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Updated: 2 hours 29 min ago

Chipotle says payment system was hacked

Tue, 2017-04-25 21:30

Chipotle Mexican Grill Inc. said on Tuesday that it detected unauthorized activity on its payment system this spring.

The company did not have details about the extent of the hack, and how many restaurants or customers could have been affected. CFO Jack Hartung said during the company’s earnings call on Tuesday that the hack affected the company’s credit card systems from March 24 through April 18.

Hartung said the company immediately began an investigation, working with cyber security firms.

“We believe the actions taken have stopped the unauthorized activity,” he said.

The news put a damper on an otherwise strong first-quarter earnings report for the Denver-based burrito chain.

Chipotle reported 17.8-percent same-store sales growth in the quarter ended March 31, along with improved profit margins. The numbers were unexpectedly positive and led to a spike that at one time put Chipotle’s stock price above $500 a share for the first time since February 2016. 

After Chipotle revealed news of the hack, the stock price fell below $480.

The company also said it would soon start testing its first dessert, called Bunuelos, which are crispy, fried tortilla strips with honey.

Contact Jonathan Maze at

Follow him on Twitter: @jonathanmaze

Del Frisco’s to create more distinction between 3 brands

Tue, 2017-04-25 21:12

Del Frisco’s Restaurant Group Inc. is creating more distinction between its three brands through new leadership, chefs and menu focus, executives said Tuesday.

Norman Abdallah, CEO of Southlake, Texas-based Del Frisco’s, said the company is taking steps to differentiate Del Frisco’s Double Eagle Steak House, Del Frisco’s Grille and Sullivan’s Steakhouse.

The company has hired Bain Consulting to help it hone the Grille concept. 

“Del Frisco's Grille is also testing a new menu based upon initial findings for Bain Consulting work, with a full rollout slated for the fourth quarter,” Abdallah said during a first-quarter earnings call. “It will include a much improved beverage program supported by formalized wine education of our staff designed to build check.”

Bain’s consumer research, which surveyed more than 3,000 Del Frisco’s guests, also found that price points were less of a concern than having a venue to socialize with friends, or providing a high-service meal.

“Only 13 percent of our guests are true value-seekers, looking for a well-priced meal,” Abdallah said. “This suggests to us that we have a distinct opportunity to build check with the overwhelming majority of our guests.”

Rhe research would also be used to determine real estate locations in the future, “so that we are even more disciplined in generating higher cash-on-cash returns from new store development,” he said.

The company will also accelerate restaurant development next year, to four to seven new restaurants.

In May, Del Frisco's Double Eagle Steak House will open a new two-story restaurant in Plano, Texas. In June, it will open a Del Frisco’s Grille in downtown Manhattan, complementing an existing location in Rockefeller Center.

The first opening of 2018 will be a Del Frisco's Grille in Westwood, Mass., Abdallah said.

“This will be the first location to incorporate the learnings from our Bain Consulting project, and to be considered our ‘Grille of the Future,’” he said.

For the first quarter ended March 21, Del Frisco’s net income fell 38.8 percent, to $3.3 million, or 14 cents per share, from $5.4 million, or 23 cents per share, the previous year. Revenue increased 3.3 percent, to $83.9 million, from $81.2 million the previous year.

Del Frisco’s systemwide same-sales slipped 0.2 percent in the first quarter, reflecting a 0.8-percent decline in average check offset by a 0.6-percent increase in customer counts.

By brand, same-store sales fell 0.5 percent at Del Frisco's Double Eagle Steak House, rose 1.1 percent at Sullivan’s Steakhouse and dropped 0.9 percent at Del Frisco’s Grille.

Among the recent leadership additions, Del Frisco’s has hired Sarah McAloon as president of the Del Frisco’s Grille brand. She assumed the post on April 3. McAloon most recently served as chief marketing officer of Cicis. 

As of March 21, Del Frisco's had 52 restaurants across 23 states and Washington, D.C., including Del Frisco's Double Eagle Steak House, Sullivan's Steakhouse and Del Frisco's Grille. 

Contact Ron Ruggless at

Follow him on Twitter: @RonRuggless 

Chipotle stock bounces on strong sales

Tue, 2017-04-25 21:06

Stock in Chipotle Mexican Grill Inc. jumped more than 5 percent on Tuesday after the fast-casual chain reported unexpectedly strong same-store sales and margins.

Same-store sales increased 17.8 percent in the first quarter ended March 31, as the burrito chain continued to recover from a year long sales slump after a series of foodborne illness outbreaks in 2015.

Higher sales also meant higher margins, a key element to investors eager to see the company return to its highly profitable ways. Restaurant level operating margins increased 6.8 percent to 17.7 percent.

“2017 is off to a strong start, as our restaurant managers and teams are energized by our renewed focus on the customer,” company founder and CEO Steve Ells said in a statement.

Investors had been expecting a comeback at Chipotle, which made Ells the sole CEO following the departure of former co-CEO Monty Moran, and which unleashed a major ad campaign in April. The stock had been up 26 percent on the year before the Tuesday evening jump. 

Revenues in the quarter increased 28.1 percent in the quarter, to $1.07 billion.

Net income in the period was $46.1 million, or $1.60 per share, up from a loss of $26.4 million, or 88 cents, a year ago. 

The company expects full-year same-store sales to be in the “high single digits for the year. It also expects to open 195 to 210 new restaurants in 2017.

Contact Jonathan Maze at

Follow him on Twitter at @jonathanmaze

Investment tracker: Early-stage restaurant financing surges

Tue, 2017-04-25 20:42

In June, venture capitalists Benzion Aboud and Joe Randazza announced plans to invest $21 million in an upstart, mall-focused burger chain called Sliderz.

At the time, Sliderz had just one location.

The investment, probably more than any other, explains the restaurant deal environment in 2016: Investors continued pumping money into upstart restaurant chains. These investors were unfazed by the industry’s weak sales, rising rent prices and concerns about oversupply.

There were at least 19 major investments in small chains with 20 or fewer units in 2016, based on a Nation’s Restaurant News census of early stage investments in restaurant chains. 

That’s the most in any single year since the recession, and continues a massive gold rush of investment capital into upstart restaurant chains unseen perhaps in industry history. Bankers and investors say the restaurant industry has never captured so much investment attention as it is right now. 

“The industry has been more stable than it used to be, and that is getting recognized,” said Greg Dollarhyde, who has made numerous restaurant investments over the years, including Veggie Grill and Zoe’s Kitchen. Last year, his Dollarhyde Investment Group invested in the fast-casual chicken concept Starbird. 

“Because the industry used to be seen as more cyclical and risky, it received lower valuations, similar to cars. Not the case today, when investors need growth that is easy to understand.”

Our list is based on public announcements and information from private sources. It does not include additional rounds of investment. Nor does it include debt-financing deals, and likely undercounts venture capital deals and private investments.

Yet it demonstrates the growing interest in the restaurant business by investors, particularly in the fast casual sector. Two thirds of the deals over the past five years involved concepts we’d label fast casual. There were still a healthy number of investments in casual dining chains, however, proving that investors will put money into ideas they consider to be strong.

Restaurants are relatively safe from the Internet encroachment that has hurt businesses like retailers — making the industry a safer haven for consumer-oriented investors. And consumers will always eat at restaurants.

“Traditional retail is generally viewed as an unattractive investment, because Amazon is disrupting traditional retail,” said Steve Rockwell, restaurant industry consultant. “There’s just a tremendous amount of money available for investment.”

The private-equity impact

Most of the deals in recent years have come from private-equity firms, who have gone “down market,” as some put it, meaning they invest in smaller chains at an earlier stage, hoping to strike gold.

Much of that is brought on by higher prices for larger, more established chains. Because prices for those concepts have increased in recent years, private-equity firms have been more likely to look at smaller concepts in their bid to generate returns. 

“As you look at the investment horizon for traditional private equity, they’re having to go down market to put their money to work,” said Jason Morgan, a managing partner for the private equity firm Hargett Hunter. Hargett did two deals in 2016, for Ruggles Green and The Original ChopShop. “They’re having to look at smaller deals.” 

Yet the business has also attracted other investors, including venture capital, something almost unheard of before the recession. While venture capital remains relatively rare, there were a handful of such deals in 2016 — including the Sliderz investment. 

That’s adding to competition for early stage investments. 

“It’s hard to find growth companies,” Dollarhyde said. “High tech is risky and hard to call, and when it gets past a tipping point, the big money already controls it, and you only get in if you are in the club. In restaurants, the tipping point can be in a city or small region and the growth bet is taking it to new” markets. 

Dollarhyde said that an investor can find a restaurant with, say, $4 million earnings before interest, taxes, depreciation and amortization, or EBITDA, and help it grow up to $10 million, with little debt. The investor can then flip that restaurant, and move onto another investment.

In addition, investors find some safety in a concept’s unit level economics, which many believe could be replicated with future locations. Yet others say they can’t always be replicated — especially when the early locations are in high population areas like New York and San Francisco.

Big money

Still, the industry has had its share of major investment victories in recent years. There was the 2015 initial-public offering of Shake Shack Inc., just three years after it received an investment from Leonard Green & Partners. Brentwood & Associates invested in Zoe’s Kitchen Inc. in 2007, when it had 20 locations. By 2014 it was valued at $276 million after its offering.

Another element in the investment landscape is a sense that the industry is evolving. The entrance of fast-casual chains that offer upgraded food in a quick-service atmosphere is perceived to be a major industry disruptor. Technology is also playing a role — many of the upstart chains receiving investment are more technologically savvy than their more established counterparts.

“Where there is change, there is opportunity,” said Jeff Cleveland, who leads the food and beverage and agricultural practice at the financial services firm D.A. Davidson.

Yet the flood of money has created a feeding frenzy of sorts, with investors targeting restaurants almost from the moment they first open their doors. Several entrepreneurs we’ve spoken to in recent years said they’ve received their first investment inquiries with just one location.

“We would have invested when he had one unit,” Dan Rowe, CEO of Fransmart and cofounder of Kitchen Fund, said of Hummus & Pita Co. — which held off Rowe’s investment offers until this year, after it had opened four locations.

Restaurants spread units

Seasoned restaurant entrepreneurs are taking advantage of the environment, and they’re starting concepts from the ground up with the express purpose of quick expansion. Sliderz, for instance, plans to expand quickly in mall spaces.

“The operators of some of these businesses have gotten pretty smart,” Moran said. “They’ve figured out how to play the game. They hire one of three different banks, and the banks create a fever for the business and attract sizable dollars.”

The problem, however, is that many of these concepts are all targeted the same types of spaces — inline, leased locations in strip centers and other retail developments. That’s increasing the lease costs for such locations.

In addition, there is plenty of evidence to suggest the restaurant industry is saturated, which is making the environment more competitive. Fast-casual concepts are driving unit growth — fast casual units increased by 7 percent in 2016, according to market research firm NPD.

“There are a lot of new, inexperienced restaurant investors looking at the industry that have in some cases pushed valuations high,” Rockwell said. “Growing a restaurant chain is extremely difficult. I wouldn’t be surprised if there were a lot of notable, disappointed investors.”

Contact Jonathan Maze at

Follow him on Twitter at @jonathanmaze

Chili’s trims menu by 20%

Tue, 2017-04-25 19:18

Chili’s Grill & Bar has been testing a menu with 20 percent fewer items for two quarters and is set to launch it nationwide in summer, executives at parent Brinker International Inc. said Tuesday.

And some Chili’s units are testing an even more streamlined menu, said Wyman Roberts, Brinker president and CEO, in a third-quarter earnings call with analysts.

“We’re already testing additional deletions as we continue to meet the needs of our target consumer,” Roberts said, adding later in the call that “we think we can take the menu down even greater.”

The reduced-item menu should be introduced systemwide in the company’s first quarter, which begins the last week of June.

“Our guests have made their feedback clear,” Roberts said. “Their dining experience needs to be faster. The food needs to be hotter. And they still want high quality product at a great value.”

To meet those consumer requirements, Roberts said the brand is “clearing the decks for operators to make it easier for them to deliver.” The reduced-item menu has resulted in “better food delivered faster while decreasing in-house labor.” 

The Chili’s division of Dallas-based Brinker has recently made several other modifications in its menu. Roberts said the kitchens now use smashed-patty cooking to produce a juicier burger. Units have moved to stainless tray serviceware for burgers and its new Smokehouse Combos, and Roberts said the trays were easier to clean and don’t break.

Chili’s has also expanded its Chicken Crisper flavors and this week is upgrading its fajitas with nearly 50 percent more protein and rice and beans with every entrée.

“We’re concentrating innovation or core menu,” Roberts said. “We’re simplifying execution.” 

The company said average check has risen to $15.20, up from $14.73 in the same quarter last year.

Chili’s has also moved away from limited-time offers to focus on the value in the core menu, Roberts said.

“From a value perspective, we believe limited-time offers are not the best way to drive our business,” he said. “They increase complexity for operations and add confusion for guests.”

As part of Chili’s efforts to speed service, Chili’s is also testing new technologies, such as waiter handheld devices. 

Joe Taylor, Brinker’s interim chief financial officer, said the company sees opportunities in to-go sales, which now make up 10.5 percent to 11 percent of the brand’s total sales.

Taylor said a new takeout test, in partnership with Olo, relies heavily on the mobile app. 

“It includes the ability to mobile pay,” he said. “As we continue to expand that test, we are seeing good results in the way the guest is reacting that new and enhanced capability.”

Roberts said the test allows customers to order, pay and alert the restaurant when they are in the parking lot, all through the smartphone app. That should launch widely at the end of the fiscal year, he said.

For the third quarter ended March 29, Brinker reported that income declined 26.3 percent to $42.4 million, or 86 cents a share, from $57.5 million, or $1 a share, in the same quarter last year. Revenues slipped 1.7 percent to $810.6 million from $824.6 million in the prior-year period.

Same-store sales for all of Brinker’s restaurants were down 2.2 percent in the third quarter with a 2.3 percent decline at company-owned Chili’s and a 1.6 percent slide at Maggiano’s Little Italy. Franchised Chili’s same-store sales were down 2.5 percent in the quarter. Traffic at company-owned Chili’s was down 6.2 percent in the quarter and down 5.4 percent at Maggiano’s. 

As of March 29, Brinker owned and franchised 1,660 restaurants, including 1,608 Chili’s and 52 Maggiano’s.

Contact Ron Ruggless at

Follow him on Twitter: @RonRuggless

McDonald’s Q1 boost thanks to Big Macs and breakfast

Tue, 2017-04-25 18:18

McDonald’s Corp.‘s strategies took hold in the first quarter, and the company’s executives believe other efforts coming in the coming years could keep customers coming back for years.

The Oak Brook, Ill.-based burger giant on Tuesday said its U.S. same-store sales increased 1.7 percent in the quarter ended March 31 — a surprisingly strong result given difficult comparisons in the period.

McDonald’s stock rose 5 percent in morning trading as a result, hitting another in a series of all-time highs for the venerable quick-service chain.

Investors and analysts had expected a modest decline, given that the company reported a decline in the fourth quarter, and was lapping a tough, 5.4-percent increase in the first quarter a year ago.

“We’re focused on growing topline sales and profitable guest counts,” chief financial officer Kevin Ozan said on the company’s earnings call on Tuesday. Executives said that the company outperformed other quick-service sandwich chains by 2.1 percent in the quarter.

McDonald’s said that traffic in the quarter fell in the U.S., but that it “began to strengthen” in the period. Yet executives said traffic was flat when they factor out the extra day in the first quarter of 2016, thanks to Leap Day. 

Traffic is an important consideration for a chain that estimates it lost 500 million transactions in its important home market since 2012. The company’s same-store sales performance in the first quarter “reflect the emphasis we’re placing on growing guest counts, which continues to be a high priority,” Ozan said.

McDonald’s generated positive momentum in the quarter thanks to a couple of new promotions, and one older one. All-day breakfast, widely credited with generating more enthusiasm at the chain starting in the fall of 2015, continued to generate sales. 

In addition, customers ordered the new sizes of Big Mac the company introduced in the quarter, including its third-pound Grand Mac and its smaller size Mac Jr. And executives said that the company’s $1 drinks promotion, notably its $1 coffee promotion, generated more traffic.

Easterbrook’s “Velocity accelerators” 

Executives also said expressed confidence in a trio of strategies it has coming into more restaurants across the country this year — which CEO Steve Easterbrook called, “velocity accelerators.”

Those accelerators are the company’s digital efforts, including mobile order and payment, delivery, and its kiosk-based Experience of the Future. Those strategies “will drive incremental, profitable growth,” Easterbrook said. 

McDonald’s has been testing delivery in Florida markets, and is now planning to take delivery to additional cities this quarter. The company would not specify which markets are getting delivery.

“We are not in test mode,” Easterbrook said. “We are expanding.”

The biggest domestic strategy is Experience of the Future, which uses kiosks and table service inside of its restaurants. Kiosks have been common in other markets, notably Europe, and McDonald’s wants them in 2,500 locations by the end of the year, and in most of its 14,000 domestic locations by 2020.

Mobile ordering, meanwhile, is being tested in more than 400 locations across the country, including Chicago, Monterrey, Salinas, Spokane and Washington D.C., executives said.

Mobile ordering is being expanded nationwide by the end of the year. That effort will include curbside service.

Easterbrook said these efforts should drive sales not just in the short term, but also the long term, as consumers adapt to the changes. 

“If we have a new menu item launch, or all-day breakfast, we end up with a good surge initially in the first handful of weeks, then it settles down to a steady run rate,” Easterbrook said. “With the three accelerators … they start well, but we have year upon year upon year of growth.” 

He noted that the company’s kiosks generate initial excitement as consumers opt for the touch screens, rather than ordering at the counter. Over time, however, the kiosks work alongside mobile order and pay, and customers find it easier to order that way. And that drives more usage.


Executives did note on the call that the company will start offering its Signature Crafted line of somewhat customizable burgers and chicken sandwiches in the U.S. next week.

But they also stressed that the company won’t rely on a lot of new products like they have in the past to generate traffic. “We will have menu innovation, but it won’t be reckless,” Easterbrook said. “We can’t have too many items, too often.” 

The company is planning to start serving Quarter Pounder burgers made with fresh beef in the U.S. by the middle of next year. Easterbrook said the company “found ways to get around operational complications” associated with the move. 

Contact Jonathan Maze at

Follow him on Twitter at @jonathanmaze

Dos Toros founders talk growth and management philosophy

Tue, 2017-04-25 15:57

Brothers Leo and Oliver Kremer founded the fast-casual chain Dos Toros in 2009 to bring the Mission-style burritos they ate growing up in Berkeley, Calif., to New York City.

They’ve done well, especially considering that neither previously had restaurant experience. Leo Kremer is a professional bassist whose résumé includes a two-year stint with the rock band Third Eye Blind. Oliver Kremer joined his older brother in New York shortly after college to open restaurants.

Dos Toros now has 13 units, all company-owned, and plans to enter its second market of Chicago later this year.

The Kremers discussed their philosophy, management approach and the importance of a burrito’s shape with Nation’s Restaurant News.

There are a lot of burrito chains. What makes Dos Toros different?

Oliver Kremer: The No. 1 thing is melted cheese on the tortilla. There’s actually a slice of Monterey Jack cheese melted on the tortilla. The red rice we use is a lot more umami than the typical cilantro-lime white rice that you see.

Leo Kremer: We sauté the grains and then steam it [with onions, garlic and tomato] in an actual pot, the old-fashioned way, versus a rice cooker. At most burrito places, the rice is probably their easiest recipe. For us, I would say it’s our hardest recipe. It’s just hard to get that sauté and fluffiness.

Oliver: Also, just the shape of the burrito. [Dos Toros’ burritos are tightly packed cylinders.] This is a fully integrated flavor profile. Where at other places you get these cubic burritos, where you get one bite of this, one bite of that, these burritos are much more integrated. The whole point of a burrito is to taste multiple flavors at the same time.

Leo: We have learned that we are not super Instagram-able, but the upside is that wonderfully integrated flavor and great eating experience.

Oliver: The photogenic burrito is elusive. 

Leo: It’s true. You see these milkshakes with M&M’s and Reese’s Pieces flying out the top.

Or unicorn milkshakes.

Leo: We could do unicorn nachos, with red chips, blue chips…

Oliver: Oh wow, definitely. But we keep it simple. We’re about using really high-quality ingredients. We’re about putting love and care into the recipes as we make them and into the food as it’s being assembled on the service line. That’s kind of our thing.

Leo: And the scratch cooking is a big deal. Even the hot sauces: Every single location is making its own hot sauce from scratch — charring jalapeños, boiling tomatillos and blending them with this huge immersion blender.

How do you maintain consistency?

Leo: That’s a good follow-up question. It’s all about the team and the training.

Oliver: The secret ingredient is our team, because the menu doesn’t change that much, but it comes down to executing day in, day out, and that’s about having great people and training them and empowering them to deliver on our brand promise.

How do you keep good employees in the current labor environment?

Leo: First, you try to hire people that have positive energy, a warm disposition and enthusiasm, and then hopefully you really create a system where they feel supported and see opportunities for growth. That’s huge: Knowing you can grow if you commit yourself. And I think once you get that ball rolling it becomes infectious, and people want to be a part of that. And they tell their friends, and their friends want to come onboard. Our turnover is about half the industry average as a result. And that helps with our complex recipes and cooking from scratch. 

Oliver: And we make silly music videos. All of our performers and a lot of those involved are Toros [employees].



What about pay and benefits?

Leo: [Employees] get best-in-class compensation and benefits. I can’t get specific about it, but we feel like we’re at the very top end of that. So it all comes together. You have systems that are empowering and fun, and you’re kind of busy and winning and giving a good experience, and you just show respect to everyone. Just being nice to everybody goes a heck of a long way. 

Oliver: It’s amazing how many establishments I’ll visit, and you can tell sometimes who the owner is, and they’re just not being warm and friendly. When we go into our restaurants, we make eye contact and say hello to everyone working there.

Leo: That goes with our sales strategy, too. If the food tastes great and we’re serving it in a thoughtful way, with hospitality and speed, then the numbers will be good. We try to drive it with product and hospitality, and then everything works out.

How did you get into the burrito business?

Oliver: Eating.

Leo: We ate burritos every day.

Oliver: We grew up eating Mission-style burritos, and this is our homage to the places we grew up eating. We’re basically recreating that cuisine using amazing ingredients [from humanely raised animals fed vegetarian diets and not treated with antibiotics or hormones]. 

A lot of people eat burritos. What prompted you to move to New York and sell them? 

Leo: We ate more burritos than most people. I’d say we’re expert burrito consumers. And so we had a lot of strong feelings about how a burrito should look and feel and taste and be served. And it kind of dawned on us that it wasn’t being done like it’s done in the Bay Area in other parts of the country — specifically New York, but lots of places. It was such an obvious opportunity. 

Why New York?

Leo: We thought about doing Providence, [R.I.,] first because it was an approachable urban environment and more like Berkeley, where we grew up — more college town. But we had more connections [in New York]. 

Oliver: And there was more opportunity. The fast-casual world is about serving a lot of people, and in New York we had the opportunity to serve a lot more people.

How did you get funding for the first restaurant?

Leo: The first location was [from] a small group of family and friends in California who believed in us. They probably shouldn’t have, and yet it worked. So we opened the first one on a shoestring budget — bought used equipment and didn’t put enough air conditioning in.

Oliver: We’ve since replaced all that stuff.

Leo: We had to replace basically every single part of that taqueria, but it got us open, and then we were able, through the grace of good press and good word of mouth, to increase sales quickly. We had a [New York] Times review that came out about three months after we opened and doubled our business, and we never looked back. We had enough cash flow to fund a second [location,] and then we were able to raise some debt through an SBA [Small Business Administration] loan and fund a few more after that, and then we did a small equity kind of deal to keep things moving.

So you have some partners now.

Leo: We do, and we like them.

What are your expansion plans for new markets?

Leo: We’re going to Chicago later this year. We’re super excited. It’s an amazing city and a great second market for us.

And after that? 

Oliver: More taquerias in more places.

Leo: Our first five years, we opened one [restaurant] a year. We’re not one of these super go-go kind of growth companies.

Oliver: That never really works. I think they say the sweet spot, if you’re really an emerging concept, is between 25 percent and 40 percent [growth] a year. Once you get above that…

Leo: The biggest constraint is talent. You can’t train people that fast. You’re going to deliver sub-par food and sub-par service.

Contact Bret Thorn at

Follow him on Twitter: @foodwriterdiary

Must-see videos: IHOP touts Springtime pancakes

Tue, 2017-04-25 15:51

IHOP's  menu includes a taste of the season with Blackberry Cheesecake, Strawberry & Cream, and Sweet Peach Praline pancakes. Burger King's Steakhouse King sandwich includes a quarter-pound of beef, bacon, steakhouse sauce, and crispy onions. Episode five of Taco Bell's “For Here or To Go” offers two ways to hack Cinnabon Delights. Panera Bread offers clean salads. 20 gurus of the grill from each of Five Guy's five regions are a step closer to $50,000.

IHOP touts Springtime pancakes

Burger King promotes Steakhouse King sandwich

Taco Bell hacks Cinnabon Delights

Panera Bread: Salads are 'so much more than green'

Five Guys Games: Semifinals

Why Subway is shrinking

Mon, 2017-04-24 21:24

This post is part of the On the Margin blog.

What has happened with Subway?

The Milford, Conn.-based sandwich giant has struggled to generate sales in recent years. And now those struggles have claimed something once thought almost unstoppable: The chain’s unit-count growth.

Subway’s unit count has declined in each of the past two years. In 2014, according to Nation’s Restaurant News Top 100 data, Subway had 27,103 locations. In 2016 Subway finished with 26,744 locations. That’s a decline of more than 350 locations.

The simple explanation for this decline is that same-store sales have been falling since 2012, and unit count has followed. The chain has smartly cut back on unit growth while it works to recover those lost sales, and unit closures result in a modestly smaller concept.

The problems affecting Subway also show a chain that expanded too aggressively and discounted too much, and lost business to competitors.

Maybe no restaurant company emerged from the recession as strong as did Subway. According to the company’s franchise disclosure documents, the chain added 2,300 locations between 2007 and the end of 2009 — when it had more than 23,000 units.

It would then add another 4,000 domestic locations over the next five years.

Put another way: In 2007, Subway had 7,000 more locations than the next largest chain by unit count, McDonald’s Corp. Subway then added another 6,300 locations — growing unit count by 30 percent over just seven years. The sandwich chain basically added the same number of locations as a Taco Bell over that period.

Operators tell me privately that aggressive development over that period cannibalized existing locations and hurt unit economics. “Stores that were exceptionally strong five years ago are much weaker now,” one franchisee said.

Subway already generated relatively low unit volumes. But it has seen big declines more recently. In 2012, estimated unit sales were $482,000. By 2016, according to NRN data, that number had fallen to $420,000. That’s a 15-percent decline.

Some of that could be attributed to the 2015 arrest and imprisonment of the company’s well-known, longtime spokesman, Jared Fogle. Yet the chain’s decline was in full force when video of the raid on Fogle’s Indiana home was broadcast nationwide.

Subway has also relied heavily on discounts. The chain successfully used its $5 Footlong promotion for years to generate sales coming out of the recession when consumers stopped eating out. And any chain as ubiquitous as Subway needs some discounting strategy.

Yet as the economy improved, consumers shifted more spending toward higher quality options, and Subway’s focus on discounts made it the lower-end sandwich seller in the market. It’s probably no coincidence that both McDonald’s and Subway started seeing sales and traffic declines in 2012.

And the sandwich market that Subway operates in today is much more competitive than it was five years ago — even with the decline of onetime major rival Quiznos. To be sure, Subway is still larger than the next six largest sandwich chains combined, including Arby’s.

But those other six sandwich chains, which also include Jimmy John’s, Jersey Mike’s, Jason’s Deli, Firehouse Subs and McAlister’s Deli, added another $1.5 billion in system sales between 2013 and 2015, based on NRN data. Subway’s system sales have declined by $700 million over that same period.

Those other chains are taking business away from Subway while also sapping its growth opportunities.

Subway did not respond to requests for comment.

To be sure, Subway is hardly standing still. By stopping development, the chain can focus on generating organic sales again — something chains like Arby’s and Domino’s, among others, have done in the past as they’ve sought their own turnarounds.

All mature restaurant chains go through no-growth periods. No restaurant can add locations in perpetuity. Ultimately, the law of averages catches up. People simply get tired and go somewhere else. 

Subway is planning to upgrade locations in the coming years. It is also focused on technology — its mobile app, in my view, is one of the best in the industry. It is hiring engineers to beef up its in-store technology efforts and is testing delivery.

Subway is also working to upgrade the quality of its products, such as eliminating antibiotics from its chicken.

But with a huge number of locations with low unit volumes in a system with declining sales, closures appear likely to continue. It will be a while before Subway will be able to get back to the unit growth that was once its birthright.

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

Contact Jonathan Maze at

Follow him on Twitter at @jonathanmaze

Buffalo Wild Wings decries activist’s ‘risky’ strategies

Mon, 2017-04-24 20:51

Buffalo Wild Wings Inc. on Monday issued a full-throated defense of its performance and stock price, and vowed that it wouldn’t support the “risky financial engineering strategies” of activist shareholder Marcato Capital Management.

The Minneapolis-based chicken-wing chain, facing an aggressive proxy fight against Marcato, took aim at the shareholder’s plan to refranchise most company-owned units in documents filed with the SEC on Monday.

Marcato wants Buffalo Wild Wings to sell most of its company-owned units to franchisees, arguing that franchise operators run more profitable restaurants.

Buffalo Wild Wings has announced plans to refranchise 70 restaurants, but argued that Marcato’s “vastly more aggressive and unproven plan … simply does not pencil out.”

“Given our focus on extending our successful, long-term track record, we will not support risky financial engineering strategies that provide an unlikely and modest short-term benefit, but create substantial long-term risk,” the company’s board said in a letter to shareholders.

Marcato did not comment on Buffalo Wild Wings’ filing, and referred only to its existing filings.

Buffalo Wild Wings and Marcato are fighting for shareholder votes on three seats to the company’s board of directors that would give the activist considerable say in how the company operates. Buffalo Wild Wings has itself nominated one of Marcato’s nominees, Sam Rovit.

Last week, Marcato asked for the resignation of Buffalo Wild Wings CEO Sally Smith, essentially making the vote a referendum on her tenure at the company.

Buffalo Wild Wings said Monday that Smith’s tenure has been a strong one. The company said its stock price has increased nearly 1,700 percent since its IPO in 2003, compared with 124-percent growth for casual-dining chains and 329-percent growth for restaurants overall. 

“Our record of outstanding performance is compelling,” Buffalo Wild Wings said. “If you invested with us at our IPO, 10 years ago, five years ago or even a year ago, you have earned a return that exceeds the median return generated by other casual-dining restaurant companies.”

In addition to Rovit, Buffalo Wild Wings has nominated former McDonald’s USA president Janice Fields to the board. Fields, Rovit and three others appointed in October — Andre Fernandez, Harry Lawton and Harmit Singh — would give the company five new board members.

Marcato has nominated former Pizza Hut CEO Scott Bergren, former Buffalo Wild Wings executive Lee Sanders, and Marcato founder Mick McGuire, in addition to Rovit.

In its filing, Buffalo Wild Wings said that Bergren refused to be interviewed by the company’s chairman during its nominee vetting process. It added that Sanders “vastly exaggerates his achievements at Buffalo Wild Wings.”

Sanders was senior vice president of development and franchising from 2001 through 2007. On its website,, Marcato said that he “successfully planned and led the national rollout and opening of 486 units within seven years, driving annual retail sales to $2.5 billion for the 1000+ unit chain.” 

Contact Jonathan Maze at

Follow him on Twitter: @jonathanmaze

One Group COO and CFO step down

Mon, 2017-04-24 20:35

One Group Hospitality Inc. chief operating officer Alejandro Munoz-Suarez and chief financial officer Samuel Goldfinger are stepping down to pursue other opportunities, the company said Friday.

The company has launched a search for a new CFO, and Goldfinger will assist with the transition. Following Munoz-Suarez’s departure, however, the position of COO will be temporarily eliminated as One Group increases emphasis on growth of licensing.

“As our growth strategy continues around an asset-light business model focused on management and licensing opportunities, we remain motivated to drive efficiencies that are aligned with that growth strategy,” said Jonathan Segal, One Group CEO.

Based in New York, One Group is parent to the steakhouse chain STK and operates restaurants and nightclubs around the world under various brands, including Bagatelle, Asellina and Heliot Steak House. 

Contact Lisa Jennings at

Follow her on Twitter: @livetodineout

Panera to expand in-house delivery

Mon, 2017-04-24 17:57

Panera Bread Co. will expand delivery to 35–40 percent of its more than 2,000 restaurants by the end of the year, and add more than 10,000 in-store and delivery driver jobs, the company said Monday. 

The St. Louis-based bakery-café chain said it was expanding its delivery reach, which at the end of 2016 was available in 15 percent of systemwide units.

Panera, which in April agreed to be sold to JAB Holding Co. for $7.5 billion, said its new “Panera Delivery” platform, based on digital and mobile ordering, generally provides lunch and dinner to locations within an eight-minute drive of a restaurant. 

“In many places across the country, all that’s available for delivery is pizza or Chinese food,” said, Ron Shaich, Panera chairman and CEO, in a statement. “We’re closing the gap in delivery alternatives and creating a way for people to have more options for real food delivered to their homes and workplaces.”

Panera introduced delivery in 2015 and expanded it in 2016, integrating it into the MyPanera loyalty program, which has grown to 25 million members.

Panera said restaurants will generally deliver between the hours of 11 a.m. and 8 p.m., seven days a week, with a $5 minimum order. A $3 delivery fee is added in most locations, the company said.

The company is also rolling out a new order-tracking system, based on Bringg technology, which lets guests track delivery orders. Customers can see the expected arrival time, follow the delivery’s progress on a map, see a picture of the driver and receive a notification when the driver is arriving.

Panera is hiring its own drivers in company-owned and franchised markets across the country. It had tested third-party delivery companies in some markets.

“Hiring our own drivers was the only way we could ensure that our delivery guests get the same high-quality experience they have come to expect from our bakery-cafés,” said Blaine Hurst, Panera’s president, in prepared remarks.

Panera’s net income for the fourth quarter ended Dec. 27 rose 2 percent, to $44 million, or $1.92 per share, from $43.2 million, or $1.74 per share, the previous year. Adjusted for one-time items, Panera earned $2.05 a share, compared with $1.88 a year ago. Revenue increased 5.1 percent, to $727.1 million, from $691.8 million the previous year.

Fourth-quarter same-store sales increased 0.7 percent systemwide. Same-store sales at company-owned units rose 3 percent, but fell 1.4 percent at franchised restaurants. 

As of Dec. 27, Panera had 2,036 bakery-cafés in 46 states and in Ontario, Canada. Of those, 902 units were company owned and 1,134 locations were franchised.

Contact Ron Ruggless at

Follow him on Twitter: @RonRuggless

Fiesta to close 30 more Pollo Tropical restaurants

Mon, 2017-04-24 16:07

Fiesta Restaurant Group Inc. will close 30 more Pollo Tropical restaurants in Georgia, Tennessee and Texas as it works to improve its performance, the company said Monday.

In October, Pollo Tropical closed 10 of its then 209 locations, most of those in Texas, as part of a portfolio review. 

On Monday, Dallas-based Fiesta said it was closing all Pollo Tropical locations in Dallas-Fort Worth and Austin, Texas, and Nashville, Tenn. Fiesta said it would continue to operated 19 Pollo Tropical restaurants outside its original market of Florida, including 13 units in Atlanta and six locations in south Texas.

As many as five closed Pollo Tropical units may be converted to Fiesta’s Taco Cabana brand, the company said.

“Where possible, employees impacted by restaurant closures will be offered positions at nearby restaurants,” the company said in a statement.

“Fiesta’s recent growth initiatives diverted resources from our core markets, and some amount of renewal is required to restore momentum in these markets,” said Richard Stockinger, who was named Fiesta president and CEO in February, in a statement.

Fiesta said preliminary same-store sales for the first quarter ended April 2 showed declines continued at both its brands. Preliminary same-store sales fell 6.7 percent at Pollo Tropical and dropped 4.5 percent at Taco Cabana. The company will announced first-quarter earnings on May 8. 

“Industrywide headwinds, which were particularly prevalent in Florida and Texas, and the impact of sales cannibalization continued to negatively impact topline performance,” the Fiesta statement said.

Stockinger added, “While the decision to close restaurants is never easy, we believe it is vital to focus the company’s resources and efforts on markets and locations that have proven successful for our brands.” 

Fiesta said it estimated impairment charges with closures to be $33 million to $37 million in the first quarter 2017, and related lease and other charges of $9 million to $12 million in the second quarter 2017.

The closures come as part of Fiesta’s “Renewal Plan,” which will include relaunching the Pollo Tropical brand in September and the Taco Cabana brand late in the year. 

For the fourth quarter ended Jan. 1, Fiesta reported net income of $2.4 million, down from $8.8 million in the same quarter last year. Revenue declined 4.6 percent, to $171.3 million, from $179.5 million the previous year.

Fourth-quarter same-store sales at Pollo Tropical declined 4 percent and fell 3.5 percent at Taco Cabana. 

As of Jan. 1, Fiesta had 177 company-owned Pollo Tropical restaurants and 166 company-owned Taco Cabana restaurants. The company also franchised 35 Pollo Tropical units and seven Taco Cabana locations.

Contact Ron Ruggless at

Follow him on Twitter: @RonRuggless

The cost of convenience: Understanding the third-party delivery dilemma

Mon, 2017-04-24 13:45

Damien Orato and Suzanne Singer are partners with Rumberger Kirk & Caldwell. This article does not necessarily reflect the opinions of the editors or management of Nation’s Restaurant News.

UberEats. Postmates. Seamless. Grubhub. Eat 24. These are just a few of the names leading the market in the quickly growing field of third-party delivery services. 

Third-party deliver generally lifts revenue by generating additional business for restaurants, especially among Millennials, who prioritize instant accessibility over cost. The introduction of third-party delivery to a restaurant’s business model is especially enticing because some sales are in decline. The convenience factor these services bring to the table is something the restaurant industry cannot overlook.  

In the midst of this tech renaissance, where maximizing convenience is king, there are important liability considerations associated with third-party delivery people bridging the gap between the restaurant and consumer. Emerging issues in this new landscape include the potential for increased litigation involving matters such as foodborne illnesses, auto accidents and possible intentional or criminal acts by delivery personnel. So, how can restaurants minimize the potential for liability exposure while using third-party delivery services? 

A recent interview with a Grubhub corporate employee confirmed that Grubhub, as is the case with most of these providers, maintains written partnership agreements with all of the restaurants for which it provides services. Regardless, and given the nature of litigants who look for the classic “deep pocket,” it makes sense that customers will hold restaurants at least partially responsible for errors, even if restaurants have formal agreements with third-party delivery companies, and even though the consumer never interfaces with the restaurant itself during these transactions.  

To mitigate risk, restaurants that utilize third-party delivery services should include not only basic operational content in these agreements, like menu pricing, but also adequate liability limitation language. In formulating such a partnership, restaurants should consider the following provisions in any written agreement:

  • Require the third-party delivery service and its drivers to actively disclaim any agency relationship with the restaurant;
  • Include strong indemnification terms which provide for a full shift of responsibility to the third-party delivery service for any claims arising from a consumer’s use of the services;
  • Require third-party delivery services to carry insurance coverage that names the restaurant(s) as an additional insured;
  • Require proof of insurance by the third-party delivery service and for any driver it utilizes, including the requirement of clear vehicle ownership by the driver or service;
  • Require compliance with industry standards for safe food handling, including  temperature maintenance and procedures to follow in case a customer is unavailable to take the delivery of an order at the time specified; and
  • Partner with a third-party delivery service that uses tracking technology so the “chain of custody” can be firmly established to aid in the defense of foodborne illness cases. 

Another emerging concern involves third-party delivery services like Postmates, which sometimes delivers from restaurants without permission. Some restaurants may already be engaging with third-party delivery services without their knowledge. These types of services weigh providing a wider array of choice over forging distinct partnerships. Even with this type of passive permission from the restaurant, there is still a risk of a non-verbal partnership creating liability exposure. For this reason, restaurants should safeguard against unsanctioned delivery services in order to inform the public that the third party operates independently from the restaurant. Here’s how to do that:   

  • Specify the third-party delivery service that the restaurant has agreements with and issue disclaimers on the restaurant website regarding unauthorized services;
  • Include disclaimer language in take-out or delivery menus; and   
  • Include disclaimer language in any online or paper advertisement for the restaurant.  

As technology evolves and becomes more innovative, we can expect a spike in personal injury or consumer protection lawsuits involving these types of third-party delivery services. It is important to take precautionary measures to reduce the risk of liability.  

Damien Orato is a partner in the Orlando, Fla., office of Rumberger, Kirk & Caldwell. He represents clients in cases involving premises liability and significant and catastrophic injuries as well as wrongful death claims. Contact him at Suzanne Singer is a partner in the Miami office of Rumberger, Kirk & Caldwell. Her practice focuses on defending clients in the restaurant and hospitality industry in tort claims involving premises liability, wrongful death and employment issues. Contact her at

Working Lunch: Restaurant servers look to save tipping

Fri, 2017-04-21 21:09

On this week's episode of Working Lunch, the Align Public Strategies crew explains a twist in the wages debate. This time it is restaurant servers coming forward to lawmakers on their own to save their tipped wages. Plus, the White House is pushing Congress to repeal the Affordable Care Act before President Trump's 100th day in office. Find out what this means for restaurant operators and how much should they count on this. Those stories and the legislative scorecard with all the top items affecting operators around the country.

Align Public Strategies is a full-service public affairs and creative firm that helps corporate brands, governments and nonprofits navigate the outside world and inform their internal decision-making.

This article does not necessarily reflect the opinions of the editors or management of Nation’s Restaurant News.

Investors put their faith — and money — in McDonald’s

Fri, 2017-04-21 18:47

This post is part of the On the Margin blog. 

McDonald’s Corp. stock rose on Friday, at one point hitting an all-time high of $133.88 per share.

McDonald’s has quietly been on a roll all year. Its stock is up more than 11 percent so far in 2017, enabling the Oak Brook, Ill.-based burger giant to hit a string of all-time highs. By comparison, the Dow Jones Industrial Average is up 3.5 percent.

It appears that investors are putting their faith in McDonald's before it reports earnings next week.

Analysts are clearly on board. According to MarketBeat, there are 17 Buy ratings on McDonald's stock, compared with 12 Hold ratings and only 1 Sell. But the consensus price target is somewhat lower than where it’s currently trading. Analysts say the stock should trade at about $131 per share.

Why the enthusiasm for McDonald’s? Analysts seem to believe the company will report good sales next week. 

Instinet analyst Mark Kalinowski raised his same-store sales forecast for the U.S. to 0.8 percent — far above the 1.1-percent decline that analysts appear to be expecting.

“We believe that a focus on value and beverages, as well as the Big Mac line extension promotion, served McDonald’s well during a challenging time for the restaurant industry in general during Q1,” Kalinowski wrote. 

A 0.8-percent increase might not seem all that thrilling, but McDonald’s is lapping strong comparisons with the first quarter of 2016, when same-store sales increased 5.4 percent. After a decline late in 2016, an increase in the first quarter would be viewed as a strong positive.

Meanwhile, BMO Capital Markets in a note initiated coverage on McDonald’s with a Buy rating, and suggesting that the stock could hit $153 per share.

Bernstein Research analyst Sara Senatore noted that 71 percent of McDonald’s managers said in a survey that new sizes of Big Macs sold ahead of plan. Earlier in the week, Senatore upgraded the company’s rating to Outperform.

Some of the enthusiasm from investors appears to be over McDonald's performance in Japan, which has been strong, even as it laps strong same-store sales from a year ago, as well as other markets. And there’s confidence in some of the chain’s domestic ideas, along with its focus on value with $1 drinks.

McDonald’s is expanding delivery across the country. And it's upgrading its mobile app with mobile order and pay, and plans to start serving fresh Quarter Pounders next year. The company also plans to expand its kiosk-based “Experience of the Future” concept to more locations.

While there are reports of some franchisee discontent — operators surveyed in the Kalinowski report were frequently critical of Experience of the Future, for instance — some analysts say the company’s efforts could fuel stronger sales in the coming quarters.

The initiatives could help McDonald’s sustain positive same-store sales into 2018, Baird analyst David Tarantino wrote in a note earlier this month. 

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

Contact Jonathan Maze at

Follow him on Twitter: @jonathanmaze

Restaurants seek a distinctive chicken

Fri, 2017-04-21 17:41

If you want to impress customers with chicken these days, you’re going to have to do more than market it with a few clean-sounding phrases. 

In order to stand out from others in the now crowded space of food from animals not treated with antibiotics, independent restaurants and small chains are turning to heritage breeds and specialty producers. Non-commercial operations are exploring the possibilities of slow-growing chickens that supporters say are less illness-prone, live better lives and taste better. 

Crack Shack, celebrity chef Richard Blais’s fast-casual chicken restaurant in San Diego, uses Jidori chicken, a premium brand based in southern California of free-range chickens.

“Which is the same chicken used in Michelin star restaurants,” CEO Michael Rosen told NRN earlier this year. “We get it 24 hours from wandering in a pasture to putting it on a plate.

With KFC’s recent announcement that it would phase out chicken treated with human antibiotics by the end of 2018, such practices are now the undisputed norm within the industry. The Yum! Brands Inc. subsidiary’s announcement came shortly after many other industry commitments to source chicken that hasn’t been treated with antibiotics or at least hasn’t been treated with antibiotics used on humans.  Chick-fil-A made the first “never ever” promise for all of its chicken in 2014, followed by Carl’s Jr. and Hardee’s. McDonald’s, too, made a commitment, but for sourcing chicken raised without antibiotics used on humans.

It’s not a coincidence that chains are distancing themselves from animals treated with antibiotics.

A recent report from sustainability advocate Global Opportunity Network found that 86 percent of consumers want antibiotic free food and 60 percent are actually willing to pay for them.  Also, the U.S. Food & Drug Administration has restricted the use of many antibiotics in all livestock beginning in 2017 due to concerns that treating healthy livestock with antibiotics in order to promote growth would also cause antibiotic-resistant pathogens to emerge.

The cost of standout chicken

For restaurant operators, offering more distinctive birds can come with higher food costs, but unique offerings.

Andrew Gruel, founder of Slapfish, a fast-casual seafood chain based in Huntington Beach, Calif., is planning on using Jidori at Two Birds, a concept that will soon open in a food hall in Irvine, Calif.

Gruel projects the food cost at the new restaurant to be in the 28 percent to 30 percent range rather than a more typical 24 percent to 25 percent. He’s offering grilled or fried breasts of 4.5 ounces to 5 ounces each in sandwiches or salad for $9, or $12 for a double.

“I think it has a little bit of a creamier, gamier flavor,” Gruel said of the chicken. “Kind of like Slapfish, we’re letting the product come first, sacrificing a little on cost of goods.”

In Las Vegas, at Bardot Brasserie at Aria, executive chef Josh Smith gets heritage breed birds from BoBo Chickens, located in upstate New York.

“It’s a Chinese family farm and they’ve become sort of a cult bird among the fine dining chefs because of the flavor and quality of the meat.”

The chickens are sold “Buddhist style,” with the head and feat still on, which Smith likes because it allows him to remove the tendons from the thighs with a French hook developed for that purpose.

“You go behind the leg, and if you know where to go you can just twist and pull them all out,” he said, resulting in a more tender and somewhat faster cooking thigh.

He also uses the head, feet and giblets to make a rich sauce for the chicken.

The Cornish cross breed that he gets has a thicker skin and a bit more fat “and just more flavor” than other premium birds he has tried.

It’s not cheap though. With the high transportation costs of the refrigerated truck coming from New York to Las Vegas, Smith pays more than $4 per pound for the chicken, compared to around $2 for other chickens.

“But the concept of a brasserie has to have a great roast chicken,” he said, and with roast chicken available at every grocery store, he had to find something special. 

After removing the tendons, Smith separates the skin from the meat using a spatula and then brines the chicken for a quick five hours in a 5 percent salt solution. Then he blanches it twice for 30 seconds, chilling it before the second blanch, which removes some of the fat from the skin and lets it crisp faster.

Then he brushes it in tamari and hangs it to dry in the walk-in for at least 24 hours. 

Next he stuffs the cavity with garlic, lemon, shallots and rosemary, brushes it with chicken fat infused with herbes de Provence and roasts it over a mirepoix. Then he rests it upside down in a bowl over the mirepoix, allowing the juices to collect toward the breast to make it juicier.

Then he reheats it in a salamander set at the lowest setting for around 7 minutes to crisp the chicken. He serves it with green beans and jus gras — chicken broth reinforced with vin jaune and chicken fat.

He charges $33 for half a chicken. 

“A lot of people come in just for the chicken,” he said. 

Local protein

Another Las Vegas concept is going for birds as local as he can find. Chef Roy Ellamar of Harvest at Bellagio recently became the first chef in Las Vegas to serve chicken from Pasturebird, a rotational grazing operation from nearby Riverside County, Calif.

“The guests are interested in the story behind ingredients, and then we want to serve something that’s different than you can get anywhere else,” said Ellamar.

Pasturebird’s chicken coups are rotated over the land to new locations every day, giving the birds different worms, insects, grasses and seeds to eat while scratching at the dirt and replenishing nutrients on the pasture. 

“We compared it with another brand that we were using that was also organic, but I felt that the flavor in the dark meat and also the breast just had more depth,” Ellamar said. “It was closer to the flavor of a Guinea hen than conventional chicken.”

Ellamar brines the chicken in a local ale with sugar, salt, mustard seed, black pepper, Worcestershire sauce, soy sauce, onion, garlic, carrot and celery. Then he smokes it over hardwood before letting it dry overnight in the walk-in to let the skin dry so it crisps up nicely when he cooks it on the rotisserie, brushing it with duck fat.

Raising chicken more slowly

Rupert Blease, chef and co-owner of Lord Stanley in San Francisco, charged $100 for his chicken for two, using birds he got from Emmer & Co. Heritage Chickens. That California company raises dual-purpose breeds that lay consistent eggs and also have good meat, as well as thick bones for making good stock. Their primary breed is the Delaware, a slow-growing bird that is kept in open-sided hoop houses on the same pasture where cattle feed, foraging for seeds, insects and “everything else they can find,” said Emmer CEO and founder Jesse Solomon. 

It takes 112 days for them to reach market weight, four weeks longer than BoBo’s chickens and almost three times as long as commodity chickens. And even then they only way 3.5 pounds.

“Visually the chickens themselves are very different,” Blease said, with bigger, longer thighs and smaller breasts. “The flavor was very, very good.”

Recently offered as a two-course special, Blease confited the wings and then fried them and finished them with lemon oil. He crisped the skin from the neck, seasoned it with salt, pepper and lemon zest and served it with an anchovy dip. 

He roasted the breast with mushrooms, and confited the thigh and served it with escarole.

Though not currently on the menu, Blease plans to offer it again soon. At $50 per person for two courses, he said “It’s doable, as long as you get people to understand that they’re not eating any old chicken.” 

Old chicken is coming into favor, however. 

For years, the chicken industry worked to grow chicken as big and as quickly as possible, with enormous breasts that would allow processors to chop them into boneless “wings” and other popular items.

But reports of growing incidence of unsightly and unappetizing conditions such as deep pectoral myopathy (also called green muscle disease), white striping and woody breast have led some industry experts to think we might have pushed chickens to their genetic limits. 

And it’s not just fine-dining chefs and their suppliers of expensive, pasture-raised chickens. Last summer Perdue Farms Inc., the country’s fourth largest chicken supplier, said it was planning to experiment with birds that grew more slowly and more uniformly. 

Since then the company has set up a research farm to explore slow-growing birds, Perdue senior vice president for corporate communications Andrea Staub said in an email. 

“Right now, we are still gathering data and learning more as we continue to evaluate slower growth,” she said. “We are currently looking at various ways to achieve slower growth, through breed, diet or some combination. We need to find the appropriate growth rate that balances bird welfare, meat quality and affordability.”

According to Lucky Peach magazine, noncommercial foodservice companies Aramark, Sodexo USA, Delaware North and Centerplate have all expressed commitment to source only slow-growth chicken within the next eight years. 

“What I can tell you is we’re in the early stages of developing plans — in partnership with our suppliers, industry associations and animal welfare organizations — to switch to slow-growth birds,” Aramark spokesman David Freireich said in an email. 

Another type of older bird is also finding a place in professional chickens: Spent hens.

Paul Fehribach, chef of Big Jones in Chicago, buys hens that are too old to be productive egg layers and stews them to make chicken and dumplings. He boils the chicken, which cost about $5 apiece, with onion and bay leaf for about two hours, “until they’re falling apart.” 

He chills them and pulls the meat. Then at service he adds onions, carrot and a seasonal vegetable — ramps at the moment, cabbage later in the year, Brussels sprouts in the winter — to the stock, adds the chicken, brings it to a bowl and then adds doughy dumplings, like wet biscuit dough, which he simmers until the dumplings puff up finishes it with black pepper and sells large bowls of it for $12 at lunch and $14 at dinner.

“We sell a ton of it,” he said.

Contact Bret Thorn at

Follow him on Twitter: @foodwriterdiary

How restaurants compete with alternative meal sources

Fri, 2017-04-21 17:12

Meals eaten away from home and those eaten at home have historically had a negative correlation. When meals eaten out are up, meals eaten at home are down, and vice versa.

But according to the latest research from The NPD Group, both have softened, in part due to consumers getting more meals from a growing bounty of sources, including meal kits, online grocers and food trucks.

“People are getting meals, food from other sources,” said NPD analyst Bonnie Riggs. “We didn’t have these options before. There’s likely to be more coming on the scene.”

In the fourth quarter of the year ended December 2016, restaurant traffic growth was flat, while in-home, or the 12-month average of retail grocery sales, was also flat.

Meanwhile, NPD is finding that alternative sources for in-home meals are gaining momentum.

“There’s a lot of places we can get food prepared food that’s not even measured that adds a layer of competition for share of stomach,” Riggs said.

These sources are currently underrepresented in retail measurement, so comprehensive data is not yet available, Riggs added, “[but] it’s is an indication of what’s happening.”

Part of the reason these alternative meal sources are attractive to consumers is that they are serving needs that not being met by many restaurants, Riggs said.

For example, meal kits and online groceries appeal to consumers’ desire for convenience. Ethnic grocers are providing the growing Hispanic population with a source of food they like to eat. Farmer’s markets, the number of which has surged in the last decade, fulfill consumers’ desire for fresh and healthful foods. And all those food trucks? They’re all about variety, portability and “something unique,” Riggs said.

For operators to get consumers out of the house and into restaurants again, Riggs said they’ll have to be more innovative and relevant, and do a better job of promoting the benefits of eating out.

“So many restaurant offerings are mediocre,” Riggs said. “Those who are really going above and beyond are thriving.”

Among the leaders are chef Mike Isabella of Mike Isabella Concepts, which includes 10 concepts in the Washington, D.C., area, and Micha Magid, co-founder of Mighty Quinn’s BBQ, a fast-casual chain with six locations in New York and New Jersey. They shared some tactics to successfully compete with alternative meal sources and more.

Mike Isabella Concepts

As is the case with Mike Isabella’s restaurants, which encompass a diverse range of cuisines, when it comes to competing with non-restaurant meal offerings, the chef and restaurateur likes to do a little bit of everything.

“Everyone has to eat everyday. You’re not always going to eat at home. You need restaurants out there,” Isabella said. “That’s why we offer what we offer. I like to do everything.”

It all started two years ago with offering take-out pizza kits at Graffiato, his Italian-inspired concept. Not long after, Isabella began making whole and half spit-roasted chickens available for take out. Most recently, he added delivery of a variety of menu items available through third-party services at all his restaurants.

Adding delivery has been the biggest and most successful effort to date to compete with the alternative meal options, he said. For example, at Yona, Isabella’s Asian concept in Arlington, Va., delivery began just six months ago. Today, delivery, catering and pickup account for 20 percent of sales. At G, Isabella’s sandwich spot in D.C., delivery accounts for about 10–15 percent of sales.

But Isabella isn’t done yet. Later this year, he will open Isabella Eatery, a 42,000-square-foot food emporium with 10 restaurant concepts featuring various cuisines and a gourmet market with prepared foods inside Tyson’s Galleria in Fairfax, Va.

“We’ve adapted to what’s going on in the restaurant industry,” Isabella said.  

Mighty Quinn’s BBQ

With increased competition coming from all directions, Mighty Quinn’s is banking on its unique and hard-to-make-at-home food to draw its largely urban customers into its growing number of restaurants. 

“When we started Mighty Quinn’s, our idea was that authentic, smoked barbecue is not available in urban areas, and it’s so universally loved,” said Micha Magid, one of the three founders of the fast-casual concept.

“Anyone can make a chicken salad or make a hamburger at home. But [if you live in an urban area], you can’t smoke a rack of ribs for six hours. It’s that uniqueness.”

But the brand isn’t counting on authenticity alone. To keep customers interested and coming back again and again, the chain recently began offering seasonal specials to its streamlined menu. Among the latest specials is a Smoked Veggie Burger, a patty made with smoked vegetables, brown rice and beans served on a brioche bun with shredded lettuce and housemade chili mayo.

The chain also offers food at price point consumers can feel good about. For example, the brisket sandwich, made of brisket that is smoked for 24 hours, is priced under $10.

“In today’s market, we are over-restauranted,” Magid said. “There’s just too many options. [We’re] over-saturated with too many choices, and that dilutes everybody. Not everyone will survive.”

Despite that, Mighty Quinn’s is opening a new location in Westchester, N.Y., and plans to open several more before the end of the year.

Why multiunit leaders are like head coaches

Fri, 2017-04-21 16:00

“Coaching is not doing, and it's not telling people what to do. It's guiding, questioning, prompting and encouraging forward movement. Most important, it's inspiring people to take ownership of their own careers.” —Simon Sinek

Some choose it, some lose it, many pursue it but never do it, most earn it and others never quite learn it. But no matter how they came to the role, there’s no denying that Multiunit Leaders — the manager of managers — are the linchpin to any successful foodservice brand.

A Multiunit Leader, or MUL, supervises dozens of unit managers, develops hundreds of leaders, shapes the experience of thousands of customers, and helps generate tens of millions of dollars in revenue, quarter after quarter, year after year, market after market, brand after brand. If a multiunit restaurant chain was a body, MULs are the brain, heart, spine and legs, keeping the enterprise focused, driven, alert, upright and moving in the right direction.

Despite the critical role MULs play in a brand’s success, the collective time, money and resources that many companies invest in annual Multiunit Leadership development is smaller than the period that ends this sentence. It’s high time to rethink the critical skills a Multunit Leader must master in the 21st century foodservice industry. And maybe Head Coach is a good place to start.

In professional sports, the Head Coach does not work alone. He or she oversees a team of assistant coaches who focus on specific team roles and responsibilities. In the NFL, the head coach supervises a group of assistant coaches who are responsible for a variety of specific disciplines, including strength and conditioning, offensive line, defensive line, quarterback, receiver, kicking, punting and special teams.

In professional baseball, the head coach is called a manager, but he or she also supervises a battery of position coaches responsible for the team’s hitting, running, fielding, pitching, base-stealing and fitness. Each coach is responsible for developing and executing a focused part of the game plan.

But a Head Coach, like an effective Area Director, is always focused on outcomes. They align preparation and talent, set a game plan in motion and execute a strategy based on targeted goals or competitive strength.

In the restaurant industry, there is a distinction. Unlike assistant coaches in sports, GMs at the unit level are not exclusively focused on just one specific aspect of the game. Like their titles imply, they are generalists. They’re responsible for every facet of the unit’s performance, including staffing, retention, service, sales, food safety, EBITDA and quality. And, naturally, they’re better at some skills than others. So the MUL’s responsibility doubles down as a Head Coach: They are the prime developers of the brand’s talent pipeline and bench strength. Ultimately, the MUL’s primary task is to constantly expand leadership capacity.

Some MULs are better teachers than others. The reason is that too many Multiunit Leaders are preoccupied by data onslaught, fixing problems or fighting fires. Not that MULs would necessarily spend all their time coaching our teams if these three distractions were removed from their lives. (But most of them say they would.) 

When confronted with common, or even uncommon, work challenges, most MULs prefer to simply fix the problem themselves and move on. Why? Because they learned the hard way that if you want something done right, you do it yourself. And when Multiunit Leaders are hard-pressed for time, they defer to the timeworn path of least resistance: do it yourself.

That path is well traveled, but it doesn’t lead to stronger teams. And it’s contrary to the MUL’s central purpose: They are hired to think, not to do. They are paid to manage the people who manage the problem, not the problem itself. 

Taking the time to coach and let managers make mistakes on the way takes time and patience. But, ironically, the more time you spend coaching your managers, as opposed to doing it yourself, the better they get at resolving problems and making progress. The better Head Coach you are, the closer you get to “MYTOP:” Multiplying Yourself Through Other People. As one of my first Area Directors told me, “If you don’t spend all your time training, you will spend all your time training.” A Zen parable if ever there was one.

Being a good coach is challenging. Being a great coach is difficult. Being the best coach ever is virtually impossible. Until you realize that coaching, like leadership, is always situational, it will be an elusive skill to master. Because of this, there is no one proven style of effective coaching, but there are proven coaching techniques that generate greater results. Here are three:

  • Informed intuition. Experienced MULs develop a sixth sense I call “informed intuition.” They know from past experience that if “this” occurs, then “that” is likely to happen next. They routinely collect and share best practices from their GMs, so their experience can help current and future leaders learn and grow both instinctively and intuitively.
  • Align instruction to strategic clarity. A great Head Coach expresses complex ideas or targeted goals in a clear, concise and timely manner. They inspire short-term goal achievement through clarity and repetition. MULs should identify the specific resources, metrics and action steps needed to accomplish team objectives and help eliminate roadblocks or obstacles so that progress is not impeded.
  • Continuous Improvement. The best Head Coaches apply constant, gentle, daily pressure to improve. It's not about always being the best; it's about being better than you were yesterday.

The reason that exemplary Head Coaches are rare in business or in sports is because it takes more patience than we’re usually willing to offer, more time than we’re normally willing to commit and more talent than we’re usually willing to develop in ourselves. But Multiunit Leaders don’t really have a choice; coaching is a pay-me-now or pay-me-later proposition.

Jim Sullivan is a popular speaker at restaurant leadership conferences worldwide. He’s the author of the bestselling books Multiunit Leadership and Fundamentals. You can access his apps, videos, podcasts and training catalog at, and follow him on YouTube, LinkedIn and Twitter @Sullivision.

KFC enlists Rob Lowe for the next colonel

Fri, 2017-04-21 13:20

Rob Lowe is going to send a Zinger into space.

The actor will be the newest version of KFC’s Colonel Sanders in ads featuring the Zinger sandwich.

In the ads, the veteran actor and funnyman will wear a spacesuit, talking about sending KFC’s Zinger out into space. The ads are set to start on Sunday.

“My grandfather was the head of the Ohio chapter of the National Restaurant Association in the 1960s and took me to meet Colonel Harland Sanders when I was a kid,” Lowe said in a statement. “It was a big deal. I thought this would be a nice homage to both Colonel Sanders and my grandfather.”

KFC has used a series of advertisements featuring various actors and comedians playing its iconic founder over the past two years. The irreverent ads have helped reinvigorate sales at the Louisville-based chicken chain. Several actors have taken turns playing Sanders.

The latest ads come as the chain has introduced its Zinger to the U.S. The sandwich is popular in KFCs around the world, and the chain is finally bringing it stateside next week. It’s served with lettuce and mayonnaise on a toasted sesame seed bun. 

First introduced in Trinidad & Tobago in 1984, the sandwich is marinated chicken breast, double-breaded in the chain’s Extra Crispy breading with a proprietary spice blend. 

It will be available as part of KFC’s line of $5 Fill Up boxes, along with potato wedges, a cookie and a drink. An individual sandwich will be priced at $3.99.

KFC is promising more details about its campaign to send one of these sandwiches into space later this spring.

“I have no idea how we’ll launch a chicken sandwich into space, but the marketing team thinks they can do it,” Kevin Hochman, KFC’s U.S. president and chief concept officer. “What I do know, is the Zinger is the best selling KFC chicken sandwich in 120 countries, and it’s now available in America.”

Contact Jonathan Maze at

Follow him on Twitter at @jonathanmaze