Hooters is chasing women — as customers

May 15, 2013

pictureHooters has always been known for tank top-wearing “girls.” Now, faced with declining sales, it’s wooing women — as customers.

The chain’s waitresses are as buxom as ever but its sales have “flattened out,” said Darren Tristano, executive vice president at research firm Technomic, Inc. Revenue peaked in 2007 at nearly $1 billion but had fallen to around $850 million last year, he estimated. (The privately-held company doesn’t release sales figures.) The brand recently announced an overhaul aimed at making Hooters more mainstream than man-cave, adding more salads to its menu, remodeling stores and rolling out a series of ads last week to tout the changes.

These efforts have only made the brand a little more popular, a new consumer survey shows.

According to market research firm YouGov’s BrandIndex, both men and women think slightly better of Hooters than they did prior to its overhaul, but men’s impression barely squeaked into positive territory, and women’s overall perception remained sharply negative. BrandIndex CEO Ted Marzilli said the small gains were encouraging for the brand, but “it’s not a brand that appeals to everyone.”

Hooters’ PR agency declined to make a spokesperson available for comment, and messages left with the company’s chief marketing officer were not returned.

The Atlanta-based chain and founder of the unfortunately termed “breastaurant” trend is trying to keep its core customer — the guy for whom the chain’s signature wings are a secondary attraction to the scantily-clad wait staff — from defecting to newer competitors like Tilted Kilt or Twin Peaks, while at the same time appealing to their girlfriends or wives.

“Restaurants can increase their base if they can negate the ‘veto vote’… Women are the driving force on our everyday eating patterns,” said Harry Balzer, chief industry analyst at research firm NPD Group. “Traditionally, when you want to appeal to more women, you’re going to bring in issues that have to do with diet. It will be salads, things that are fresher.”

“The food had not kept pace over time,” CEO Terry Marks told Nation’s Restaurant News in August. “By broadening the menu and introducing items that are better for you, we can get both new people and lapsed guests who might have outgrown our core items.”

In January, Hooters debuted its first redesigned location, which the company said gives customers “a more open and brighter appearance,” thanks to higher ceilings and lighter colors.

“They’re moving it forward, but it’s a larger brand, so in order to move the needle, it’s going to take some time,” Tristano said.

“They developed a niche and by some standard were certainly successful in establishing that niche,” Marzilli said, but the chain’s focus on sex appeal has some inherent limitations. “There are some women who will say it’s a sexist theme or I dont like what the brand stands for.’”

In good economic times, that might not be an issue. But the recession pummeled the casual dining sector, and Hooters’ core customer, young men, have been disproportionately affected by unemployment.

“The overall casual dining space… has been undergoing a lot of turmoil over the last four to five years,” said John Gordon, principal and founder at restaurant consulting company Pacific Management Consulting Group. “Hooters had an even more difficult situation,” he said, because ownership turmoil distracted management from reinvesting in and reinventing what was becoming a dated brand.

NPD data found that Americans went out to eat, on average, 74 times last year. That’s the lowest number since the company began tracking it in 1984. “They’re appealing to a behavior that’s decreasing in this country,” Balzer said.

“The question is, mathematically… how do I keep my base while growing and attracting logical new users?” Gordon said. For Hooters’ management, the answer seems to be greater inclusivity.

But Tristano questioned whether catering to women is really in the brand’s best interest. “I think they need to stay true to their brand,” he said. “To try to make Hooters more female-oriented will move away from what has attracted men to the concept… It may be as harmful to target them as it is helpful to bring them in the doors.”

Leave a Comment » | 'breastaurant, Economy, Financial Activity, Franchise Activity, Marketing Initiatives, Menu, Menu Trends, Uncategorized, Wings | Permalink
Posted by bnoone

KFC Growth Seen Slowing as Indonesia Limits Franchisees

May 13, 2013

i59E2rCg2bVEYum! Brands Inc. (YUM), owner of the KFC and Pizza Hut dining chains, and other fast-food companies may be forced to slow store growth in Indonesia, the world’s fourth- most populous nation, because of government rules to protect small businesses.

As US revenue drops, Yum is focusing on growing overseas, particularly in China and Southeast Asia. A plan taking effect in the next five years to limit restaurant franchise holders to operating 250 outlets in Indonesia, where fast-food sales rose 15 percent in 2011, may crimp openings for Yum and other US food chains as well as encourage similar restrictions in other nations.

“It’s going to probably slow things down a bit,” said Darren Tristano, executive vice president at Chicago-based restaurant researcher Technomic Inc. “This is going to be a bump in the road” for Yum, which already has 700 locations in Indonesia, he said.

Indonesian Trade minister Gita Wirjawan earlier this month announced the rule, which has certain exceptions, in a bid to protect small- and medium-size businesses. KFC, which sells wraps, spaghetti and chicken porridge in Indonesia, is the top US fast-food chain in the Asian nation with about 32 percent of the market, according to Bloomberg Rankings data from July.

Customers eat fried chicken with rice at fast-food restaurant Kentucky Fried Chicken in Jakarta. KFC, which sells wraps, spaghetti and chicken porridge in Indonesia, is the top US fast-food chain in the Asian nation with about 32 percent of the market, according to Bloomberg Rankings data from July. (Getty)

The rule “doesn’t impact Yum’s growth plans,” Virginia Ferguson, a company spokeswoman, said in an e-mail. “Our local franchisee will continue to work with authorities on the guidelines.”

Yum Expansion

Yum’s saturation of two or three stores per million people in Indonesia can expand to that of the US, where it has 50 to 60 eateries per million people, Muktesh Pant, chief executive officer of Yum International, said at an investor conference in December.

There is “no fundamental reason why Indonesia will not get there,” he said. In Indonesia, where gross domestic product growth is outpacing that of Brazil, Russia and India, Yum has said it can grow 43 percent to 1,000 stores by 2015.

“Indonesia is a very attractive market because of the extremely fast-growing middle class with discretionary income,” Bill Edwards, CEO of Irvine, California-based Edwards Global Services Inc., which advises retailers and restaurants, including Denny’s Corp. (DENN), in opening stores overseas.

While Yum says its growth won’t be affected by the rule, it’s harder to keep the brand and food quality consistent with different and smaller store owners, Edwards said.

“What if one operator does a bad job?” he said. More franchisees will require more supervision from the parent company, he said.

Yum, based in Louisville, Kentucky, has dropped 1.4 percent this year, while the Standard & Poor’s 500 Restaurants Index has gained 4.5 percent.

‘Still Evaluating’

The regulation affects companies such as PT Fastfood Indonesia, which operates more than 400 KFC restaurants in Indonesia. The rule applies to all food-mart franchisers and franchisees, including public companies, Wirjawan said.

“We are still evaluating and calculating the potential impact of the new rule,” Justinus D. Juwono, director of PT Fastfood, said in a telephone interview. “We haven’t changed or revised our investment plan or target yet. But, we’ll closely look into it, when we get our evaluation and calculation done in two or three weeks.”

Companies in Indonesia are allowed to operate 250 outlets either by selling partnership stakes or agreeing to open them in certain remote locations to be determined later, Wirjawan said at a press briefing in Jakarta on February 15. They will have five years to comply, he said.

Indonesia Population

Indonesia is the fourth-most populous country in the world with about 248.6 million people, according to a July estimate from the US Central Intelligence Agency World Factbook. China is the biggest country by population, followed by India and then the US, with 313.8 million people, the data show. Indonesia’s economic growth was about 6 percent in 2012. The nation had the world’s largest Muslim population as of 2010, according to the Pew Forum on Religion & Public Life.

Fast-food sales in Indonesia climbed 15 percent to $1.54 billion in 2011, compared with an increase of 9.6 percent globally and 3.6 percent in the US, according to data from Euromonitor International.

Dunkin’ Brands Group Inc. (DNKN), owner of the Dunkin’ Donuts and Baskin-Robbins dining chains, has about 600 stores in Indonesia, all of which are franchised. The company has been remodelling its Baskin-Robbins ice cream stores there.

“We are currently reviewing the regulation, and it is too early to determine possible impact,” Michelle King, a spokeswoman for Canton, Massachusetts-based Dunkin’ said in an e-mail. “We remain committed to the market.”

Me Too

McDonald’s Corp. (MCD), the world’s largest restaurant chain by sales, has about 130 stores in Indonesia, all of which are franchised. Becca Hary, a spokeswoman for the Oak Brook, Illinois-based company, declined to comment on the rule.

Indonesia may be the first of nations to impose restrictions on retail operators as other markets take on a “me-too” approach, Edwards said.

“This is one of the things we’re worried about in the franchise community,” he said. “This may set a precedent for other countries – the ‘me too’ does happen.”

Leave a Comment » | Economy, Franchise Activity, Future Plans/Announcements, Government, Growth | Permalink
Posted by bnoone

Experts Warn of Impending Food Price Increases

May 10, 2013

PICTUREThe lingering effects of last summer’s drought — the largest in the U.S. since the 1950s — don’t appear to be dissipating any time soon. Quite the contrary, in fact, as many experts now warn of food price increases throughout this year.

Analysts with Great American Group Inc. report that overall retail food prices are likely to increase between 3 and 4 percent in 2013, which is above the historical average.

According to the National Climatic Data Center, about 55 percent of the country experienced at least moderate short-term drought in June 2012, for the first time since December 1956. It was compounded by a heat wave-laden July, which left farmers scrambling to save harvests.

The corn harvest in particular was dramatically reduced by the drought, affecting the cost of animal feed, which has spiked the cost of meat and dairy products. After reaching a high of $8.43 per bushel in August, corn prices softened in the remaining part of the year and into January 2013. Despite the recent decline, corn prices remain well above those of prior years.

To raise or not to raise prices?

In its latest Food Monitor (Inventory and Equipment), Great American Group notes that retail food prices have already been impacted by increases in commodity costs, with some operators wondering whether or not to pass those costs along to consumers.

“Commodity prices have been high for several months, and food retailers have been feeling pressure to pass along price increases to customers,” said Ken Bloore, chief operating officer for Great American Group’s Advisory and Valuation Services division. “Prices are expected to increase more significantly in the coming weeks and months.”

Some consultants, however, advise against increasing prices too much. Michael Shepherd, who owns three pizzerias in Ohio and Michael Shepherd Consulting LLC, said operators will risk losing customers if they increase prices too much while the economy is still slow.

Five or 10 years ago, this would have been a better option. Now, however, “it’s a whole new world,” he said.

“When people’s incomes are going down, your prices can’t keep going up,” he said. “Increasing sales volume to outrun your rising costs is a race you can never win. You’ll reach a point where you can’t squeeze any more from your customers, and when the economy goes south again, it’ll catch up to you.”

However, Darren Tristano, executive vice president at market research firm Technomic, said grocery prices are rising faster than restaurant prices, so “for consumers, restaurants are now actually a better value.” But while consumers may be more optimistic than they were last year at this time (by 4 percent), operators are feeling the commodities pressure and will have little choice but to pass along some costs.

“This year we expect a big spike in beef, so we’ll see more veggies and chicken, as well as operators who plan to take price increases. Fifty-four percent say they will raise their prices this year. They don’t want to, but most will have to,” Tristano said. He added that all eyes will be on McDonald’s. As the chain bumps its value offerings from $1 to $1.29, it makes other brands more comfortable to inch up prices as well.

Other factors at play in rising costs

The drought of 2012 isn’t the only driver of rising costs. Food prices were also impacted by the consumption of corn in the production of biofuels, as well as population growth and increased energy costs, according to Great American Group.

Also, gridlock in Washington, D.C. may exacerbate the issue, particularly with a possible sequester looming. The sequester (or the “second mini fiscal cliff,” according to CNN) dates back to 2011, when President Obama and Congress agreed upon certain budgeting cuts totaling $1.2 trillion to gain control of the nation’s debt. This agreement was made with a the idea that the government’s bills would be paid in the interim, but a compromise has yet to be made, which will force spending cuts to go into effect on March 1.

According to CNN, if these cuts aren’t averted by March 1, there will be a $51 million cut to food safety programs. This means food inspectors will be furloughed and meat and poultry plants could be closed for up to 15 days. Consequently there would be shortages of chicken, eggs, pork and beef, leading to price increases. U.S. Department of Agriculture Secretary Tom Vilsack told CNN: “Food safety could be compromised. There will have less food available — by as much as 2 billion pounds of meat, 3 billion pounds of chicken, 200 million pounds of eggs.”

Leave a Comment » | Commodity Costs, Economy, Price | Permalink
Posted by bnoone

Burger King Tries Again in France

April 25, 2013

BKFRANKFURT – Once a week, Vincent Bonnaire drives 15 miles from his office in Aix-en-Provence to Marseille airport in the south of France. He’s not catching a flight. He just wants his weekly Whopper fix.

Bonnaire, 28, an electrical equipment salesman, can once again enjoy his favorite burger in France. After a 15-year absence, during which rival McDonald’s captured almost half of the $12 billion French fast-food market, Burger King Worldwide returned to France in December. In the coming months, it plans to open its second outlet, off a motorway in Reims.

Burger King’s first French foray was haphazard, ending with a quiet retreat after shuttering 39 restaurants. This time, Burger King has hedged its bets, sharing costs with Italian restaurant operator Autogrill. At stake is one of McDonald’s biggest markets based on sales and profits.

To beat McDonald’s and European rival Quick, which have gobbled up the best locations and tailored their menus to French tastes, the Miami chain must emphasize the flame-grilled burgers that have won passionate fans, according to Michael Schaefer, an analyst at researcher Euromonitor International.

“They have the name recognition, that weird cult following in France,” Schaefer said. “That’s kind of half the battle. The best thing for Burger King right now is to keep it simple and focus on things people know.”

Another failure in France could sour investors on Burger King’s shares, which have advanced about 20 percent from the company’s opening share price on its June 20 return to the New York Stock Exchange, after owner 3G Capital completed a merger with a company co-founded by activist investor William Ackman. The stock has outpaced both McDonald’s and the Standard & Poor’s 500 index since then, bolstered by an international push that has taken the chain into places as far-flung as Siberia and Peru.

A setback in France “would be a very big blow for the organization and for the brand,” said Darren Tristano, executive vice president at researcher Technomic Inc. in Chicago.

Burger King is saying little about its plans in France, where the fast-food market will grow 17 percent by 2016, Euromonitor predicts. Autogrill provides expertise “in the travel sector,” according to emails from Leo Leon, Burger King’s general manager for Europe, the Middle East and Africa. Autogrill, based in Novara, Italy, runs restaurants – including more than 140 Burger Kings – in airports, railway stations and roadsides on four continents.

The Autogrill pact allows Burger King to test the waters without big upfront investments, said Jerome Hamrit, head of the consumer and retail practice at A.T. Kearney in France.

Burger King may benefit from its beef-heavy menu, a contrast to that of McDonald’s, often called “McDo” in France, which has increased its offerings of fare such as salads, fruit and pastries. Burger King should focus on the basics such as its Double Whopper, said Suzanne Stahlie, managing director at consultants FutureBrand in Paris.

“We can go to McDonald’s to eat ice cream or have a coffee,” she said. “People go to Burger King for the American burger.”

Waits can stretch to 45 minutes or more during lunch at the Marseille airport location.

Leave a Comment » | Burger, Economy, Expansion Strategy, Experience, Franchise Activity, Future Plans/Announcements, Growth | Permalink
Posted by bnoone

Casual Dining Now on Resort Menus

April 24, 2013

665371The Four Seasons Resort Scottsdale recently opened a whimsical, comfort-food restaurant with a soda fountain, shuffleboard table and regional American specialties such as chicken-fried buffalo with buttermilk mash.

The venue, Proof, is a radical departure in dining at the AAA Five Diamond property and a first for the luxury hotel chain. It’s also an example of a casual dining trend taking hold at luxury resorts Valley-wide.

“We realized that our guests wanted a restaurant where they could eat in their T-shirt and shorts. It’s not that formal dining is gone completely but rather that the demand is increasing for approachable foods at approachable prices in a family-friendly setting,” Executive Chef Jesse Hansen said of the new restaurant.

After a five-year struggle to fill seats and make fancy dining rooms profitable, many resorts are moving their high-end restaurants down-market or adding informal dining options alongside them.

Economics and lifestyle are driving the move away from starched white tablecloths and china to wood tables and pottery, from four-course dinners to shared plates, according to industry experts.

Diners no longer have an appetite or pocketbook for $100 Kobe beef patties topped with foie gras.

Instead, today’s business and leisure diner wants the price to be as good as the food.

“The consumer mind-set is toward value, and resorts are getting the message,” said Darren Tristano, executive vice president of Technomic Inc., a Chicago-based market-research firm for the food-service industry. “They know that diners perceive the traditional resort restaurants as expensive and formal, so they are opening ones that are cheaper and more casual.”

Experts estimate that diners can cut a dinner tab almost in half by eating at a casual resort eatery. The lower prices especially appeal to guests who stay several nights and have little desire or money to dine nightly at the first-class restaurant.

The resort trend dovetails with an industrywide boom in casual dining. According to market researcher NPD Group, casual dining will continue to outpace all other sectors through 2019.

Along with saving money, business and leisure diners at resorts have less interest than their grandparents in suiting up for multiple courses in formal dining rooms.

At Montelucia Resort and Spa in Paradise Valley, Executive Chef Michael Cairns recently opened Centro Lounge, a Southwestern-inspired bistro that meets an ambitious guest wish list: fresh, locally inspired food; small plates to share; entrees under $20; Wi-Fi access; and a light, bright, unpretentious space in which to enjoy a meal.

“People want technology in the dining room so they can check e-mail, watch TV or chat on the phone while eating,” Cairns said. “We blew up the old model of resort dining and brought in the new.”

The changes work for Francis Miller and her husband. The Lancaster, Pa., couple spend weeks every winter at the resort at the base of Camelback Mountain.

“We like that we have a casual, bright and light restaurant to grab something to eat,” Miller said. “Guests watch sports, the food channel. It’s a nice addition to have on the property.”

Resorts also are banking that the hipper, casual eateries will prevent guests from spending their dining dollars elsewhere while enticing locals to the resort for a meal. The new casual model is midway between the rank-and-file coffee shop and formal dining room, replicas of innovative, one-of-a-kind, chef-owned eateries.

“Food is a critical part of a resort’s overall profits, so it’s important they keep guests on site for as many meals as possible,” said Kristen Jarnagin, vice president of communications for the Arizona Lodging and Tourism Association.

The long run of good times for Arizona resort restaurants began stalling in 2008. That April, Mary Elaine’s, for 20 years a showcase of luxury fine dining with decadent touches like purse stools, closed. The Phoenician replaced the restaurant with a partnership with superstar chef and international entrepreneur Jean-Georges Vongerichten for J&G Steakhouse.

Shortly after, two other high-end Valley resorts shuttered their decades-old, fine-dining rooms in favor of celebrity-chef spinoffs. The Marquesa at the Fairmont Scottsdale Princess turned into Bourbon Steak, a Michael Mina steak house; while the Chaparral at the Marriott Camelback Inn turned into BLT Steak, a Laurent Tourondel concept.

Diners view steak houses as a more casual alternative to the old-school, stuffier resort restaurants and a popular draw to business travelers dining on company expense accounts, hospitality-industry experts said.

But is casual resort here to stay? Predictions range from yes to passing fad.

Chefs such as Cairns are certain the days of dark leather, starched tablecloths and French continental fare are over forever. Yet Jarnagin believes formal dining, like most cyclical trends, eventually will return.

“Everything comes full circle, and when the good times roll, people will want that truly special meal that only a high-end hotel at a resort can offer,” Jarnagin said.

Despite the growing popularity of casual dining, properties such as the Sheraton Wild Horse Pass and Resort have no plans to shutter or offer lower-tier alternatives to their upscale, showcase restaurants.

“Kai is part of our resort’s identity and a way we share the Native American culture, history and legacy,” said Stephanie Sanstead, spokeswoman for the Gila River Reservation resort. “Kai is here to stay no matter what happens at other resorts.”

Leave a Comment » | Casual Dining, Economy, Hotel, Price, Technology | Permalink
Posted by bnoone

Growing Taste for Mediterranean

March 5, 2013

Inside a refurbished two-story warehouse in Paterson’s down-at-the-heels Bunker Hill area, a homegrown company is riding the nation’s wave of enthusiasm for Mediterranean cuisine.

Workers dressed in white overalls operated a mechanized production line Wednesday morning, mixing, cutting and shaping fillo — a paper-thin dough made by Kontos Foods that is used to make Greek or Middle Eastern pastries.

The production line, which was opened about a month ago, is the latest move in a steady expansion by family-owned Kontos, which in recent years has included buying its leased manufacturing and distribution facility, expanding the building and buying another one to house the fillo dough operation.

The projects were backed by the New Jersey Economic Development Authority, which issued bonds that were acquired by TD Bank. The two property acquisitions, the purchase of machinery and equipment, and related expenses cost $11.5 million, according to EDA records.

And despite the fact that the company added a second floor to double the size of the latest acquisition to 45,000 square feet, the expansion is still not enough, said Warren Stoll, the company’s marketing director.

“This was pretty much maxed out the day we started,” said Stoll, as he showed off the refurbished building with Steve Kontos, company vice president and a co-founder.

“We are working 24 hours a day to fill orders for Singapore, Taiwan, Korea and China,” Kontos said. He said the company added a second floor to the building, rather than develop the parking lot, so that it would still have space to expand there in the future.

The company was started in 1987 by Kontos and his father, Evris, at the time making pita bread. It now has 200 employees, 10 of whom were added when the new facility was opened. And the product line has since expanded to include 50 bread products, as well as yogurts, crepes, wraps and other items sold nationwide through retail outlets and to restaurants and hotels.

While the expansion is driven in part by growing name recognition for Kontos products, another key factor is the rising interest among American consumers in Mediterranean foods, Stoll said.

Darren Tristano, executive vice president for Technomic, a Chicago-based food industry research company, said the increased interest in Mediterranean foods can be seen in the rise of Greek-concept franchises, such as Little Greek and Hungry Greek in Florida, and the Garbanzo Mediterranean Grill chain, which is soon to open a restaurant in Florham Park. In New Jersey, the It’s Greek to Me chain now has 10 restaurants, six of them in Bergen or Passaic counties.

“The second important indicator is the health and wellness trend,” in which Mediterranean food is perceived by consumers to be healthy, Tristano said. “These Mediterranean-style foods are designed for healthfulness, for lower calorie counts and are generally fresh in nature.”

Leave a Comment » | Beyond Foodservice, Distributors, Economy, Expansion Strategy, Experience, Financial Activity, Flavor, Food, Franchise Activity, Future Plans/Announcements, Growth, Health & Wellness, Ingredient, Mediterranean, Menu Development/Innovation, Menu Trends | Permalink
Posted by bnoone

Asian food companies buy O.C. factory space

March 1, 2013

Their acquisitions help nourish county’s hot industrial real estate market.

Many Orange County residents enjoy wantons, azuki-filled pastries and other Asian foods. And that’s helping to fuel a rebound in the industrial real estate market.

Even as some traditional manufacturers have closed plants and moved out of the area in recent years, a number of large Asian food companies have purchased industrial properties in Orange County to expand their local operations. Among the growing companies are CJ America Inc., the South Korean maker of Annie Chun’s packaged food, which acquired industrial property in Fullerton, and Imuraya USA, a Japanese dessert company, which bought a plant in Irvine.

Allen Buchanan, a principal with Lee & Associates who helped broker the CJ America deal, sees a trend. “We have seen a few examples of food companies backfilling industrial buildings formerly occupied by companies that vacated O.C.”

Buchanan noted that the area’s large and growing Asian American population and the need for food production to be close to consumers are factors in the rising interest among Asian food companies for manufacturing space.

The vacancy rate in Orange County’s industrial market was below 4.7 percent at the end of 2012, down from nearly 6 percent two years earlier and among the lowest levels since the beginning of the recession, according to new data from Voit Real Estate Services in Newport Beach. Over that same span, average lease rates rose 6 percent to 57 cents per square foot and sale prices climbed 15 percent to about $149 per square foot.

“The numbers have been positive,” said Jerry Holdner, Voit’s vice president of market research. “The industrial market has performed very well since 2010.”

The vacancy rate increased slightly in the fourth quarter, but Holdner said that was partially due to a dwindling supply of choice properties in the local industrial market. Some companies that want to expand have struggled to find the space or land to do so.

CJ America, which was looking for a space that could accommodate growth, bought a 68,466-square-foot facility that sits on nearly 7 acres of land. The company paid $8.2 million for the property, a former commercial refrigeration manufacturing plant at 500 S. State College Blvd.

In July, a Taiwanese bakery chain called 85 [degrees]C cafe paid more than $5.6 million for a 70,492-square-foot property in Brea that will be a commercial kitchen supplying its growing operations. The company, which opened its first U.S. location in 2008, has three local stores and expects to open five this year.

“We have plans to continue our expansion,” said Stephanie Peng, project manager for 85 [degrees]C. “Ever since we opened the store in Irvine, there’s been a huge demand for our products.”

Peng said the company’s products have become more popular with non-Asian-American customers, which has helped accelerate the company’s growth.

Darren Tristano, executive vice president of food industry consulting firm Technomic, said many menus reflect a trend toward Asian-food flavors, which have become more popular among mainstream consumers in the United States.

“What’s happening is that American consumers, especially millennials, are developing more adventurous taste palates. You can see it in the emergence of Japanese, Korean and Vietnamese, in addition to Thai, restaurants,” he said. “Those organizations that already produce those products internationally are opening production facilities in the U.S.”

Robert Socci, an executive vice president with Voit who specializes in industrial properties, said he has noticed more interest from Asian food companies, but he said there are larger factors influencing the market’s rebound, including an improving economy and limited supply of space.

“It’s recovered very quickly,” he said. “Everybody’s looking for land, there’s a very big demand for sale product, prices are increasing very quickly … and business overall is doing better. It’s a convergence of a lot of different factors that are contributing to a very hot market.”

Leave a Comment » | Asian, Economy, Expansion Strategy, Franchise Activity | Permalink
Posted by bnoone

Retailers Need to Clearly Stand Out From Restaurants

February 28, 2013

CHICAGO — At the height of the economic downturn, many consumers flocked to convenience stores, supermarkets, mass merchandisers, warehouse clubs and other retailers looking for a deal on prepared food. Now that the economy is recovering from the recession, though, consumers are purchasing retailer meal solutions (RMS) less often than they did just two years ago.

New research from Chicago-based consulting firm Technomic Inc. found that 38 percent of today’s consumers say they purchase RMS from traditional supermarkets each week, down from 42 percent who said the same in 2010.

“These consumers may be reversing the patterns they set a couple of years ago by heading back to restaurants,” said Darren Tristano, vice president of Technomic. “For retailers to gain or maintain their share of foodservice dollars, they’ll need to clearly stand out from restaurants — especially since our data shows that consumers’ expectations are rising for the taste, quality, freshness and appearance of retailer prepared foods.”

To help foodservice executives understand the latest consumer behavior, preferences and attitudes regarding retailer foodservice, Technomic has developed the Retailer Meal Solutions Consumer Trend Report.

This report explores retailer foodservice trends at traditional, upscale or fresh-format supermarkets; warehouse clubs; convenience stores; mass merchandisers and specialty food stores.

Among the report’s findings are:

  • Some of the top RMS menu trends include signature fried snacks; more variety for vegetable sides; higher-quality pizzas; a distinct specialty focus for sandwiches and burgers; and a move toward ethnic flavors.
  • More than two-fifths of consumers who purchase RMS at least once a month (43 percent) say they do so four or more times per month, meaning they purchase RMS at least once a week.
  • More consumers today than those polled two years ago place a high importance on attributes such as value, price, convenience, taste, freshness and quality of prepared foods.
  • Opportunities exist for retailers to leverage their customization options to compete with restaurants; only 38 percent of consumers agree that retail prepared foods allow for more customization than food purchased from a restaurant.
  • At least four out of five consumers who visit each retail chain measured for prepared foods purchase RMS items at these locations at least once a month, reiterating the strong role routine and convenience plays in the RMS purchasing decision.
  • Although half of consumers think the quality of prepared foods has greatly improved since 2010, nearly two-fifths call for more name-brand foods that typically denote a higher quality perception.

Leave a Comment » | C-Stores/Retailer Meal Solutions, Economy, Menu Trends, Price | Permalink
Posted by bnoone

Fast-food chains revamp value menus

February 21, 2013

value_menu_460Wendy’s launched its first value menu in October 1989 — seven items ranging from a junior bacon cheeseburger to a garden side salad to a small Frosty, all priced at 99 cents.

It was the first volley of a revolution that changed the fast-food industry in America.

“I think the Wendy’s 99-cent value menu was a very innovative approach to pricing that has stood the test of time and created a way of life for fast-food-chain customers,” said Darren Tristano, executive vice president of Technomic, a food-industry research firm in Chicago.

And with payroll taxes rising and consumer confidence falling, it’s time for value again. Restaurant chains such as Wendy’s and Taco Bell are making over their value menus to balance customers’ dwindling paychecks with rising food costs.

“In tough economic times, that’s when value is even more important,” said Denny Lynch, a spokesman for the Wendy’s Co. in Dublin.

The fast-food value menu is rooted in value theory — understanding how and why people value some things more than others. In 1989, “value” meant fast food that cost less than a buck, and Wendy’s set the standard.

One thing Wendy’s did not do, however, was cut the price of its premium menu items. “In the late’80s, there was an awful lot of discounting in the industry, not different from today,” Lynch said.“At the time, you would see 99-cent Whoppers (Burger King) and Big Macs (McDonald’s).”

Instead, Wendy’s offered customers the predictability of the same value items every day. “That turned out to be a big hit that resonated with consumers,” he said.

Over time, the definition of fast-food value changed. Consumers decided they also wanted quality and variety for their dollar. “It’s not just ‘fill me up’ anymore,” Lynch said.

That spelled pricing pressure for restaurant operators. So they juggled their value menus, aggressively promoting the lowest-cost items, cutting portion sizes, switching to lower-cost suppliers and moving high-cost items to other parts of the menu.

In mid-2005, Wendy’s experimented with raising the prices of some value-menu items above $1 to compensate franchisees for rising food costs. For example, Wendy’s raised the price on its junior bacon cheeseburger to $1.29 from 99 cents, according to The New York Times.

The pricing move confused longtime Wendy’s customers and was partly responsible for a slump in sales, securities analysts said at the time. Wendy’s went back to a 99-cent value menu within six months.

A few years later, Wendy’s competitor Burger King priced its double cheeseburger at $1, even though franchisees complained they were losing money on the sandwich.

The National Franchisee Association sued Burger King on behalf of the franchisees in 2009. Franchisees settled the suit two years later, winning not higher prices for the cheeseburgers but more say in future value-menu pricing.

Meanwhile, the prices of food, utilities and labor have continued to rise. “All restaurants are dealing with food price inflation,” said Technomic’s Tristano.

Last year’s drought, considered the worst in half a century, is adding to food and fuel costs. New health-care mandates for employers, beginning next year, also could drive up labor costs, Tristano said.

So in recent years, some Wendy’s franchisees took liberties with their value menus, raising prices for some items above $1. That meant one restaurant might have charged 99 cents for a Jr. Cheeseburger Deluxe, but at a different location, the same sandwich cost 30 cents more.

Inconsistent marketing messages, including price disparities at its restaurants, caused Wendy’s to lose market share and traffic in its “price/value” segment over the past 15 months, Emil Brolick, the company’s president and CEO, told investors during a recent conference.

On Jan. 2, Wendy’s relaunched its value menu as the Right Price Right Size menu — 18 items ranging in price from 99 cents to $1.99. Breaking the 99-cent barrier of previous menus could give Wendy’s and its franchisees flexibility to deal with rising costs.

KeyBanc Capital Markets analyst Christopher O’Cull praised the Right Price Right Size menu in a recent research report for its potential to make value pricing more consistent across Wendy’s restaurants.

This potential has yet to be realized. Wendy’s can’t dictate the prices that franchisees charge for their value-menu products, Lynch said.

“We believe that the launch of the Right Price Right Size menu is the first and a very important step in beginning to address that” problem, Brolick said. “The response we’ve seen initially is very, very encouraging.”

The only 99-cent item that remains from Wendy’s original value menu is the small Frosty, Lynch said.

Whatever the evolution of the menu, it continues to resonate with at least some customers.

David Head of Columbus likes Wendy’s new value menu. Head started with one sandwich and french fries on a recent afternoon, then went back for a second sandwich.

“I’ve had two sandwiches and an order of fries for $3,” Head said. “I feel like I’m getting a lot for my money.”

Leave a Comment » | Economy, Fast Food, Financial Activity, Flavor, Food, Health & Wellness, Ingredient, Menu Development/Innovation, Menu Trends, Price | Permalink
Posted by bnoone

A Snack Trend With Pop: Gourmet Popcorn Takes Over

February 12, 2013

113263407Move over, CrackerJack: The hottest snack food of 2013 is gourmet popcorn. And we’re not talking that bright orange stuff that comes in the tins you get around the holidays, or the vats with the synthetic butter you get at the movies. Today’s popcorn has gone seriously decadent, flavored with everything from black truffles to the Italian spirit Campari to wasabi.

Americans eat around 16 billion quarts of popcorn a year, according to The Popcorn Board, and artisanal, handmade varieties are garnering an increasing chunk of what was nearly a $1 billion market at the beginning of the decade. The Doc Popcorn chain, which claims to be the biggest popcorn retailer in the world since it began franchising in 2009, has grown by leaps and bounds; co-founder Rob Israel told CNBC that his company has 85 locations open and 300 in development.

The Boston Globe and the Syracuse Post-Standard both report that gourmet popcorn shops are flourishing. Maybe the economy is doing better than the data would suggest, if enough of us have the discretionary income to fork over $4 or $5 for a small bag.

Oh, that’s the other thing about this trendy treat: It’s not cheap. But snackers seem willing to pay for the variety and the convenience, says Darren Tristano, executive vice president at consulting company Technomic. “The consumer can’t create it easily at home, and when they’re out, they’re willing to pay more for it,” he says. “The impulse nature… and the convenience factor of getting it fresh is certainly going to go a long way towards that price point.”

“People come to our mall stores. They will literally buy a bag, eat it, and buy another bag,” Israel told CNBC.

Gourmet popcorn is even edging out the cupcake tower at trendy gatherings, with photos of and chatter about gourmet popcorn bars popping up on wedding-planning forums, blogs, and social networking sites like Pinterest. “Elaborately spiced and flavored popcorn has been showing up at events in 2012, and caterers are predicting that they’ll see even more in 2013,” the event industry trade magazine Catersource predicts.

Food marketing company the Sterling-Rice Group and the National Association for the Specialty Food Trade say gourmet popcorn is one of the top 10 food trends for the year. Sterling-Rice predicted popcorn will “explode” this year thanks to its “addictive” quality and its use as a vehicle for sweet and savory flavors.

Doc Popcorn’s flavors include the classics — caramel, a couple varieties of cheddar, sweet and savory buttered — as well as more unusual ones like jalapeno and cinnamon. Other popcorn purveyors push the envelope even further with flavors like bacon, buffalo and blue cheese, s’mores, spicy or salted caramel, stout beer, and cheesecake.

Aside from its versatility, the other reason behind popcorn’s newfound popularity is that the popcorn business is a relatively easy one to break into, Tristano says. The start-up costs aren’t exorbitant; the corn is simple enough to make with equipment that can fit into a kiosk or small storefront; and, as anyone who’s made a batch themselves can attest, it doesn’t take a high level of technical know-how to make the stuff.

Even though popcorn — the world’s supply of which is almost all grown here in the U.S. — was affected by the drought that afflicted the nation’s agricultural belt last year, experts don’t see that affecting its popularity, or, for that matter, its profitability. Although both retail and wholesale prices rose this fall, Reuters said, Tristano says the cost of the corn is only a small portion of a seller’s costs.

But will popcorn have the staying power of other food trends like bacon or cupcakes, or will it be a flash in the, er, kettle? “It’s a question of whether popcorn is enough to hang a retail business on for the long term,” Louise Kramer of the National Association for the Specialty Food Trade tells the Globe. ”As a popcorn retailer you have to keep it interesting and different.”

Leave a Comment » | Economy, Expansion Strategy, Flavor, Future Plans/Announcements, Growth, Ingredient, Menu Development/Innovation, Menu Trends, Price, Snacking | Permalink
Posted by bnoone

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