Wetzel’s Pretzels founders opening Subway-style pizza chain

April 30, 2012

April 17th, 2012, 4:59 am • • posted by Staff Writer, the Orange County Register

The founders of Wetzel’s Pretzels are opening a Subway-style pizzeria near the UC Irvine campus.

Blaze Fast-Fire’d Pizza will open this summer at the University Center where customers can order personal-sized pizzas from a pre-set menu, or build their own pizza with the available toppings. Some toppings might have an additional charge. The 11-inch pizza will sell for $6.85 and a simple cheese will sell for $5.

Founders Elise and Rick Wetzel partnered with Chef Bradford Kent, owner of Olio Pizzeria & Café in Los Angeles, to develop a dough that bakes a light crust.

At the start of the assembly line, Blaze will flatten a ball of dough for each customer. From there the customer can choose what does and doesn’t get to be a part of their creation. Then the thin-crust pizza is sent to the oven as you pay.

Blaze can also accommodate certain dietary needs with its gluten-free dough and vegan cheese option.

The centerpiece of the eatery will be the open-hearth oven where the pizzas will cook for 180 seconds in temperatures reaching 800 degrees.

Customers can also choose to build their own salad from a selection of greens, toppings and house-made dressings. A selection of wine and hand-crafted beer will be available as well.

The announcement of a new pizza chain comes as pizza consumption is on the rise, according to market research firm Technomic. In a recent survey, the firm said 41 percent of consumers are eating pizza once a week. That’s up from 26 percent two years ago.

“Consumers increasingly view pizza as the ‘go-to’ food when they don’t feel like cooking,” said Technomic Executive Vice President Darren Tristano.

New pizza concepts expanding or adding more locations in Orange County include Pizza Lounge, Spin, Pizzeria Mozza, Pitfire Pizza and Pie-ology.  The latter concept is identical to Blaze. Dubbed the Chipotle of pizzerias, Pie-ology in Fullerton allows customers to order their 12-inch custom pizzas in an assembly-line fashion. Pizzas cost about $7.50. Pie-ology plans open a second location this summer at the Irvine Spectrum Center.

Pie-ology founder Carl Chang said he’s not surprised by the Blaze concept.

“I think there are several well capitalized people in the food industry trying to enter the custom pizza space with similar concepts partly because of our success at Pieology,” Chang said. “Hopefully,  at the end of the day we are the people’s choice.”

Blaze is set to open July 1.

Address: 4255 Campus Dr., #A120

-Story by Jaryd Lucero/Staff writer The Orange County Register


Fast Casual releases 2012 Top 100 Movers & Shakers

April 27, 2012

Fast Casual has released its seventh annual Top 100 Movers & Shakers, a ranking of the top fast casual concepts, people, technology, menu and innovation trends that impacted the industry in 2011.

This year’s winner was Denver-based Smashburger.

When Smashburger opened its first unit in 2007, the better burger category was just beginning to emerge. Five years later, Smashburger is an industry leader and has moved both the better burger and fast casual segments forward in major ways.

David Prokupek, the chain’s chairman and CEO, called 2011 a “capstone year.” Not only did Smashburger increase sales 72 percent over 2010, the company signed several international development deals and continued its US-based growth, opening in 12 new markets. If that wasn’t enough, the chain was ranked by Forbes magazine as America’s Most Promising Company, a testament to the corporate and consumer culture chain has worked hard to develop.

This year—our 7th of publishing the Fast Casual Top 100—we decided, as did many of our brands last year, to add some new flavors to our mix.

In the past, the Top 100 focused exclusively on concepts. In so doing, it omitted a range of important factors that contributed to the continued growth of this innovative and rich segment. For this edition, our rankings include not only the top brands, but also the people, trends and technologies that contributed most to the segment.

Not only was Smashburger our top performer in 2011, Prokupek also was named as the year’s top mover & shaker, followed by Steve Ells, founder and Steve Ells of Chipotle Mexican Grill.

To determine the brands, people and trends that made the list, our first step was to request nominations from our readers. We received hundreds. Our panelists then pored over the results and set about ranking them.

Special thanks goes to our panelists: Darren Tristano, EVP, Technomic; Kathleen Wood, founder, Kathleen Wood Partners LLC; and Linda Duke, founder, Duke Marketing.

This year’s Top 100 is sponsored by Eaton, Ohio-based Henny Penny. Here’s a look at the Top 5 brands and Top 5 people that made the list:

Brands

  1. Smashburger
  2. Zoes Kitchen
  3. Firehouse Subs
  4. Zoup
  5. Freebirds World Burrito

People

  1. Dave Prokupek, CEO, Smashburger
  2. Steve Ells, founder and CEO, Chipotle Mexican Grill
  3. Matthew Corrin, founder and CEO, Freshii
  4. Betsy Craig, founder, MenuTrinfo & Kitchens with Confidence
  5. Don Fox, CEO, Firehouse Subs

Click here to download the 2012 Top 100 Movers & Shakers


Chipotle Sales, Earnings Sizzle In First Quarter

April 26, 2012

By KEVIN HARLIN, INVESTOR’S BUSINESS DAILY Posted 04/19/2012 07:03 PM ET

Burrito chain Chipotle Mexican Grill (CMG) sizzled past earnings forecasts late Thursday, thanks to strong sales and a better handle on food costs.

Earnings surged 35% to $1.97 per share, 4 cents above consensus estimates. Sales climbed 26% to $640.6 million, beating analyst forecasts for $630.9 million.

Sales at restaurants open at least a year grew 12.7%, the seventh straight quarter of double-digit growth.

 Exceptionally mild weather in much of the country boosted sales by 1% to 2% in the quarter, the company said. The extra Leap Year day helped too. Chipotle sees mid-single-digit same-store growth for 2012.

Shares rose 1% in after-hours trading following a 1.7% drop in the regular session.

Chipotle, No. 18 on the current IBD 50 list, has been a top performer in the strong fast-casual dining segment, according to Darren Tristano, executive vice president with restaurant consulting firm Technomic.

he said.

Food costs remain an issue for Chipotle, which missed Q4 2011 earnings forecasts in part on those raw material expenses.

Q1 food costs climbed about 6% or 7%, Chipotle estimated on a conference call with analysts. Those inputs accounted for 32.2% of restaurant operating costs, flat vs. Q4 but up from 32% a year ago, the company said.

Cheaper avocados from Mexico and Chile, and moderating dairy prices helped offset higher chicken and beef costs.

Chipotle expects food costs to climb in the second and third quarters as it returns to pricier California avocados this summer, and shifts to sour cream made from pasture-raised cows. It sees full-year food inflation in the mid-single digits.

Chipotle raised prices 4.9% in March in its high-cost California and Pacific region, but says it doesn’t plan more hikes in 2012.

“We’re not compelled to take short-term pricing increases to drive quarterly results,” CFO John Hartung said on the conference call.

Denver-based Chipotle opened 32 restaurants in Q1 for a total of 1,262. It says it’s on pace for 155 to 165 new locations this year. It plans to open its first Paris restaurant this spring. It has two in London now and expects three more to open in the United Kingdom before year-end.

In September Chipotle opened ShopHouse Southeast Asian Kitchen in Washington, D.C., its first non-Mexican-themed eatery. It says it will open a second ShopHouse in D.C. later this year.

McDonald’s (MCD), which once owned a majority stake in Chipotle, reports Q1 results Friday. Analysts expect the fast-food king to post 7% EPS and sales gains. Strong U.S. sales are being offset by weakness in Europe.

Yum Brands (YUM), parent of Taco Bell, Pizza Hut and KFC, late Wednesday reported better-than-expected Q1 profit and sales, but reported slowing growth and higher costs in China. Its shares fell 2.1% Thursday.

Across the S&P 500, companies have been beating modest expectations. About 21% of those firms have reported, with 82% beating forecasts. Typically about 62% of firms beat views.


‘Breastaurants’ Take Aim at Hooters

April 25, 2012

By HAILEY EBER, The Fiscal Times March 9, 2012

It’s been about 15 years since I was last in Hooters on a family vacation that took a strange turn one hungry, lost afternoon, but little seems to have changed, from the bubbly letters of the logo to the waitress’s oft-derided nude pantyhose. “It definitely needs an overhaul,” Darren Tristano, an Executive Vice President at Technomic, a food industry consulting firm, says of the brand. “It’s considerably outdated.”  The only clear indicator of the 21st century at the Hooters in Midtown Manhattan is a sticker on the front door offering free wifi.

Faced with increased competition in the crudely termed “breastaurant” business, tough economic times, and the increasingly sophisticated tastes of consumers, Hooters is struggling.  Sales in the U.S. fell by 7.5 percent, from 960 million to 888 million, from 2007 to 2010, and more than a dozen domestic locations shuttered, according to Technomic data. By comparison, the varied-menu chain restaurant segment as a whole saw sales fall by 8.6 percent over the same period. “It’s pretty common knowledge that the casual dining space has been challenged,” says Hooters CEO Terry Marks. “The sales decline that Hooters experienced was not as deep, but we went into decline a bit earlier and have been slower to pull out of it.”

Hooters Performs a Self-Examination

In an effort to revive the brand, last December the company embarked upon what Marks calls the “most comprehensive body of work in trying to understand how users and lapsed users feel about the brand.”.  Over the last few months, customers and potential customers have been extensively surveyed both online and in-store to help determine where Hooters should go next. “It’s all about aiming well before you fire,” says Marks.

One key finding to come out of the research he says is that “it’s all about the food.” Marks talks of plans to expand the menu beyond its famous wings and basics to include more gourmet offerings, like burgers with high-quality beef and a shrimp and spinach salad that’s on the menu at the “new generation” Hooters that opened last month in downtown Atlanta — a “semi-prototype” of Hooters to come. Over the next three or four years, Marks say there are plans to remodel a “significant majority” of the nearly 400 Hooters locations across the country. There are no plans to open any additional corporate stores in 2012.

Meanwhile, relative newcomers in the “breastaurant ” business are rapidly expanding and nipping at Hooters’ panty-hose clad heels. Since it was founded in Denver in 2005, Twin Peaks, which touts its “scenic views,” has rapidly grown to 20 locations in eight states and plans to open at least 30 outlets at the end of year, staffed by comely women in hiking shorts and plaid crop-tops. Twin Peaks draws easy comparisons to Hooters not just in concept but also in its talent pool. Last May, the chain hired Rick Akam, who served as Hooters’ President and CEO from 1995 to 2003, to serve as its Chief Operating Officer.

Hooters Execs Strike Back at Siliclones

Then, in August, just a month after leaving his post as president and CEO of Hooters, Coby Brooks, whose father Robert H. Brooks had a majority stake in Hooters and was integral to its success until his death in 2006, led an investment group to ink a deal to open 35 Twin Peaks locations over the next decade. Some half a dozen other former top Hooters execs are now part of La Cima Restaurants group, along with Brooks. In September, Hooters brought a lawsuit against La Cima alleging that one of its execs had stolen trade secrets. It has yet to be settled, and Hooters declined to comment on the matter.

Twin Peaks president Jack Gibbons is more vocal when asked about it, calling it “interesting” and the “best kind of flattery” that Brooks would join his team. He professes amusement at the idea of “trade secrets” in the breastaurant biz, though he admits to the obvious similarities. “The idea of Twin Peaks is to take an outdated idea and make it fresh and innovative,” he says. He notes the quality of the food, which he says is aided by the fact that Twin Peaks is part of the Texas-based Front Burner Restaurants group, which runs a variety of restaurants with relatively modern menu offerings. “Have you eaten in a Hooters lately?” he asks with a laugh.

Meggie Miller, Twins Peaks’ Director of Marketing raves about Twin Peak’s “comfortable and very flattering” uniforms and touts internal programs stressing health and fitness and opportunities for Twin Peaks girls to move up the company ladder. “The girls, they take care of themselves,” says Gibbons.

Staying  Abreast of Changes in Customer Tastes

Twin Peaks isn’t the only rapidly developing breastaurant. Tilted Kilt, an Arizona based franchise with a Celtic theme — think knee-high socks, short plaid kilts, exposed plaid bras  — has grown in recent years, from eight restaurants in 2007 to 59 in 2010. Brick House Tavern + Tap, a “man cave” themed concept restaurant from the same company that brought Joe’s Crab Shack to a mall near you, has also seen rapid growth, expanding to 16 locations since launching in 2008. But, despite such rapid growth in the sector, Technomic’s Tristano says the good times won’t last forever and that the market will become over-saturated soon enough. “Three years from now, we’ll start to see some of the fallout,” he says. That’s when the industry will need more support to lift it out of the doldrums.


Burger King to go public – again

April 24, 2012

by Heidi N. Moore

Marketplace for Wednesday, April 4, 2012

Now to a little corporate soul-searching in the world of burgers and fries. Burger King’s been struggling, and not for the first time. A year and a half ago, private equity investors bought it and took if off the stock market — also not for the first time. Their plan? Broaden the customer base beyond men in their 20s chomping down bacon-and-cheddar double stackers. Burger King’s new owners plan to take the chain public again soon. But will this latest move help the chain fry and frappe their way to a comeback?

Our New York bureau chief Heidi Moore reports.

Heidi Moore: Harry Balzer is a vice president at the NPD Group, where he tracks how Americans eat. Recently, he walked into a Burger King in Glendale, Calif. It was pretty spiffy.

Harry Balzer: Digital menu boards up there, a TV in there, people were smiling. It impressed me. It tasted better because the place looked newer.

Burger King’s owner, private equity firm 3G Capital, has spent the past 18 months plotting a Hollywood makeover for the fast food chain. Burger King’s ads now feature the swoon-worthy David Beckham and Salma Hayek. The menu has grown to include chicken strips, frappe coffees, salads and smoothies.

Balzer: Yet, I still had a double cheeseburger.

Balzer is just like the consumers he studies: he likes seeing something new, but sticks to ordering his favorites. That’s certainly true of the various private equity firms that have owned Burger King over the past decade. They like one formula: buy the company, take it off the public stock exchange, then cash out by listing it on the exchange again.

Here’s Technomic analyst Darren Tristano.

Darren Tristano: My first thought was: Would you make up your mind already? Public, private, public, private.

But is Burger King ready for prime time? Last year it was only half as it was profitable as it was in 2009. Here’s RJ Hottovy, a senior restaurant analyst for Morningstar.

RJ Hottovy: I think I would have liked to see more progress on any turnaround.

The chain has fallen to third place behind McDonald’s and Wendy’s. Hottovy’s take on Burger King’s bid to be public again?

Hottovy: It’s more of a situation where 3G is looking to make a profit off their investment than it is Burger King needing the capital.

Burger King, the company, has now been flipped more often than the flame-broiled burgers it serves.

In New York, I’m Heidi Moore for Marketplace.

About the author

Heidi N. Moore is the New York bureau chief and Wall Street correspondent for Marketplace, where she reports and writes about the culture of banks, companies, financing and markets. Follow Heidi on Twitter @mooreh


Capturing Lunch and Dinner Customers

April 23, 2012

John Lofstock | Apr 06, 2012

When it comes to foodservice, convenience store operators must develop the expertise to make smart choices and deliver winning mealtime solutions.

 People need food, and convenience stores need people to like their food, which is why keeping lunch and dinner menus fresh, new and exciting is so important.

The food itself is the key point of differentiation for anyone in the foodservice business. Keeping menus fresh requires innovation and a keen eye for new products and emerging consumer trends.

“I think everybody likes variety, at lunch especially,” said Rick Yost, operations manager for Dead River Convenience Stores in Rockport, Maine. “You may get a guy two or three days a week for lunch and he’s not going to want to eat the same cheeseburger two or three times, so it’s important to have a variety.”

Dead River stores offer a standard, core food menu, but the company also gives store deli managers the latitude to add as many as five items on top of those that they feel will appeal to local tastes. There is, Yost pointed out, sufficient geographic diversity to make such flexibility critical to success.

“The optional five items rotate in and out,” Yost noted. “My stores are far apart and we have some coastal region locations that do a lot of lobsters rolls and things like that in the summertime. Then we also have some mountain-based stores where there are a lot of snowmobilers and skiers. They’ll do a lot of chili-type items in the wintertime, which aren’t necessarily big sellers in the stores along the beaches, but they’ll do well there. That’s where that kind of menu diversity is crucial.”

Tracking the Trends

Yost and his Dead River colleagues keep their fingers on the pulse of Americans’ ever-shifting food preferences by studying the retail market and interacting with consumers.

When it comes to identifying new products and food trends, suppliers are also a good source for information. “As long as it’s a two-way street where suppliers are feeding us accurate trending data and not trying to simply sell us something, we will always listen to what they have to offer,” Yost said.

Among the trends Dead River is seeing in its New England markets for the lunch daypart is a surge in Mexican foods, such as mini tacos and burritos. At dinner, customers are seeking value meals and more bundling.

“People are looking for more full meals,” Yost said. “It used to be our entire dinner menu consisted solely of pizza. Now we offer a Chester’s Chicken program in a lot of stores, with an eight-piece meal that comes with potatoes and other side dishes. It’s really a replacement meal, an alternative to the QSRs out there.”

The Dead River menu has expanded over the past two years to include several varieties of lasagna, spaghetti and chicken. “These are the alternative, full-service meals that are providing our strongest growth to date,” Yost said.

This coming summer, Dead River will once again be focusing on meal replacement items. As such, the company is placing a greater emphasis on desserts, such as smoothies and bakery items. “Customers like to end meals with an indulgence. We have found that when we have bundled these items together with a fresh meal, sales have been strong, so we will continue to focus on this growing demand.

Seeking Value

One trend that relates equally to the lunch and dinner dayparts is the move toward value offerings, including both dollar menus and combo meals, according to Kelly Weikel, consumer research manager for Chicago-based research and consulting firm Technomic Inc.

“I think that as more c-stores compete to take business from QSRs and fast-casual restaurants they will take a page from these locations and start offering more value menus—this will also be relevant to the snacking category—and pushing more combo meals that bundle an entrée, side and beverage at lunch,” Weikel said.

Additionally, as the quality perception of c-store foods increases, the industry will become a more viable choice for consumers at dinner. Since their positioning is centered on convenience, Weikel reasoned, and because other retailers are actively pushing them, this could mean more family-style bundles offered at dinner.

Indeed, in October 2011 a Technomic survey polled 500 c-store customers who purchase foodservice items at least every six months at a convenience store about value meals and dollar menus in a c-store setting. To ensure that consumers understood the difference between these two types of value offerings when responding, value meals and dollar menus were discussed separately and clearly defined.

Consumers not only agree that value offerings are appropriate at convenience stores, many have come to expect them and say such offerings influence them to visit c-stores instead of fast-food restaurants, Technomic found. Many customers reported they expect to see value meals (44%) and dollar menus (50%) at c-stores.

Despite the fact that value menus are a fast-food staple, Technomic research suggested more consumers (54%) expect fast-food restaurants to offer dollar menus. More importantly, most consumers said value meals (55%) and dollar menus (54%) can influence them to visit c-stores instead of fast-food restaurants, Technomic reported.

While both types of value offerings are about equally likely to drive traffic and help c-stores compete with fast-food restaurants, the data relating to consumer expectations indicated that consumers think value or dollar menus could be effective in a c-store setting.

Among the overall c-store trends Weikel identified are:

• A focus on stealing business from both quick-serve and fast-casual restaurant operators.

• Continued emphasis on quality,   freshness,  health and made-to-order foods.

• A growing need to cater to Hispanic consumers, especially with snacks and desserts.

• The expansion of private-label brands to offset a weak economy.

• C-store consumers will push for more adult beverages, specialty/high-quality coffees.

Boosting Meal Occasions

Technomic, which tracks and analyzes all retail segments that serve food and beverages, reported in January that over the past year, 40% of consumers have cut back on away-from-home dinner purchases, largely because they have less money to spend on dining out. This makes it more important than ever that c-stores combine quality with value. If they can deliver on these promises, the industry has a real opportunity to steal customers from other foodservice segments.

When weighing dine-out options, today’s consumers are more likely to choose restaurants based on the availability of frequent diner programs. As a result of consumers’ decrease in away-from-home dinner purchases, it is vital for operators and suppliers to stay on top of dinner and late-night trends, such as combo meals, smaller portions or shareable items, in order to more effectively identify opportunities of growth.

“It’s imperative for operators to recognize the importance of today’s value equation,” said Darren Tristano, Technomic’s executive vice president. “Drawing dinner and late-night traffic now means exploring new ways to underscore value beyond low prices. Operators may be able to boost dinner sales by strengthening their overall value with other pricing strategies, such as specials or combo meals.”

Technomic researchers have also found average unit volumes for c-stores offering prepared food and dispensed beverages jumped to more than $136,000 in 2011, up from $123,000 in 2007. The growth rates were based on approximately the same number of stores offering foodservice, indicating operators are becoming better at foodservice expansion and execution.

Overall, Technomic reported, c-store foodservice grew to $11.5 billion in 2011 (from $10.2 billion in 2007), based largely on the expansion of foodservice items, additional stores adding foodservice and more foodservice experience.


Why Going Green Can Mean Big Money for Fast-Food Chains

April 23, 2012

By Sonia van Gilder Cooke Monday, Apr. 09, 2012

In late 2008, a fast-food burger restaurant in Sweden received an odd complaint letter. It was from a mother of two, asking the chain to get rid of the boxes that its kids’ meals were packaged in. Her children only wanted the fries and toys, she said, and she was annoyed at having to throw the boxes straight into the recycling bin. It was an unusual request with an unusual outcome. Max Burgers — Sweden’s No. 1 burger chain — decided to do away with the kids’-meal boxes in all of its 75 restaurants, explaining to customers that it was reducing waste. No one complained. In fact, sales of kids’ meals rose. The company had turned sustainability into a selling point.

Max didn’t just get rid of its kids’-meal boxes, though. Since 2006, the chain has reassessed its entire enterprise, searching for ways to reduce its environmental footprint. It has installed energy-efficient grass roofs on 12 new restaurants and cut energy consumption by 20% company-wide. The chain buys only wind power and offsets all its carbon emissions by planting trees in Uganda. And in 2008, Max started putting CO2 labels on its menus, quantifying exactly how much carbon dioxide, from field to fryer, is emitted in making each dish. “One of the problems being a burger business is, of course, the beef,” says Max’s chief sustainability officer, Par Larshans, noting that the meat industry is responsible for about 18% of global greenhouse-gas emissions. By showing that its Grand de Luxe Cheese ‘n’ Bacon beef burger produced five times more carbon dioxide than its vegetarian burger and six times more than its fish sandwich, Max hoped to nudge customers toward a more sustainable choice.

It worked. Customers started eating more nonbeef burgers, causing sales of the low-carbon alternatives to jump by 16%. Meanwhile, Max began eating up the competition. From 2005 to ’11, the chain opened 45 new restaurants and more than doubled its market share in Sweden. In 2008 — the year it put its carbon labels on menus — Max became Sweden’s most popular burger chain, according to a survey of 250 brands carried out by the market-research firm ISI Wissing, trouncing McDonald’s despite the fact the American chain has three times as many restaurants in the country. With a 16% operating profit, Max has also become the most profitable burger franchise in Sweden. And after opening its first franchise in Norway last year, it’s eyeing expansion across Europe.

So how did the company do it? For one thing, the green initiatives seemed to boost customer loyalty, which increased by 27% from 2007 to ’09, according to a survey by the global media network Mindshare. But the real key was drawing in new customers. Vegetarians who might never have set foot in a fast-food restaurant now drop into Max for its veggie Greenburgare, bean salad and a Lyxshake Jordgubb (strawberry milk shake).

Max Burgers isn’t alone — fast-food chains elsewhere have also started burnishing their green credentials in recent years, with positive sales results. In the U.S., the Mexican-food chain Chipotle — which sources many of its ingredients locally and buys nearly half its beans from organic farms — has tripled its revenues since 2006 to $2 billion and now has more than 1,200 stores. Naked Pizza, which launched in 2009 in New Orleans and serves pies topped with hormone- and antibiotic-free meats, has plans to expand to 500 stores worldwide from its current 24. And in 2010, a vegetarian chain called Otarian launched in New York City and London with menus showing the amount of carbon dioxide emitted while making each food item (1.37 kg for a mushroom-quinoa burger) as well as the amount emitted by the typical fast-food equivalent (2.96 kg for a beef burger). Customers can store up the difference on a “Carbon Karma” card and redeem it for a free menu item of their choice.

Major companies have also experimented with measuring carbon emissions. Walkers (Britain’s biggest potato-chip manufacturer) and Coca-Cola have both begun monitoring the carbon footprint of their U.K. products with the help of the Carbon Trust, a British nonprofit group. For the companies, it not only improves their corporate image but can also save money. Walkers, for example, noticed it could cut costs by asking its farmers to water their potatoes less. “When you’re making [potato chips], you’re trying to get rid of most of the water,” explains John Kazer, a carbon-footprint-certification manager at the Carbon Trust. Drier potatoes take less energy to transport and bake to a crisp.

While carbon labeling and other environmental initiatives have caught on in some corners of the fast-food industry, however, they’re still not a huge selling point in the U.S. “Ultimately, with Chipotle, it’s a 1¼-lb. burrito,” says Darren Tristano, executive vice president of Technomic, a consultancy that monitors food-industry trends. “I think they’re going to win on portion and value more so than the environmental integrity.” In fact, the numbers show that diners interested in sustainable food are in the minority — only 27% of U.S. consumers feel it’s important that their restaurants be environmentally conscious, according to a 2010 Technomic survey.

This may change slowly, however, as the eco-minded Millennials — a third of whom report they want restaurants to be socially responsible and environmentally conscious — move through the workforce and begin earning higher salaries. “Every year, we are seeing more shift of the Millennial generation toward these concepts and spending their dollars there,” Tristano says. “Over time, it’s inevitable.”

For Max, pushing through new policies in recent years was a way of getting ahead of the curve. “When we introduced our carbon label in 2008, we were afraid that someone else would come in ahead of us,” Larshans says. Four year later, however, Max still hasn’t been joined by many others. “I don’t understand why more places aren’t doing this,” he says. “For us it’s a very good part of the business.”


McDonald’s Pursuit of Perfect Fries Risks Overpromising

April 22, 2012

Biting into a McDonald’s Corp. (MCD) french fry should be like “walking on freshly fallen snow.”

Barbara Booth, the company’s director of sensory science, was presiding over the fast-food giant’s semi-annual French Fry Evaluation — a contest among McCainFoods Ltd., ConAgra Foods Inc. (CAG)’s Lamb Weston and J.R. Simplot Co. to cook perfect versions of McDonald’s “World Famous Fries.”

“Close your eyes,” Booth told the three executives and 11 supplier representatives as they sniffed, sampled and spit fries in a ritual akin to tasting a Napa Valley Pinot. “If you can’t tell what you’re eating in three seconds, there’s a problem.”

As chains such as Five Guys Burgers and Fries and Smashburger attract diners looking for a better burger, McDonald’s is more than ever focused on the quality of its food. And in an age of 24-7 social media and hyper-informed consumers, the world’s largest burger chain is being forced to open up about the provenance of its beef, potatoes and more.

In January, McDonald’s began featuring online homages to its suppliers. In one “Supplier Story” video, Frank Martinez, who farms about 1,000 acres of potatoes (400 hectares) in Warden, Washington, brushes the dirt from a spud, slices it and declares: “Good potato!”

While sales growth at McDonald’s stores open at least 13 months has exceeded 3 percent for two years, the company is “mindful American consumers are wanting more education than ever before,” said Mark Kalinowski, an analyst at Janney Montgomery Scott in New York. “They want to make sure that they are not losing business to competitors that do a better job at communicating this type of message.”

Conversation Change

Providing more information about the McDonald’s menu is also a way to change the conversation, according to Michael Jacobson, executive director at the Center for Science in the Public Interest, a Washington-based advocacy group. Locally sourced potatoes don’t change the fact that a large order of McDonald’s fries delivers 25 grams of fat.

McDonald’s tries “to come across as warm and fuzzy,” Jacobson said. “They don’t show the frying of the potatoes” which “end up far higher in calories than they start out at.”

Last year, McDonald’s store owners received an e-mailed call to arms from the chain’s U.S. President Jan Fields. The industry has been “negatively impacted” by “food and product safety concerns,” Fields wrote. “Our ultimate success will require a fundamental shift in how we approach Brand Trust and how we incorporate these efforts in to everything we do.”

More Questions

Americans “have more questions about where their food comes from — whether they’re purchasing it from McDonald’s or whether they’re purchasing it from a grocery store,” said Heather Oldani, a McDonald’s spokeswoman. “We’ve just started to scratch the surface with the ‘Meet Our Suppliers’ campaign.”

McDonald’s is making other efforts to come clean about its food. Earlier this year, the Big Mac seller said it will require its pork suppliers to phase out the gestation pens that animal- rights groups have long deemed cruel to pigs. The move follows that of Chipotle Mexican Grill Inc. (CMG), which more than a decade ago began requiring its suppliers to raise pigs outside or in large cages and use antibiotic-free and vegetarian food.

Five Guys and Chipotle locally source their food. Some Five Guys locations post signs identifying the specific farm where their potatoes come from and the burrito seller tries to source veggies from nearby farms, defined as being within 350 miles of a restaurant, when practical.

Food Origin

While McDonald’s took to Twitter about two years ago to get feedback on its menu and stores, it’s now focusing the online conversations on suppliers and food origin, said Rick Wion, the social media chief, whose nine workers regularly send Twitter followers to YouTube videos about growers.

“We’re continually looking at ways we can promote our suppliers and talk about what goes into our supply chain,” he said. “We get questions about it all the time.”

McDonald’s would be best to proceed with caution in telling its food and supply-chain story, said Dick Adams, a San Diego- based restaurant franchisee consultant and former McDonald’s store owner.

“There’s no way that they can keep up with the smaller chains in terms of sourcing locally,” said Adams, who says there’s nothing wrong with McDonald’s food. “They have to be careful they don’t overpromise.”

The emphasis on fries is no accident. McDonald’s serves about 9 million pounds of them worldwide each day. And its competitors aren’t standing still, according to Darren Tristano, executive vice president at the Chicago-based researcher Technomic Inc.

Fry Prepping

McDonald’s suppliers spend weeks prepping for the fry evaluations, according to Ken Haynes, director of global quality at Lamb Weston: “It’s a big deal.”

The sampling began at 9 a.m. with the 15 tasters crowded around a large, rectangle table. Bottled water and unsalted crackers were on hand as palate cleansers.

Cooks in white lab coats served the first sample, the so- called “gold standard.” The tasters waited two-and-a-half minutes and then got started. Three fries were eaten on the first bite to discern unwanted buttery, sour or reheated potato flavors. The tasters scribbled notes on a score sheet — rating the fries on appearance, texture/mouth feel and flavor/aroma.

Booth pointed out black spots, dehydrated ends and oily and limp fries, all of which hurt a sample’s score.

Eighty minutes later, a winner was declared: Lamb Weston, which for the second time in a row had triumphed with a sample from its American Falls, Idaho, plant. The final score was 95 out 100 points — showing there was still room for improvement.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

 


Makeover of menu is whopper of a task

April 20, 2012

Burger King’s new items ape archrival

By Candice Choi-Associated Press

 MIAMI — When Burger King set about to fix its ailing empire, the fast-food giant started by scrutinizing everything on the menu — even the mayonnaise.

A group of Burger King executives and franchisees last year sat through a lengthy presentation, complete with charts and graphs on how oils and eggs affect the quality of the spread. A blind taste test of 30 varieties followed. The verdict: They liked the one Burger King was already using.

“That was actually a pretty hard day,” recalls John Koch, Burger King’s executive chef.

It wasn’t the only one. Over the past year, Burger King evaluated all of its ingredients from the bacon to the cheese slices it serves on its chargrilled burgers as part of a yearlong quest to reverse years of slumping sales of its Whoppers and fries.

The result: On Monday, it plans to launch a lineup of smoothies, frappe coffees, chicken strips and snack wraps. The 10 new items mark Burger King’s biggest menu expansion since the chain opened its doors in 1954.

Burger King’s food odyssey shows how grueling it can be for a fast-food company to come up with new menu items — a process most Americans aren’t aware of when they’re handed a bag at a drive-thru window. Burger King is the latest chain to revamp its menu as part of the fast-food industry’s move away from its nearly single-minded courtship of young men.

Once the lifeblood of the industry, those junk-food fanatics were particularly hard-hit by the economic downturn. At the same time, Americans generally have been demanding healthier options.

Burger King has failed to evolve even as competitors have gone after new customers with breakfast items and healthier fare. Last year, Wendy’s for the first time edged out Burger King as the nation’s No. 2 burger chain behind McDonald’s.

To stem the decline, Burger King executives last year decided to remodel its aging system of 7,200 stores to make them more contemporary, redesign worker uniforms with aprons so they stay clean and even serve the iconic Whopper in cardboard cartons instead of paper burger wrapping for the first time in more than 20 years. The food, however, is at the heart of its plan.

Consumers have longed for more food options at Burger King, but the revamp is a gamble. The new menu may not go far enough to differentiate Burger King from its competitors.

After all, there are striking similarities between Burger King’s new items and the offerings of its much-bigger rival, McDonald’s. The Golden Arches already rolled out specialty salads in 2003, snack wraps in 2006, premium coffee drinks in 2009, and fruit smoothies in 2010.

“Being an innovator is critical in the fast-food industry,” said Darren Tristano, an analyst for researcher Technomic Inc. But in recent years, he said, Burger King has been more of a follower.

Burger King executives don’t deny that its new items are pretty close to those on McDonald’s popular menu. But they say the new menu was created as a result of Burger King’s own research.

“Consumers wanted more choices,” said Steve Wiborg, president of Burger King’s North America operations. “Not just healthy choices, but choices they could get at the competition.”

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


McDonald’s, rivals see diminishing appeal for kids meals

April 19, 2012

Purchases of children’s fast-food meals falling off as dollar menus undercut pricing, accompanying toys tank

By Emily Bryson York, Chicago Tribune reporter, 8:29 PM CDT, April 10, 2012

Julie Oelling’s 6-year-old daughter Zoe started asking to go to McDonald’s for Happy Meal toys when she started preschool two years ago.

“When she was 4, it was kind of a big thing to do, but when she turned 5, it tapered off,” Oelling said, adding that it’s been about six months since her daughter’s last request. “I’d even say she’s starting to outgrow it now depending on what the toy is.”

Long portrayed as a key contributor to childhood obesity, fast-food kids meals may be losing their appeal to youngsters — and, more importantly, their parents. The emergence of dollar menus among restaurants have given price-conscious parents a powerful incentive to choose an a la carte burger or fries rather than ponying up nearly $4 for a kids meal.

Industry observers also say the toys served up with every meal aren’t capturing older kids’ attention, while others add that children are simply aging out of the meals earlier as they’re becoming more technologically savvy.

According to the NPD Group, visits to fast-food restaurants in which kids meals were purchased have declined every year since 2007, falling 5 percent in 2011 from the prior year.

“I don’t know if there’s a silver bullet here, or a smoking gun that would indicate” why it’s happening, said a McDonald’s franchisee. “I think there’s a combination of factors at play.”

“It’s something we’d love to reverse,” he said.

Fast-food kids meals have been subject to intense scrutiny in recent years. Activist groups have zeroed in on the products and accompanying toy, saying they introduce children to a lifetime of unhealthy eating. San Francisco and a number of other cities have enacted regulations for nutritional content of fast-food kids meals when toys accompany them. Regulations vary by city.

While McDonald’s is the largest player in fast food by far, most major chains, including Wendy’s, Burger King and Subway, offer kids meals. Burger King declined to comment for this story, and Wendy’s did not respond to requests for comment.

In a statement, McDonald’s spokeswoman Danya Proud said the chain is “seeing behavior shift slightly among what is being ordered” for children, “because families are eating differently than they used to when they go out.”

“Kids are curious and may share items with their parents, or they still stick to their favorite Happy Meal,” she said, adding that “Family visits to McDonald’s remain strong and slightly higher than the rest of the industry.”

Darren Tristano, executive vice president of Technomic, a Chicago-based food industry consulting firm, estimated that McDonald’s has the biggest share of kids meal sales in the fast-food industry, as much as 25 percent of the total. He doubts McDonald’s Happy Meal sales have been declining.

“I would put it flat at worst,” he said. But with the rest of the chain’s business soaring, a major product line stuck in a holding pattern would be struggling by comparison.

The Oak Brook-based burger giant is riding nearly nine years of global same-store sales gains. During 2011, McDonald’s total U.S. sales increased 5 percent to $8.5 billion. By comparison, total quick-service industry sales rose 2 percent in 2011 to $240 billion, according to NPD.

Happy Meal sales account for about 10 percent of McDonald’s U.S. sales, the company said, but the meal, and toys in particular, have been an important vehicle to get kids and their parents to eat at the Golden Arches. Higher incidence of family meals at fast-food restaurants tends to boost the average check, an important metric of success in the restaurant industry.

“They’re very important if you think about the roots of what (McDonald’s Corp. founder) Ray Kroc was trying to do: Create an environment where families could have a meal at an appropriate price,” Tristano said.

One executive familiar with McDonald’s business said that Happy Meals have been losing older children for at least a decade.

“First it was around 11 or 12, then it went from 10 to 11, then 9 and now anytime after 8 years old, kids aren’t satisfied with the Happy Meal offering,” the executive said, adding that was a reason the company introduced the “Mighty Kids” Happy Meal, with larger entrees like double cheeseburgers and six-piece chicken nuggets, in 2001.

Toys have been a big problem in retaining older children, the executive said, adding that they expect more, thanks to increased exposure to technology.

Others, like former McDonald’s franchisee Irwin Kruger, said the shift is “probably more correlated with education and income, or people who have a stronger sense of the importance of a balanced meal. But you have to throw in the cost of cheaper food on the dollar menu.”

Bonnie Riggs, NPD restaurant industry analyst, agreed, noting that mothers have “probably switched to the value menu because it was cheaper than the kids meal.”

Parents who order a sandwich, fries and a drink from the dollar menu would likely have paid $3 until the end of March, compared with $3.39 to $4.49 for a Happy Meal at a downtown McDonald’s. Prices may vary by region.

Recent changes at the fast-food giant, which created an “Extra Value Menu,” have made such pairings more expensive. A four-piece order of chicken nuggets, small fries and chocolate milk cost $3.78 in downtown Chicago, compared with $3.89 for the most similar kids meal combination.

“I think there’s a lot to the idea of ‘Let’s buy a big hamburger and cut it in half to share’ because of the economic situation,” said Barry Klein, a former McDonald’s advertising executive who now works as a marketing consultant. He added that the 20-piece order of chicken nuggets, now offered on the Extra Value Menu for less than $5, would be ideal for a family to share.

Some parents move away from kids meals just to get more food.

Vandana Sharma, mother to sons Varun, 11, and Aayush, 8, said she stopped buying Happy Meals two years ago in favor of a la carte burgers and fries. A small fry is 2.5 ounces, compared with a 1-ounce portion in a kids meal, which also comes with a small side of apple slices.

“Before, they were only interested in the toy,” she said, adding that the meal went straight into the trash. “Now at least they’re eating.”

Freelance writer Cheryl V. Jackson contributed.

eyork@tribune.com

Twitter @emilyyork

Copyright © 2012, Chicago Tribune


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