Juice Craze May Be Next to Tank, Analyst Says

July 22, 2014

As the demise of Crumbs Bake Shop, and its cupcake kingdom, roils the food industry, one analyst is already predicting the next hot trend that is likely to cool off: Juices.

That’s the word from Darren Tristano, executive vice president of restaurant research company Technomic.

In a blog this week, food guru Tristano wrote that juice concepts, while “all the rage today,” are at risk of over-saturation and too much competition. The Westfield Garden State Plaza in Paramus is now home to Jamba Juice and Freshu Grill and Juice Bar.

“With health and wellness getting more play from affluent and millennial consumers, it’s clear the cold-pressed juice concepts will be pushing hard to expand,” Tristano wrote.

“Even though these concepts have price points over $10 in major markets like Los Angeles and New York, it’s clear that Hollywood-starlet impact on our country with juice cleanses is evident. Juice specialists will likely expand quickly as the fad continues but the trend will settle into concepts that represent reasonable prices for the mainstream consumer.”

He predicted that big brands such as Starbucks’ Evolution Juice and Juice It Up will have an edge in this competition.

“But ultimately, the ‘craze’ will settle down and many restaurants will likely see declines in sales that make it difficult to continue their operations,” Tristano wrote.


Crumbs Bakery Chain Closes Up Shop

July 21, 2014

When Crumbs, the New York City-based chain that built its business around cupcakes, shuttered several dozen of its remaining locations on Monday, it seemed like an abrupt ending for a company that opened a decade ago to ride the wave of popularity of the sugary treat sparked by the TV series Sex and The City.

But Crumbs’ rise and fall isn’t surprising when considering the company’s dependence on a fad. In fact, it’s the latest cautionary tale for one-item restaurants and other chains that devote their entire menus to variations of a single product.

- Krispy Kreme, for instance, expanded rapidly in large part on the cult-like following of its doughnuts. But sales started declining and the company ended up closing locations. Last year, restaurant industry researcher Technomic said Krispy Kreme had 249 locations, down from 338 a decade ago. The chain has broadened its menu more recently.

- A similar fate befell Mrs. Fields, which is known for its cookies. The chain has suffered in part because of the ubiquity of places that sell cookies, and it was down to 230 stores last year, from 438 a decade ago.

- TCBY had 355 stores last year, down from 1,413 a decade ago. Part of the chain’s problem is the competition, given the proliferation of frozen yogurt places.

Companies that only offer one item can fall victim to a number of risks. For one, trendy products tend to attract competition from big and small players that want to jump on the bandwagon. For instance, Starbucks and Cold Stone Creamery have been trying to capitalize on the cupcake trend with cake pops and ice cream cupcakes, respectively.

Being beholden to a single item also makes companies more susceptible to customers’ whims and changing tastes. There’s always a new fad. Frozen yogurt. Chopped salads. Freshly squeezed juices. Entrepreneurs may be eager to open stores selling these products, but there’s always the danger that fickle customers will move on to the next thing.

“A cupcake shop today can’t survive on just cupcakes,” said Darren Tristano, a Technomic analyst.

To combat the risks, many chains diversify their menus. And several have prospered by moving beyond their flagship products.

Dunkin’ Donuts, for instance, has been pushing aggressively into specialty drinks and sandwiches, with a focus on boosting sales after its morning rush hour. And Starbucks has introduced a range of new foods and drinks in its cafes, including premium bottled juices and salad boxes. The coffee chain even plans to expand wine and beer offering in evenings to as many as 1,000 locations over the next several years.

Magnolia, another popular New York City cupcake shop, is credited for sparking the cupcake craze after it was featured in Sex and the City.

The chain, which opened in 1996, has endured while many of the cupcake shops that opened up in its wake – including Crumbs – focused on just cupcakes. That’s in part because Magnolia, which now has 7 locations, offers a variety of desserts, including cakes, pies, cookies, brownies and banana pudding.

Sara Gramling, Magnolia’s spokeswoman, said the company is learning about the dangers of focusing too heavily on one product, as well as expanding too quickly.

“We’ll be mindful of those lessons,” she said.

Still, some chains manage to persevere by carving out a niche where there aren’t many competitors; Auntie Anne’s and Cinnabon have expanded locations over the years.

As for Crumbs, the company noted in a statement late Monday that it was evaluating its “limited remaining options.” That will include a Chapter 7 bankruptcy filing.


7-Eleven Launches New Doritos Loaded

July 18, 2014

By 10 a.m. Wednesday, the day of its launch, 7-Eleven’s brand new Doritos Loaded product had at least one Crystal Lake fan.

Karen Black-Vetter went into 7-Eleven, 1024 McHenry Ave., Crystal Lake, intending to leave with the usual snacks. But then, she saw the bold red signs advertising Doritos Loaded.

At $1.99 and 360 calories for a pack of four, Doritos Loaded are warm triangular pan-fried snacks, filled with melted cheese and encrusted with the signature nacho cheese flavor.

“We read that sign, and I said, ‘We have to try that,’” Black-Vetter said, sitting in the car with out-of-town friend Leslie Phiscator.

7-Eleven Inc. on Tuesday announced the launch of the new product, which can be found exclusively at 5,500 7-Eleven stores nationwide as of Wednesday, corporate spokeswoman Margaret Chabris said.

The snack food comes hand-in-hand with a new tropical Mountain Dew flavor called Solar Flare.

While its appeal is meant to hit all “on-the-go folks,” Chabris said Doritos Loaded is expected to be especially popular among younger Americans who prefer snacking to full meals – specifically, millennials.

“We have found that more and more people are not sitting down for three square meals a day, but they want something filling and affordable,” she said, adding the information stems from corporate studies. “It seems like, particularly, millennials snack throughout the day, so this is a perfect snack item for them.”

According to a 2012 report from the NDP Group, a market research company that tracks consumer trends, more than half of all Americans – 53 percent – snack two to three times a day.

Darren Tristano, executive vice president of food industry consulting company Technomics Inc., said annual studies done by Technomics also have found today’s America to be more snack-inclined than years prior.

“The snacking trend we’ve seen … is consumers are grazing more now, which means they’re having less to eat with greater frequency,” Tristano said. “Instead of three square meals, we’ve started to see more late-night snacking … and snacking late-morning and mid-afternoon.”

As far as snacks go, however, a dietitian at Centegra Hospital – Woodstock and McHenry said 7-Eleven’s newest product probably isn’t the best choice as it’s heavy in sodium, containing 1,070 mg.

“Anything that is providing half a day’s worth of sodium and it’s just a snack,” Susannah Baldock said, “that would be the first sign to look at something healthier.”

Those who indulge in Doritos Loaded could be swayed simply because of brand familiarity, though.

Tristano said food trends are pointing toward the use of big-name brands to increase revenue opportunities.

“One of the trends we’ve seen has been the opportunity for branded food services to take very leverageable brands like Doritos and other snacks, and build them into food service products in restaurants, and now we’re seeing it more out of the convenience stores.”

Based on previous new-product rollouts, however, Tristano said the buzz will likely quiet down in time.

“Most products that 7-Eleven introduces tend to be on a short-term basis,” he explained. “They’ll probably see how it registers with customers.”

At the Crystal Lake store, owner and franchisee Katen Patel was optimistic about the future of Doritos Loaded.

“I think it targets our target customer; I think kids are going to love it,” Patel said, sporting an official Doritos Loaded T-shirt. “If it does what Doritos does for our chips brand, I think it’ll do really, really well.”

It only took one bite each before Black-Vetter and her friend, Phiscator, were nodding in approval to one another in the car.

“Oh yeah,” Black-Vetter said. “I’ll get this again.”


Restaurant Loyalty Varies by Generation, Finds Technomic

July 14, 2014

Dow Jones Global Press Release Wire

Copyright © 2014, Dow Jones & Company, Inc.

Repeat patronage is critical to most foodservice operators’ success. However, guests’ intent to return and their reasons for doing so vary considerably by generation, as revealed in a recent white paper using data from Technomic’s Consumer Brand Metrics (CBM) program.

The white paper, titled Keep ‘Em Coming Back: Customer Loyalty and What Drives a Generation to Return reveals that more consumers report they will return in the near future to Papa Murphy’s Pizza and In-N-Out Burger than any other restaurant tracked. Papa Murphy’s scores are driven by Generation X and Baby Boomers, while more Millennials than members of other generations say they’ll soon return to In-N-Out Burger.

“Millennials are looking for restaurants that not only satisfy their hunger, but that they can feel good about,” says Darren Tristano, executive vice president at Technomic. “Older consumers, on the other hand, place a higher priority on atmosphere and service.”

Highlights from the white paper include:

-In-N-Out Burger and Papa Murphy’s Pizza garner the strongest intent to return. More consumers strongly agree that “I will return to this restaurant in the near future” for Papa Murphy’s Pizza (54 percent) and In-N-Out Burger (52 percent) than for any other restaurant tracked in the program. While limited-service chains, which are visited more frequently overall, generally outperform full-service concepts on this attribute, both Cracker Barrel (46 percent) and Texas Roadhouse (44 percent) rank in the top fifteen restaurants overall.

- Among Millennials, In-N-Out Burger is the chain most likely to be revisited. Millennials place greater emphasis on the concept’s brand image, agreeing more strongly than other generations that In-N-Out Burger supports local community activities, offers new and exciting products and is an innovative brand.

- Gen Xers and Boomers are especially likely to say they’ll revisit Papa Murphy’s soon. Their motivations for returning differ, as Generation X rates the brand most favorably on cleanliness, convenient location and beverage quality, while Boomers score the chain most highly on service attributes, such as staff friendliness and payment handling.

These findings were derived from Technomic’s Consumer Brand Metrics (CBM) program, which offers consumer insights based on ongoing tracking of consumers’ perceptions of their recent experiences across 128 leading U.S. restaurant brands. Clients can analyze results across 62 experience attributes by time period, demographic group, dynamics of the occasion or designated market area. Data is updated on the Consumer Brand Metrics website quarterly.

Technomic provides numerous online services to the foodservice industry. To learn more, please visit Technomic.com or contact one of the individuals listed below. For Technomic updates, please follow us on Twitter, LinkedIn and our blog.


How Does the Cupcake CRUMB-le

July 9, 2014

pictureWas anyone surprised by the recent demise of the Crumbs Bake Shop? For those who read the Wall Street Journal article about the gourmet-cupcake crash in April 2013, or those that had invested in the publicly traded company, it should not have been unexpected.

Last April, it was clear that the “cupcake fad” was crumbling right at the time Crumbs Bake Shop was expanding locations and working hard to be the category leader in the high-growth cupcake snack segment.

So what went wrong?

With Crumbs following in the footsteps of high-flying brands like Mrs. Fields, TCBY, Cold Stone Creamery and Krispy Kreme, consumers have proven that they are very fickle about where they shop for indulgence. As more independent and regional chains of cupcakeries grew nationally, the strong demand and growth provided short-term evidence that the trend was hot and would continue. But supermarkets jumped in with significantly lower price points, and consumers began baking cupcakes at home for even less. Kids’ lemonade stands across America began offering cupcakes for 50 cents, and the obsession with this traditional classic fell flat.

Brands that rely on a narrowly focused product will have greater risk. Although In-N-Out Burger has fewer than 10 items including burgers, fries, soda and shakes, it continues to do well by expanding slowly and cautiously and staying in tune with its customer. Overall, a bakery positioning with a broader offering and strong beverage platform could have strengthened the Crumbs business model with a bigger play at lunch to complement their breakfast and snacking occasions.

How have other brands fared with more narrowly focused offerings?

Mrs. Fields brought fresh baked cookies to America and by 1993 had nearly 600 stores open in malls around the country. At a time when malls were very popular, many consumers couldn’t get enough of those chocolate chip cookies. Today, there are less than 230 locations open and some have paired up with frozen yogurt brand TCBY to provide more variety in the co-branded location.

TCBY was the original leader in fro-yo until gourmet ice cream stole the show, forcing many stores to close. TCBY peaked in 1997 with more than 2,800 locations in the U.S. Americans’ willingness to pay more for what they considered “better ice cream” was evident as many brands emerged in the premium ice cream category including Ben & Jerry’s, Cold Stone Creamery, Marble Slab and Maggie Moo’s.

Krispy Kreme’s exceptionally craveable glazed donuts became President Clinton’s favorite and soon worked their way into regular consumption across the country. Peaking in 2004 with nearly 400 units, the donut company had sales in the U.S. of over $1 billion. Then came Atkins and low-carb diet trend. Krispy Kreme’s narrow focus on donuts paired with aggressive expansion put it at risk and caused it to shutter nearly half its restaurants by 2010. Today, Krispy Kreme has continued to expand globally and has started to open new stores in the U.S., posting a year-end 2013 total unit count of 249.

Cold Stone Creamery captured the hearts and wallets of many American consumers by introducing gourmet ice cream, customized on a cold slab with mix-ins. Although the chain continues to provide frozen desserts to many Americans, it does so with far fewer locations since its peak in 2007 at around 1,400 locations. Cold Stone Creamery ended 2013 with 990 stores in the U.S.

So what are the early warning signs for when a brand or category may be at risk?

Early warning signs appear as the category becomes more competitive. Category leaders begin to slow unit expansion, and same-store sales level out. As many brand leaders push expansion nationally, they begin to see greater competition from regional chains and independents that are in tune with the local consumer base. As more regional chains expand nationally and begin to battle for share in larger markets, new locations result in cannibalization and often consumers trying new brands just to see if they are different.

Strong blocking and tackling efforts are necessary to maintain differentiation and loyalty. Customers can be easily lost if franchise and company stores don’t deliver high levels of service and quality standards.

When does a segment become mature?

Many up-and-coming categories show high growth in unit expansion that drives sales volume growth. When longer-term sales growth shifts from high growth (above 5 percent) to lower growth (below 5 percent) you can usually see that the consumer interest is plateauing or that supply has caught up with demand.

In some cases, older legacy brands may be on the decline, offsetting growth from more contemporary concepts. Or menu-category products have been introduced into other segments, such as flatbread pizza in casual dining competing with limited-service pizza or more seafood options in the steakhouse segment competing with seafood-focused restaurants. In any event, declining growth rates generally show the state of the category and where it is headed.

Which segment is hot today but at risk in the short-term?

Juice concepts appear to be all the rage today. With health and wellness getting more play from affluent and Millennial consumers, it’s clear the cold-pressed juice concepts will be pushing hard to expand. Even though these concepts have price points over $10 in major markets like Los Angeles and New York, it’s clear that Hollywood starlet impact on our country with juice cleanses is evident. Juice specialists will likely expand quickly as the fad continues but the trend will settle into concepts that represent reasonable prices for the mainstream consumer.

Expect major brands like Starbucks’ Evolution Juice and Juice It Up to have a leg up on the competition, but ultimately, the “craze” will settle down and many restaurants will likely see declines in sales that make it difficult to continue their operations.

For cutting edge trend research and results, always keep Technomic in mind!


Consumer Reports: McDonald’s burger ranked worst in the U.S.

July 8, 2014

McDonalds Sales.JPEG-054a3By Jiaxi Lu  

Copyright 2014, The Washington Post Co.  All Rights Reserved.  

Some major fast-food chains—McDonald’s, KFC, Taco Bell—may find the latest Consumer Reports fast-food survey hard to swallow.

According to the survey, released on Wednesday, more than 30,000 Consumer Reports subscribers say these restaurants’ signature items are the worst in their categories: McDonald’s has the worst burger; KFC has the worst chicken; and Taco Bell has the worst burrito.

Consumer Reports surveyed 32,405 subscribers about their experiences at 65 fast-food and fast-casual chains. This is what they were asked: “On a scale of  1 to 10, from least delicious to most delicious you’ve ever eaten, how would you rate the taste” of their signature dishes?

Habit Burger Grill, In-n-Out and Five Guys Burgers received the highest rating for their burgers, 8.1, 8.0 and 7.9 respectively.  Meanwhile, McDonald’s scored a paltry 5.8 rating.

McDonald’s: Changing menu adds pressure to prep kitchen

McDonald’s has been busy changing its menu in an effort to attract more customers. But despite the novelty items the company promoted in 2013 — Fish McBites in February, McWraps in March, Mighty Wings in September, etc. — the company’s U.S. sales dropped 0.2 percent last year.

During a conference call with investors, McDonald’s chief financial officer Peter Bensen said the company “probably did things a little bit too quickly” in terms of introducing those new menu items. The constant changes and bold experiments with the menu put pressure to the restaurants’ kitchens, which sometimes took too long to fill orders. But new items introduced this year will be welcomed by the chain’s new kitchen equipment. Prep tables will be replaced with larger surfaces that are able to hold more sauces and ingredients.

In 2014, Bensen said, the company will “refocus the core,”  including tried-and-true favorites such as the Big Mac, Chicken McNuggets and the Quarter Pounder, as well as breakfast.

Consumer searches for healthier choices

Research shows Americans are spending $683.4 billion a year dining out, and they are also demanding better food quality and greater variety from restaurants to make sure their money is well spent.

When deciding where to dine, consumers are giving more consideration to food quality, according to the Consumer Reports survey. The restaurant’s location is less important than it was in 2011, when the group last conducted the survey. Diners today are more willing to go out of their way and find tasty meals that can be customized.

“Fast-casual dining in places like Chipotle and Panda Express lets the consumer guide the staff to prepare their meal just the way they like it,” Darren Tristano, executive vice president of Technomic, a food-service consulting firm, said in the report.

While many of the traditional chains have lagged in offering higher-quality ingredients, he said, some food chains — including Chipotle, Noodles & Company and Panera — have been offering meat raised without using antibiotics in animal feed, a feature that attracts consumers searching for healthier options.

Fast-food alternatives: fast-casual restaurants

Chipotle was rated by readers as their top fast-casual restaurant. (Fast-casual restaurants usually serve higher-quality, higher-priced fast food.) According to the survey, McAlister’s Deli gets the award for most improved as the chain’s score increased significantly since the 2011 report.

Top fast-casual restaurants: 

Chipotle Mexican Grill Firehouse Subs Five Guys Burgers and Fries Jason’s Deli Jersey Mike’s Subs Jimmy John’s Gourmet Sandwiches McAlister’s Deli Panera Bread Schlotzsky’s 


Jamba Juice Isn’t Just About Smoothies; It’s a Leading Health Brand that Keeps Extending Its Reach

July 7, 2014

By Brian Bixler

Franchise Chatter

In the juice and smoothie space, Jamba Juice not only has the leading market share, it is recognized for its innovation which should encourage future growth, according to an industry guide published by Franchise Chatter.

Jamba Juice has cleverly positioned itself as a “healthy, active lifestyle brand,” which leaves possibilities for future product development wide open. Technomic Inc. places it in a specialty category among limited-service restaurants, along with other smoothie purveyors as well as snack and cafe businesses such as Pretzelmaker and NrGize Lifestyle Cafe.

Technomic puts Jamba Juice sales at $531 million for 2013, a 3.4 percent increase from the year before. Sales are coming from new products with higher profit margins.

“What you’re seeing is that juice has moved up and down to the very high end, up to 12 bucks (for a serving),” said Darren Tristano executive vice president of Technomic Inc. “And then you’ve got smoothies that have been shifted down to the McDonald’s price point. McDonald’s blew (the low-priced smoothie market) open.”

The good news for Jamba Juice, Tristano continued, is “a big consumption trend moving upward” and “the big loser in all this is the carbonated beverages.”

Jamba Juice Company started 2014 strong when it announced international plans for expansion by reaching an agreement with Foodmark, a division of Dubai-based Landmark Group. The agreement should lead to the opening of 80 Jamba Juice stores across the Middle East over the next 10 years with the first one set to open in Dubai sometime this year.

At the same time, Jamba Juice reinforced its brand by launching a line of “Whole Food Nutrition” smoothies and juices made with “straight-from-the-earth, whole-food ingredients.”

In addition, Jamba Juice announced that it had accelerated a roll-out plan for the expanded fresh-squeezed juice menu, beating its original target date by six months, and having it available in more than 500 Jamba Juice stores nationally as of June 2, instead of the end of the year as originally planned.

Jamba Juice dominates the industry with $500 million-plus sales compared to $39 million for such competitors as Robeks Fruit Smoothies & Healthy Eats and $16 million for Smoothie Factory, according to Technomic’s numbers.

But there are other big names in this race: Brands like Starbucks, Tropical Smoothie Cafe and the aforementioned McDonald’s, which opened the door for Dunkin’ Donuts to pair smoothies with doughnuts. And frozen yogurt stores such as Let’s Yo! and Red Mango have already added smoothies to their menus as nonseasonal offerings.

“I think we’re going to see more brands opening, and it’s going to be a slower growth rate,” Tristano said. “There will be 3 to 4 percent growth rate in limited-service (restaurant) growth over the next five years, but smoothie and juice won’t grow as fast as the fast-casual segment and Mexican and coffee chains.”


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