Starting From Scratch With Better Coffee

February 25, 2015

Joan Verdon

https://global.factiva.com/du/article.aspx/?accessionno=WPATHN0020150220eb2k0005u&fcpil=en&napc=T&sa_from=&cat=a

Copyright 2015 Herald News (Woodland Park, NJ). Distributed by NewsBank, inc.

The food-services company Mascott has fed its growth by introducing other people’s restaurant and food franchise ideas to North Jersey. Now it wants to build a beverage and food concept from the ground up.

Hillside-based Mascott, which brought the first Smashburger and Noodles & Co. restaurants to Bergen and Passaic counties, is launching a coffee-shop business called Ground Connection that it hopes will become a home-grown New Jersey hit. The company opened the first Ground Connection last week at The Shops at Riverside in Hackensack and plans to open three more locations in Livingston and Jersey City in the spring and summer.

Just as Smashburger sizzled as the “better burger” trend exploded, Mascott Chief Executive Officer Scott Gillman is betting the “better coffee” movement will create demand for Ground Connection. The shops serve small-batch roasts, use specially sourced milk and flavorings, and buy its sandwich breads, salads and other foods from local suppliers.

Gillman said he is trying to bring the coffee connoisseur experience found at some of the hot big-city artisanal coffee chains such as Blue Bottle Coffee, Stumptown Coffee Roasters and Intelligentsia Coffee to the suburbs, with prices and an atmosphere friendlier to suburban shoppers.

“There’s a huge movement into specialty coffee,” Gillman said. “It’s a better quality coffee. Often it’s handpicked. It’s relationship coffee,” he said, with the roasters developing a relationship with small farms.

Rather than trying to become a franchisee for an existing artisanal coffee brand, just as he did with burgers and Smashburger, this time Gillman decided to create his own response to a trend.

“I wanted to do what I thought would sell the best, and also what would sell the best in the suburbs,” he said. Brands like Blue Bottle, while it has millennials lining up and willing to wait for single-brewed cups, probably would be too expensive and too slow-paced to succeed with suburban mall shoppers. The Ground Connection’s prices are comparable to Starbucks’, at $1.75 for an 8-ounce cup and $2.75 for a 16-ounce, but are 50 cents to 75 cents lower than other specialty coffee brands.

Gillman and Mascott are entering the coffee field at a time when the competition is heating up, according to research firm IBISWorld, which noted in a report in December that the two biggest coffee chains, Starbucks and Dunkin’ Donuts, plan to open hundreds of stores over the next five years.

While the artisanal “better” coffee chains are growing their sales by more than 20 percent a year, big players such as Starbucks are hoping to cut into those sales by introducing their own better brands. Starbucks recently rolled out the Starbucks Reserve brand in some 500 of its more than 20,000 stores worldwide, and is selling the small-batch roasts through the mail to subscribers.

Gillman has a proven track record in the food-service industry and a reputation as one of the smartest franchise operators in New Jersey. His company owns an upscale restaurant in Jersey City, Markers, and has operated dozens of franchise restaurants over the past two decades, ranging from Popeye’s Chicken and Biscuits, Cinnabon, and Seattle’s Best Coffee, to more recently Smashburger and Noodles & Co.

Mascott opened the first Smashburger in New Jersey in 2010 in Glen Ridge and built the franchise into 14 locations, before selling them back to the Smashburger Corp., which wanted the high-performing stores in its corporate portfolio.

With the Ground Connection, “I wanted to do something that took everything I learned over 25 years,” and put his own stamp on a concept, Gillman said. He hired Casey Killo, a 21-year-old who already had a half-dozen years of barista experience, to train his baristas. Steve Parker, the corporate chef for Mascott, developed a breakfast and lunch menu that included muffins and pastries baked in a separate kitchen elsewhere in the mall, as well as soups, flatbread pizzas, sandwiches served heated, and salads.

The restaurant serves coffee from Toby’s Estate, a Brooklyn small-batch roaster. The lattes and cappuccinos use milk delivered fresh from Battenkill Valley Creamery in upstate New York, because it is richer than commercially available milk. Central Bakery in Hackensack supplies the sandwich breads, Gillman said. He estimated his start-up costs to open the Riverside location at $500,000.

Curtis Nassau, of Ripco Real Estate in Lyndhurst, which brokered the Riverside lease for Mascott, said Ripco “sees terrific growth potential” for the Ground Connection. Coffee, he said, “is a well-established, yet still expanding category in New Jersey retail.”

The Ground Connection was drawing a healthy lunch crowd on Thursday, and Gillman said the first week’s sales exceeded his expectations.

But success at Riverside could increase his risk from Starbucks, said Darren Tristano, executive vice president of food-industry research firm Technomics. “It isn’t just build them where Starbucks isn’t,” Tristano said. “Once you’ve built it, that kind of gives Starbucks a reason to build one there,” he said. “You’ve proven that the demand is there, and all they would do is come in and take your business away.”

But, Tristano said, there are customers looking for coffee shops that have more of an independent feel than Starbucks. “Although Starbucks fans are very loyal, there’s some really good opportunity to even go beyond that,” he said.

Grounds for expansion; * $30.2 billion – annual U.S. coffee and snack-shop revenue, 2014; * $1.8 billion – profit, 2014; * 2.7 percent – annual growth rate, 2009-14; * 3.8 percent – projected annual growth rate, 2014-19; * 42.4 percent – market share of dominant player Starbucks; * 25.5 percent – market share of second-largest competitor, Dunkin’ Donuts; Source: IBISWorld Coffee & Snack Shops in the U.S., December 2014

 


Shake Shack, Born in a Park, Goes Public With Big Dreams

February 6, 2015

SHAKE-tmagArticleBy Michael J. de la Merced and Kim Severson

The New York Times

Copyright 2015 The New York Times Company. All Rights Reserved.

http://dealbook.nytimes.com/2015/01/29/shake-shack-born-in-a-park-goes-public-with-big-dreams/?_r=0

Nearly 14 years ago, on something of a lark, the restaurateur Danny Meyer opened a Chicago-style hot dog cart in Manhattan’s Madison Square Park, hoping to draw crowds to the park and give summer jobs to the staff at one of his nearby high-end restaurants.

That stand has morphed into Shake Shack, a burger-and-crinkle-fries empire with outposts in London, Dubai, Istanbul and Las Vegas. On Friday, it will begin trading on the New York Stock Exchange with a valuation of about $745 million, and will increase Mr. Meyer’s net worth by about $155 million.

Conceived as a homage to the friendly Midwestern fast-food joints of Mr. Meyer’s childhood, Shake Shack has become one of the most prominent purveyors of fast-casual food. That sector, dominated by the likes of Chipotle, has fundamentally reshaped the fast-food industry with its emphasis on using fresh ingredients. In short, Americans seem willing to pay more for fast food made better, so long as they are still served quickly.

The success of Mr. Meyer’s chain stands in stark contrast to McDonald’s, the global behemoth suffering from its worst slump in more than a decade. The golden-arched restaurant chain announced a change in leadership this week facing sagging sales and a flat stock price, as it struggles to adjust its well-worn menu for modern tastes.

Mr. Meyer, 56, and his team have had no such trouble. Shake Shack has resonated with consumers who grew up on fast food but are both wary and weary of it. Burgers have been enjoying a makeover that began in the late 1990s, as younger eaters have flocked to a new generation of burger chains like Shake Shack, Five Guys and Smashburger.

Mr. Meyer’s chain is part of a new crop of fast-casual restaurants that promote the authenticity of ingredients. Many have since gone public, stirring up investors’ appetites: Shares in Zoës Kitchen have doubled from the chain’s public debut, while those in El Pollo Loco are up 76 percent. The shares of another chain, Habit Restaurants, have risen more than 80 percent since their November debut.

Yet the fast-casual dining sector has become crowded, with a host of new entrants in an already competitive restaurant business. Shake Shack has tripled its store count in just two years, with 63 branches, and now Mr. Meyer and his team must prove they can manage their chain’s explosive growth and weather the public’s fickle tastes.

Shake Shack is rooted in Mr. Meyer’s own culinary experiences. Its origins lie in St. Louis, where he grew up on straightforward food served with Midwestern friendliness at restaurants like the German restaurant Schneithorst’s and Steak ‘n Shake, itself now a 500-restaurant chain.

He also came to love the frozen custard at Ted Drewes, which began selling Christmas trees and frozen custard in the 1930s. That restaurant introduced the concrete, a shake as thick as ice cream with a raft of mix-ins, in 1959; it is now a signature item at Shake Shack.

So integral is the frozen treat to the company’s identity that Mr. Meyer nearly named the hot dog cart ”Custard’s First Stand.” He acknowledges in the stock sale’s prospectus that the name was ”pretty bad.”

But Shake Shack also draws on the lessons Mr. Meyer has learned in his three decades as one of New York’s most successful restaurateurs. His career began in 1985 when, at age 27, he opened the Union Square Cafe as a kind of antithesis to New York restaurants of the time that cultivated exclusivity and excess. The restaurant’s mix of warm service, dishes made with produce bought at the nearby Greenmarket and top-notch food served more casually was groundbreaking.

Since then, hospitality has been the calling card for his empire, which has expanded to what are now fixtures of the New York dining scene: Gramercy Tavern, Blue Smoke and Maialino among them. (Those restaurants are part of a separate company, the Union Square Hospitality Group, that will remain privately held.) The restaurateur has even written a best-selling book, ”Setting the Table,” a primer on customer service.

Even in its prospectus, Shake Shack refers to its customers as ”guests.”

”The thing I learned growing up in St. Louis,” he told St. Louis magazine in 2007, ”was the power of hospitality. The enormously warm feelings of loyalty that come from feeling welcome and being recognized and having the sense that the restaurant is happy to see you.”

That combination of quality ingredients and warm service has proved profitable, though the company is still a relative minnow. Shake Shack reported $5.4 million in net income in 2013 on $82.5 million in sales. Chipotle, by contrast, reported about $327 million in net income on $3.2 billion in sales in the same year.

Still, its success has helped bolster the fortunes of Shake Shack’s owners and close partners. Beyond Mr. Meyer, the top shareholder is Leonard Green & Partners, a Los Angeles private equity firm that invested in the company in 2012. The firm’s partner now on Shake Shack’s board, Jonathan D. Sokoloff, was introduced to Mr. Meyer through top executives at Whole Foods, in which Leonard Green once held a stake. They initially met over dinner at Gramercy Tavern.

Responsible for helping propel the growth of Shake Shack, Leonard Green’s holding in the company is now valued at roughly $193 million.

Shake Shack has even helped transform Pat LaFrieda, which manufactures the company’s secret burger blend, from a local artisanal butcher into a nationally lauded purveyor of quality beef.

But Shake Shack’s ambitious expansion plans — the chain plans to open at least 10 company-owned restaurants in the United States each fiscal year — may threaten the high level of hospitality the company is known for.

Mr. Meyer’s original network of restaurants was opened within a tight radius within New York City, so that the restaurateur could walk between them and ensure that each was up to par. That hasn’t been possible with Shake Shack for some time, and its increasingly far-flung locations risk eroding that quality of service.

Already, its Manhattan-based locations are more profitable than its other branches, reporting 31 percent operating profit margins compared with 21 percent for non-Manhattan restaurants.

Another potential problem is that the so-called ”better burger” slice of the fast-casual market is getting crowded, according to Darren Tristano, an analyst at the research firm Technomic. While the market may grow from $3 billion to $5 billion, he argued, it won’t grow much more — and consumers may slowly lose their hunger for burgers.

”I wouldn’t necessarily call them unique or the best, but they are a very well-positioned burger concept with good service,” Mr. Tristano said. ”They’re not that much different from regional players.”

But Shake Shack is wagering that hungry customers will beg to differ.

”When Shake Shack opened up a block from my house,” the chef Anthony Bourdain said in 2011, ”I dropped to my knees and wept with gratitude.”

This is a more complete version of the story than the one that appeared in print.


Super Bowl Wings Will Be Fat But Pricey as Chicken Count Shrinks

January 28, 2015

Lydia Mulvany
Bloomberg

Copyright © 2015 Vancouver Sun

http://washpost.bloomberg.com/Story?docId=1376-NILQBC6VDKHV01-2E7MM3M04PF2SQP6R5M335CK8E

On Super Bowl Sunday, expect two things when your order of chicken wings arrives: They’ll be fat, and they’ll be pricey.

First the fat part. American farmers are giving their chickens extra feed, taking advantage of plunging corn and soybean costs to help lift poultry production – as measured by weight – to a record.

But each chicken, of course, still only has two wings, regardless of its size. And the number of actual chickens slaughtered last year fell, causing a drop of about 50 million wings, government data show. That smaller supply is what’s triggering the pricey part of the equation. The cost of wholesale wings sold by processors in Georgia, which sets the benchmark for the nation, has surged 8.2 per cent this month to $1.715 US a pound, the biggest jump to start a year since 2012.

Americans will consume 1.25 billion wings when game day arrives Feb. 1. That estimate, provided by the National Chicken Council, is unchanged from last year’s Super Bowl.

“Wings are just all over menus,” Darren Tristano, executive vice-president at Chicagobased research firm Technomic Inc., said in a recent interview. Demand for wings remains “very high with consumers because they’re customizable,” he said. “There’s a health halo around it, because it’s chicken. There are a lot of flavour profiles, and it’s a fun finger food.”

Buffalo Wild Wings Inc., a Minneapolis-based restaurant chain with more than 1,000 stores, raised menu prices by an average of three per cent in November, CEO Jim Schmidt said this month. The company normally would have raised prices in February, but made the increases earlier partly because of higher wing costs, he said.

Chicken output will rise 2.7 per cent from 2014’s record to an all-time high of 39.21 billion pounds this year, the U.S. Department of Agriculture estimates. Still, fewer birds slaughtered means that wholesale wing prices are up more than 30 per cent from a year earlier.

Americans paid 9.2 per cent more for meat last year, the biggest jump of any food group, USDA data show. The gains were led by increases for beef and veal amid shrinking cattle herds, and that advance helped support prices for other proteins as consumers sought cheaper alternatives to record costs for steaks.

“It’s a good thing the Super Bowl pastime is chicken wings and not hamburgers,” said Andy Wiederhorn, CEO of Beverly Hills, Calif.-based Buffalo’s Cafe, where a pound of wings costs about five to 10 per cent more than this time last year at its 50 locations in the U.S. and Canada. “The prices have been generally reasonable, unlike beef prices, which have skyrocketed to record highs.”

The Super Bowl, which will pit the Seattle Seahawks against the New England Patriots this year, marks the No. 1 wing-eating day in the U.S. Demand peaks in the first quarter of the year, with consumption also high south of the border for the National Collegiate Athletic Association basketball tournament games. An increase in restaurants serving wings is also supporting prices. The number of U.S. chicken-wing franchises grew seven per cent to more than 2,000 restaurants in the five years through 2013, according to Arlington, Va.-based franchise researcher Frandata. Demand for the meat is also rising as pizza chains including Pizza Hut and Little Caesar’s serve wings, Technomic’s Tristano said.

 


Shake Shack IPO Filing Comes Amid a Hunger for Premium Burgers

January 14, 2015

Passersby walk in front of the Shake Shack restaurant in the Manhattan borough of New YorkCopyright 2015 Thomson Reuters. All Rights Reserved.
By Anjali Athavaley

NEW YORK, Jan 2 (Reuters) – Shake Shack Inc’s filing this week for an initial public offering underscores a question for investors and foodies alike: How hungry are U.S. consumers for another burger chain?

A key part of Shake Shack’s growth strategy involves expanding its locations beyond its New York base, and investors and analysts are bullish on its prospects.

They say there is room for more “fast casual” restaurants that offer higher quality burgers, a variety of toppings and in some cases, beer and wine. Shake Shack’s burgers are described in its preliminary prospectus as all-natural and hormone- and antibiotic-free.

To be sure, there are skeptics who say the excitement over Shake Shack is overblown.

“Consumers love it and it will be well greeted in the market – and then probably fizzle out,” said Doug Kass, president of Seabreeze Partners Management in Palm Beach, Florida, and a noted short-seller.

“That a company of such a small size can get a valuation is symptomatic of the silliness … that develops in a period of zero interest rates,” he said.

A Shake Shack spokeswoman declined to comment.

Still, several factors appear to be working in Shake Shack’s favor. First, 2014 was a solid year for restaurant IPOs, particularly of the fast casual variety.

Burger chain Habit Restaurants Inc’s shares have risen 3 percent since its $30 Nasdaq debut on Nov. 20, based on Friday’s prices, and Zoe’s Kitchen was up 12 percent from its April market debut at $28.72 on Friday. Shares of El Pollo Loco, another fast casual company, were up 5.5 percent Friday from their $19 market debut in July.

Second, premium burger chains are outperforming the burger category as a whole, thanks to demand from younger, more affluent consumers. Sales at such chains including Five Guys and Smashburger rose 9 percent in 2013, according to restaurant consultancy Technomic Inc, while overall sales at all burger chains including fast food restaurants such as McDonald’s Corp were down 1 percent.

“The better burger space has been a pretty disruptive force for McDonald’s and other players,” said Darren Tristano, executive vice president at Technomic.

NEW YORK AND BEYOND

Shake Shack has developed a fervent following since it was founded by restaurateur Danny Meyer in 2001, but the challenge will be to replicate the success it has found in New York in the rest of the United States and overseas. The company has 31 company-operated and five licensed locations in 10 states and Washington, D.C., and 27 locations abroad.

The chain believes it has the potential to increase the number of domestic company-operated Shacks to at least 450 and analysts say that finding new locations with affluent consumers is critical.

Consumers such as Leticia Garza, 33, a middle school teacher in Austin, Texas, help illustrate the brand’s potential in other parts of the country, but also the challenges. Garza says she is excited to hear that Shake Shack planned to expand to Austin.

Still, she notes that she has many similar options. “There’s definitely going to be some competition because we have recently gotten an In-N-Out, and a couple of local versions that are similar to In-N-Out: P. Terry’s and Mighty Fine.” She adds: “We have Smashburger, too.”

Indeed, the market may be just a few years away from being saturated with too many fancy burger places, some analysts say. Furthermore, premium burger chains are not the only ones offering more personalized options: McDonald’s is rolling out a new “Create Your Taste” program this year that will give customers a choice of sandwich toppings.

In December, the world’s biggest fast food chain, which has not had a monthly gain in sales at its established U.S. restaurants since October 2013, said it also planned to cut the number of items on its U.S. menus. It also plans to use fewer ingredients in food, in an effort to reach consumers who want simpler, more natural choices.

McDonald’s is cheaper than Shack Shack and competes for a less affluent consumer. Still, industry watchers say such efforts could put pressure on premium burgers.

“We’re always looking for the latest version,” said Harry Balzer, an analyst at NPD Group, a market research company. But, he said, “there’s a limit to the burgers we’re going to eat.” (Additional reporting by Sinead Carew; Editing by Eric Effron and Tomasz Janowski)


Here Are the Only 6 Food Trends You Need to Know for 2015

January 12, 2015

pictureExperts forecast that we’ll be eating more fat and insects, and predict the next sriracha

With all due respect to sports geeks, music freaks, stock jocks, and teenage girls, there is no group more obsessed with The Next Big Thing conversation than food people.
The “restaurant trends for 2015″ predictions aren’t just coming now; they’ve been coming, steadily, since before Halloween. Press releases, slideshows, listicles in trades and foodie zines all aimed at telling us what’s the next kale, sriracha, or quinoa.

Interesting reading, often hunger inducing, but with so many predictions — from so many chefs, flavor-makers, food companies, bloggers— it’s hard to make sense of it all.
So this year, to cut through the tsunami of food punditry, I submit a highly abridged list.

I asked only six experts — all industry people who live and breathe food trends. And I asked these carefully chosen experts to make some carefully chosen decisions. Instead of a top ten list — or even a five-item slideshow — just give me that one big food prediction for 2015.

1. The Rise of Fat
For most health-conscious people, fat ranks right up there on the no-no list with nicotine and smog. But Kara Nielsen, culinary director of the Boulder, CO-based Sterling-Rice Group, believes 2015 could be known as the year that more and more Americans get over their fat phobia.

Nielsen isn’t talking about just any fat — not the trans fats found in highly processed foods. She’s talking about natural, animal-derived fats. Real butter sales are at a 40-year high; cultured butter is surging in popularity; high-end burger joints, like Shake Shack, celebrate fat as an essential part of a better burger. And the trend seems to be broadening: There’s a San Francisco restaurant selling a wildly popular chicken fat rice dish; there’s a rapidly growing Boulder company that only features full-fat yogurt. Nielsen expects more high-fat dairy products, more fat-celebrating meat purveyors, and more higher fat Asian foods to hit restaurant menus and grocery store shelves in 2015. “Americans are recognizing that the fear of fat that we’ve lived under for so long is erroneous,” said Nielsen. And it’s not just because of a foodie quest for flavor. Says Nielsen: “It’s also because of books like The Big Fat Surprise that are making the argument that natural fat is an essential part of a healthy diet.”

2. Local Meat
There’s near unanimity among food trend trackers that the local foods movement will continue to grow in 2015. Darren Tristano is no exception. Tristano, who tracks the restaurant industry for market research giant Technomic, expects more local produce, more local beer, more local grains. But Tristano believes the big local story of next year will be local meat. Californians will see more menus boasting of grass-fed beef from Niman Ranch; Chicagoans will likely see more free-range bacon from Slagel Farm. Diners in DC will see more chicken sandwiches from Polyface Farms. In short, get ready for more restaurants to celebrate the local origins of their chicken, beef, or pork just as zealously as their local Brandywine tomatoes or radicchio.

3. Insect-Powered Foods
Restaurants serving grasshopper tacos and ant guacamole, entrepreneurs peddling cricket-powered powerbars —there’s been tons of media coverage of insect-eating in 2014. Yet most people regard it as a curiosity, more Fear Factor-fad than food trend.

Not Suzy Badaracco. The president of food trend consultancy Culinary Tides believes insects will rise as a foodstuff in the U.S. far sooner than many expect. In picking insects as her “Food of 2015,” Badaracco said that insects draw on not one but three food trends: the growing interest in foraging, the invasivore movement (i.e., don’t kill them, eat them), and, the granddaddy of current trends, the desire for more protein. (Insects are protein powerhouses; grasshoppers, for instance, have about the same protein content as a chicken breast). Full-bodied insects won’t appear in your Safeway this year; get ready for them to arrive in processed form, especially protein-packed power bars, like Chapul and Exo. Badaracco expects insects, processed as flour, to soon become a popular protein sources for bakery and cereal products. Full-bodied insects — tentacles and all? Further off, but coming. Badaracco sent a list of more than a dozen American restaurants that feature insect options, such as the “Grass Whopper” —a burger made from cricket meat.

4. The Next Sriracha is Harissa
A few years ago, it was the unpronounceable hot sauce that you might find in Chinatown. Now, you can get a Subway chicken sriracha melt with a side of sriracha potato chips.

Maeve Webster, a restaurant analyst for market researcher Datamonitor, believes the next sauce to experience a sriracha-like rise is harissa, a spread of dried chiles, garlic, tomatoes, caraway, paprika, coriander, and olive oil that’s as common as ketchup in Tunisia. It’s still largely unknown to Americans, but Webster says all the elements are in place for harissa. “U.S. consumers can’t get enough of spicy foods. Harissa has a flavor profile that is both spicy and familiar,” Webster says. Like sriracha, harissa is also versatile and can work in a wide variety of applications. Last year, Datamonitor found that less than 3% of American restaurants included a harisssa item, but Webster noted that’s a more than 180% leap over three years. If Webster is right, get ready for the chicken harissa melt — maybe not this year, but soon.

5. The Next Quinoa is Millet
Melissa Abbot, director of culinary insights at The Hartman Group, concedes that her pick for “Food of 2015″ is not very sexy. Millet is, after all, best known as the main ingredient in birdseed. But Abbot believes that this avian staple could quite possibly become the next quinoa. Ever since quinoa exploded on the scene, the food industry has been in hot pursuit of the Next Great Grain, and there are plenty of healthful, gluten-free candidates. So why millet, and why not amaranth, sorghum, teff, or fonio? It’s gluten-free, protein-rich, high fiber, and, Abbot says, has a superfood quality all of its own. “It retains its alkaline properties after being cooked, which helps in reducing inflammation ideal for those with wheat allergies and sensitive digestion.” Another plus for millet: it’s local. The Great Plains, especially Colorado, is one of the world’s major millet growing regions.

6. Peas
This pick for “Food of 2015″ will not necessarily be found on restaurant menus or on grocery store shelves. You may even need glasses to notice it.

Barb Stuckey, who is a vice president at Mattson, one of the world’s largest food product developers, describes Americans as being in a “torrid love affair” with protein. While it’s debatable whether Americans should be seeking out more protein, the reality is food companies are responding to our love affair with protein by giving us more protein.

Soy is one of the best, most widely available, efficient ways of fortifying foods with protein, Stuckey says. But whether deserved or not, soy is falling out of favor. Food makers are searching for non-GMO plant-based sources of protein and, Stuckey says, “the newest, hottest kid on the block is pea.” Peas are high in protein and, as people gain more experience processing it, the flavor is improving. “Look for pea protein to show up the ingredient list of bars, cereals, beverages, you name it.”


GrubMarket Aims to Bring Farmers Markets Straight to Your Door

January 7, 2015

chi-grubmarket-mike-xu-bsi-20150102-001By Amina Elahi

Copyright © 2015, Chicago Tribune

There’s not much growing around Chicago these days. That means farmers markets are on hold and even the most persistent locavores are forced to shop at conventional grocery stores.

A young San Francisco company called GrubMarket hopes it can keep consumers connected to local food suppliers with an ecommerce platform that lets farmers and small food businesses sell their goods, even in mid-winter. The company expanded operations to Chicago in December in its first push beyond the west coast.

“I am a big fan of local food and supporting local farms,” said founder and CEO Mike Xu.

GrubMarket is a member of of the San Francisco accelerator Y Combinator’s current class. Xu said the company has raised $2 million from the program and other investors since launching in February. The platform includes 280 vendors who sell to the Chicago and San Francisco markets, Xu said. The majority of those are in the Bay Area.

Chicago is GrubMarket’s first expansion market because of Xu’s connection to the Midwest — he went to the University of Wisconsin at Madison — and due to the number of farms and farmers markets here.

The vendors GrubMarket works with may not be big enough or even willing to sell their goods through retail channels. Xu said his company can help those who want an easier way to sell directly to customers. He’s set on creating software to automate the inventory process, for example.

“We need to manage the logistics and communication with vendors, local small farms,” Xu said. “They need a lot of coordination with us and the buyers.”

Xu said GrubMarket has sold $400,000 worth of food, including fresh produce, cheeses, nuts, condiments, meats and more. GrubMarket contracts with drivers to offer free delivery of goods, though vendors have the option of charging customers for direct shipping. The site indicates when products will be available for delivery, so customers know if an item won’t be available until the following week, for example.

Sharon Seleb, the company’s general manager for Chicago and the Midwest, said Chicago customers can buy goods from vendors in Illinois, Indiana, Wisconsin and Michigan. She said she works with vendors and helps them market their goods with free photography. Since GrubMarket takes a negotiated percentage of vendors’ gross revenue, Seleb said it’s in the company’s interest to promote their goods.

Customers also have the option of ordering Grub Boxes, pre-selected cases of goods with themes such as fruits or meats to be delivered at regular intervals. The prices depend on size and contents. GrubMarket’s California Fruit Bounty box costs $45 for a regular box and $65 for the large version.

“Our customer is more educated, and they would understand the purpose of getting a certified organic apple versus the apple for 50 cents,” Seleb said. “In terms of price point, our prices will be more on par with a Whole Foods or a farmers market. They’re not cheap.”

The service thereby is unlikely to replace the grocery habits of most Chicagoans, said Darren Tristano, executive vice president at Chicago-based food and foodservice consulting firm Technomic. He expects Millennials or more affluent consumers — those who likely frequent farmers markets — to take interest in GrubMarket.

Tristano said the local food movement is driven by shoppers’ desire to make purchases they see as supportive of their communities or eco-friendly because products don’t need to be shipped as far. All of this has contributed to a change in these consumers’ values.

“Traditionally it’s been around price and quantity, but the new consumer equation seems to be around where does it come from, how does it connect to my lifestyle, can I connect to this brand?” Tristano said. “Those things are all driving value to a Millennial consumer and to those who can quite frankly afford it.”

Tristano also pointed to restaurants’ role in the success of farmers markets. In many places, he said, chefs seek out fresh goods from local markets. He suggested that some may turn to GrubMarket for similar reasons.


Pizza Hut Risks Becoming ‘Pizza What?’ with Bold Rebranding Effort

December 31, 2014

© 2014 Central Penn Business Journal. Provided by ProQuest Information and Learning. All Rights Reserved.

Go big, or go home.

It’s a catchy phrase. It glorifies the daring move, making a splash, going all in for the win. It even concedes that it might not work. And it’s a risky strategy for an established brand like Pizza Hut.

Here’s a quick summary: Pizza Hut same-store sales have declined for two years. Its parent company, Yum Brands, has seen growth for its Taco Bell and KFC units, but Pizza Hut hasn’t kept up. Archenemy Domino’s seems to be eating Pizza Hut’s lunch with decent sales increases, even though it does not have a sit-down casual dining option.

So, Pizza Hut has launched a rebranding effort that consists of a new logo (more on that later), a completely revamped menu, with a much wider range of toppings and crust flavoring options, and a tongue-in-cheek ad campaign called the “Flavor of Now,” in which its new pizza combos are tested by Old World Italians and flatly rejected as “not pizza.”

Pizza Hut seems to be counting on millennials to bite on the classic reverse psychology presented in the spots as a joke.

“This is the biggest change we’ve ever made,” Carrie Walsh, chief marketing officer of Pizza Hut, said in an interview with USA Today. “We’re redefining the category.”

But, in changing so much about the brand in one fell swoop, is it trying to do too much? After all, this isn’t just adding stuffed crust as an option. This also takes away a great deal of what makes the brand familiar to its core audience.

Darren Tristano, executive vice president at Technomic, the restaurant industry research firm, responded in the same USA Today story in this way: “Pizza Hut may be doing too much too quickly. It would appear that the brand that has lost touch with the consumer is trying to change too much overnight.”

All told, Pizza Hut will add 11 new pizza recipes, 10 new crust flavors, six new sauces, five new toppings, four new flavor-pack drizzles, that new logo, new uniforms, a new pizza box and a partridge in a pear tree.

That Pizza Hut is going big, there is no doubt. But there are risks, starting with its core customers. This isn’t New Coke, but will its loyal customer base be thrown by so much change?

While I’m not sure Old World Italians would think that Pizza Hut’s previous offerings were any more worthy of their blessing, it is a product that’s been more or less established for decades. So, there is some risk that the new menu, which replaces some items, will alienate a percentage of its customers and drive them to try other options.

Let’s say that number is 5 percent of sales. That’s a big chunk to overcome with sales from new customers just to break even on this venture.

The second risk is that, with so much change, will it be possible to tell what’s working and what’s not? The chain has more than doubled its available ingredients at all of its 6,300 locations. Will it be possible to tell which combinations are working well when there will be so many possibilities? Maybe not.

But maybe it won’t matter. If the pizza-makers at the country’s leading pizza chain can manage all the extra ingredients and make what will be essentially custom pizzas for anyone who wants one, Pizza Hut could be on to something. Personalized menu items are working for Chipotle and Panera, so why not take a shot at riding the wave? It can always moonwalk its menu back to where it came from if it doesn’t move the needle. It’s got Pizza Hut Classics in its back pocket just in case, right?

Now, about the new logo. It’s great to signal a rebranding effort with an updated logo. People take notice. It makes them curious. And this one uses a mark that resembles a pizza, or, more accurately, the sauce of a pizza, which puts the product front and center.

The part that gets me is that the roofline “hut” image from the old logo has been dropped in the middle of the sauce. Now it looks like a hat, not a roof. Unless it’s supposed to be one of the new toppings, it just looks like pieces of the logo have been redistributed.

Pizza Hat, anyone? Or Pizza What? In a few months, we’ll know whether this little pizza rebrand went to market or if it went all the way home.

But there are risks, starting with its core customers.


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