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McDonald’s same-store sales fall

Nation's Restaurant News - Mon, 2017-01-23 23:45

McDonald’s Corp.’s same-store sales fell 1.3 percent in the U.S. in the fourth quarter ended Dec. 31, thanks largely to tough comparisons, the company said on Monday.

Same-store sales increased 2.7 percent worldwide, however, while diluted earnings per share increased 10 percent to $1.44 from $1.31 — beating analysts’ expectations for the quarter. McDonald’s stock fell slightly in early trading.

Global same-store sales increased 3.8 percent on the year, the best year for the company since 2011.

“Throughout 2016, we worked diligently to lay the groundwork for our long-term future,” CEO Steve Easterbrook said in a statement. “Our efforts yielded a more streamlined and focused organization that generated solid fourth quarter and full-year results.” 

Net income fell 1 percent to $1.19 billion from $1.21 billion. Revenues fell 5 percent to $6 billion from $6.3 billion. Refranchising, general and administrative cuts and various one-time costs and revenue sources influenced the numbers.

McDonald’s introduction of all-day breakfast in 2015, combined with mild weather, led to 5.7 percent same-store sales growth in the fourth quarter of that year. While the company added items to that menu in 2016, it couldn’t quite match up to that performance.

The company said on Monday that it plans to focus on increasing traffic in 2017. Yet Easterbrook noted that the company faces a similar issue in the first quarter of this year, when year-ago same-store sales increased 5.4 percent thanks to better weather and all-day breakfast as well as the introduction of the McPick value menu. 

Same-store sales increased 2.8 percent in its International Lead segment, including more mature foreign markets. They increased 4.7 percent in the company’s High Growth segment, thanks in part to strong performance in China. Same-store sales increased 11.1 percent in the company’s Foundational markets thanks to strong performance in Japan and certain markets in Latin America. 

Contact Jonathan Maze at jonathan.maze@penton.com

Follow him on Twitter at @jonathanmaze

Union Square Hospitality Group invests in 14-unit NYC coffee shop

Nation's Restaurant News - Mon, 2017-01-23 23:32

The first time Jonathan Rubinstein spotted Danny Meyer at Joe Coffee, his New York coffee shop, Rubinstein was so nervous that he couldn’t bring himself to talk to the famous chef.

“I remember being super star-struck,” Rubinstein said in an interview. “I was unable to introduce myself.”

Years later, Meyer has since become a big investor in Joe Coffee. On Monday, Meyer’s Union Square Hospitality Group announced its investment in the 14-unit chain of coffee bars. Terms of the investment were not disclosed. 

The funds will help the chain grow — though Rubinstein, at least for now, is in no rush to look beyond New York City.

“I think right now, the world is our oyster,” Rubinstein said. “But we’re going to spend 2017 focusing on New York. There’s still a lot for us to fix. There are stores we’d like to change, stores we’d like to move. We’d like to work on the brand.

“In 2018, we will try another city.”

City shopping is a long way from where Rubinstein was pre-coffee in 2002. In August that year, he left his job as a talent agent, deciding to do something “that was kind of opposite of a high pressure corporate job.”

The following January he settled on starting a coffee bar, then spent the next few months learning everything he could about coffee before the shop opened its doors that summer. “I learned it all from when we signed the lease to when we opened the doors,” said Rubinstein. 

Joe Coffee has since evolved into a player in what is known as the “third wave” of coffee concepts seeking to bring higher quality coffee to the public. In addition to the coffee bars, the company has a roaster with a burgeoning wholesale venture, a catering business and an education component.

The company started roasting its own beans four years ago and started a wholesale venture a year and a half later, selling coffee to restaurants, hotels, cafes and grocery stores. Rubinstein believes that is a big opportunity for his company. 

Joe Coffee also has an education component. The company views itself as a major advocate for coffee education. The company and its baristas have developed a curriculum to teach people how to make their own espresso beverages at home. The company held about 60 classes last year.

“It’s great for the brand for people to think of us as the coffee authority,” Rubinstein said. 

The company also got into catering, almost by accident. After the Natural History Museum asked if the company could brew coffee for a meeting of 20 people, Joe Coffee developed a catering strategy.

The company will now offer pop-up coffee bars for meetings, fashion shows, weddings or other events for anywhere from 20 to 700 people. Last year, the company did 220 such events. 

“It has become a big part of our business,” Rubinstein said. “There are days we have four or five events. It’s been sort of a sleeper hit.”

Rubinstein ultimately got to know Meyer when, in 2006, Meyer tapped Rubinstein to serve as a judge in Union Square’s first Barista Olympics. Joe Coffee has worked closely with Union Square, providing coffee for the café at the 9/11 Memorial Museum Pavilion and at Public Fare, the all-day cafes at Central Park’s Delacorte Theater and in Bryant Park.

“USHG has had a meaningful relationship with Joe Coffee and founder Jonathan Rubinstein for many years, both as avid fans of their coffee bars and also having served their coffee at Union Square events for years,” Meyer said in a statement.

Ultimately, Rubinstein said, as Union Square started looking to make investments in “like minded companies,” Joe Coffee was given the opportunity to meet with Meyer and his group.

“We were almost jumping out of our seats,” Rubinstein said. “We were so excited about what we could do together.” 

Meyer said in a statement, “We chose to make this investment with Joe Coffee because they are dedicated to the pursuit of making flawless coffee, are led by passionate and exceptional management, and share the same hospitality values as USHG.”

The company has funded its growth and expansion largely by relying on funds and investments from friends and family. The funding from Union Square will free the company from those constraints.

But the funding also provides Joe Coffee with access to Union Square’s experience and skills, especially on issues like real estate selection.

“They have a scientific way of looking at things,” Rubinstein said. “Instead of what I did when we moved to Philadelphia, with me jumping on a train, walking around all day and saying, ‘This is neat, let’s open here.’”

And though Rubinstein has had a relationship with Union Square and Meyer for years now, he remains awestruck at what his coffee bar has achieved since 2003.

“Who would have thought that some day he would choose to invest in us and be part of our world,” Rubinstein said. “It’s still unbelievable to me.” 

Contact Jonathan Maze at jonathan.maze@penton.com

Follow him on Twitter at @jonathanmaze

McDonald’s confronts falling customer counts

Nation's Restaurant News - Mon, 2017-01-23 22:29

This post is part of the On the Margin blog. 

Amid the euphoria over same-store sales increases at McDonald’s Corp. last year was this undeniable fact: Its customer count remained weak.

McDonald’s sales increases came from higher prices and from consumers adding items like Egg McMuffins to traditional lunch orders. But customers were reducing overall visits.

Last year, guest counts fell 2.1 percent at the Oak Brook, Ill.-based burger giant. That came on top of a 3-percent decline the year before.

In fact, it was the fourth straight year that customer counts fell in McDonald’s important home market. The chain’s traffic fell a compounded 10.4 percent over that period.

Worse, the traffic decline in 2016 came despite numerous traffic-generating initiatives. McDonald’s started to promote its McPick 2 Menu last January, hoping that discounts would bring customers in the door.

While that effort included a couple of national promotions over the course of the year, different McDonald’s regions frequently kept their own McPick menus going in order to increase traffic.

On McDonald’s earnings call Monday, CEO Steve Easterbrook cited “pockets of success in regions that doubled down on affordability,” suggesting that areas that did more to push value generated more traffic.

“The McPick menu does work well for customers,” Easterbrook said. “But that alone isn’t winning market share on the value end.”

McDonald’s traffic problems are likely worse than appearances, too. Assuming that traffic has remained steady at breakfast — which McDonald’s executives have routinely described as “strong” — we can calculate that traffic at lunch and dinner has fallen a cumulative 12.5 percent to 13.5 percent over that period. That’s a lot of lost customer count.

Ironically, McDonald’s enjoyed strong unit profits last year. Company-operated restaurant margins, for instance, were 17 percent last year, up from 15.2 percent. Those margins came thanks to unusually high price increases and lower commodity costs last year.

Improved unit-level cash flow for franchisees means there’s “never been a better time to be an owner-operator in the McDonald’s system,” Easterbrook said. But he acknowledged that the company’s profitability over time depends on traffic.

Traffic “dominates our conversations,” Easterbrook said. “Owner-operators are particularly mindful of it.”

Easterbrook suggested that McDonald’s will focus on investing some of the company’s high cash flows toward generating traffic.

The company said its $1 McCafé beverage offer — which includes $1 coffee and $2 small specialty McCafé drinks — could, along with McPick offers, generate better traffic. McDonald’s also introduced two new sizes of Big Macs this month, and is planning a major ad campaign.

Easterbrook also said McDonald’s would invest in its “Experience of the Future,” expanding the interface to more markets this year. The service model enables customers to order via kiosk and get table service.

“It’s something we’ve had great success with in more mature markets around the world,” he said.

Ultimately, however, this is a competitive market. McDonald’s immense size makes growing traffic that much more of a challenge.

But company executives said the market offers room for growth.

“The market is huge,” Easterbrook said. “We have a relatively small percentage of the formal eating-out market. Plenty of customers are eating out. We have to fight harder to get customers coming our way.”

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

Activist pushes for new Bravo Brio board members

Nation's Restaurant News - Mon, 2017-01-23 21:02

Bravo Brio Restaurant Group Inc.’s largest shareholder has taken a big step to get more involved in company operations with the nomination of three independent directors last week.

TAC Capital LLC, owner of 15 percent of Bravo Brio stock, on Friday nominated three people to the board and urged the Columbus, Ohio-based casual-dining operator to add them as directors immediately. The investment firm said that the company would benefit from the infusion of independent directors.

“As a shareholder, we believe the board would benefit from the addition of new independent directors, and we expect the director candidates will offer to the board new perspectives, strengths and experiences with their backgrounds in restaurant operations, finance, management and strategic planning,” Donald Adam, chairman at TAC, wrote in a letter to the board last week.

In a statement, Bravo Brio said it acknowledged receiving the letter and that it would “always consider constructive input.”

"Bravo Brio Restaurant Group is committed to executing a business strategy aligned with the best interests of the company and all of its shareholders,” according to the statement. “The company regularly engages in open and transparent dialogue with its investors and will always consider constructive input that helps drive long-term shareholder value."

TAC has been buying up shares of Bravo Brio for months, but initially filed as a “passive” investor, meaning that it didn’t plan to push management to make changes or nominate board members.

The filing late last week signals that it is getting off the sidelines and pushing for changes. 

TAC recommended three people for the board, including Jimmy Loup, founder of the 17-unit Grub Burger Bar and a former joint venture partner at Outback Steakhouse. 

The firm also recommended James Wolfe, president of financial services firm The Adams Corporation/Group — of which TAC Capital is a subsidiary — and William Dusek, senior vice president of corporate development with The Adams Corporation.

Bravo Brio, which owns the Bravo Cucina Italiana and Brio Tuscan Grille chains, has struggled recently with declining sales and profits. The company recorded a $1.8 million operating loss for the first nine months of 2016 through Sept. 25, while revenue fell 2.6 percent, to $308.6 million.

Bravo reported a same-store sales decline of 8 percent in the third quarter, or a decline of 11.1 percent on a two-year, stacked basis. Meanwhile, Brio’s same-store sales fell 3.7 percent, or a 7.5-percent decline over two years.

Contact Jonathan Maze at jonathan.maze@penton.com

Follow him on Twitter: @jonathanmaze

Chili’s cuts corporate and field staff in a restructuring

Nation's Restaurant News - Mon, 2017-01-23 20:33

Chili’s Grill & Bar has laid off nearly 50 employees from its corporate staff and more than 30 people from its field director team in a restructuring, the company told employees Friday.

In a message to employees, the Dallas-based division of Brinker International Inc. said the layoffs included nine regional directors, 29 area directors and nearly 50 corporate employees.

The layoffs aim at streamlining the “above-restaurant organization” to bring the Chili’s team “closer to the restaurants,” a company spokesperson wrote in an email Monday.

“This new structure ensures that we are well-organized to leverage our resources more effectively and prioritize our efforts to help reduce complexity, ensure clarity in roles, enhance collaboration and improve efficiency in decision-making,” the spokesperson said.

Brinker, which also owns the Maggiano’s Little Italy brand, is scheduled to report second-quarter earnings before the stock market opens on Wednesday. 

For the first quarter ended Sept. 28, Brinker said it experienced “choppy” sales at both brands. 

Chili's company-owned same-store sales declined 1.4 percent, and Maggiano's same-store sales slipped 0.6 percent. Traffic at Chili’s company-owned locations fell 4.1 percent in the quarter.

Brinker’s first-quarter net income fell 30 percent, to $23.2 million, or 42 cents per share, from $33.2 million, or 54 cents per share. Revenue declined 0.5 percent, to $758.5 million, from $762.6 million the previous year.

Brinker’s last large-scale layoffs were in 2008 and 2009. Chili’s cut 125 positions at its corporate headquarters in 2008, and trimmed 155 jobs after the sale of Romano’s Macaroni Grill in 2009.

As of Sept. 28, Brinker owned, operated and franchised 1,652 restaurants, including 1,601 Chili’s units and 51 Maggiano’s locations.

Contact Ron Ruggless at Ronald.Ruggless@Penton.com

Follow him on Twitter: @RonRuggless

Late-night snack attack: There are ways to combat it

Topix - Mon, 2017-01-23 18:11

Lisa Herzig, Fresno State associate professor and director of the Dietetics and Food Administration Program, explains why it's tough to resist unhealthy snacks late at night. It's worse than Dracula sucking blood, the power that cookies, candies, pies, chips and ice cream have over us after the sun goes down and the dinner dishes have been washed.

Categories: Today's Food News

Burger King Testing App in Miami That Lets You Pay for Food Without a Cashier

Topix - Mon, 2017-01-23 13:35

Tim Horton's , the Canadian coffee-and-doughnuts chain, selected Miami to be a testing ground for a Burger King smartphone app that lets customers pay for their food without going through a cashier. Since December, a t least 25 Burger King locations, along with more than two dozen Tim Horton's spots in Ontario, have been testing the app, which is planned for launch this spring at both restaurant chains in more than 4,000 locations across Canada, the Canadian Press reported.

Categories: Today's Food News

Crime 40 mins ago 5:26 a.m.3 armed robberies at fast food restaurants; CMPD investigating

Topix - Mon, 2017-01-23 08:55

Charlotte-Mecklenburg Police are investigating three robberies that took place at fast food restaurants in the Charlotte area on Sunday night. A Burger King, Jack in the Box and a Cook Out were all robbed within two hours of one another.

Categories: Today's Food News

CMPD investigating 3 armed robberies at fast food restaurants

Topix - Mon, 2017-01-23 08:55

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Categories: Today's Food News

String of Sunday fast food restaurant robberies under investigation

Topix - Mon, 2017-01-23 08:55

Three fast food restaurants were robbed Sunday night in the Charlotte area, prompting an investigation into whether the cases are related. Charlotte-Mecklenburg police say the string of armed robberies started around 8:30 p.m. at the Burger King located in the 2900 block of South Boulevard.

Categories: Today's Food News

Contractor gives overhead look, inside peek at Carl's Jr.-Bossier

Topix - Mon, 2017-01-23 02:33

A contractor is giving viewers an overhead look and an inside peek at one of Bossier City's newest fast-food restaurants. Work appears to be nearing completion on Carl's Jr. immediately north of Sam's Southern Eatery in the 2900 block of Barksdale Boulevard.

Categories: Today's Food News

Fast food outlet in 2am opening bid

Topix - Sun, 2017-01-22 22:33

NIGHT PLAN: The Oak Lane outlet of fast food chain Mahmood's wants to stay open until 2am, but the Environmental Health team has concerns about noise BRADFORD'S Environmental Health team is objecting to a fast food restaurant's bid to serve hot food and drink until 2am. A branch of Bradford-based burger chain Mahmood's, in Oak Lane, Manningham , has applied for a licence for late night refreshment from 11pm to 2am daily.

Categories: Today's Food News

Restaurant Brands International (QSR) Downgraded by Zacks Investment Research

Topix - Sun, 2017-01-22 18:16

According to Zacks, "Restaurant Brands International Inc. operates as a quick service restaurant company. It is the parent company for Tim Hortons Inc. and Burger King Worldwide, Inc. Tim Hortons menu includes premium coffee, hot and cold specialty drinks , specialty teas and fruit smoothies, fresh baked goods, grilled Panini and classic sandwiches, wraps, soups, prepared foods and other food products.

Categories: Today's Food News

We tried grilled-chicken sandwiches from all the major fast-food chains - and the winner is obvious

Topix - Sun, 2017-01-22 14:08

While nowhere near as glamorous or greasy as its crispy companion, grilled chicken is starting to increase in popularity as it rides the wave of health-conscious dining. But seared chicken isn't masked by a delicious fried coating, so it has to be good to pass muster.

Categories: Today's Food News

'Founder' director John Lee Hancock sees parallels between...

Topix - Sat, 2017-01-21 23:07

There's a scene in new movie "The Founder" in which its subject, Ray Kroc, the failed salesman turned visionary of the McDonald's fast-food empire, is recruiting new franchise owners by speaking to church and civic groups, at synagogues and to Boy Scout leaders, among others. Director John Lee Hancock remembered telling actor Michael Keaton , who plays Kroc, he was going to shoot him in six places, saying essentially the same thing, and intercut the scenes, so the actor should just "bang those home."

Categories: Today's Food News

Someone left a pig's head on the pavement outside Burger King in Cardiff

Topix - Sat, 2017-01-21 18:52

Shoppers in Cardiff were baffled when a pig's head was left on the pavement outside a branch of Burger King. The head was left outside the fast food chain in St John's Street on Saturday afternoon with - in equally confusing fashion - a dead fish placed on top of it.

Categories: Today's Food News

Disgusted Kentucky Fried Chicken diner 'finds beak' inside spicy wing takeaway

Topix - Sat, 2017-01-21 14:33

A KFC fan says he was amazed to find what looked like a chick's beak inside his spicy wing. Jordan Simpson, 22, treated himself and his girlfriend Shirley Clarke, also 22, to a KFC takeaway after work on Friday evening.

Categories: Today's Food News

Super Duper Burgers: First an East Bay expansion, then the world

Topix - Sat, 2017-01-21 10:11

Super Duper Burgers, a growing San Francisco-based chain, specializes in burgers made of vegetarian-fed beef from family-owned ranches, which is ground daily, plus organic Straus Creamery shakes and house-made pickles. - Super Duper Burgers , the San Francisco-born chain that aims to expand not just throughout the Bay Area but globally, is starting with new locations in Concord and Berkeley and at SFO.

Categories: Today's Food News

Bloomingdale welcomes Chick-fil-A, still miffed about Walmart

Topix - Sat, 2017-01-21 05:47

Now that the dust has settled and some nearby homeowners' tempers have tempered a bit following the highly contentious March 2016 opening of the Walmart Supercenter in Crest Pointe Towne Center, owners of an upcoming newcomer on the 43.5-acre site have high hopes for a warm welcoming. Chick-fil-A Brandon South, a 4,971 square-foot fast-food restaurant fronting Bloomingdale Avenue just east of Blowing Oak Street, will open Thursday with inside seating for 130 diners and a two-lane drive through to accommodate grab-and-go customers.

Categories: Today's Food News