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What does a McDonald’s comeback mean for competitors?

Thu, 2017-05-25 20:35

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

Contact Jonathan Maze at jonathan.maze@penton.com

Follow him on Twitter: @jonathanmaze

5 reasons independent restaurants are winning

Thu, 2017-05-25 20:29

This post is part of the On the Margin blog.

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

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

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

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

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

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

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

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

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

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

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

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

Contact Jonathan Maze at jonathan.maze@penton.com

Follow him on Twitter: @jonathanmaze

Restaurant CEO pay rises with stocks

Thu, 2017-05-25 19:44

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Contact Jonathan Maze at jonathan.maze@penton.com

Follow him on Twitter: @jonathanmaze

Nutella spreads its reach with new café

Thu, 2017-05-25 17:54

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

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

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

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

 

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

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

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

 

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

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

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

Contact Ron Ruggless at Ronald.Ruggless@Penton.com

Follow him on Twitter: @RonRuggless

Chefs celebrate berry season with strawberry shortcake

Thu, 2017-05-25 17:32

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

Cicis names Billie Jo Waara CMO

Thu, 2017-05-25 16:47

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

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

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

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

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

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

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

Contact Ron Ruggless at Ronald.Ruggless@Penton.com

Follow him on Twitter: @RonRuggless

Advisory firm endorses Buffalo Wild Wings shareholder

Thu, 2017-05-25 15:03

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

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

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

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

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

Buffalo Wild Wings stock rose 8 percent on Wednesday.

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

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

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

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

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

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

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

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

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

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

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

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

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

Contact Jonathan Maze at jonathan.maze@penton.com

Follow him on Twitter: @jonathanmaze

Red Robin outlines strategy amid casual-dining tumult

Wed, 2017-05-24 20:43

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Contact Ron Ruggless at Ronald.Ruggless@penton.com

Follow him on Twitter: @RonRuggless

Taco Bueno names new executives

Wed, 2017-05-24 20:40

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

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

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

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

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

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

Contact Ron Ruggless at Ronald.Ruggless@Penton.com

Follow him on Twitter: @RonRuggless

Faltering restaurants shed secondary concepts

Wed, 2017-05-24 20:34

This post is part of the On the Margin blog.

Restaurant companies seem intent on getting smaller, at least if you’ve read the news lately.

On Monday, for instance, I wrote about Buffalo Wild Wings Inc.’s sale of its minority interest in the fast casual chain PizzaRev to an investment firm led by former McDonald’s Corp. CEO Don Thompson.

That same day, the Chalak Mitra Group, owner of the Genghis Grill chain, sold a trio of its “non-core brands,” including Elephant Bar, Baker Bros. American Deli and Ruby Tequila’s Mexican Kitchen.

Those two deals came just days after Jack in the Box Inc. said that it was looking at alternatives for its Qdoba Mexican Eats chain — meaning a likely sale.

In March, meanwhile, Chipotle Mexican Grill Inc. sold its ShopHouse Asian Kitchen concept. Or, more specifically, it sold the leases for ShopHouse’s 15 locations to Bibibop Asian Grill — essentially killing the ShopHouse brand.

The concept shedding stands in direct contrast to what seems like a trend toward industry consolidation. Just this year, for instance, Restaurant Brands International Inc. bought Popeyes Louisiana Kitchen, JAB Holding bought Panera Bread Co., and Darden Restaurants Inc. bought Cheddar’s Scratch Kitchen.

The Popeyes and Panera deals, in particular, were notably expensive. Indeed, private-equity firms represented only 16 percent of buyers in the consumer space last year, the lowest percentage since 2005, according to a study by A.T. Kearney. One big reason: Strategic buyers pushed them aside. 

In the restaurant space, the diverging trends of consolidation and concentration demonstrate the wide gap in performance in the restaurant industry.

Strategic buyers only get permission from their investors to acquire additional concepts when they’re doing well. Three years ago, Darden investors would have gathered outside the company’s Orlando headquarters with torches and pitchforks if the company bought a varied menu casual dining concept like Cheddar’s.

In the case of Buffalo Wild Wings, however, the chain is struggling to generate a sales lift. Its stock is down more than 20 percent off of its peak. And an activist shareholder, Marcato Capital Management, is pushing for seats on the company’s board and wants the CEO, Sally Smith, to resign.

Chipotle was another activist investor influenced decision. The company gave seats on the board to Bill Ackman late last year, and is still working to recover from an awful sales slide in 2016 after various foodborne illness outbreaks late in 2015. 

The divestitures of both ShopHouse and PizzaRev made sense from a corporate standpoint. Neither did much to add to the revenues and profits at their respective companies. They were long-term bets on the part of the companies’ respective executives.

Such long-term bets seem silly at a time when the typical public company CEO is in his or her job for about six years. And the concepts made it appear as if the executives were distracted at a time when their core concepts needed work.

Qdoba is a different animal. It is bigger than PizzaRev, ShopHouse, Elephant Bar and the others combined. It’s not entirely clear that Jack will sell Qdoba — the company could theoretically refranchise the concept to make it more like its flagship chain. Indeed, any buyer is likely to sell off those company stores.

Yet in that situation, Jack executives concluded that operating the two brands is hurting the company’s overall valuation. It probably is, but that won’t keep someone from buying the chain if it is put up for sale. 

And that would enable Jack in the Box to focus on its single concept. Until it’s successful enough that it could think about buying again.

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

Prices for restaurant chains near their peak

Wed, 2017-05-24 20:34

This post is part of the On the Margin blog.

Prices for restaurant companies keep increasing. Popeyes Louisiana Kitchen and Panera Bread, among other brands, were acquired for multiples once thought to be unheard of in the big chain world.

But the multiple expansion of recent years could be coming to an end, at least in the views of one firm.

“We’re almost at peak,” said Bahige El-Rayes, principal in the consumer and retail practice at the consulting firm A.T. Kearney.

Multiples for restaurant companies are crazy. Multiples for large restaurant companies in 2016 averaged 15.5 times earnings before interest, taxes, depreciation and amortization, or EBITDA.  

Smaller deals are getting a more modest, 13.3 times EBITDA on average, meaning that buyers are paying heavily for the safety of a large company.

Both numbers, however, are down from where they were in 2015, when both large and smaller deals averaged 15.7 multiples. Still, the size of large-scale deals so far in 2017 — Panera and Popeyes both went for enormous prices — suggests the pricing levels remain elevated.

Pricing levels for restaurant acquisitions are important because they fuel much of the activity in the industry. A multiple of 15, for instance, means a buyer would require 15 years to pay off the acquisition at existing earnings levels.

Those kind of prices put pressure on buyers to expand, even if they plan on keeping their acquisitions for many years — which is certainly the case in both the Panera and Popeyes deals, where buyers JAB Holding Co. and Restaurant Brands International Inc. have no plans on flipping them in five years like traditional private equity buyers.

It also pushes buyers to look for other deals. And as we reported earlier this month, private-equity groups that are reticent to pay multiples of 15 for companies have been looking “down market” at smaller concepts they can grow.

Not surprisingly, there were more down market deals for upstart restaurant chains than during any year since the recession — and probably ever.

There are two huge reasons multiples for restaurants have expanded even amid concerns over sales.

First, the Internet has hammered consumer companies, particularly retailers, as companies like Amazon.com draw business. So there’s a sense of safety in the restaurant world. People always have to eat, after all.

Second, there’s a major sense among investors that the restaurant industry is evolving, paving the way for newer types of concepts. But companies can also find expansion opportunities overseas, which provides opportunities for growth, even though the U.S. market is filled with restaurants.

One other factor, at least at the chain level, has been the presence of strategic buyers, which tend to pay higher prices than are private equity and other financial buyers.

Indeed, financial buyers are “having a hard time, especially with megadeals,” El-Rayes said. “They’re getting priced out.”

But, he said, expect private-equity groups to make a comeback. These firms should get more financing and more interest in making deals. And that could keep the deal flow moving in the coming years. 

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

BJ’s aims to set standard with new slow-roasted meats menu

Wed, 2017-05-24 20:04

BJ’s Restaurants Inc. pushed protein to the center of the plate earlier this month, a move that is both uncharted and familiar to the casual-dining chain.

“This is very much in keeping with what we’ve been doing for a number of years,” BJ’s president and CEO Greg Trojan told Nation’s Restaurant News. 

The new Brewhouse Slow-Roasted Menu lineup features a hearty selection of protein entrees, including prime rib, pork ribs, pork shoulder and a double bone-in pork chop. Meats are roasted for up to eight hours before being carved to order.

Prime rib is only available on peak weekend evening hours and all day on Sundays. The pork chop is served exclusively after 4 p.m., every day.

“I don’t view this as a change in strategy at all,” Trojan said of the menu.

“[BJ’s is] not a bar-and-grill,” he added of the Huntington Beach, Calif.-based chain.

Last year, Applebee’s, which is a bar-and-grill chain, sought to energize its menu with new items centered around hand-cut steaks cooked in wood-fired grills at each restaurant.

But the new platform could not save Applebee’s from stumbling. After launching the new menu in May, Applebee’s same-store sales fell 4.2 percent by the close of the second quarter ended June 30. As a result, Julia Stewart, then chairman and CEO of parent company DineEquity Inc., eventually resigned. 

When asked if BJ’s new menu could face a similar fate, Trojan did not express concern with Applebee’s results.

“These are the products that people have shown that they want,” he said. 

There were no qualms about the price points of the new items, Trojan said, and BJ’s goal to “deliver a surprising level of quality at an amazing value” has not shifted. 

BJ’s has successfully executed center-of-the-plate protein entrees before, he noted, saying that customers complained after the chain removed a previous incarnation of the pork chop dish in the past. 

The new menu items range from $11.75 to $26.95, and require new ovens to be installed in BJ’s 192 restaurants across 24 states.

In addition to the new meat-centric menu, BJ’s is not shying away from its bar program. 

BJ’s has been brewing its own beer for over 20 years. On the menu, beers are paired with mainstream brands that are similar to the in-house selection, so customers can make more informed choices before trying a new pint. 

The restaurant’s bar areas and sports-friendly atmosphere tend to draw a Millennial crowd looking to watch games in a social environment, Trojan said. 

BJ’s same-store sales in the first quarter ended April 4 fell 1.3 percent. The company reported net income of $9.3 million, or 42 cents per share, compared with $11.6 million, or 47 cents per share the previous year. Revenue rose 5.9 percent, to $257.8 million. 

Jefferies said it continues “to model flattish same-store sales for the year, as we believe BJ’s will need at least some modest improvement in the overall full-service operating environment to see same-store sales turn more meaningfully positive.”

Trojan admitted that the casual-dining segment faces challenges. He cited oversaturation of competition and the declining state of retail as two obstacles.

With retail stores failing, there are less opportunities for customers to stop in while out and about on shopping trips. And developers and property owners turn to restaurants to fill vacant storefronts when retail options can no longer pay the rent.

Despite the roadblocks, Trojan was bullish about the new menu. 

“What we love about [the new menu] is the chance to do this segment of product in a way that sets a standard in our segment,” he said.

Contact Dan Orlando at dan.orlando@penton.com

Follow him on Twitter: @danamx

Soupman CFO indicted on tax fraud charges

Wed, 2017-05-24 17:20

The chief financial officer of Soupman Inc. was indicted Tuesday on tax fraud charges after he allegedly failed to pay taxes for the company’s employees over a four-year period.

The company suggested this week that the indictment could cause serious problems in its ability to stay afloat. 

Robert N. Bertrand was charged in a New York federal court over failing to pay $594,000 in Medicare, Social Security and federal income taxes for employees at Soupman from 2010 through 2014.

Soupman, based in Staten Island, N.Y., immediately suspended Bertrand.

“The company is deeply shocked and saddened by these events,” Jamieson Karson, Soupman’s CEO, said in a statement.

Bertrand allegedly paid employees in cash on the side, along with “large unreported stock awards,” according to the U.S. Attorney’s Office in the Eastern District of New York.

From 2010 through 2014, Bertrand allegedly paid $2.9 million in cash and stock to employees.

Soupman will immediately launch an internal investigation to determine whether its public filings need to be amended during the period in question, Karson said. And he indicated that the indictment would hurt the company, which is struggling with financial losses. 

“We expect that this news will not make it easier for us to raise the capital we need to remain in business,” Karson said. 

Soupman Inc. licenses the recipes of Al Yeganeh, the “Soup Nazi” character from the television program “Seinfeld.” As of Aug. 31, 2016, Soupman had nine franchised locations. But in recent years, the company has focused more intently on selling its Original Soupman brand soup to grocers, convenience stores and other restaurant chains. 

The company’s most recent financial report said it no longer has revenue or costs associated with its franchise operations. About 6 percent of revenue last year came from franchising operations.

Soupman reported a net loss of $1.7 million in the six months ended Feb. 28, on revenue of $1.9 million. The company had a working capital deficit of $9.4 million.

“These factors raise substantial doubt about the Company’s ability to continue as a going concern,” Soupman said in its most recent earnings report. 

Contact Jonathan Maze at jonathan.maze@penton.com

Follow him on Twitter: @jonathanmaze

Turnover: The root of all restaurant problems

Wed, 2017-05-24 15:41

Jim Sullivan is a popular keynote speaker at leadership, franchisee and GM conferences worldwide. This article does not necessarily reflect the opinions of the editors or management of Nation’s Restaurant News.

“Ideas are easy. Execution is hard.”—Jeff Bezos, founder, chairman and CEO, Amazon.com

The only thing more challenging than the expansive pile of problems that restaurant operators and managers deal with daily is the fact that those problems are frustratingly familiar.

It’s hard to shake the nagging notion that we may be systematically treating symptoms and not root causes, resulting in constant reoccurrence and escalation of the same issues over and over again.

Let’s examine the root cause of why 90 percent of restaurant systems and processes fail. Here are four snapshots from four different restaurants to frame the discussion:

1. A District Manager visits a restaurant for the third time in 30 days, and for the third straight time, cleanliness is an issue. Not so much on the counters or floors, where it’s obvious, but where you don’t see it: behind the grills, under the fryers, on the walk-in shelves. You recall the words of Ray Kroc, who said, “Clean the corners and the middle will take care of itself.” But the corners are being overlooked. Frustrated, the DM looks for the team member they showed how to clean the grills and fryers during their last visit. But he quit nine days ago. The cook he showed how to clean and organize walk-in shelves? Took a different job yesterday. The DM resolves to get a district-wide memo out detailing how and what to deep clean.

2. A GM at another restaurant a thousand miles away is tasked to reduce labor costs 5 percent in the next quarter. She discusses options and strategies with her assistant managers at this week’s meeting. One of the other numbers that comes to light during the discussion is the hourly turnover rate of 90 percent. What parts of the recruiting, hiring and onboarding budget would she recommend scaling back on in order to hit the 5-percent labor reduction goal? One of the managers volunteers to cover an hourly shift three times a week to help hit the labor goal this period, since hitting the labor cost goal is a prime factor for her to hit her bonus, too.

3. Equipment and facility repair and maintenance costs have risen 24 percent in the last six months at another restaurant 850 miles northeast of the previous one. So the restaurant’s owners and managers invest 30 additional hours researching equipment suppliers, interviewing new repairmen and trying to renegotiate leases with their landlords in an effort to get a grip on the escalating costs.

4. Five hundred miles to the southwest, at a different restaurant chain’s headquarters, a CFO is reviewing spreadsheets and notes that Unit #118’s Thursday night sales were down 18 percent from a week earlier, and down 22 percent from the same day a year ago. But he also notes that that market was hit with a big thunderstorm that night and concludes the weather is to blame.

Four different surface challenges: cleanliness, labor costs, repair and maintenance issues, and an unexpected sales dip. These challenges send supervisors scurrying in four separate directions to source a solution. But the one thing they probably would overlook is the real underlying cause for each situation: employee turnover.

If a DM instructs hourly workers on how to deep clean fryers, grills and walk-ins, but those employees leave and take that knowledge with them, all the cleaning memos in the world won’t improve the restaurant’s cleanliness as much as employee retention will.

Saving labor costs by not filling open positions and having managers work the shifts instead so they hit bonus is not a strategy for success; it is a broken bonus system guaranteed to hollow out and exhaust supervisors who will soon join the ranks of fleeing hourly workers themselves. The real culprit? Endless employee churn.

Escalating repair and maintenance costs could be the result of a vast conspiracy of landlords leasing decrepit facilities, equipment manufacturers selling faulty designs and repair people buying new summer homes. Or maybe it’s the result of that 100-percent turnover you’re experiencing, which interconnects an endless stream of new untrained employees with breakable ovens, grills, slicers, dishwashers, plumbing and POS systems.  

And as far as last Thursday’s sales dip goes, yep, maybe the storm kept people home. Or maybe the restaurant was busy traffic-wise, but you had a brand-new cashier who didn’t upsell and was overwhelmed because she’s not familiar enough with the POS system’s order-inputting, and Jason the manager was so busy filling in for a cook who didn’t show up that he couldn’t help her. Sure, it may have been the weather, but it’s just as likely that it was a perfect storm of employee turnover and training forfeiture.

The employee turnover crisis in foodservice began nearly two decades ago. Like a casual game of ping-pong, the ball slowly tapped back and forth over the net between employee and employer. It was an issue in motion, but controllable. Then 10 years ago, then five years ago, then five months ago, the turnover game suddenly accelerated into faster and faster volleys, slices, lobs and serves. Retail competitors, joint-employer regulations, anemic unemployment rates and government agencies joined in. Now there are more than two players and more than one ball, and it’s flying so quickly from all directions and from all the players that the end game is unclear. No one can follow it anymore; no one knows how to win; but everyone knows this much: it can’t go on like this much longer.

The facts are that our industry averages 100-percent annual turnover among hourly teams, we are also inching toward a $15 per hour wage but not getting $15 per hour skill competencies or equivalencies in return. In order to maintain consistent levels of profitability in the face of rising wages, and lower skills, you have to increase sales, reduce costs or boost customer traffic. There’s only one strategic process that will achieve all three: Training. And the solution to lowering employee turnover? Increasing employee retention. That results from training combined with fair pay, reciprocal caring and sustaining a culture of kindness.

Either way, you’d better address the issue now, with all hands on deck. Employee turnover is the root of all evil, or at the very least, the cause of most problems in your business. Retention is a pay-me-now or pay-me-later proposition.

Jim Sullivan is a popular keynote speaker at leadership, franchisee and GM conferences worldwide. His book “Fundamentals” has sold over 175,000 copies. Get it at Amazon or Sullivision.com. You can follow Jim on LinkedIn, YouTube and Twitter @Sullivision.

Spicing up seafood

Wed, 2017-05-24 04:00

Sponsored by Cholula Foodservice

Grilled fish platters and sandwiches, Baja fish tacos, ceviche and sushi burritos are hot — literally and figuratively — on restaurant menus today. Credit that to seafood’s flavorful and healthful reputation, and affinity for spicy condiments and global recipes. The tingle of heat on the palate pushes many a fish creation to a higher echelon of enjoyment.

However, before executing a spicy seafood creation, it is wise to consider the species, advises Sandy Ingber, executive chef of the Grand Central Oyster Bar and Restaurant in New York.

“How well fish goes with spiciness really depends on the type,” says Ingber, culinary helmsman of the iconic eatery, which opened in 1913. “Mild-flavored fish like flatfish, lemon sole and halibut are not that good with spicy stuff. Medium-flavored or stronger-flavored fish like grouper, mahi mahi, tuna and swordfish go much better with a spicy profile.”

Making it easy for customers to customize their food has made the Oyster Bar one of the largest users of Cholula Original Hot Sauce in New York, Ingber says. The 500-seat restaurant positions a bottle of Cholula on every table, going through five to 10 cases per week in that manner. A few years ago, Ingber switched from a competing brand of hot sauce to Cholula after running a taste test of the two sauces with his customers. “Hands down, my customers chose Cholula,” he says.

At the table, a few splashes of Cholula enhance many of the Oyster Bar’s seafood creations. It also enlivens fresh oysters without overwhelming their natural flavor, Ingber says. 

Customers also have it their way at Padaro Beach Grill in Carpinteria, Calif. A self-serve pump dispenser of Cholula Original Hot Sauce on the counter invites them to add zest to Baja fish tacos, shrimp tacos, grilled ahi tuna sandwiches and many other items. 

“Some people put it on the side, others pump it right on a fish taco,” says Will Ransone, owner of the oceanfront restaurant. “It gives an extra pop of flavor.” 

Along with the seafood items, Padaro Beach patrons also like to dress up French fries, nachos or burgers with Cholula, Ransone says. He estimates that 40 percent of them customize their meals in that manner.

In addition, Ransone has explored dipping sauces for special items made with other flavors of Cholula. The line also includes Chipotle, Green Pepper, Chile Lime, and Chile Garlic varieties. The customer reaction has been enthusiastic. “People’s palates are more adventurous today and many are interested in trying new things,” Ransone says.

 A glance at menus around the country reveals many more examples of spiced-up seafood. At Wildflower Bread Company, a Scottsdale, Ariz.-based chain of 14 fast-casual restaurants, a salmon sandwich with a lively flavor profile is in development. It features a fillet of grilled wild Alaskan salmon on a brioche roll with sweet shishito pepper aioli sparked by Cholula Original. It is topped with basil leaves, tomatoes and a sunny egg.

Poke, a marinated, raw fish salad of Hawaiian origin, often has a spicy component. It is one of a handful of items touted as “heating up” in the National Restaurant Association’s What’s Hot 2017 Culinary Forecast. Aloha Poke Co. in Chicago offers sashimi-grade ahi tuna or salmon over a bowl of rice or mixed greens punched up with add-ons like Spicy Aioli, Volcano Sauce (chile and ponzu mayo), wasabi and jalapeños.

In San Francisco, Sushirrito features Asian-Latin sushi burritos like the Sumo Crunch, a medley of shrimp tempura, surimi crab, shaved cabbage, cucumber, ginger guacamole and red tempura flakes with sriracha aioli. Sushi Burrito in Chicago raises the heat level with the Ganzo, a burrito with spicy salmon, spicy tuna, spicy crab salad, cream cheese, cucumber, avocado, spinach, sweet potato, jalapeño, hot sauce and unagi sauce. 

Also in vogue is ceviche, a Latin-inspired dish of citrus-marinated seafood. Leche de tigre — “tiger’s milk” in Spanish — is a piquant Peruvian ceviche marinade that includes hot chiles, lime and garlic. Raymi in New York City offers salmon ceviche with ginger, peanuts, sesame seeds, wontons and habanero chile. GT Fish and Oyster in Chicago menus ceviche with coconut, roasted brown rice and fresno chile.

There is no end in sight to the customer appetite for lively and innovative seafood applications. Chefs and restaurateurs can tap into the trend by leveraging boldly flavored sauces, like those of Cholula’s flavorful options mentioned above, both in recipes and as condiments for customizing dishes at the table.

Retail woes hit Cracker Barrel

Tue, 2017-05-23 19:31

Not even the rocking chairs and knickknacks at Cracker Barrel Old Country Store Inc. are immune to the disease spreading through the retail sector.

The Lebanon, Tenn.-based chain of roadside family-dining restaurants, which includes retail areas, said on Tuesday that same-store retail sales fell 4.7 percent in the third quarter ended April 28.

That was considerably worse than Cracker Barrel’s restaurant sales. Same-store restaurant sales fell 0.4 percent in the quarter, with traffic declining 2.1 percent.

Speaking on the company’s earnings call Tuesday morning, Cracker Barrel executives suggested that some of the same problems afflicting casual dining — notably heavy discounting — are far worse in the retail world.

“As much as we believe that discounting in the restaurant business is significant, it’s even more so in the retail industry right now,” Cracker Barrel CEO Sandra Cochran said. “I would characterize the environment as even more highly competitive.”

Cracker Barrel’s retail areas sell everything from doormats to hammocks to the rocking chairs along the restaurants’ porches, where customers sit while they wait for a table. 

The company makes most of its money from its restaurants, but the retail area is a sizable portion of the business. So far this year, 20.3 percent of the company’s revenue has come from its retail business, down from 20.9 percent a year ago. 

Retail is a tough business to be in these days. With heavy competition from Amazon.com and other online companies, retailers have been shutting their doors and marking down prices in a bid to win back customers. Hundreds of retail locations have closed since January. 

Cochran said on Cracker Barrel’s earnings call that customers have grown accustomed to the markdowns they see at mall-based retailers, and Cracker Barrel hasn’t done a good enough job of showing off its lower cost items.

She said the company is working to “highlight value on the merchandise floor.” For instance, she said Cracker Barrel is more clearly marking that all jewelry on a display is the same price.

Cochran said the company is “aggressively looking at inventory levels and, where they could, trimming them.” 

Still, for all the retail woes, Cracker Barrel is still a restaurant chain. The chain’s same-store sales decline reflects similar problems at other family-dining chains, such as IHOP and Denny’s.

The results were “below our internal projections,” Cochran said. However, the company hopes that national marketing and a change to the chain’s 1,600 billboards along highways nationwide, can generate incremental sales and traffic.

Still, the company expects a continued challenging environment and anticipates same-store sales to be flat to up 0.5 percent for the full year.

Cochran said the restaurant environment is “increasingly competitive,” both at quick-service restaurants, with which Cracker Barrel competes at breakfast, and at casual-dining concepts. Many of these companies are pushing value.

Cochran said Cracker Barrel plans to emphasize more of its value offerings to improve sales in relation to competitors.

Executives did have some success with off-premise business, including a Holiday Heat and Serve program, with a family-sized meal for 10 guests available for pickup. Executives said the program generated traffic and favorable sales.

Cochran also cited Cracker Barrel’s online wait list, enabling customers to go online to join the wait list, something numerous other casual dining chains are doing.

She said the online wait list shouldn’t hurt the chain’s retail sales because most customers buy retail items after they visit.

“This allows them to come in and eat, and gives them time at the end to visit and shop at our stores,” Cochran said. “There’s been no negative impact on retail related to online wait lists.” 

Contact Jonathan Maze at jonathan.maze@penton.com

Follow him on Twitter: @jonathanmaze

Dunkin’ Brands adds Linda Boff to board of directors

Tue, 2017-05-23 18:26

Dunkin’ Brands Group Inc. has named Linda Boff, CMO of GE, to its board of directors, the company said Tuesday.

Nigel Travis, chairman and CEO of Dunkin’ Brands, said Boff will be vital to the quick-service operator as it looks to fine-tune its marketing.

Linda Boff Photo: Dunkin' Brands

"Linda is one of the pre-eminent marketers in the country, and we are delighted she has joined our board of directors," Travis said in a statement. "Her extensive background in integrated marketing and digital media, as well as her global brand-building expertise and reputation for innovation, should greatly assist us in our quest to position Dunkin' Donuts as the leading beverage-led, to-go brand."

Boff leads GE’s global marketing strategies. She has been with the company since 2004. 

Boff is also on the Board of Partnership with Children, a New York City-based organization that provides social support to hard-to-reach schoolchildren.

She is also vice chair of the Ad Council and serves on the executive committee of the Association of National Advertisers. 

Dunkin’ Brands said Boff’s marketing skills would benefit the more than 20,000 points of distribution that the company has worldwide. 

Contact Dan Orlando at dan.orlando@penton.com

Follow him on Twitter: @danamx

Denny’s names Michael Furlow CIO

Tue, 2017-05-23 17:23

Denny’s has named Michael Furlow, an industry veteran with more than 30 years of experience, as its new CIO and senior vice president of information technology. 

The move comes as Spartanburg, S.C.-based Denny’s puts more attention towards maximizing tech strategies.

“Technology is critical to restaurants today, and Michael will be a welcome and instrumental member of our team as we continue to develop new ways of leveraging technology to better serve our guests,” Denny’s CEO John Miller said in a statement.  

“We look forward to having Michael’s deep knowledge of the restaurant industry coupled with his expertise in strategic technology development added to our capabilities. Michael’s track record in building solid, organized IT teams makes him an ideal fit for the role, and we are excited to welcome him to the team,” Miller added.

Furlow was CIO at Red Robin Gourmet Burgers and Brews from October 2015 through April 2017.

“Having spent my career in the restaurant industry, I have always admired Denny’s for its ability to evolve and adapt to best serve customers both in the U.S. and around the world,” Furlow said in a statement. “I’m thrilled to join the dynamic team of leaders at the company and look forward to leveraging technology to help support the company’s strategic objectives.” 

Previously, Furlow served as CIO for Dunkin’ Brands Group Inc. and Einstein Noah Restaurant Group Inc. before his tenure at Red Robin. 

Alex Lewis had served as Denny’s CIO since 2009. In April, Lewis moved to a vice president role with a focus on strategic analytics. 

Denny’s has more than 1,700 franchised, licensed and company-owned restaurants across the United States and worldwide. 

Contact Dan Orlando at dan.orlando@penton.com

Follow him on Twitter: @danAMX

 

Must-see videos: Behind Olive Garden's Mediterranean-inspired menu

Tue, 2017-05-23 17:17

IHOP offers special pancakes for the spring. The entire restaurant team at Chick-fil-A learned sign language for the hearing impaired team member. Olive Garden offers a tour of Italy. The change at Denny's will happen on May 30th. To help restaurants make more money, Breadcrumb POS by Upserve and Grubhub have integrated their products.

IHOP touts Strawberry & Cream Pancakes

Chick-fil-A gives birthday surprise to team member

Olive Garden shows where ingredients are sourced

Denny's hints at big changes ahead

Restaurants increase order volume with Breadcrumb POS and Grubhub

Must-see videos: Olive Garden shows where ingredients are sourced

Tue, 2017-05-23 17:17

IHOP offers special pancakes for the spring. The entire restaurant team at Chick-fil-A learned sign language for the hearing impaired team member. Olive Garden offers a tour of Italy. The change at Denny's will happen on May 30th. To help restaurants make more money, Breadcrumb POS by Upserve and Grubhub have integrated their products.

IHOP touts Strawberry & Cream Pancakes

Chick-fil-A gives birthday surprise to team member

Olive Garden shows where ingredients are sourced

Denny's hints at big changes ahead

Restaurants increase order volume with Breadcrumb POS and Grubhub