7-Eleven Launches New Doritos Loaded

July 18, 2014

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


Franchise Chatter Names Emerging New Food Segment The Hottest Franchise Concept of 2014

May 22, 2014

By Brian Bixler
Franchise Chatter

During the last few years, a band of start-ups has been racing to become what some have called “the Chipotle of pizza,” seizing upon the fast-casual custom concept and mimicking the company’s model in hopes that they can do for pizza what Chipotle did for the burrito. With major names in franchising recognizing the potential in the fast-casual custom pizza segment and backing some of the brands financially, potential franchisees are seeing dollar signs in what has evolved into the hottest franchise concept of 2014—one that looks to have staying power, rather than being a passing fad.

That’s the conclusion drawn in a report from Franchise Chatter, an online information resource for franchisees. Published on franchisechatter.com, the new report looks at the latest developments and growth within the fast-casual custom pizza segment, which has been drawing increasing interest among investors as new brands look toward explosive expansion, spreading the concept across the country.

“There are now dozens of brands in this segment, which could become as popular as frozen yogurt franchises were a few years ago,” said Ambrosio Cantada, founder of Franchise Chatter. “As these companies gain market share, we know potential franchisees will want to read about the future of this segment of the pizza category, and which brands may end up on top. “

Since 2008, a growing number of companies has moved into the custom pizza segment by establishing fast-casual restaurants in which customers choose their ingredients—including the dough, sauce and toppings—along a service line. With pizzas being cooked in high-temperature ovens, the concept combines speed and customization that customers are looking for today, with a variety of healthy ingredients.

So many new brands are entering the market with none of them dominating yet that potential franchisees face the dilemma of striking while the iron’s hot (or, in this case, the oven) or sitting on the sidelines to see which brand will best capture market share.

Some brands are posting impressive annual sales volumes as high as $1.8 million at individual units, according to Technomic Executive Vice President Darren Tristano, who recently completed the Fast-Casual Pizza Cluster Report for the market research firm.

Even though Technomic’s year-end 2013 figures show Pie Five Pizza Co., Uncle Maddio’s and Your Pie leading some competitors in the number of units, each with 18, the landscape is about to change.

“I think right now the two brands that are at the forefront would be PizzaRev because of the investment of Buffalo Wild Wings and Blaze Pizza, which is expanding rapidly,” Tristano says. “They both have strong management and overall knowledge of the consumer market.”

The speed with which the dueling companies bring their concepts to additional markets will be key to determining their success, he added. Tristano expects the custom pizza segment to be especially popular with the noon crowd.

“Fast-casual pizza has emerged out of a white space that’s typically lunch time,” he said, adding that brands that offer comfortable environments and alcoholic beverages will also be able to pick up dinner and nighttime customers as well.

“We expect to see a lot of opportunity for growth in the next five to eight years,” Tristano said. “It will likely attract more franchisees and other investors to come into the market as it’s still in the very early stage.”

The Franchise Chatter report includes updates on specific brands it has identified for having the greatest growth potential over the next five years.

For more information, click on the Hottest Franchise Concept of 2014 banner at franchisechatter.com.

Brian Bixler is a freelance journalist and blogger who writes for several business-oriented websites, including Franchise Chatter, a membership site devoted to reviewing franchise earnings claims. By talking to executives of leading brands as well as some of the most successful franchisees across the country, Franchise Chatter reports on growing brands as well as those that might be struggling. The website also examines the profit potential of all the major brands with its FDD Talk feature.


Subway Owners Take Stake in BurgerFuel

May 14, 2014

subwaylogopromoThe “better burger” niche is already crowded with domestic startups, but a new player from New Zealand, BurgerFuel, soon might break into the competition and onto the fast track to growth, helped by a partnership with Subway founders Fred DeLuca and Peter Buck.

According the The New York Times, DeLuca and Buck acquired a 10-percent stake in BurgerFuel in January through their investment company, Franchise Brands, which supports small and midsize concepts. BurgerFuel reportedly hopes to leverage this strategic alliance into expansion throughout the United States by selling franchises to operators of Subway, which is 100-percent franchised and has more than 25,500 restaurants in the United States.

Officials from Milford, Conn.-based Subway did not respond to inquiries for comment as of press time.

Darren Tristano, executive vice president of Chicago-based research firm Technomic Inc., noted that Subway’s growth in extremely nontraditional spaces — such as a church, a Goodwill training center and auto showrooms, to name a few recent openings — show franchisees’ willingness and demand to open restaurants.

Fellow industry expert Dennis Lombardi, executive vice president of Columbus, Ohio-based WD Partners, added that those Subway franchisees might be looking to open more units but, depending on where they are located, might not have the chance to grow as fast with more Subway locations as they could with a new concept, like BurgerFuel.

“It may not be about the 25,000-plus Subways [in the United States], but more about a franchisee’s home trade area, where it’s hard to expand your own franchise business and almost have to wait for somebody in the area to sell,” Lombardi said. “This gives the franchisees the opportunity to have a growth vehicle, and typically these kinds of new brands have a higher revenue potential relative to Subway’s.”

With BurgerFuel as a possible growth vehicle, Subway might have a way to enable its franchisees’ growth in more traditional spaces or make inroads with a slightly different customer base, Tristano said. He added that Subway’s tack of looking for a concept outside its segment — similar to Chipotle’s interests in ShopHouse Southeast Asian Kitchen and Pizzeria Locale, or Buffalo Wild Wings’ investment in PizzaRev — is likely the better option than taking its current offering and trying a more upscale take on it, as Taco Bell plans to do with U.S. Taco Co. and Urban Taproom.

“Subway is looking for growth potential, and it probably has more opportunities outside of the sandwich segment than within sandwich,” Tristano said. “They should look at something that could work in a co-branded way, like maybe with desserts. They still have so many franchisees that they could really leverage that base.”

Lombardi added that BurgerFuel’s possible entry to the United States “is not exactly coming in at the early stage of the better-burger trend.” In addition to muscling into a crowded segment, BurgerFuel would present completely new operations models or real estate needs to Subway franchisees, but “that’s not an overwhelming issue” to the better-performing operators in the system, he said.

“Subway is doing something nice for its franchisees by making this concept available to them,” Lombardi said. “But you’re not going to give a marginal operator the ability to expand into a second concept. If they want to grow, they’ll have to show Subway they are good at what they do.”

Both experts agreed that a possible expansion of BurgerFuel in the United States could be an intelligent long-term plan for Subway, and neither saw it as an indication that Subway’s growth could be slowing down in the United States.

“If you think about Subway’s royalty stream coming into its two owners, it’s crazy; you probably wouldn’t need to do anything else,” Tristano said. “But progressive brands always need to think about where the future is. There may be a day when people don’t believe Subway is the healthiest restaurant in the world, so Subway would need some bench strength and a way to hedge a little.”

Lombardi said that day is not really close to arriving.

“There are no real negatives in this, and I’m not surprised it’s happening,” he said. “Subway is still the golden goose for them. I just interpret this as another growth angle, an ‘and,’ not an ‘or.’”

As of May 13, Subway had 41,800 restaurants in 106 countries.


Does Taco Bell’s Fast-Casual Entry Have a Chance?

April 24, 2014

Taco Bell is following the lead of its YUM! sister brand KFC, which entered the fast-casual market last year. KFC Eleven features hand-crafted food—flatbreads, rice bowls and KFC Boneless Original Recipe Chicken—in a more contemporary environment.

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Taco Bell’s new fast-casual concept, U.S. Taco Co. and Urban Taproom, provides the chain an opportunity to move into fast casual while maintaining its identity and value positioning with existing customers in the quick-service segment. Many brands today are trying to shift toward a more upscale menu, food and atmosphere positioning, but this strategy can confuse loyal customers and make it difficult to stay true to the brand identity. Taco Bell’s strategy makes sense and supports its goal to increase sales from $7 to $14 billion in the U.S. market.

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So what are the challenges this new brand faces?

Competition: In addition to a strong independent Mexican restaurant market, today’s Mexican grill segment features strong category leaders like Chipotle Mexican Grill, Qdoba Mexican Grill and Moe’s Southwest Grill. And there are more than 50 other fast-casual chains competing for share of stomach, many of which are growing aggressively.

Also within the landscape are successful taco shops that are growing from regional roots in California and Texas like Fuzzy’s Taco Shop, Torchy’s Tacos and Chronic Tacos. The 2013 limited-service Mexican category totaled $18 billion in sales with more than 18,000 restaurants. With so many competitors in the space, finding room for U.S. Taco Co. will be a challenge for Taco Bell’s young “intrepreneurial” team.

Price: With price points per-person pegged at $11.50‒$12, many economically challenged consumers may not be able to afford to eat at U.S. Taco Co. on a frequent basis. Average fast-casual price points are still south of $10. And with average prices of fast-casual burritos in the $6‒$7 range, consumers will continue to see pound-for-pound value at Mexican grill concepts. Recent Technomic research with consumers indicated that the optimal price at fast casual for lunch was $7.60, with a high price threshold of about $10. At dinner, consumers indicated that $9 was the optimal price, with $12.50 providing the upper threshold limit. As a result, consumers will likely see this U.S. Taco Co. as a place to go for dinner, as its lunch prices are too high for many consumers on weekday occasions.

Menu: Many American consumers have come to expect high levels of “authenticity” around both Mexican and Southwest dishes, sides and beverages. The menu at U.S. Taco Co. will feature the following tacos:

  • The One Percenter, featuring fresh lobster in garlic butter with red cabbage slaw and pico de gallo on crispy fry bread.
  • The “Brotherly Love,” a nod to the Philly Cheesesteak, with carne asada steak, grilled peppers and onions, roasted poblano queso and cotija cheese (rather than Cheez Whiz), and fresh cilantro in a flour tortilla.
  • The “Winner Winner,” which features Southern-style fried chicken breast with “SOB,” or “South of the Border” gravy, roasted corn pico de gallo with fresh jalapenos, and fresh cilantro in a flour tortilla.

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And on the side, guests can get “papas fritas,” which resemble steak fries, coated with habanero dust and served with housemade dipping sauces such as ghost chile ketchup or roasted poblano crema. Guests can also order their fries loaded with taco ingredients sans tortilla as a “secret menu” option.

Taking a page out of Red Robin’s play book, the menu will include shakes spiked with beer, and the brand will eventually offer tap, can and bottled craft beer.

So how will consumers react?

Patience and education will be important to getting consumers to consider an even more Americanized version of a traditional, authentic Mexican taco. Replacing the American burger with a taco served with fries and a shake will be a new behavior for many Americans. Although this new offering will likely have great appeal for Millennial consumers age 21‒36, Gen X and Boomers will likely continue to lean toward more familiar and traditional meals. As innovation and thinking outside the box (or bun in this case) is essential for filling white space, this new format may be a bit ahead of its time.


Expect New Dishes at Your Favorite Casual-Dining Spots

April 21, 2014

getimage.aspx“The food, it is kind of incidental to everything else,” said Myers, dining recently in the cafe at Universal CityWalk.

Hard Rock is seeking to change that attitude with a major menu makeover, one of many that casual-dining chains are doing to keep up in a competitive industry. Olive Garden, Smokey Bones and Tony Roma’s are among those trying to offer a better bill of fare to woo diners with increasingly sophisticated palates.

“People are more food savvy because of social networking,” Hard Rock’s executive chef Russell Booth said. “They’re expecting great food with flavor, with punch.”

A musical museum of sorts, Hard Rock is themed to the extreme. But the company said it wants to make what diners taste as much a reason to visit as what they see and hear. So it conducted a soup-to-nuts analysis that spanned 15 months and solicited opinions from more than 3,000 customers.

Thirty dishes and drinks are new. Almost as many other items have different ingredients and preparation methods.

Results range from a new chicken arugula salad to adult beverages with trendy additions such as bacon and salted caramel. Hard Rock replaced queso on its nachos with two layers of mixed cheeses and added toppings such as smoked beef brisket. Other changes are more subtle, such as new brioche burger buns to replace potato ones.

Still, Hard Rock hasn’t strayed too far from its roots: heaping portions of typical casual-dining chow.

Tony Roma’s took a more radical approach with a rebranding experiment in Orlando. It essentially gutted its old menu, keeping its signature ribs but switching out almost everything else for trendier fare such as pulled pork tacos and fish with couscous.

That’s risky, however, and unusual, experts say.

“It’s about balancing what is familiar — old favorites, signature items, with items that are new,” said Darren Tristano, executive vice president of restaurant-research firm Technomic.

Experts say casual-dining restaurants are reinventing menus to fight a trend of declining traffic and sales. But other types of restaurants are making changes, too. Atlanta-based Chick-fil-A recently introduced grilled-chicken dishes marinated in sea salt, lemon, garlic and herbs and cooked on a new kind of grill meant to create the flavor of a backyard barbecue.

Such changes aren’t always a recipe for success.

In late 2012, Red Lobster added more-affordable meals and many others that didn’t feature fish. Sales at the seafood chain owned by Orlando-based Darden Restaurants have declined sharply since, diving 8.7 percent in its most recent quarter.

At Olive Garden, also owned by Darden, one lesson learned from Red Lobster is that “you can’t forget that there’s something for everyone on this menu,” said Jay Spenchian, the Italian chain’s executive vice president of marketing. “You have to have those messages to different audiences going simultaneously.”

Olive Garden recently debuted more than 20 new tapas-style dishes meant to attract younger consumers. Grilled chicken with broth and vegetables appears on the lighter-fare section aimed at health-conscious diners. Several $9.99 pasta and sauce combinations are meant to appeal to customers on a budget.

To lure people with more adventurous tastes, Olive Garden added dishes with pesto and spicy diavolo sauces, which the chain had previously shied away from for fear of alienating core customers.

“We can’t be afraid when we put something on the menu [that] some people aren’t going to like it,” Spenchian said. “Before, we were a little enamored with trying to get everyone to like something a little bit.”

One of Olive Garden’s competitors, Tampa-based Carrabba’s Italian Grill, also recently added 15 new dishes for less than $15.

At Orlando-based Smokey Bones, Chief Executive Officer Chris Artinian said the goal of recent menu changes is to emphasize freshness. More sides and sauces are homemade. The restaurants are buying brisket with more fat and smoking it longer — 14 hours — for more tender meat and richer flavor. New items, meanwhile, include fried pickles, additional chicken-wing sauces and a margarita with Pop Rocks on the rim.

At the restaurants, some foods have disappeared — and not just to make room for new ones.

The overall number of items at Tony Roma’s dropped from 62 to 51 after the chain already dropped about 30 others a year and a half ago. Smokey Bones and Hard Rock both ended up with slightly fewer items than before.

Spenchian said Olive Garden’s menu is about the same size but a few things could be deleted in the near future to make operations less complex.

That, too, is a common theme in the industry now.

At Smokey Bones, Artinian said, part of the revamp was “ensuring our menu has enough variety but also small enough that we do everything great.”


On the Horizon: Five Trends for U.K. Restaurants

January 24, 2014

The trends driving restaurant growth and innovation are driven by consumer demands for transparency, quality, flavour, and flexibility.

The U.K. foodservice scene continues evolving in unique and interesting ways. Looking forward to next year, Technomic’s analysts and consultants have identified five key trends that expected to play major roles at British restaurants.

Catering to the Millennial customer

As the influence and collective spending power of the U.K.’s Millennial generation grows, expect to see restaurant operators amplify efforts to target these consumers via foods and brands that appeal more directly to a Millennial demographic.

For instance, consumers aged 18–34 display the strongest interest in ethnic flavours. And a greater proportion of younger than older consumers indicate that it is important to them that cafés offer a variety of side options and seasonal menu items, according to Technomic’s U.K. Café Consumer Trend Report. Further, 31% of consumers aged 18–34 strongly agree that they would order limited-time offerings (LTOs) at cafés, compared to just 22% of all consumers polled.

Also watch for new mobile apps and digital tools that integrate seamlessly into Millennials’ lifestyle. Offering free WiFi in-store and letting customers place orders online are great starting points for connecting with these on-the-go, always-connected guests. Leading operators are also going beyond these steps.

Last spring, Wagamama partnered with Blippar, an image-recognition mobile application, to introduce augmented-reality place mats. Guests who downloaded the free Blippar app could hold their mobile device over (aka “blip”) the special place mats to access promotional information about the Wagamama Lounge, a pop-up concept featured at London-area summer music festivals.

Domino’s last September rolled out the free Pizza Hero app in the U.K., giving customers the chance to play professional pizza maker, rolling out pizza dough virtually, adding tomato sauce and then sprinkling on cheese and assorted toppings. A direct link takes users to the ordering page on Domino’s website.

And Apple’s Passbook lets iPhone users group their coupons, loyalty/rewards cards and more in one quasi mobile wallet—giving them quick access to their most-used or most-important passes. Last fall, casual-dining chain Harvester Salad & Grill became one of the first U.K. restaurant concepts to offer Passbook integration, and gave diners who used the app at Harvester £5 off when they spent £30.

The evolution of pubs

Classic British pubs will push even harder in 2014 to transform and grab market share from conventional restaurants by focusing more attention on creating upscale, premium food and drink (particularly speciality coffee and American craft beer); launching repositioned outlets in nontraditional sites; introducing web-enabled ordering systems that emphasise convenience and speed of service for guests; and promoting low-price-oriented menus and new loyalty programmes designed to spur customer traffic and strengthen the value perception.

Die-hard traditionalists might scoff at the idea of having a coffee and working on a mobile device at the pub, but a customer-centric evolution can help pubs maintain their relevance with a new generation of consumers.

Throughout 2013, we’ve seen examples of how pubs and pubcos are tackling the task of serving consumers who have higher expectations for food/drink, amenities and service at pubs. We expect the focus on this imperative to be that much keener in the year ahead.

For example, Orchid Group—whose approximately 250 pubs are now up for sale—realised that those establishments best positioned for success in Ireland and some U.S. cities after smoking bans took effect there were those that emphasised attractive food offerings. Orchid re-evaluated its menus and added pizza and Thai food, among other items, driving increases in food’s share of the sales mix. The company also took efforts to appeal to women.

Similarly, Marston’s PLC announced at the beginning of the year that it would install free Wi-Fi at about 550 pubs under its managed pub estate, Marston’s Inns & Taverns. The Prince George pub in Brighton, East Sussex, offers an all-vegetarian menu and a vegetarian-friendly wine list. And in August, Wetherspoon announced a new initiative pairing craft brewers from the U.S. with U.K. brewers, as part of an effort to seize upon U.K. consumers’ heightened interest in craft beer. The U.S. brewers produce their beers in the U.K. for sale at Wetherspoon pubs.

Honest chicken

Thanks in part to the recent crop of “better chicken” concepts opening in London, emerging chicken-focused concepts will flourish in 2014, a trend closely tied to growing consumer interest in sourcing, preparation and menu transparency. Pret a Manger, for instance, touts that its chicken is starch-free, phosphate-free and sourced from a higher-welfare supplier in Suffolk. Expect to see chicken increasingly described as “free-range,” “locally sourced” and “hand-battered.” We’ll also see more American influences in the form of barbecue chicken and buttermilk fried chicken, as well as simpler cooking techniques that let the quality of the chicken speak for itself.

KFC in the U.K. touts that its chicken on the bone comes from only British and Irish chickens, and that chicken goes from the refrigerator to a breading of flour and the chain’s 11 signature herbs and spices and then to the fryer within two minutes. Little Chef touts that its Crispy Chicken Platter features 100% chicken breast fillet.

Other takes on fried chicken include Scream’s Southern-Fried-Style Chicken fillets served with barbecue seasoned chips, Jubo’s Chicken Roll with Korean fried chicken fillet, kimchi slaw and gojuchang mayo, and Clutch’s Love Me Tenders, fried chicken tenders in a peanut and chilli crust.

These dishes also illustrate U.K. consumers’ growing appetite for spicy heat, also evidenced incurries that pack a little more punch than chicken tikka masala; the rising popularity of Mexican cuisine; and the cult-like following of London-based Nando’s, the fast-casual concept specialising in flame-grilled piri-piri chicken. Neutral-flavoured, food-cost-friendly chicken offers an ideal protein platform for showcasing the vibrant flavours and colours of chillis from around the globe.

Migration of street food

Fueled by younger consumers’ demand for authentic and unique offerings, chefs are looking to global street foods for menu inspiration for their brick-and-mortar restaurants. Trendy street-inspired dishes starring on menus include Venezuelan arepas, Chinese jian bing and bao, Taiwanese hirata buns and Italian arancini.

KFC U.K. got in the game last year, introducing a limited-time Streetwise Sweet Chili Wrap featuring a chicken mini-fillet, sweet chili sauce, lettuce and cheese wrapped in a tortilla. And London-based fast-casual chain Leon introduced a Thai Green Chicken Curry box, featuring slow-cooked shredded chicken thigh, roasted aubergine and bamboo shoots served on brown rice.

Looking ahead, ethnic beverages like Mexican aguas frescas and horchata will carve out a wider niche on the menu. Also watch for dynamic flavour mashups from different cuisines and the continued growth of food trucks serving ethnic and fusion street foods.

Telling the sourcing story

Transparency is now top-of-mind for operators who want to keep customers confident in their brand. Use of eco-friendly food packaging, such as recycled or reusable cups or stemware, is increasing along with a growing commitment to ethical food sourcing. Next year will bring a surge in brand campaigns communicating quality and traceability. Watch for package logos denoting animal welfare standards, in-restaurant signs documenting supplier sourcing, and marketing initiatives focusing on the use of British and Irish products.

A good example is the Olive Branch Pub in Clipsham. Its website highlights a story about head chef Sean Hope’s recent lobster fishing trip, to source the freshest lobster for dishes such as grilled lobster Thermidor and a fresh lobster claw and tail meat with lobster tortellini. The site also provides a list of the pub’s suppliers and producers—not just the names of the farms but also the actual farmers with whom the Olive Branch works.

For its part, McDonald’s U.K. invited three young British farmers to get a behind-the-scenes look at operations inside McDonald’s stores as the part of its Progressive Young Farmer Training Programme. The mentoring-focused programme, according to McDonald’s, “aims to help young people looking to work within agriculture kick-start careers in the industry by providing them with the blend of farming and business acumen needed to succeed in today’s modern farming sector.”

The programme has the added benefit of providing a fresh, interesting supply-chain story that McDonald’s—which also announced in April that it was switching to serving 100% Freedom Food pork raised on farms that meet strict animal-welfare standards—can share with consumers.

Similarly, fast-casual burrito specialist Chipotle, whose Food With Integrity philosophy/sourcing model has won acclaim in the U.S., notes on its U.K. website that it uses Freedom Food chicken, Farm Assured beef and free-range pork.

Key Takeaway

The trends driving restaurant growth and innovation are all driven by consumer demands for transparency, high-quality and -flavour, and flexibility. Restaurant operators should examine and pay attention to these trends but follow the lead of their own customers and those they are trying to attract.


Premium Toppings, Pairings Boost Pizza Sales

January 13, 2014

picCustomizable options and combo opportunities are creating exciting new options across the foodservice category.

Pizza remains among one of the most demanded foodservice options anywhere in the country. But it’s also one of the most competitive menu options. Customers are demanding high quality toppings and more exciting varieties in their pizza pies, as well as value-driven add-ons, such as beverages and side dishes that can complete a meal. Moving into 2014, convenience stores can expect increased competition from fast casual restaurants selling customizable pizzas and pizzerias attracting customers with craft beer options.

Chicago-based research firm Mintel International found in a recent study that the pizza restaurant market in the U.S. grew throughout the recession and is continuing to gain momentum. Pizza restaurant sales grew 10% from 2007 to 2011, and a growth of 16.7% is predicted from 2012 to 2017, reaching a projected $44 billion in 2017.

C-stores have ample opportunity to cash in on pizza’s popularity and take advantage of pizza trends coming out of other channels, from bundling beer and pizza to featuring more gourmet toppings and themed pizza options.

Italian Meats Pizza
Wade Mannino, president of Patoka Fast Stops in Patoka, Ill., and Stop and Go Marts in Marine, Ill., has been partnering with Hunt Brothers Pizza since 1996. He is seeing the latest trends in pizza first hand. “Customers are looking for specialty pizzas and add-ons—like bread sticks, chicken wings or calzones—anything they can add on to the pizza order,” he said.

Mannino’s stores witnessed customer excitement from the introduction of Hunt Brothers’ new Italian Meats Pizza (pictured above), which brought a bump in pizza sales with its debut during a test market launch earlier this year. “Anything new here sells,” Mannino said, noting that his stores offer all of the limited time only (LTO) pizzas, such as the Buffalo Chicken pizza, that Hunt Brothers offers to keep customer interest high year round.

The Italian Meats pizza uses Hunt Brothers’ original rising fresh crust, topped with a signature sauce, layered with slices of Italian-style ham, salami, pepperoni and 100% mozzarella cheese.

According to a recent Mintel report (see sidebar), pepperoni and sausage are the two most popular toppings. The Hunt Brothers’ varieties were tested in the Dallas and St. Louis markets (which includes Illinois) from Aug. 18 to Oct. 14, and rolls out nationwide this month. When introducing meat topping pizzas, c-stores often struggle with a low quality perception, but by elevating the quality of the meat and product, c-stores can not only increase price, but can break through that perception and increase sales, said Darren Tristano, executive vice president, for the Chicago-based research firm Technomic Inc.

“Customers like the Italian Meats pizza because it’s new and it’s more of a premium product,” Mannino said.

Just as important, the pizzas are delivered with all the toppings already in place, making it easy for employees to prepare. “All you have to do is add the seasonings and spices they use, and if the customer wants double cheese then you’d add the double cheese to that,” Mannino said.

LTO Excitement
Gier Oil Co., with 37 Eagle Stop Convenience Stores in Missouri, also partners with Hunt Brothers Pizza at a number of its locations.

Bethany Poe, operations supervisor for eight Eagle Stop stores, six of which offer the Hunt Brothers program, said her customers are also looking for variation, and are attracted by limited time offers. “Customers miss the LTOS when they are taken off the menu, but then they’re excited when they bring them back a few months later,” she said.

Poe’s stores also tested the Italian Meats pizza during the pilot period. “Some of our stores are in rural areas, and it’s especially beneficial to try to do something different in these locations to change up the offering for the customers,” she said. “With the Hunt Brothers offering, we have the option of selecting the pizzas we want to offer, but we normally go with what Hunt Brothers recommends to stay competitive with the other stores,” she noted.

Technomic found that when it comes to flavors, themed pizzas continue to trend, especially at the c-store level. “The Buffalo chicken pizza is popular because it has the protein—chicken—but also the Buffalo sauce that’s going to give it some spiciness, which customers love,” Tristano noted.

Hawaiian pizza—with ham and pineapple— is another example of a popular themed pizza. Themed pizzas are gaining traction because customers don’t have to decide what topping to add.  “This is something that can be picked up by c-stores and leveraged as an opportunity to sell more pizza,” Tristano said.

When selecting a variety of themed pizzas it’s important to note that an increasing subset of the Millennial generation identifies as vegan, vegetarian or flexitarian (vegetarian most of the time but sometimes eats meat), making it wise to offer a non-meat pizza option alongside a meat-eaters option to capture customers in this demographic, Tristano noted.

Trending Now
Tristano pointed to two overarching trends set to impact pizza in 2014: the pizza pub concept of pairing pizza and alcohol together, and customizable pizza pies, made exactly how the customer desires.

Better fast casual pizza concepts are a key trend now emerging—not only on a regional basis—but soon to hit the national landscape as they gain momentum and capital for growth.

“In California, Blaze Pizza and Pieology are examples of concepts doing something similar to what Chipotle does. You pick a pizza they have or customize it as you interact with the person preparing the pizza,” Tristano said. “What these brands are doing is taking advantage of customization and speed, while leveraging quality and premium ingredients and flavors, which are all on target with what consumers are looking for from the pizza segment.”

Better With Beer
Craft beer is trending with both men and women—and especially with Millennial consumers. Pizzerias are tapping into this demand, showcasing an array of craft, domestic and premium beers alongside their pizza offerings.

“To some extent you have this already in a c-store, most of which sell beer,” Tristano said. “A lot of times a pizzeria isn’t going to have the same beer selection as you can find at a c-store, making this an opportunity for c-store retailers.” 

Technomic consumer research shows customers continue to demand premium high quality toppings and convenience, and proximity and convenient location weigh as key factors in customer intent to purchase.

“That’s something c-stores have an incredible advantage with, not just because of the number of locations, but the ease of going in and out, parking and the ability to pick up other items, such as pop, candy snacks and desserts,” Tristano said.

Convenience stores that currently serve pizza can boost sales by making it easy for customers to select the types of items usually purchased with pizza. That could be chicken wings, but more likely it’s desserts, snacks and beverages—including beer—that can be offered as a bundle deal or simply merchandised nearby.

Trendiest Toppings
Chicago-based research firm Mintel International, recently polled consumers to discover the hottest pizza toppings. Pepperoni took the lead (65%), followed by sausage (54%) and mushroom (51%). Other winners included extra cheese (45%), onion (39%), green pepper (37%), olive (34%), bacon (31%), ham (29%) and pineapple (21%).
Men are much more likely than women to order bacon-topped pies (38% of men versus 24% of women), sausage (60% to 48%), pepperoni (71% to 60%), and ham pizzas (34% to 25%).
Age also impacts topping preferences. Those 18-24 prefer bacon-topped pizza (40% versus 31% on average), extra cheese (54% to 45%), ham (36% to 29%), and pineapple (26% to 21%).


Custom-Made Burgers Reach McDonald’s

December 4, 2013

McDonald’s, a company that pioneered uniform, assembly-line hamburgers, is now experimenting with a somewhat antithetical concept: Custom-made burgers. The chain is currently testing them in Laguna Niguel, Calif., where diners make selections on an iPad; the burgers cost more than Big Macs, are grilled-to-order, and come with a choice of more than 20 toppings and sauces. The beef patty isn’t cooked until you order, so the sandwich requires extra time to prepare. It’s a head-scratching departure from the burger-factory model that has allowed the chain to serve food quickly, inexpensively, and profitably. “It goes against what they stand for: speed, convenience, price, and value,” says Darren Tristano, an executive vice president at food industry consultancy Technomic.

On the other hand, McDonald’s isn’t exactly killing it lately. Same-store sales have slowed in the U.S. (They were up only 0.7 percent last quarter and slowed to 0.2 percent in October.) That’s not all: The chain has been plagued by complaints of slow service and inaccurate order responses. In response, McDonald’s has tried to pare its sprawling menu and will redesign its drive-thrus next year to shorten waiting times.

A widespread introduction of custom-made burgers wouldn’t help these issues. What it might do, though, is help the chain stay relevant as consumers—twentysomethings in particular—express interest in customization, Tristano says.

McDonald’s spokeswoman Lisa McComb said in an e-mail that it’s too early to comment on the custom-made burgers, although the test will offer valuable consumer insights. “With these tests, we will have an opportunity to hear directly from our customers in real-time on what they expect from McDonald’s in terms of the overall restaurant experience and their ability to further customize their menu choices,” she said. Even if McDonald’s doesn’t go down the Chipotle road, letting customers say what they want on their burgers—”Hey, everyone really likes burgers with guacamole!”—could shape menus in the future.

While the option to customize could help McDonald’s look less like a mechanized food factory, Tristano says most customers would probably continue ordering from the regular menu. “It’s more of a promotion, and marketing, and trying to change its brand image,” he says. Even as McDonald’s expands its premium offerings, its bigger promise to customers is still speed and price.


How a Fast-Food Chain Plans to Bulk up on Quinoa, Smoothies

November 19, 2013

AR-310199982.jpg&maxw=368&q=100&cb=20131119093150If Matt Matros has his way, Protein Bar’s quinoa bar-ritos and protein smoothies might just become the next burger and milkshake.

Spurred by a $22 million investment by private-equity firm Catterton Partners, Mr. Matros’ four-year-old healthy fast-casual restaurant chain is poised to go national and aims to hit 40 locations by the end of 2015. At least one analyst says Protein Bar eventually could have between 300 and 1,000 stores across the country.

Since opening his first restaurant across the street from Willis Tower in 2009, Mr. Matros, 34, has grown the chain to 12 locations throughout the Chicago area and Washington. The 400-person company projects nearly $20 million in sales this year.

By the first quarter of next year, Protein Bar will open two more Loop outlets, another in Streeterville and one in Lincoln Park. Protein Bars will also debut in Evanston and Schaumburg, as well as in Denver and Boulder, Colo.

The chain will hire about 15 corporate operations staff and about 25 to 40 employees per new store, according to Mr. Matros, founder and CEO.

“We were the starting pitcher (in the healthy fast-casual game), but it’s still only the second or third inning,” he says. “It’s a long game, and we’re not the only player who’s going to be successful, but we like to think we’re well-positioned.”

The need to expand quickly is paramount, agrees Darren Tristano, an executive vice president at food consultant Technomic Inc. in Chicago. “You cannot hide a successful concept like Protein Bar very long,” he says. “You’re going to see other burrito-inspired brands start to pull in its aspects.”

Two older competitors also have built their presences in Chicago and elsewhere. Freshii, a New York-based chain launched in 2005, boasts 13 area locations, while Palm Springs, Calif.-born Native Foods Cafe, a vegan fast-casual concept that has been around for two decades, has opened three Chicago outlets in recent years.

The urgency is heightened by the fact that growth in the overall market for fast-casual dining—which offers a higher-end selection and atmosphere than typical fast food—while still robust, is slowing down.

Chipotle Mexican Grill Inc., which helped create the category, opened its doors in 1993. Two decades later, fast-casual restaurants will generate about $35 billion in sales this year, according to Technomic estimates, up from $31 billion in 2012.

‘THE NEW STARBUCKS’

Protein Bar, Mr. Tristano says, differentiates itself by creating healthy food that tastes good. The chain charges premium prices—about $10 for a salad, for example—with ingredients such as antibiotic-free chicken and a salad mix that includes kale and spinach.

“They pull in an affluent corporate customer, as well as the millennials who feel that they’re entitled to it,” he says. “Protein Bar is the new Starbucks—it’s all about status.”

Those loyal customers, who often line up out the door of Protein Bar’s Loop locations between noon and 1 p.m., is one reason that Greenwich, Conn.-based Catterton invested. The firm previously has taken stakes in restaurants including Noodles & Co., which went public in June, and P.F. Chang’s, as well as health-focused brands such as Core Power Yoga and O.N.E. coconut water.

“Many folks have tried to do ‘better for you,’ but no one has combined that with the taste and crave-ability that Matt and his team have achieved,” Catterton partner Jon Owsley writes in an email. “We think that is a winning combination that will be tough to beat.”

As the company expands into Chicago’s neighborhoods, Protein Bar will have to move beyond its primary lunch business and prove that it can lure customers for dinner—long the Achilles’ heel of fast-casual chains.

Mr. Matros says Protein Bar’s stream of new menu items is up to the challenge.

“Our job is to stay in front of the consumer by continuing to introduce them to nutritionally relevant items,” he says. “We want to exist in the sweet spot between . . . foods you’ve never heard of” and ingredients that are ubiquitous.


For American Restaurant Chains, the Future is Mexican

November 15, 2013

1025_fast_food_mexican_630x420Yum! Brands’ (YUM) most profitable fast-food chain in the U.S. isn’t Pizza Hut or KFC–for years, it’s been Taco Bell. With the success of Doritos Locos Tacos, the upscale Cantina Bell menu, and breakfast (available nationwide next year), Taco Bell’s comparable sales have been up for seven consecutive quarters, including a 2 percent increase in the most recent period.

The chain’s financial results are just one sign of the growing popularity of Mexican food in the U.S. Data from food researcher Technomic show that sales at Mexican-style restaurants grew 9.3 percent in 2012, outpacing the 5.8 percent increase among all limited-service restaurants. In fact in the U.S., tortillas outsell burger and hot dog buns, tortilla chips eclipse potato chips, and salsa tops ketchup, according to an Associated Press report.

“We know that for the U.S. to have a successful year, it’s important for our most profitable U.S. brand to do well, and we certainly have a lot going in our favor at Taco Bell,” said Yum chief executive officer David Novak during a recent earnings call. The late-night gordita joint now accounts for 60 percent of Yum’s operating profits in the U.S. There are 5,704 Taco Bells in the U.S., about 32 percent of Yum’s total in the country.

The burger-and-fries business, meanwhile, has seen better days. McDonald’s (MCD) same-store sales grew only 0.7 percent last quarter, Wendy’s (WEN) was up 0.4 percent, and Burger King (BKW) fell 0.5 percent.

Mexican quick-service restaurants offer “high value and appeal with millennial consumers and affluent groups,” says Darren Tristano, an executive vice president at Technomic. Popular burrito purveyor Chipotle (CMG) has led the way, and the 1,525-store chain just reported a same-store sales increase of 6.2 percent in the last quarter.

Even casual-dining giant Chili’s Grill & Bar (EAT), where comparable sales fell 1.9 percent last quarter, is looking for a rebound via its Mexican menu. “When you look at tacos, quesadillas, fajitas, that category represents really the biggest category that we have at Chili’s. Bigger than burgers,” said Wyman Roberts, CEO of Brinker International, Chili’s parent company, during an earnings call on Wednesday. Chili’s Mexican food, he said, will give the chain an edge over casual-dining rivals.

The plan for Chili’s is to focus on that part of its menu. A spokesperson for the restaurant chain wrote in an e-mail: “Mexican is a menu category our guests have given us all the permission in the world to expand, and with Southwestern ingredients already a part of our flavor profile, it is the natural next step in Chili’s menu innovation.”

So while burger and pizza chains remain the most popular in the U.S., diners and those trying to capture their attention are increasingly moving in a south-of-the-border direction.


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