that chains can’t gain market share. They can, as Olive Garden, Dave & Buster's and Texas Roadhouse can attest. But general trends suggest that independents have advantages in the battle over the consumer dollar that they haven’t had since, well, ever.

Jonathan Maze, Nation’s Restaurant News senior financial editor, does not directly own stock or interest in a restaurant company. 

Contact Jonathan Maze at jonathan.maze@penton.com

Follow him on Twitter: @jonathanmaze

Restaurant CEO pay rises with stocks

Nation's Restaurant News - Thu, 2017-05-25 19:44

With stock prices on the upswing, restaurant companies were feeling generous last year.

The typical restaurant industry CEO received a pay increase of 2.5 percent in 2016, according to a Nation’s Restaurant News analysis of pay packages for CEOs at publicly traded companies. 

Restaurant stocks finished up 2.8 percent in 2016, and the companies whose CEOs we analyzed for this story had a median increase of 6.8 percent.

Read more: How much did restaurant CEOs make last year?

But pay hikes in the corner office varied greatly — a reflection, perhaps, of a great divide in industry performance. Indeed, CEOs of the largest companies seemed to benefit the most last year.

Consider this: Yum! Brands Inc. CEO Greg Creed and McDonald’s Corp. CEO Steve Easterbrook received the two largest pay increases among CEOs in the job at least two years.

Creed’s pay more than doubled, to $15.4 million from $7.5 million. Easterbrook’s pay jumped more than 94 percent, to $15.4 million in 2016 from $7.9 million the year before — though Easterbrook was not CEO for the full year in 2015. 

The higher pay, especially for executives with the largest chains, followed overall business trends. Median pay for the executives at the 104 largest U.S. companies increased 6.8 percent last year, according to the Wall Street Journal.

This NRN list analyzes the pay packages of CEOs at 36 restaurant companies that did not make a change in the middle of the year in 2016, which factors out partial year pay packages.

So the list does not include a number of chains that struggled and made CEO changes, like Noodles & Co., Fiesta Restaurant Group Inc., and Famous Dave’s of America Inc. 

And this analysis does not include The Wendy’s Co. CEO Todd Penegor, who received more than $5.1 million, but was not the CEO for the full year. In addition, pay for the CEOs of Popeyes Louisiana Kitchen and Panera Bread Co were not available, because the companies have been purchased.

The average pay package for the 36 CEOs with their companies for at least two years was $5.6 million, up from $5.2 million a year ago.

Twenty of the 36 CEOs received raises. But the highest paid CEOs received the largest pay bumps. The 15 CEOs who received packages worth $5 million or more received an average pay increase of 21 percent.  For those who received less than $5 million, pay declined an average of 6 percent.

Salary makes up a small part of a typical CEO’s pay package — less than $900,000 of the $5.6 million was in the form of salary, on average. 

The rest of that $5.6 million comes in the form of stock, stock options and bonus and incentive pay. Only $1.3 million of Easterbrook’s $15.4 million package, is in the form of salary, for instance.

Five CEOs received total pay packages of $15 million or more, including both CEOs at Chipotle Mexican Grill Inc., Steve Ells and Monty Moran, who received more than $15 million apiece. Ells’ pay jumped 13 percent in 2016, while Moran’s pay increased 14 percent — even though Chipotle’s stock price fell by 21.5 percent in 2016. 

The highest paid CEO in the restaurant industry, once again, was Starbucks Corp. CEO Howard Schultz, whose pay increased 8.6 percent to $21.8 million in his final year overseeing day-to-day operations at the coffee giant.

Not included in the ranking, however, is Sardar Biglari, the CEO of Biglari Holdings and owner of Steak ‘n Shake. Biglari receives a $900,000 salary as CEO, but his private-equity firm, Biglari Capital, received a $31.6 million incentive from the company — a $32.5 million total package that would make Biglari the highest paid CEO in the industry.

We opted not to include Biglari, given that his company operates more like a private-equity group, and because of the complexities of his pay package.

On the other end are pay decreases for CEOs of struggling companies that have since made changes at the corner office.

That includes DineEquity Inc., the owner of Applebee’s and IHOP. Julia Stewart saw pay fall by 22 percent last year to $4.5 million, Ruby Tuesday Inc. CEO JJ Buettgen, meanwhile, received $2.3 million in the company’s 2016 fiscal year, down 40 percent from the year before. Buettgen has since left the company, which is up for sale.

Papa Murphy’s Holdings, meanwhile, let go of its CEO, Ken Calwell at the end of a difficult 2016 in which the chain’s sales had fallen steeply. His pay package fell by 23 percent.

To be sure, sometimes pay packages change for one-time reasons. At Ruth’s Hospitality Group Inc., CEO Michael O’Donnell in 2015 received one-time awards that he did not receive in 2016, and so his pay fell by 61.25 percent to $2.8 million. His pay in 2016 was more indicative of his historic pay package, than the $7.7 million he received in 2015. 

And Shake Shack Inc. CEO Randy Garutti’s pay package fell by 82 percent to $1.2 million. Garutti received $5.9 million in option awards in 2015 that he did not receive in 2016.

Contact Jonathan Maze at jonathan.maze@penton.com

Follow him on Twitter: @jonathanmaze

Nutella spreads its reach with new café

Nation's Restaurant News - Thu, 2017-05-25 17:54

Ferrero USA Inc. will open its first Nutella Café, highlighting its chocolate-hazelnut spread, on May 31, in Chicago.

The Parsippany, N.J.-based company, whose products also include Ferrero Rocher chocolates and Tic Tac mints, said the new Nutella Café will offer coffee, lunch items and a number of to-go options.

Ferrero has had a Nutella Bar for several years in Chicago’s Eataly food and restaurant market, but this is the company’s first standalone café.

“We wanted to create a world of Nutella for our fans that could truly capture the essence of the brand — not just in the dishes that will be served, but in the full experience from the moment you step into the space." said Noah Szporn, head of marketing for Nutella North America, in a statement.

 

Even the entryway that faces Chicago’s Michigan Avenue features architectural outlines and lighting shaped like the signature, squat Nutella jar and its round lid. The new café is a block from the city’s Millennium Park. 

Ferrero said the menu will include exclusive items such as grilled baguettes with Nutella, freshly roasted hazelnut and blueberry granola with yogurt and Nutella, and Italian specialties like "panzanella" fruit salad and gelato affogato topped with Nutella.

The company said a number of menu items will be available without Nutella, such as panini and salads.

 

"The Nutella Cafe offers something for everybody, and we encourage everyone to come in and try a dish or snack,” Szporn said. “We hope Nutella enthusiasts, Chicagoans and visitors enjoy the café as much as we enjoyed creating it."

The café will officially open on Wednesday, with an event including chef Rocco DiSpirito.

Nutella was created in Italy and debuted in the United States in 1983. The spread is available in about 160 countries. 

Contact Ron Ruggless at Ronald.Ruggless@Penton.com

Follow him on Twitter: @RonRuggless

Chefs celebrate berry season with strawberry shortcake

Nation's Restaurant News - Thu, 2017-05-25 17:32

A sure sign that summer is imminent is the proliferation of strawberry shortcake on menus. This year, chefs are celebrating the arrival of berry season with familiar and innovative versions of this classic dessert.

“With desserts, people want something that’s a little bit different,” said Anthony Alberin, executive pastry chef at Coffeemania, a Euro-Russian eatery in New York City. “For me, traditional ideas are boring. I want to see something more.”

Alberin’s “something more” is called Love Me, Love Me Not, an intricate take on classic strawberry shortcake. The dessert, which is evocative of a flower, is made with wild strawberry mousse with a mixed berry gel inside, on top of a shortcake base. It’s finished with a white chocolate and cocoa butter spray to give the exterior a velvety look.

“When you look at the display, it definitely stands out,” said Alberin of his bestselling dessert. “It’s strawberries — everybody loves strawberries.”

Also looking to make a strawberry standout is DaVee Harned, pastry chef at Pawpaw in Charleston, S.C. Harned’s creation features a lemon poppy seed bundt cake for the shortcake and first-of-the-season strawberries macerated with brown sugar, served with a side of basil ice cream. 

“It's just super light and fresh,” Harned said. “It also just puts a different twist on something that is very traditional. I wanted to have something that you can't get everywhere else."

 

At Halifax in Hoboken, N.J., pastry chef Stuart Marx adds height and an unexpected crunch to the summer favorite. His strawberry shortcake is made with three layers of vanilla spongecake, each brushed with a strawberry sauce that also contains lemon and sugar, then coated with graham cracker crumbs and topped with fresh and pureed strawberries and pistachios. It’s served with vanilla whipped cream and a scoop of roasted pistachio ice cream.

“My style is classic with a twist, so I knew I wanted to do a version of strawberry shortcake,” Marx said. “Plus, strawberry and pistachios is one of my favorite combinations since childhood. The flavors go perfectly together.”

And at the Tuck Room Tavern in Westwood, Calif., chef Sherry Yard serves a deconstructed strawberry shortcake: She places Harry’s Gaviota strawberries, Scottish shortbread and Bellwether Farms whipped cream in a decorative glass.

Chains are serving up strawberry shortcake, too. From June 19 to the end of August, Buffalo Wings & Rings, the 55-unit, family-friendly sports bar chain, will serve a cookie shortcake base dusted in powdered sugar and topped with vanilla ice cream, strawberries that will be locally sourced by each franchisee, and whipped cream.

Shortcake is resonating so strongly that some pastry chefs, like Amy Beeman of The Rieger in Kansas City, are finding creative ways to menu it even before strawberries comes into season near them.

“Shortcakes are kind of everywhere now,” Beeman said. “I love nostalgic desserts, things that remind you of your childhood. Strawberry shortcake is that for me.”

Despite fresh strawberries not yet being available near Kansas City, Beeman is whipping up a spin on the nostalgic dessert that has a similar taste and texture but takes advantage of another in-season favorite: rhubarb.

Beeman’s rhubarb shortcake is made with buckwheat shortcakes that are split open and filled with rhubarb puree. That’s topped with orange blossom pastry cream and finished with fleur spice (a mixture of pink peppercorn, hibiscus, rose petals and mint), and served with a side of poached rhubarb. The combination of the ingredients makes “everything pink and springy,” Beeman said. 

Cicis names Billie Jo Waara CMO

Nation's Restaurant News - Thu, 2017-05-25 16:47

Cici Enterprises LP, parent to the Cicis buffet pizza chain, has named Billie Jo Waara as chief marketing officer, the company said Wednesday. 

Waara, who most recently served as CMO of Cheyenne, Wyo.-based Taco John’s, succeeds Sarah McAloon, who left Cicis in March to join Del Frisco’s Grille.

“Billie Jo has an outstanding track record of working with transforming brands, and we are confident in her ability to keep the Cicis success story moving forward,” said Darin Harris, CEO of Irving, Texas-based Cicis, in a statement.

Waara is credited with digital initiatives and culinary innovation at 400-unit Taco John’s.

“Cicis is alive and relevant again, and it’s a dynamic time to join the company,” Waara said in a news release. “I am becoming part of an incredible team and look forward to working with them to build upon their success and continue growing our brand.”

In the upcoming Nation’s Restaurant News Top 100 census, Cicis booked an estimated $449.7 million in sales for the fiscal year ended December 2016, rising from $440.1 million in fiscal 2015.

Cicis, founded in 1983, has about 430 restaurants in 32 states.

Contact Ron Ruggless at Ronald.Ruggless@Penton.com

Follow him on Twitter: @RonRuggless

Advisory firm endorses Buffalo Wild Wings shareholder

Nation's Restaurant News - Thu, 2017-05-25 15:03

A proxy advisory firm has recommended that Buffalo Wild Wings Inc. shareholders vote for a trio of board nominees recommended by an activist investor, potentially paving the way for major changes at the board and at the company.

Institutional Shareholder Services has recommended that the Minneapolis-based company’s shareholders vote for former Pizza Hut CEO Scott Bergren as well as Mick McGuire, managing partner of activist investor Marcato Capital Management.

ISS also recommended that shareholders put Sam Rovit, CEO of food maker CTI Foods, who both Marcato and Buffalo Wild Wings endorsed. And the service recommended former McDonald’s Corp. executive Janice Fields get a seat.

Rovit, Bergren and McGuire will give Marcato “a sufficient voice to continue to push for appropriate changes at the company,” ISS said.

Marcato “has presented a compelling case that additional change is warranted at this time,” ISS said in its report.

Buffalo Wild Wings stock rose 8 percent on Wednesday.

“We are pleased that ISS recognizes further change on Buffalo Wild Wings’ board is needed and greater shareholder oversight will help increase accountability and avoid any delays in the implementation of strategic projects,” McGuire said in a statement.

ISS’s recommendations would further a general overhaul of Buffalo Wild Wings’ board, and would remove two of three directors who have been on the board for more than a year.

“If shareholders follow ISS' recommendation, there will be only one independent director on the Buffalo Wild Wings Board that has served for longer than eight months,” the company said on Wednesday. “We are surprised that ISS did not even consider the fact that its recommendation would essentially empty the boardroom of all independent institutional knowledge.”

ISS the best known among proxy advisory firms, who make recommendations to shareholders over corporate governance issues. Many institutional investors rely on these recommendations, and so they can have a big impact on the results of board elections such as the proxy fight between Buffalo Wild Wings and Marcato.

Marcato recommended four people to the Buffalo Wild Wings board. One of those four includes one of the chain’s former executives, Lee Sanders, whose nomination has been subject to a particularly forceful challenge from the company.

Buffalo Wild Wings has argued Sanders has exaggerated his role at the company. And earlier this week, the company said Sanders has been sending emails and texts to the chain’s franchisees as recently as February, offering to buy their restaurants.

The proxy vote could have major implications for Buffalo Wild Wings’ future and its direction. Marcato has called for the resignation of the chain’s longtime CEO, Sally Smith.

It also believes that the company should rapidly refranchise the vast majority of its more than 600 company locations, and that sales of those locations would take two years or less. Buffalo Wild Wings has argued such a strategy is too aggressive. The company plans to refranchise 80 locations, or 13 percent of its 634 company locations.

Fast refranchising deals are not uncommon, especially these days. But ISS did warn in its report that such quick changes are rare in casual dining, with only Applebee’s having done so that quickly.

“It appears unwise [for Buffalo Wild Wings] to fully commit to such a specific level of franchising at this point,” the report said.

Mostly, however, the proxy fight has been over the company’s performance under current management, with Marcato arguing that the company has lost its way over the past two years. ISS agreed with Marcato that the company has underperformed other restaurants, in terms of returns to shareholders.

ISS argued that Buffalo Wild Wings aggressively increased costs in 2015 as it faced commodity pressure, which hurt traffic in the long run. It then says the company bought restaurants in 2016 to sustain topline growth. That hurt profit margins and the company’s returns on its investments.

ISS also argued that many of Buffalo Wild Wings’ recent decisions “have been driven by [Marcato’s] engagement with the company,” the report said.

Contact Jonathan Maze at jonathan.maze@penton.com

Follow him on Twitter: @jonathanmaze

Off-lease vehicles could send U.S. sales tumbling, analyst warns

AutoNews - Thu, 2017-05-25 15:00
An incoming "tsunami" of off-lease vehicles could send annual U.S. new-vehicle sales tumbling as low as 13 million by 2021, according to one Wall Street analyst.
Categories: Latest News

May U.S. auto sales projected to rise -- slightly

AutoNews - Thu, 2017-05-25 12:49
U.S. new-vehicle sales are expected to rise very slightly in May from a year ago, narrowly snapping the industry's streak of four consecutive monthly declines.
Categories: Latest News

Stunted Growth

Hotel Interactive - Thu, 2017-05-25 12:26
STR: U.S. Lodging Industry Momentum Slows As Pricing Power Proves Elusive

Chevy extends marketing deal with Detroit Red Wings at new arena

AutoNews - Thu, 2017-05-25 11:06
Chevrolet extended its sponsorship contract with the NHL's Detroit Red Wings, becoming the official vehicle of Detroit's new Little Caesars Arena.
Categories: Latest News

4 ways to use tech to optimize labor costs

FastCasual.com - Thu, 2017-05-25 08:07
Monitoring labor costs is more crucial than ever, but back-office systems can automate and help lower labor costs.

Hilton Opens The First Ever Tru By Hilton And Reaches 5,000 Hotel Milestone

Hotel Interactive - Thu, 2017-05-25 07:21
OKLAHOMA CITY, OK––Hilton (NYSE: HLT) today celebrated the grand opening of the first-ever Tru by Hilton – the company’s 5,000th hotel ...

Cambria Hotels Opens Its Second Chicago Property In The Loop-Theatre Ditrict

Hotel Interactive - Thu, 2017-05-25 07:14
ROCKVILLE, MD--Choice Hotels International, Inc. (NYSE: CHH), one of the world's largest hotel companies, in partnership with developer Murphy Asset Management ...

Marshall Hotels & Resorts Opens 162-Room Grand River Hotel In Grand Rapids, MI

Hotel Interactive - Thu, 2017-05-25 05:27
SALISBURY, MD—Marshall Hotels & Resorts, a leading hotel management and services company that operates properties nationwide, today announced that the company ...

Red Robin outlines strategy amid casual-dining tumult

Nation's Restaurant News - Wed, 2017-05-24 20:43

Red Robin Gourmet Burgers Inc. is overhauling its operations, redefining service, adding off-premise alternatives and reconsidering mall locations as it faces a challenging casual-dining market, executives said Tuesday.

At the Greenwood Village, Colo.-based company’s first investor day in more than three years, Red Robin executives said many of its restaurants share the traffic declines in big-box retail and entertainment, as more consumers shop online and get entertainment streamed into their homes.

“I'm here to tell you casual dining peaked, and it's not coming back,” Denny Marie Post, Red Robin’s CEO, told analysts. “It is not going to be the reigning concept ever again to the extent that it was. It had its moment.

“It had its moment when we were all discovering big-box stores and going out to movie theaters and doing lots of stuff, of which casual dining was part of that occasion,” Post said. “We were never a destination, or a very few were. We were part of something else.”

Red Robin executives said they are reconsidering where they locate restaurants and are also testing off-premise channels like catering and delivery.

Alexander Slagle, an analyst with Jefferies LLC, said Red Robin is showing “early signs of improvement.”

In a note to investors, Slagle said the company’s “efforts to improve ops in the restaurants, build awareness in high-penetration markets using incremental local media and drive frequency via renewed focus on everyday value seem to be moving the needle.”

Slagle also noted that the company was keeping it unit growth modest, with emphasis on markets it had already penetrated, “allowing it to better leverage its scale and awareness in those regions.”

Les Lehner, Red Robin’s chief development and procurement officer, said the brand halted mall development in 2015. He said about 17 percent of Red Robins locations are in malls, and they tend to lag other units in revenue.

“Everybody is aware that malls are struggling right now and face a very difficult path,” he said.

Post pointed out, however, that some mall locations do especially well, including Red Robin’s highest volume restaurant, with $6 million annually, at the Northgate Mall in Seattle. 

“We're either seeking an exit strategy, because we don't believe that the redevelopment plans and programs that the landlords had in place are going to work, or we're trying to find some creative ways to create incremental revenue streams out of these models,” Lehner said.

Jonathan Muhtar, the head of Red Robin’s marketing and off-premise programs, said the company hopes to tap its 6.6 million loyalty program members with more focused messaging and to look at delivery and carryout, which survey indicate would increase frequency among half the brand’s guests.

The company is looking at various delivery possibilities, as well as introducing this summer a new “Burger Bar” packaging for large orders.

“This has really developed with an eye toward catering as well, where we have the ability to provide many different toppings and ingredients, keep those fresh and display [them] in a way that's appealing to our guests, while also protecting the hot product,” he said. 

Post said Red Robin is also looking at other service models. While only about 8 percent of sales are in alcoholic beverages, she said the brand would look at possibilities such as self-service “beer walls.”

“There's a point at which we might turn that into an experience where the guest can help themselves, and not make it a takeaway but in fact that guest will probably step back and appreciated the chance of sample variety and if you seen those kind of beer walls that really very, very effective,” she said.

Carin Stutz, Red Robin’s chief operating officer, said the brand is testing six new service models in various locations, adding that two seemed to provide the “frictionless and hassle-free service” that would work in the future.

For the first quarter, Red Robin said its income declined 18.7 percent, to $11.6 million, or 89 cents per share, from $14.2 million, or $1.03 per share, the previous year. Revenue increased 4.1 percent, to $418.6 million, from $402.1 million the previous year. 

Red Robin said same-store sales fell 1.2 percent in the first quarter ended April 16. That reflected a 1.7-percent decline in traffic and a 0.5-percent increase in average check, the company said.

As of April 16, Red Robin had 556 restaurants, including 469 company-owned locations and 87 franchised units.

Contact Ron Ruggless at Ronald.Ruggless@penton.com

Follow him on Twitter: @RonRuggless

Taco Bueno names new executives

Nation's Restaurant News - Wed, 2017-05-24 20:40

Taco Bueno Restaurants L.P. has named new executives to head operations and marketing for the Tex-Mex fast-casual chain, the company said Wednesday.

Tony Darden, formerly of Panera Bread, has been named to the new position of chief operating officer. Sarah Beddoe, formerly of Sonic Drive-In, was named in January as chief marketing officer, succeeding Jeff Carl, who left to pursue other opportunities, a company spokeswoman said. 

“These key additions are solidifying our intent to keep firmly rooted in the traditions that have supported our brand for the past 50 years while taking innovation seriously in an extremely competitive market,” said Mike Roper, Taco Bueno president and CEO, in a statement. “We are committed to strengthening our industry presence to attract and keep new customers.”

Darden most recently was with Panera Bread, where he served as vice president of operations.

Beddoe most recently served as vice president of national marketing at Sonic. Prior to Sonic, she was director of digital experience and social engagement for Pizza Hut Corp.

Taco Bueno, founded in 1967, operates 183 restaurants in Arkansas, Colorado, Kansas, Louisiana, Missouri, Oklahoma and Texas. The company is privately held by TPG Growth.

Contact Ron Ruggless at Ronald.Ruggless@Penton.com

Follow him on Twitter: @RonRuggless