What Obesity Problem Burger King’s Low-Calorie Satisfries Are a Total Flop

August 29, 2014

pictureThe fast-food chain plans to discontinue the healthier fried chunks of potato in most of its U.S. restaurants.

By Liz Dwyer

Americans may seriously tip the obesity scales, but when it comes to chowing down on fried wedges of potato, apparently we want full fat or nothing at all. At least, that’s what the demise of Burger King’s line of Satisfries seems to reveal. The fast-food giant announced on Wednesday that because of a lack of customer demand, it is discontinuing the relatively healthier french fry product.

“Earlier this week, franchisees in North America were given the option to continue offering Satisfries in markets where this game-changing product continues to perform well,” the company announced in a statement, according to Bloomberg Businessweek. Two-thirds of restaurants chose to ditch the product.

The fries were first made available last September as part of Burger King’s effort to appeal to folks who might be on the hunt for healthier menu options. Satisfries were marketed as “great tasting crinkle-cut french fries with 40 percent less fat and 40 percent fewer calories” than McDonald’s french fries.

Consumers might have been a bit confused by the product. At $1.89 for a small container, Satisfries were more expensive than their full-fat, full-calorie counterpart, which are $1.59. A small box of Satisfries racked up 270 calories, 11 grams of fat, and 300 milligrams of sodium—not much less than the 340 calories, 15 grams of fat, and 480 milligrams of sodium found in the same-size traditional fries.

There’s also the tiny detail that when customers walk into a Burger King, they’re not usually on the hunt for a healthier food choice. “They go to fast food restaurants like Burger King for indulgence,” Darren Tristano, executive vice president of food industry consultant Technomic Inc., told NBC News.

So what do Americans want instead? This week Burger King also announced that because of grassroots demand on Twitter and Facebook, its previously discontinued Chicken Fries are back. As one fan enthused on Facebook about the fat-, sodium-, and calorie-packed product, “When you guys got rid of these I stopped going there my one to two times a week and only went a couple times a year after that. So time to kick back into gear and get my chicken fries on!”


Pizza Hut Grows Stale with American Diners

August 28, 2014

35a5f4ba06ee437491f8f75417fb078bBy Venessa Wong, Businessweek

Pizza Hut, the country’s largest pizza chain, seems to be losing favor with American diners.
The 56-year-old pizza restaurant’s same-store sales in the U.S. have fallen for seven consecutive quarters as competitors Domino’s (DPZ +1.35%) and Papa John’s (PZZA +0.56%) have seen sales increase.
“We’re obviously disappointed with second-quarter results and particularly with the very poor performance in our U.S. business,” David Novak, the chief executive of parent company Yum Brands (YUM +0.50%), said of Pizza Hut during an earnings call in July. “We’ve had our ebbs and flows versus the competition over the years, and I can assure you we will be back,” Novak told investors.

Pizza Hut remains the largest pizza chain in the U.S. by far, with more than 7,800 restaurants — it continues to add more locations. But, says Darren Tristano, executive vice president at research firm Technomic, as quick-service competitors such as Papa John’s, Domino’s, and Little Caesars cut into Pizza Hut’s U.S. business, new fast-casual, made-to-order pizza concepts are also expected to steal market share.

Pizza Hut’s recent menu launches — such as crazy cheesy crust pizza, three cheese stuffed crust pizza, and Blake Shelton-endorsed BBQ sauce pizza — have failed to improve results.

The chain is focused heavily on China, where it is developing Pizza Hut as a more upscale casual dining restaurant rather than as a delivery and takeout joint. It now has 1,134 sit-down locations in China — where sales are increasing — and just 215 delivery shops. In the U.S., only 14 percent of Pizza Hut’s business is dine-in.

Pizza Hut spokesman Doug Terfehr says China has not been a distraction. “Both our domestic and international businesses are incredibly important to the health of our brand,” he said in an e-mail. “As we’ve matured around the world, we’ve developed dedicated resources to handle that growth without wavering on our commitments to our business here.”

Terfehr cited recent efforts, such as a dessert partnership with Hershey (HSY +0.02%) that kicked off with an 8-inch cookie, the addition of equipment to all Pizza Hut restaurants to serve Wing Street chicken, and updating its website and app this spring as major turnaround efforts.

Bigger changes are on the way. Novak told investors that Pizza Hut will “launch a number of major initiatives in the United States to reignite sales beginning in the fourth quarter,” including plans to boost millennial-targeted advertising and digital marketing and a greater focus on value.

Brisket Channel proves to be ultimate reality TV

August 27, 2014

Article by: David Phelps, Star Tribune

© 2014 Star Tribune

Remember the Brisket Channel on Duluth TV?

It was on for 13 hours and five minutes over the Memorial Day weekend.

It turned out to be quite a hit, once reruns made it to YouTube. Nearly 400,000 viewers tuned into the Internet version of the smoked brisket marathon developed for Arby’s by the Minneapolis ad agency Fallon.

So popular was the website that each unique visitor spent an average of 38 minutes on the site, watching a brisket slow cook in the same manner that Arby’s prepares brisket for its customers. It also helped that visitors had a chance to win one of $20,000 in prizes that included a 10-gallon hat, lasso and beef-scented candles.

“We were blown away by that,” said Matt Heath, Fallon creative director, of the viewership.

And the client was pleased. “Thirty-eight minutes is longer than a lot of TV shows,” said Jeff Baker, Arby’s senior brand experience director. “It was a great idea based on simplicity.”

Besides setting a Guinness record for the longest TV commercial, the brisket show and limited brisket sandwich offer set the stage for Arby’s new “we have the meats” advertising campaign that Fallon launched earlier this month.

Results for the fledging ad campaign so far are inconclusive. But Rocky Novak, Fallon’s managing director, said: “We’re seeing a lot of social media love.” Arby’s said it does not release sales figures. But when it first made the brisket sandwich limited-time-offer available in October of 2013, “we declared it the most successful [limited-time offer] in the brand’s 50-year history,’’ said a spokesman Wednesday.

Gone as Arby’s pitchman is Bo Dietl, the former New York City police detective who was the face and voice of Arby’s for nearly two years. To quote Dietl from a commercial for Arby’s fish sandwich, “Really?” Yeah, really.

In fact, the new Arby’s commercials are faceless. The only human element seen by viewers is of a person from the shoulders down wearing a chef’s jacket. A roast beef or turkey or corned beef sandwich is the star of the commercial.

“The LSR [limited service restaurant or fast food] industry is not hyper-focused on food. There are a lot of entertainment factors,” said Heath. “We wanted to see how close we could get to the food. We didn’t want to put a face in there. It’s about the finished product.”

Among the tag lines used for the new set of Arby’s commercials are “this is meatcraft,” “fear not the meats,” “meats crafted with a heavy hand” and “it will change you.”

“We feel like we have an incredible heritage of meats and that presenting them in a simple way was the best way,” Baker said in an interview earlier this week.

Brand overhaul

Arby’s new advertising campaign will be accompanied by a new branding campaign that the Atlanta-based company announced in June. The branding effort includes remodeled exteriors, revitalized interiors and staff training.

Based on some consumer testing, Arby’s message and image could use a little retooling.

According to the food industry consulting firm Technomic, sales and market share at Arby’s have declined in each of the last two years, placing the roast beef king a distant second behind Subway in the non-hamburger sandwich sector and ahead of a hard-charging Jimmy John’s.

“Arby’s is considered to be unique because its about roast beef, not hamburgers, not chicken. We’re talking about an older, nostalgic brand,” said Darren Tristano, executive vice president for Chicago-based Technomic. “Clearly there are some advertising opportunities and some innovative opportunities.”

Novak said the new Arby’s advertising campaign is all about what goes between a bun or two pieces of bread in the Arby’s kitchen.

“The main takeaway first and foremost is that this is about the meat that is put in the sandwich,” Novak said.

Tristano said Arby’s scores well with consumers on a number of metrics, including service, decor and “craveability.” But it doesn’t score so well on prices, healthy options and “advertising that makes me hungry.”

“By focusing on what differentiates you, that creates memorable and creative advertising,” Tristano said. “Freshness gives you a stronger feel of healthiness.”

And credit for a new Arby’s feel may come down to a Texas-smoked brisket that took 13 hours to cook and five minutes to carve.


Wahoo’s Grows Up

August 26, 2014

Ray-wahoosgrowsup-OCBJ-599x1024Paul Hughes

Orange County Business Journal

© 2014 Orange County Business Journal. Provided by ProQuest Information and Learning. All Rights Reserved.

Chain Gets Past Downturn, Puts Corporate Vet in Kitchen

Wahoo’s Fish Taco wants to keep it casual for customers even as it tightens up the way the 61-restaurant chain goes about its business.

That’s a shift for a company with laid-back Orange County roots-its dining rooms are monuments to surf and skate culture, with stickers for various brands dominating the decor.

It also is a response to some bruises sustained during the recent recession.

“Like everyone else, we’ve had a rough couple years,” said Wing Lam, a cofounder who is the chain’s public face.

The recession left behind a new catch phrase for established restaurant chains, he said: “Flat is the new up.”

It’s been up and down for Wahoo’s, according to Lam, with a dip last year. The Santa Ana-based chain’s 61 restaurants-34 company-owned and 27 run by franchisees-accounted for sales of $52 million, a 4% drop.

The chain is back on a growth track this year, according to Lam.

“We’ve had growth every month through July compared to the last two years,” he said.

Most of the restaurants are seeing revenue growth between 2% to 8%, he said.

The aim now is to establish a new approach that provides more structure to a lot of the processes that go into getting food to customers.

Lam and his brothers Ed Lee and Mingo Lee cofounded Wahoo’s with Steve Karfaridis, the company’s chief operating officer, in 1988. It grew into a small roster of restaurants and began franchising in 1993, often to the founders’ friends.

By 2010, it had 54 locations, including 21 franchises in California, Hawaii, Colorado and Texas, and was aiming for 70 in early 2013.

The push for expansion through franchising led to the 2010 hire of Tom Orbe as a vice president, an early step toward a more formal approach for the chain. Orbe was a franchisee himself and still operates a Wahoo’s in Temecula and another in Huntington Beach.

Trying to grow through the economic downturn produced mixed results.

Wahoo’s didn’t make it to 70 restaurants it has closed three since 2012, including one in New York, its first on the East Coast.

Deals in Arizona and Rhode Island also haven’t panned out.

The chain is adjusting, with plans to open a restaurant in Philadelphia in November. It’s rethinking its bid in New York, where the initial location was in Manhattan. It’s now eyeing suburban Westchester and Long Island for another try.

Wahoo’s added a location in Japan last year, and the chain wants more overseas.

It also has a big project in the works in its backyard: a restaurant at the Honda Center.

“Good Hard Look”

The strong start this year hasn’t deterred Wahoo’s from longer-term strategies.

“We’re taking a good hard look at systems and putting most of our resources there,” said Karfaridis.

He said Wahoo’s will bring point-of-sale, labor management and accounting to cloud based hosting.

Wahoo’s also plans to add ordering to its smartphone app, he said.

Another big effort is focused on supplier relationships, a key to containing costs and saving time.

A roasted salsa, for example, is shipped almost ready to Wahoo’s restaurants by a supplier working from one of the chain’s proprietary recipes.

“They create the base, and we finish it,” Karfaridis said.

Another supplier starts the teriyaki sauce, but each location completes it. A meat vendor pre-slices came asada-something that used to be done by Wahoo’s staff in the restaurants.

“As you grow, you come to a decision point,” Karfaridis said. “How do you preserve the spirit of the food while growing? How do you scale Wahoo’s without compromising quality?”

Balancing Act

It’s a balancing act for a chain that’s facing new levels of competition, said Darren Tristano, executive vice president of Chicagobased restaurant industry researcher Technomic Inc.

“They have to build on the menu and flavors without straying too far from the core tastes,” Tristano said. “The fish taco made them popular, but fish tacos are everywhere now.”

Karfaridis said customers often guided menus at individual restaurants.

“They’d say, T want my Maui bowl in a burrito,’ so we created the Banzai Burrito,” he said.

That produced good relations but inconsistent results across the chain.

Karfaridis said Wahoo’s wants to keep the close-up feel of the chain but streamline the process.

Wahoo’s brought on Raymond Martin in January to work on the menu.

He had stints at Huntington Beach-based BJ’s Restaurants Inc. and Calabasas Hillsbased Cheesecake Factory Inc.

Less Complexity

His mandate is to reduce complexity and costs in food preparation and presentation while maintaining or improving taste and service.

“You don’t want to waste steps or product, and customers are looking for new flavors,” Martin said.

He said he got a better price and more consistent product on tortillas through a new deal with Irving, Texas-based Mission Foods, a major supplier.

He focused on fewer ingredients with strong flavors-ginger, garlic and onions for its teriyaki sauce.

Martin cut the cooking time on came asada to retain more meat and juice. The beef continues to cook as it comes hot off the grill, ensuring its still cooked properly when it reaches the customer.

“You keep more meat, use less sauce and get the same amount of product,” Martin said.

He added a table salsa by tweaking Wahoo’s legendary pico de gallo-which is also still available-and is testing a spicy ketchup, a southwestern ranch sauce, smashed beans and seasoned onion rings.

Don’t expect sweeping changes-Lam said fish is still king.

Nearly half of Wahoo’s customers are going to eat something with fish in it, he said.

“You can get a chicken burrito from anyone,” Lam said. “But there’s only so much fish out there, and we have a great relationship with our suppliers.”

Honda Center

Martin estimated 80% of the menu has been improved in some big or small way.

Tristano said Technomic’s research on Wahoo’s consistently reveals high levels of consumer loyalty.

That meets the benchmark set out by the chain’s owners.

“Nothing will be compromised,” Karfaridis said. “We’re adding scalability and leaving the core qualities intact.”

Back in 2010, when Wahoo’s brought Orbe to boost franchising, he said the chain could grow to 400 or 500 locations but didn’t want to do it in “cookie-cutter” style.

Lam used the same term last year to describe what he intends to guard against in the latest push for growth.

“While Chef Ray is working, I’m out there gallivanting in the Wahoo’s (food) truck testing the theories,” Lam said. “Then he and I compare notes.”

Lam said not all of his ideas translate into good-or cost-effective-products on the wider scale that Martin’s been hired to oversee.

“He’s about process and presentation, and I’m about convenience and flavor, and we meet in the middle,” Lam said.

The results of the collaboration will get a showcase when Wahoo’s opens in the Honda Center this fall.

Success there could lead to another growth push and more hires for Wahoo’s management team, Karfaridis said.

“We can bring in people to do that,” he said. “This has been four guys doing all of it on the run for a long time.”

Wahoo’s Fish Taco wants to keep it casual for customers even as it tightens up the way the 61-restaurant chain goes about its business. A roasted salsa, for example, is shipped almost ready to Wahoo’s restaurants by a supplier working from one of the chain’s proprietary recipes. How do you scale Wahoo’s without compromising quality?” Balancing Act It’s a balancing act for a chain that’s facing new levels of competition, said Darren Tristano, executive vice president of Chicagobased restaurant industry researcher Technomic Inc. “They have to build on the menu and flavors without straying too far from the core tastes,” Tristano said.


5 Reasons Burger King Wins with Tim Hortons Beyond the Tax Inversion

August 25, 2014

Print

Yesterday Burger King announced plans to acquire Canadian coffee-café chain Tim Hortons, which would enable the burger chain to relocate its headquarters to Canada. The move would lower its tax obligations, a fact the media has latched onto. But even without the so-called tax inversion, Burger King could win with the deal. Here’s how.

  1. Burger King continues to compete in the breakfast daypart, and coffee is essential to attracting patrons. Although Burger King has integrated Seattle’s Best coffee into its breakfast offering, replacing it with Tim Hortons’ premium-blend 100% Arabica bean could be a more financially advantageous opportunity on coffee purchasing.
  1. With increased emphasis on global brand growth, a combined Burger King/Tim Hortons provides strong growth opportunity through co-branding. Giving potential licensees the opportunity to offer a strong breakfast/lunch offering from Tim’s and lunch/dinner offering from Burger King maximizes rents and revenues.
  1. Competing with McDonald’s has become a challenge for larger brands. Since both Tim’s and Burger King compete with the global burger giant, Burger King should get a leg up in the competition. With greater opportunities to fine tune their Canadian operations, Tim’s knowledge of the market should support BK’s strategy and planning in Canada and create stronger competition with McDonald’s stores overall.
  1. Consumer loyalty and sentiment toward Burger King would likely improve with the Tim Hortons marriage. As the majority of Tim Hortons’ customers are brand fans, the strong emotional connection could carry over to Burger King with the new relationship. Emotional connections are important to younger Millennial consumer, and the connection could help strengthen brand perceptions.
  1. Out-of-the-bun thinking is becoming increasingly important to consumers. Menu innovation, limited-time offerings and the need to build what’s new and what’s next on the menu is important for consumers to maintain relevance to restaurant operators. The crossover of Tim Hortons’ and Burger King’s insight and development teams can provide some new perspective and ideally leverage staff experience and skills to support ongoing development programs.

Final Thoughts: Although this investment makes strong financial sense, the post-investment reality will be on leveraging synergies that exist and maximizing the relationship with new emphasis on overall brand growth objectives. How quickly each brand accepts the new realities and bands together culturally will determine the expected success.


What Went Wrong: Burger King Cuts Satisfries

August 14, 2014

The “Zone of Creativity”—when the consumer gives their permission to the restaurant operator to innovate with strict parameters.

Consumers have greater health and wellness expecations from restaurants, and operators are doing a better job of listening. But does the consumer lie to them or to themselves? Each day we tell ourselves we want to eat healthy, but then we don’t. Consumers order salad but then add several ladles of sweet dressing on top. They insist that restaurants, particularly fast-food chains, aren’t healthy, but when healthy options exist, they still choose indulgent, less-healthy products.

Burger King listened to consumers and tried to “satisfy” them. The intention: a lower-fat, lower-calorie french fry that was aimed at giving consumers more choices and healthier fare. The result: higher prices, lower demand and kitchen complexity that led the burger giant to discountinue the fries at a majority of stores less than one year after their debut in September 2013.

8-14-2014-1

So what went wrong?

There are 3 important elements to the demise of Satisfries:

First, BK priced the product higher than its standard french fry offering, making price part of the decision to eat healthier. When low- to middle-income consumers consider the price differential, they will generally go with lower price for a similar product, especially when they understand what they are getting from past purchases.

Second, the consumer perception of healthy food at fast-food restaurants may have come a long way, but it isn’t quite where it needs to be. Consumers don’t always trust restaurants to provide healthy food in a way that tastes good. With negative implications on “healthy,” getting consumers to believe is a challenge.

Lastly, the kitchen complexity for the BK operator needs to be simple to maintain speed of service. Having to manage two different preparations for regular and Satisfries adds complexity to the back-of-house logistics in preparing the side, keeping it fresh and serving it hot.

What could have been different?

Giving consumers fewer options by shifting to the new Satisfries could have been a more risky “all in” strategy but may have had a greater chance of success by focusing on one product instead of two. Keeping prices the same would also take the complexity out of the decision. Also, by positioning Satisfries as premium instead of healthy, consumers would have felt like they were getting a better-for-you product that would be worth a higher price, and their perception of health may have driven by quality and not by calories.

By the way, it’s not every day that we get to feature two perspectives on indulgent french fries. Check out my piece on the return of crinkle-cut fries at Shake Shack here.


Call it What You Like, but Not a Chain

August 13, 2014

By ANDREW ADAM NEWMAN

The New York Times

Copyright 2014 The New York Times Company.

Adco-master675WHITE CASTLE claims with pride that it is the first fast-food hamburger chain, and for good reason. It opened in 1921, just 15 years after Upton Sinclair’s ”The Jungle” exposed horrific conditions in meat-processing plants. With its pure-sounding name, white interiors and fully viewable food preparation areas, White Castle helped restore America’s appetite for beef, promising consistency regardless of which location a customer visited.

But today chain ownership is sometimes viewed as a negative by food aficionados seeking one-of-a-kind food trucks and microbreweries, and locavores celebrating restaurants that use ingredients close to home.

 

Now Legal Sea Foods, which has about 35 locations, most in the Boston area, is railing against the term. Its chief executive, Roger Berkowitz, argues in a series of new commercials that its seafood restaurants should never be called a chain.

 

”While Legal Sea Foods has a number of locations, we’re not a chain,” says Mr. Berkowitz, seated at a restaurant table, in one of the new spots. ”Each of our restaurants is unique, not cookie-cutter, so you can call me stupid, an egomaniac, or even an” — the word is bleeped and his mouth pixelized in a scene. ”Just don’t call me a chain.”

 

In another spot, Mr. Berkowitz is hooked up to a lie detector, and his interrogator asks if he is the owner of Legal Sea Foods, to which he responds ”Yes.” He is asked if it is a chain, to which he responds ”No” as the needles etch straight lines on the scrolling paper. ”Is the person who called Legal Sea Foods a chain a complete moron?” asks the interrogator. Stone-faced, Mr. Berkowitz pauses a moment, then responds ”No,” sending the needles scribbling wildly up and down.

 

The spots close with a new tag line for the campaign, ”Where chain is a four-letter word.” The campaign, which also includes print advertising, is by DeVito/Verdi in New York. The company declined to provide estimated advertising expenditures for the campaign, which will be introduced Friday in the six states, and the District of Columbia, where restaurants are.

 

Mr. Berkowitz, who since 1992 has run the company that his father started — first as a Cambridge fish market in 1950, then a no-frills fish restaurant in 1968 — has long insisted on using the term ”family” or ”group” to refer to his restaurants.

 

”When anyone thinks of a chain, they think of cookie cutter, institutionalized, dummied down, and those aren’t the best adjectives,” Mr. Berkowitz said in an interview.

 

”There’s sort of a built-in prejudice about it that really doesn’t define who we are and what we do.”

 

Unlike many chains, Mr. Berkowitz said, Legal is privately held, and its restaurants are all company-owned rather than franchised. Menus vary among locations, and the company has several iterations, like restaurants called Legal C Bar, which are more bar-focused, Legal Test Kitchen, which are faster and more focused on to-go offerings, and Legal Oysteria, which has a Northern Italian menu.

 

”People never associate chains with the kind of passion or quality that we put into our food,” Mr. Berkowitz said. ”So if we’re referred to in a review or something like that and ‘chain’ is used, whether inadvertent or not, there’s almost just a dismissive aspect to it that I find objectionable.”

 

The term can even give compliments a backhanded flavor, like a New Jersey food blogger who put this headline on a glowing review: ”Legal Sea Foods is a chain, it’s in a mall: and it does not suck.”

 

In the industry, however, others disagree on how to define ”chain.”

 

Technomic, a restaurant consulting and market research firm, considers a company with 10 or more restaurants to be a chain, said Darren Tristano, its executive vice president. He had no recollection of any of the top 500 restaurant brands that Technomic tracks proclaiming in advertising that they were not chains. (Legal, based on estimated revenue of $186.2 million in 2013, is ranked at 167 on that list).

 

Mr. Tristano lauded Legal as ”a brand that’s been around a while and knows its customer.” He added that he could understand why Mr. Berkowitz might feel ”pigeonholed” by some of the negative connotations. But he found something particularly ironic about the mere existence of the new advertising campaign.

 

”The single mom-and-pop type of restaurant does not have an advertising budget,” Mr. Tristano said. ”And it doesn’t have the economies of scale for purchasing that a 30-plus unit chain has,” he continued, ”so if you’re in the industry and you run a restaurant group that’s large, you’re a chain whether you like it or not.”

 

DeVito/Verdi has taken a provocative approach in much of its Legal work over the last seven years. For its first campaign, it promoted freshness in print ads with copy like: ”If our fisherman comes back with fish we don’t like, we throw the fisherman back,” and, ”Fish so fresh one time the main course took a bite out of the appetizer.”

 

In 2013, promoting the notion that omega-3 fatty acids found in fish promote brain function, the brand introduced a series of commercials and print ads that featured people doing stupid things. The ads included a man sawing off a branch as he sat on it, another man stopping a ceiling fan with his head, and a women shutting herself in a Laundromat dryer. The tag line: ”Fish is brain food. We have a fish.”

 

Ellis Verdi, president of DeVito/Verdi, said that the campaign about chains was unlikely to cause a drastic change — for now.

 

”My expectation is not to change the vocabulary necessarily, because that takes a while,” Mr. Verdi said. ”But we want to at least put it in their minds that this isn’t something that we like to be called or it makes sense to call us.”

 

In new commercials, Roger Berkowitz, chief executive of Legal Sea Foods, stresses the singularity of each of its outlets.


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