Industry Evolution

October 1, 2013

U.S. restaurant chains of all stripes are taking on fast-casual attributes to evolve their concepts and remain relevant to consumers.

Change is one of the few constants in the restaurant industry. Whether restaurants are adding another daypart, updating the décor or introducing new prototypes, the best foodservice operators understand that, to succeed in the business, they should be aware of the unpredictability of the industry and be open to evolving.

In the past few years, we’ve seen many U.S. concepts make some key changes to keep up with the restaurant industry’s best performer: the fast-casual segment. Thanks to customisable and craveable options, premium ingredients and quick service, growth of the fast-casual segment is outpacing that of the quick-service and full-service sectors. As reported in Technomic’s Top 500 Chain Restaurant Report, turnover for the restaurant industry as a whole from 2011 to 2012 increased 5.2%, including a 5.8% rise in limited-service turnover and a 4.5% increase in full-service turnover. In comparison, turnover for the fast-casual segment increased 13.0% from 2011 to 2012, and that growth is expected to continue.

To compete with fast-casual restaurants, quick-service and casual-dining operators are branching out of their comfort zones to find different ways to reach new consumers as well as retain their customer base. Full-service chains such as Applebee’s and Red Lobster have introduced fast-casual elements to attract on-the-go consumers, and Burger King, which receives most of its business from drive-thru and carryout orders, added delivery service to increase its convenience factor. Other chains like Auntie Anne’s and Chick-fil-A are using food trucks to generate brand awareness by bringing their food to festivals, sporting events and community gatherings.

It’s not just existing chains that understand the need to evolve. The latest crop of limited-service pizza concepts, which includes Pie Five Pizza Co. and MOD Pizza, functions more like a Chipotle than a Pizza Hut. Patrons create their pizzas by making their way through an assembly line-style queue, choosing a crust, sauce, cheese and toppings as they go. They then receive their pizzas in minutes, sometimes by the time they reach the cash register. This style of ordering allows diners to be much more involved in the pizza-making process than at a traditional limited-service pizza concept, where patrons usually don’t watch the preparation of their pizzas. The customisability and quick service are some of the reasons why Technomic predicts made-to-order fast-casual pizza concepts are the next “better burger.”

Below are some examples of operators thinking outside of the box in order to keep their concept relevant in the ever-changing restaurant industry.

Full Service to Limited Service

In the U.S., the limited-service sector is growing at a faster rate than the full-service segment, leading some of the country’s top full-service chains to experiment with limited-service prototypes. In August, midscale chain Bob Evans launched Bob Evans Express, a new counter-service prototype for nontraditional venues such as corporate offices, universities and shopping malls. The new format, which offers a limited menu of hot foods along with packaged items, was designed to expose patrons who otherwise wouldn’t have the time to visit a sit-down Bob Evans restaurant to the chain’s signature homestyle breakfast and lunch offerings.

Earlier this year, U.S. casual-dining seafood chain Red Lobster began testing a new limited-service offering, Seaside Express, at two of its Florida locations. Patrons visiting the restaurants can choose either the standard full-service Red Lobster dining experience or order from the Seaside Express counter, which offers a menu of mains such as burgers, sandwiches and flatbreads, priced between $6.99 and $8.99 (approximately £4.50 and £5.79). After ordering, customers seat themselves and a server brings out their food. Because patrons pay for their meals at the counter, the concept is meant to appeal to diners who are pressed for time and may not like waiting for a cheque to be brought to the table. It also appeals to those looking for a discounted Red Lobster experience—the Seaside Express menu features lower-priced mains compared to Red Lobster’s standard menu.

Also earlier this year, Applebee’s expanded its limited-service model, Applebee’s Express Lunch, to 23 company-owned locations in the U.S. The format, first launched in Kansas City in July 2012, is similar to Seaside Express, in that patrons choose to either sit down and be waited on or order their meal from the Express counter, then seat themselves. The menu features pick-two combos starting at $6.99.

Applebee’s launched a fast-casual offering, Applebee’s Lunch Express. Patrons order at a counter then seat themselves, and a server brings their food to their table.

Applebee’s launched a fast-casual offering, Applebee’s Lunch Express. Patrons order at a counter then seat themselves, and a server brings their food to their table.

The Un-Delivered Pizza

Today’s trendiest limited-service pizza concepts don’t focus on delivery—in fact, most don’t even offer it. Fast-casual pizza concepts such as Uncle Maddio’s Pizza Joint and Blaze Fast Fire’d Pizza are revolutionizing the limited-service pizza industry by specializing in create-your-own personal pizzas. Thanks to high-tech pizza ovens that cook pies at incredibly high temperatures, patrons no longer have to call ahead to place a takeaway order or sit at their house waiting for a pizza to be delivered. Now, customers can simply line up at a counter, choose their crust, sauce and premium toppings, and either have their pizzas ready for them by the time they reach the cash register or brought to their table by a server in minutes.

One of the largest points of differentiation is that these fast-casual pizza concepts focus on dine-in service. Instead of operating out of small, minimally decorated counter units, these restaurants feature a hip, chic décor and plenty of seating to attract dine-in consumers. Most also menu adult beverages, a characteristic that attracts value-seeking consumers on a dinner date or group outing who may not have the funds to visit a full-service restaurant and provide a tip.

Décor at Uncle Maddio’s Pizza Joint units (top) includes abstract wall dividers and a word wall, dominated by the phrase “Served with love.” Pie Five Pizza Co. units feature science-themed murals, such as a periodic table that replaces the elements with Pie Five pizza ingredients.

Décor at Uncle Maddio’s Pizza Joint units (top) includes abstract wall dividers and a word wall, dominated by the phrase “Served with love.” Pie Five Pizza Co. units feature science-themed murals, such as a periodic table that replaces the elements with Pie Five pizza ingredients.

These new concepts haven’t gone unnoticed by the quick-service pizza sector. Pizza Inn, a U.S. pizza chain that consists mostly of buffet and counter-service restaurants, launched its own fast-casual made-to-order pizza concept, Pie Five Pizza Co., in 2011, which has since grown to 14 locations. Sbarro, another U.S. quick-service pizza chain, is set to debut a fast-casual pizza concept, Pizza Cucinova, later this year.

Not all pizza chains are launching fast-casual concepts; some are instead choosing to incorporate fast-casual elements into their existing concept. Within the past few years, Domino’s Pizza has converted dozens of restaurants into its Pizza Theater prototype. The model still functions like a typical Domino’s Pizza unit but features a comfortable dining room and an open kitchen for patrons to watch the preparation of their pizzas. Other new elements to the Pizza Theater prototype include ordering kiosks, electronic order tracking, and chalkboards where customers can doodle and leave feedback while waiting for their order.

Quick-Service Delivery

In contrast, some quick-service concepts are updating their concepts by adding delivery services. In 2012, Burger King launched delivery in the U.S. at select locations in Washington, DC, and has since expanded the service to select markets in 14 states, from California to Illinois to New York. The chain boasts that hot food is delivered hot and cold food is delivered cold, thanks to new innovative packaging. The service is designed for large orders (a minimum order amount of $10 is required), so in addition to Burger King’s standard offerings, the delivery menu also features several large combo meals, like a four-sandwich bundle with fries and an option with 10 cheeseburgers and 20 chicken nuggets.

A loyalty program specifically for customers using the delivery service has been implemented to bring in more users. Those who use the service and are enrolled in the loyalty program receive a free sandwich with every fourth order.

Burger King launched delivery service in select markets in the U.S. The delivery menu features Burger King’s traditional offerings along with large combo meals.

Burger King launched delivery service in select markets in the U.S. The delivery menu features Burger King’s traditional offerings along with large combo meals.

It will be interesting to see if the service succeeds and if other concepts will be inspired to launch delivery. Burger King says customers in the U.S. have embraced the new option, and it continues to expand delivery to other U.S. markets, most recently to Washington State and Minnesota. But so far, it appears only one other major U.S. quick-service chain, White Castle, has followed suit. The popular burger chain has been testing delivery at a restaurant in Columbus, OH, since earlier this year and recently added delivery to a second site in Columbus, but it hasn’t discussed any plans to expand the service nationwide.

Key Takeaways

While the fast-casual segment is booming in the U.S., it is relatively new in the U.K.—only seven of Technomic’s Leading 100 U.K. Chain Restaurants are classified as fast casual. However, all of those chains posted turnover increases in 2012, and three of them–Patisserie Valerie, PAUL and Le Pain Quotidien–reported double-digit turnover growth. As a group, they increased sales by 8.5% and grew their unit count by 6.6%.

With these numbers, along with the recent entry of U.S. fast-casual concepts like Shake Shack and Five Guys Burgers and Fries in the U.K., we can expect the U.K. fast-casual sector to continue growing. Thus, it’s likely we’ll see top quick-service and casual-dining chains in the U.K. evolve their concepts to compete with the growing fast-casual segment.


Too big to sell? McDonald’s looks at super-sized menu

May 31, 2013

 Medill Reports ChicagoDT_screenshot 

Darren Tristano, Executive Vice president at Technomic, Inc., weighs in on balancing McDonald’s expansive menu with consumer demand.

Click to view the video (please allow a few seconds for item to download).


American Regional Cuisines Make Their Way Across the Pond

March 12, 2013

The U.S. is home to numerous regional cuisines that are often thought of as “ethnic” by U.K. consumers. Among these are Creole, Tex-Mex and regional American barbecue—three American specialities that are all gaining traction in the U.K.

Technomic’s recent U.K. Ethnic Food & Beverage Consumer Trend Report found that more than four out of five consumers see Creole cuisine as “ethnic.” Louisiana’s Creole cuisine—dubbed “city cooking” in New Orleans—has its refined French roots. It’s a rich, indulgent style of cooking that incorporates plenty of butter, cream and tomatoes. Most consumers who think Creole is ethnic consider it to be an emerging ethnic cuisine.

More than seven out of 10 U.K. consumers see Tex-Mex fare as “ethnic.” Tex-Mex is Americanised Mexican cuisine, a twist on traditional Mexican fare. More than half of consumers consider Tex-Mex to be mainstream.

And one-third of consumers consider American cuisine to be “ethnic.” Familiar American staples include hot dogs, burgers, fried chicken and deli sandwiches. The vast majority of consumers who identify American fare as “ethnic” say it is mainstream.

ethnic_cuisine

Base: 1,000 consumers aged 18+
Percentages may not equal cumulative percentage due to rounding
Percentages do not add up to 100%. The remaining percentage of consumers do not consider the cuisine to be ethnic.
Source: The U.K. Ethnic Food & Beverage Consumer Trend Report, Technomic Inc., 2012

The United States is a melting pot of ethnicities. The foods Americans eat are deeply influenced by a vast mix of global cultures and traditions as divergent as European, Native American, Asian and West African, which have come together over centuries to represent something distinctly American. Different cooking styles abound from state to state, such as the regional barbecue methods that span the country. Other distinctive regional American influences are found in Creole cuisine as well as Tex-Mex fare. The following sections look at each of these cuisines and their influence on U.K. menus.

Creole Flavors Rose from the South

Born in the southern state of Louisiana, Creole cuisine is perhaps the first ethnic-fusion cuisine apparent in the United States. Creole cuisine combines Native American, French, Spanish, African, Caribbean, German and Italian influences. Certain elements of this cooking style reflect its refined French roots, resulting in rich and indulgent menu items that often incorporate butter, cream and tomatoes. A variation on this sophisticated cuisine is spicy country-style Cajun, also from Louisiana.

Once beloved only by those living in Louisiana and other parts of the South, Creole foods like gumbo (a traditional roux-based stew), jambalaya (a melange of rice, sausage, chicken and seafood, similar to Spanish paella) and étouffée (a thick and spicy stew served over white rice) now appear widely on restaurant-chain menus across the United States. So do traditional Cajun cooking methods and seasonings, like blackened proteins (meat, chicken or seafood that is heavily crusted with spices and cooked) and spice-rubbed barbecued meats.

The vast majority of American consumers consider these home-grown cuisines to be ethnic. Survey responses for Technomic’s U.S. Ethnic Food & Beverage Consumer Trend Report showed that 86% thought of Creole and Cajun cuisines as ethnic.

Louisiana-style regional American cuisine has a tiny niche on restaurant-chain menus in the U.K., suggesting that these cuisines may have room to grow on menus. According to MenuMonitor, Technomic’s exclusive menu database, most of these Louisiana-style items on U.K. menus simply call for Creole or Cajun spices incorporated as a rub for chicken or shrimp, a seasoning for burgers, a flavour for batter or breading, or an accent to mayonnaise or another condiment.

Going forward, the trends for regional Louisiana cuisine will include more experimentation by restaurant chefs in order to showcase not just spice blends, but actual Creole and Cajun specialities. Here are two examples of classic Louisiana-style main courses as seen on the menus of major restaurant chains:

  • Creole Gumbo—served with garlic bread (Bodean’s)
  • Louisiana Cajun Jambalaya—chicken, spicy chorizo, crayfish and rice, in an authentic Creole sauce with mushrooms, onions and tomatoes (Smollensky Bar & Grill)

Tex-Mex: Americanised Mexican

Another distinctive ethnic cuisine in the United States is Tex-Mex, which melds Mexican culinary traditions with the food ingredients and preparations of the Southwestern United States—specifically, the state of Texas. Sprung from the ranching culture of southern Texas and northern Mexico, Tex-Mex fare originated among Tejanos—Texans of Mexican descent. Traditional Mexican ways of cooking were incorporated with North American food products (such as yellow cheeses) that were affordable and readily available, leading to a blended cuisine that has become known as Tex-Mex or Southwestern.

Today, popular Tex-Mex foods include chilli con carne (diced or ground beef with chillies or chilli powder), fajitas (marinated, grilled steak or chicken, cut into strips and served with warm flour tortillas, grilled onions and peppers for diners to assemble into wraps) and nachos—crisp tortilla chips topped with melted cheese (typically cheddar), chopped jalapeño peppers and assorted components ranging from seasoned meat to tomatoes, lettuce and sour cream.

Tex-Mex preparations and flavours have thrived for decades in the U.S., and there are signs that this regional American cuisine has established itself as a menu favourite in the U.K. in recent years. For example, fajitas and nachos are fixtures on many full-service casual-dining menus, and there are even major chains in the U.K. that directly position menu offerings as “Tex-Mex.”

  • Artisserie offers Tex-Mex Chicken Soup
  • Hungry Horse offers a signature Tex-Mex Burger, as well as a Tex-Mex Combo, featuring ribs and chicken
  • Pizza GoGo offers a Tex-Mex starter sampler
  • Wacky Warehouse’s Tex-Mex Criss Cross Fries are topped with guacamole, Heinz tomato salsa and sour cream

American Barbecue Is Deeply Regionalised

In the U.S., barbecue (including smoked pork, beef, chicken, sausages and other proteins—and all of its sauces and accompaniments) is a regionalised cuisine. Ask Americans in one part of the U.S. to describe their favourite barbecue meal, and the answer will differ widely from that of Americans in another part of the country. The Southern-style barbecue in Memphis, Tennessee, differs from a style of barbecue that is beloved in the Midwestern city of St. Louis, which in turn will differ from the barbecue style and barbecue sauces that are traditional in Texas.

Promoting quality and skill of preparation for regional barbecue is a solid trend on North American restaurant menus. There are signs that both brick-and-mortar restaurants and food-truck operators in the U.K. are beginning to underscore regional differences in American barbecue as well. Regionalising barbecue means successfully executing the culinary nuances between “dry” (spice-rubbed, served with no sauce) and “wet” (drenched in barbecue sauce) barbecued meats, as well as distinguishing between sauces—from the thick, molasses-based, sticky barbecue sauces of St. Louis or Kansas City to the thinner, mustard- and vinegar-based sauces of the coastal Carolinas.

For most U.K. operators attempting to operate within this sphere, it is enough at the moment to simply position American barbecue offerings as “Southern,” while also playing up the decidedly British love of roast meat preparations. This positioning works for Pitt Cue, the Southern-inspired barbecue concept that first built a customer base off its food-truck operation before launching a standalone restaurant venture. Pitt Cue offers a British take on Southern-style American barbecue. “Our food is inspired by the Southern United States of America, but as Brits we love to make things our own,” the chain’s website proclaims. “We make all our own sauces and rubs and our meat is cooked low and slow, smoked in-house and finished over charcoal. Our produce is British, ethically sourced, and our menu changes with the British seasons.”

Here are a few examples of mainstream U.K. restaurant chains that are trying to emphasise regional qualities for American-style barbecue in order to build the perception of quality:

  • Bodean’s signature pulled pork shoulder is accompanied by a Carolina-style barbecue sauce
  • Miller & Carter’s St. Louis Ribs are served with an “authentic American barbecue sauce”
  • Tavern Table offers a Memphis Cherry BBQ sauce as a barbecue accent to various items, including rotisserie chicken

Key Takeaway

Consumer interest in and demand for ethnic foods at restaurants and other foodservice locations is on the rise. For operators seeking to differentiate their menus through globally influenced offerings to gain an increased share of consumers’ foodservice spending, American regional cuisines can be a flavourful tool in their arsenal.

Darren Tristano is Senior Managing Director of Technomic Inc., a Chicago-based foodservice consultancy and research firm. Since 1993, he has led the development of Technomic’s Information Services division and directed multiple aspects of the firm’s operations. For more information, visit http://www.technomic.com.


Trendspotting: Five Trends for 2013

December 10, 2012

stk310224rknConsumer demands for customisation, new flavour, better-for-you food, flexibility and speed will drive industry trends in the coming year.

The foodservice scene in the U.K. continues evolving in appealing ways, with some trends mirroring developments also seen in other parts of the world, while others are distinctly British. Looking forward, Technomic has identified five key trends expected to play major roles in the coming year, each based on consumer demand.

Customisation Encourages Experimentation

For customers, the lure of customisation is control. Restaurant-goers increasingly want more command over nearly everything on the menu, from ingredients and portion size to flavour combinations and healthfulness. They also want value and convenience, both of which are satisfied through a flexible menu. Operators who incorporate a service model of customisation into their concepts will propel themselves ahead of their competitors by creating unique, customer-created food and drink.

Think made-to-order meals à la Chipotle Mexican Grill. Five Guys Burgers and Fries is entering the U.K. from the States, seeing a market for its small menu of burgers that can be customised with dozens of toppings, as well as different rolls and proteins. Home-grown player handmade burger Co. taps the same opportunity, promising “our burgers are made to order, so if you would like to change any of the ingredients in your burger, please let out team know, and they’ll be happy to do that for you.” That’s after guests peruse the 40-some burgers already on the menu.

These operators recognise also that it’s safer for customers to experiment with a new flavour or ingredient if it comes along with something that they are already familiar with. It’s easier to add a chimichurri sauce to a burger, for example, than to select a foreign dish with a name that’s hard to pronounce.

Expect to see more operators branching out with creative approaches to build-your-own dishes, offering mix-and-match combo meals, and even making customisation a cornerstone of their concept.

Ingredients from Two Extremes

The U.K.’s current crop of leading independent chefs is striving to understand and cater to consumers’ disparate desires for both super local foods and authentic global foods on the same menu. Concepts that can satisfy both cravings in innovative ways will be the most successful.

Technomic’s recent U.K. Ethnic Food & Beverage Consumer Trend Report found that eight out of 10 U.K. consumers purchase ethnic foods and flavours away from home at least once a month, and half of consumers who live in London do so once a week or more often. Additionally, three in 10 U.K. consumers say they are eating ethnic food more than they were a year ago.

Younger consumers are even more likely to enjoy global food and flavours. At the same time, we generally find that younger people are also more likely to say they care about issues like sustainability and local purchasing.

Some restaurants are already using local ingredients in global preparations, such as Bohemia Bar & Restaurant, whose Roast Fillet of Local Line-Caught Pollack gets Asian influence from sweet-and-sour purée and hoisin sauce; and The Mistley Thorn, which offers Griddled Local Wild Bass “à la Niçoise.”

Watch for local British ingredients highlighted in street foods such as Middle Eastern falafel and Mexican tacos. Not only will such items excite diners’ palates, but they are also an opportunity for chefs to pioneer new flavour combinations and dishes without spending a bundle.

Stealth Health

Although healthy eating is an established trend, the stealth-health movement—in which chefs replace salt, fat and sugar with healthy, bold flavours without promoting it to consumers—is gaining ground.

On one hand, because consumers now expect healthy options in all restaurant types and segments, chefs need to comply by offering such without sacrificing flavour. Creating healthy yet satisfying meals is chefs’ new battle. On the other hand, there are still many consumers who say they want to eat healthful foods, and even say they do eat them, but when it comes time to order their meal at a restaurant, they don’t consider calories, nutrients or how much the ingredients were processed. In fact, those same consumers may perceive “better for you” items to have less flavour.

Some menu developers have decided that it’s to the benefit of all diners—if not their responsibility—to offer plenty of dishes that are made with healthier ingredients and preparation methods. Thus, even those consumers who neglect their health when eating out will eat healthier.

Next year will bring a surge in stealth-health ingredients, including superfoods like beans, dark-green vegetables, salmon, soya, walnuts, yoghurt, tea and blueberries, as well as standard dishes with a healthier spin.

Keep in mind that many concepts are unabashedly proud of promoting the quality and healthfulness of their food; witness Apostrophe and its Superfood Salad with sprouting broccoli, sweet potato, broad beans, kidney beans, beetroot, red onion, baby spinach, roasted pumpkin seeds, soya and balsamic vinegar. Apostrophe is one of the restaurants that have listened to their consumers in order to provide what they want. Regardless of menu trends, that is a smart tactic.

Snacking Matures

Consumers no longer have three meals a day, seven days a week. They skip meals, nosh throughout the day, and have breakfast food for a late-night snack. Eating patterns are inconsistent by the day and even within each day. And they want foodservice outlets to be prepared to accommodate.

Restaurant operators are expanding their snacking menus to boost traffic between dayparts, particularly from younger consumers. Retailers that have long dominated the snack market are now competing with restaurants to hold share of consumers’ snack pounds. As the snacking daypart grows up, so will the types of snacks on offer. Between-meal bites are maturing into gourmet offerings with the addition of high-quality ingredients and innovative flavour combinations.

More restaurants will be adding full snacking menus while others will look to discounting snacks during off-peak hours. Trends to watch include around-the-clock snacking, ethnic snacks and bite-sized offerings. Some new offerings that have already debuted in the U.K.: Cheddar Cheese Bites from Burger King, Cheese & Onion Bites from McDonald’s, and Jalapeño Bites from Southern Fried Chicken.

Swift-Service Concepts Cater to Hurried Diners

Convenience is top-of-mind for today’s consumer. Fast-paced diners want quick, portable and inexpensive meals that don’t sacrifice quality. Expect to see an upsurge in food trucks, quick-service and fast-casual restaurants increasing takeaway options and meal deals for on-the-go consumers.

Also expect to see a rise in express-version spin-off concepts from established sit-down restaurants. Some examples that we’re seeing already include Little Chef Express from Little Chef; Café Rouge Express from Café Rouge; Ed’s Shakes ‘N’ Hotdogs from Ed’s Easy Diner; and Giraffe’s Burgers & Cocktails by Giraffe, a replacement for its Giraffe’s Guerilla Burgers brand.

Key Takeaway

The trends driving restaurant growth and innovation are all driven by consumer demands for customisation, new flavour, better-for-you food, flexibility and speed. It’s worth noting that it’s a rare restaurant that would follow all of these trends. Trying to be all things to all people is generally a losing proposition in today’s environment. Savvy restaurant operators will examine and heed the trends, but follow the lead of their own customers and those they are trying to attract.


International Imports: Overseas Chains Look to U.S. for Growth

September 7, 2012

Note: This post originally appeared as a Technomic white paper. Download .pdf file.

In Japan’s busy city centers, the line for McDonald’s queues out the door. The Sphinx sees KFC as it looks across the desert. Restaurant chains are a prime export for the United States, as companies see an escape from the crowded domestic market.

But at the same time U.S.-based chains look to global markets for growth, many chains from outside our borders are finding ample opportunity to expand their concepts and compete in our homeland.

U.S. operators ignore these international imports at their peril. In their effort to stay ahead of the competition, operators must identify and monitor their competition—both domestic chains and global concepts—examining performance data, menu and marketing updates, and expansion plans.

Growing List of Imports
Over the years, as Technomic has been building its intelligence on international markets—now including Canada, the U.K., Brazil, France, Germany, Italy, Spain, Australia and Mexico—and the restaurant brands that lead those markets, it continues to uncover concepts that are looking at the United States for expansion opportunities. Chains such as Tim Hortons, Le Pain Quotidian and, more recently, Red Mango have led the way for a growing list of contenders eyeing the U.S.

What they see when they examine the U.S. market is a consumer who spends almost half their food budget at restaurants, and one who is eager to try new ethnic flavors. U.S. consumers are also ethnically diverse themselves, and many are well-traveled and already familiar with global foodservice brands.

Overseas operators also see large cities and small, some of which may look a lot like the markets in which they successfully operate at home. The real-estate experts in this group will spot the many good locations left by domestic operators and other businesses that couldn’t make it through the economic downturn and slow recovery.

Challenges and Opportunities
There are certainly challenges to overcome to opening in a new country, especially one as saturated as the United States. Beyond the usual complexities of offering a compelling point of differentiation at what consumers feel is the correct price point and keeping up with their busy and demanding lives, an overseas operator is at a disadvantage simply by being located outside the country. A new country’s supply chain methods, legal and governmental regulations, and human resource issues have to be understood and addressed. This means the operator must find partners, franchisors or trusted employees to handle Stateside business and operations.

But there are also opportunities for concepts that feed consumer needs, stay ahead of food and dining trends and manage unit economics. Those with a strong brand and niche, well-defined menu and value proposition have a chance of capturing the attention—and eating-out dollars—of American consumers.

Concepts to Watch
Following are profiles of 10 concepts in varying stages of expansion within the United States. We didn’t select them based on size or seniority. They are merely a diverse group of concepts from around the world that offer something different that gives them the potential to thrive in America. Some have achieved success through the authentic cuisine of their homeland, but others are making leaps with models that they believe are primed for success with U.S. consumers.
What they have in common is attention to consumer trends, such as better-for-you cuisine, a convenient and flexible format, or focus on authentic or innovative flavors.

AFRICA
Nando’s Peri-Peri, formed in Johannesburg, South Africa, in 1987, is a quick-casual chain specializing in peri-peri chicken, a Portuguese-style preparation of poultry basted with a spicy, vinegary sauce that gets its heat from the African Bird’s Eye chile. Portuguese beers and wines provide an authentic accompaniment. Units, averaging 3,800 square feet, operate primarily in high-visibility sites that often have multiple levels. Nando’s restaurants are uniquely constructed and designed, often reflecting the country in which they operate. Interior design elements typically include natural materials such as marble and antique oak, bold African artwork and large potted plants. Nando’s has entered numerous international markets and made its U.S. debut in Washington, DC, in 2008.

Why it’s worth watching: Nando’s pleases flavor-seekers and has strong global brand awareness, operating in three dozen countries on five continents.

ASIA
Gyu-Kaku, founded in 1995 in Tokyo, is a chain of contemporary casual-dining restaurants offering Japanese-style barbecue. It specializes in yakiniku (Japanese for “grilled meat”), in which guests cook their own marinated bite-sized meats, seafood and vegetables over individual smokeless braziers. Averaging 3,500–4,000 square feet, units are located in urban and suburban areas with heavy foot traffic such as shopping malls and lifestyle centers. Interiors are modern and characterized by Japanese-influenced artwork, dark woods, exposed brick and sheer fabrics. Large dark tables provide communal and private seating. Six years after its Tokyo debut, the chain entered the U.S. market with the 2001 opening of a West Los Angeles location.

Why it’s worth watching: Japanese barbecue is underrepresented in the U.S., and Gyu-Kaku gives it a distinct spin with its cook-it-yourself platform and social element.

Little Sheep Mongolian Hot Pot, established in Baotou, Inner Mongolia, China, in 1999, is a casual-dining restaurant chain with an interactive, cook-it-yourself Mongolian-food focus. Customers dip meat, seafood and vegetarian dishes into hot broth at their table to cook them. Signature items range from lamb shoulder, to shrimp meatballs, to mussels and clams. Units occupy at least 4,000 square feet and feature lustrous and contemporary décor with Mongolian murals, calligraphy and bamboo. After launching in Baotou, the chain expanded further into China as well as Taiwan, Japan and Canada. The first U.S. Little Sheep restaurant opened in 2006 in Union City, CA.

Why it’s worth watching: Yum! Brands Inc. owns a portion of the chain and is looking to acquire a majority stake in the company via a $573 million takeover bid.

AUSTRALIA
Guzman Y Gomez, launched in Australia in 2006, is a fast-casual Mexican taqueria that prides itself on being one of the first concepts to bring authentic Mexican food and Latin culture to Australia. The chain celebrates all things Latin: the region’s music, art, personality and especially the food. It specializes in burritos, mini burritos, tacos and bowls prepared with a choice of meat or vegetables and various toppings. It operates both small walk-up operations in food courts and lifestyle centers and larger units, which have TVs, foosball tables and billiards, and a bold décor heavily incorporating the brand’s yellow-and-black color scheme. Units also typically feature exposed brick, framed black-and-white photos and potted cactus plants. Since its founding, Guzman Y Gomez has expanded across eastern Australia.

Why it’s worth watching: Guzman Y Gomez has carved out a niche in Australia as one of the only chains offering authentic, made-to-order Mexican fare, and aims to compete against fast-casual Mexican leaders.

Pie Face, started in 2003 by an American living in Sydney, is a quick-service bakery-café chain known for its freshly baked sweet and savory pies marked with smiley-face designs on the crust. Popular varieties include chunky steak and Thai chicken curry. Stores are counter-service operations that occupy as little as 160 square feet. Whenever possible, they stay open 24 hours a day. Rows of pies and other pastries are showcased in glass cases, and red and black menu boards list the brand’s offerings. After getting under way in Sydney, the chain opened stores throughout Australia and began franchising in 2009. In early 2012, the chain made its U.S. debut, opening a unit in New York City—the first of many planned for the Big Apple.

Why it’s worth watching: Pie Face is bringing Aussie-style handheld, savory meat pies to American consumers, who may be open to this portable and inexpensive meal option.

EUROPE
PAUL, which traces its roots all the way back to 1889 in Croix, France, is a chain of fast-casual French-style bakery-cafés. The concept is designed to evoke a traditional French bakery, where patrons grab a quick bite to go or sit and relax with friends. Units, typically inline shops located along the high street, feature rustic French décor with the look and feel of a village bakery. Design elements include signature black storefronts, exposed interior brickwork and sculptured woodwork. In its present-day form, PAUL opened in 1963 in France. It eventually expanded into a number of countries before it opened its first U.S. unit in Washington, D.C., in May 2011.

Why it’s worth watching: The bakery-café segment continues to perform well, and PAUL differentiates itself with French-inspired décor and traditional French baguettes.

Pret A Manger, founded in London in 1986, is a grab-and-go sandwich concept emphasizing convenience and speed. Pret A Manger, French for “ready to eat,” specializes in prepackaged sandwiches, soups, salads, sushi and breakfast pastries. Food is made daily in-house with natural ingredients and then stocked in stainless-steel, temperature-controlled cases. Any food that is not sold by the end of the day is donated to local charities. Restaurants seat 20–30 customers, measure about 1,500 square feet and feature a bright, modern décor. Units reflect and preserve their European roots with staff members from Europe and from each unit’s host country. Pret A Manger expanded abroad with the 2000 opening of a unit in the Wall Street area of New York City.

Why it’s worth watching: The chain is in the midst of developing what it calls “Pret Local,” an interpretation of the original concept that offers more of a fast-casual positioning in a suburban setting.

YO! Sushi, which debuted in London in 1997, is a conveyor-belt sushi concept (known as “kaiten” in Japan) that aims to make Japanese food accessible and affordable. Freshly made sashimi, sushi maki rolls and nigiri circulate on a moving conveyor belt, and customers grab their dishes right off the belt. They may also order off the menu. Food is served on color-coded plates, each of which corresponds to a different price point; a staff member counts the plates to tally the bill. Store locations range from urban business districts to high-end department stores and airports. YO! Sushi made its U.S. debut in mid-2012 in Washington, D.C.’s Union Station and is planning 30 additional U.S. locations.

Why it’s worth watching: YO! Sushi’s interactive platform, combined with its exhibition sushi preparation, make for a unique and fun dining experience.

NORTH AMERICA
Freshii, founded in Toronto in 2005, is a healthy fast-casual concept that offers salads, wraps, bowls and burritos in signature as well as build-your-own varieties. The concept also stands out with eco-friendly initiatives in packaging and paperless marketing. Averaging 150–1,500 square feet, units are in high-traffic urban areas and feature contemporary décor, shelves lined with packaged snacks, and grab-and-go cases stocked with bottled beverages. Rapid expansion began in 2009 with a master franchise deal for the Chicago market. Eventually the chain expanded across Canada and the U.S. before entering Europe and the Middle East. Long-term expansion plans call for 1,000 units by 2015.

Why it’s worth watching: Freshii fills a dual niche within the rapidly growing fast-casual segment: an eco-conscious chain specializing in healthy, fresh fare.

SOUTH AMERICA
Giraffas, established in Brazil in 1981, is a limited-service chain specializing in Brazilian favorites. The family-owned chain’s signature item is a create-your-own burger with a choice of filet mignon, chicken, ground beef or meat substitute, and a selection of sauce and toppings. The concept goes beyond burger-joint fare to offer traditional Brazilian steak and meat entrées at moderate price points. Units vary in size from 750–3,000 square feet and in location from kiosk to freestanding restaurant. Interiors are contemporary and evoke the feeling of an African safari with tufted rugs and giraffe murals. In mid-2011, Giraffas opened its first international unit, a U.S. store in North Miami.

Why it’s worth watching: Giraffas, already well-established with some 350 stores in its native Brazil, has firmly set its sights on U.S. expansion, calling for additional locations to open over the coming months.

Conclusion
Like many industries, restaurant operators have become global in nature. Just as American chains have found fertile ground around the world in which to grow, internationally based chains are looking at the United States as a market to expand their brand and further develop a platform for growth. U.S. operators should view these new entries not as “flash in the pan” concepts but as true contenders challenging them for traffic and dollars.

Technomic currently tracks major chain operators and menu trends in 10 countries including the U.S., Canada, Mexico, U.K., France, Germany, Spain, Italy, Brazil and Australia. Market intelligence for these countries is available through our industry leading online Digital Resource Library and MenuMonitor.


Burgers and Blueberries?

May 8, 2012

They don’t like to admit it, but today’s consumers are still influenced by advertising perceptions. Key marketing terms can drive those perceptions toward better-for-you emotional drivers, craveability and real attitude and usage trends.

Recently, Burger King launched their “Fresh Menu,” which adds several new items including salads, premium chicken tenders and smoothies. McDonald’s recent earnings report indicates that the focused and increased effort by Burger King toward this new and fresh promotion has allowed them to gain some share from McDonald’s and has given Burger King some renewed momentum. 

McDonald’s, on the other hand, has been promoting a more “wholesome” menu and recently added “sweet, plump, fresh blueberries by the bushel” to their menu promotions. They are combined with crunchy walnuts, real banana and two full servings of whole grains in Blueberry Banana Nut Oatmeal, and with yogurt and granola—“a half cup of dairy and a full serving of whole grains”—in the Blueberry Yogurt Crunch. The effort shows an emphasis on more healthful offerings combining seasonal berries with “low-fat” yogurt and the “wholesome crunch of granola.”

Although these efforts may only have a small impact on consumer menu choices, these brands are providing the important alternatives that give consumers better options when dining away-from-home. 

This may be a small step, but nonetheless, a step in the right direction.

McDonald's Blueberry Ad (English)

 

McDonald's Blueberry advertisement (Español)


Don’t miss my live presentation at the NRA Show this Sunday!

May 3, 2012

Darren Tristano Presents at NRA

What: Fast Casual: A Recipe for Growth

When: Sunday, 05/06/2012 12:00PM – 1:30PM

Where: Room S402A, McCormick Place

Coverage: Technomic’s Executive Vice President, Darren Tristano, provides an overview of the fastest growing segment in our industry. You’ll see Fast Casual compared to the overall industry using data including NRA’s 2012 Restaurant Industry Forecast. Learn the secrets to their success as they share stories of innovation, unit growth and people metrics that are critical in creating the WOW factor of the Fast Casual experience.

Additional Speaker(s): Don Fox, Geoff Alexander, Ian Vaughn, Louis Basile


Wings: A fan favorite beyond March Madness, says Technomic

April 18, 2012

Chicago, March 14, 2012, PRNewswire – Even if your favorite college basketball team falls out of contention, the March tourneys still provide an excellent excuse to gather around a platter of your favorite chicken wings. But the excuses don’t end with March. Wings have remained a year-round favorite, exhibiting substantial innovation and room for growth according to recent research from restaurant consultants Technomic. 

“Wings and sports have long been a winning combination—and more than 10 percent of all wing-based limited-time offers are game-day promotions,” says Technomic Executive Vice President Darren Tristano. “However, wings’ overall appeal comes from their ability to suit consumers’ desire for customization, including traditional and global flavor options from sweet to super hot, and for portion flexibility, serving as snacks, starters, entrées and sides. And they are fun finger foods that are easy to share, so they lend a social aspect.”

In its new Category Close-Up: Wings report, Technomic delves into its MenuMonitor online menu-tracking resource and finds that 36 percent of the Top 500 restaurant chains offer wings, and that number has grown year after year.

Of particular note is the extent to which restaurants have innovated in the wing category:

  • Wing flavors and sauces found on menus range from Buffalo and barbecue to the tequila-lime-barbecue at Quaker Steak & Lube and the Raspberry Ice—a sweet and tangy blend of raspberry and horseradish—at Hurricane Grill &Wings.
  • Buffalo/hot sauces are the most commonly menued wing sauces. Among these types, the less-spicy mild and medium sauces have declined as Buffalo and “extra-hot” varieties have grown. 
  • Wing concepts offer an average of 18 different sauces. Hurricane Grill lists more than 30, as does Wild Wing Café. Variety is also found at chains not focused on wings—Beef ‘O’ Brady’s and Cheeseburger in Paradise, for example, each offer 12 options.
  • Sweet-style barbecue sauces are more popular than spicy-style barbecue sauces, though preferences vary heavily by region. Consumer preference for sweet sauces indicates opportunity for flavors such as sweet and sour, honey-chipotle and maple-brown sugar.
  • Fully 28 percent of wing-focused limited-time offers promote new wing flavors, offering operators a compelling method to drive sales while testing new wing varieties.
  • Boneless wings are on the rise. And, interestingly, as restaurants have added them, the incidence of traditional wings has not decreased. Operators have found boneless wings appeal to a new consumer—one who does not enjoy the finger-licking aspect of traditional wings.

Chicken wings are among the most popular menu items, but also one of the most difficult to classify and analyze. Technomic’s Category Close-Up: Wings provides restaurants and industry suppliers with a thorough review of wing menu trends, pricing, sizing, sauces, accompaniments and limited-time offers, in addition to consumer perceptions of the leading wing chains and other related consumer research.  

To learn more about this report, please visit Technomic.com or contact one of the individuals listed below.

Contacts

Press Inquiries: Darren Tristano, 312-506-3850, or dtristano@technomic.com

Purchasing Details: Heather Nelson, 312-506-3855, or hnelson@technomic.com

About Technomic

Technomic provides clients with the facts, insights and consulting support they need to enhance their business strategies, decisions and results. Its services include numerous publications and digital products, as well as proprietary studies and ongoing research on all aspects of the food industry.

Source: Technomic, Inc.


Pizza places getting fired up for pricy pies

April 16, 2012

By Richard Mullins, Published: March 28, 2012 

Yolanda DeVesta gets a bit emotional talking about pizza.

“My husband is authentic Italian, and this — this is the kind of pizza he would make,” DeVesta says, pointing to an empty plate that once contained her lunch at Pizzaiolo Bavaro downtown. “They use fresh basil, fresh cheese, sauce from scratch. It melts in your mouth — there’s just no way to compare this to something like, like a Dominos.”

Pizzaiolo Bavaro opened three years ago after shipping a van-sized stone oven from Italy and making it the centerpiece of its Franklin Street location. Now, a rush of upper-tiered pizza restaurants are flooding the Tampa market.

Anthony’s Coal Fired Pizza will open a third location today in Tampa, following the openings of Pizza Fusion, YourPie, Mellow Mushroom and Wood Fired Pizza — all focusing on especially authentic, gourmet pizzas, and hoping to do for pizza what Five Guys did for burgers.

That is, elevate an iconic meal for customers who are craving more local, organic and authentic options.

Sure, the U.S. market has hundreds of thousands of pizza restaurants, but “outside of Chicago or New York, I’m not sure how many people know what really, really good pizza is,” said Darren Tristano, a restaurant expert with Chicago market researcher Technomic.

“For a lot of people, Pizza Hut or Dominos is what they think pizza tastes like.”

That creates a huge opportunity, Tristano said, for gourmet pizza joints to attract a crowd of affluent and younger eaters who are willing to spend more.

Some gourmet pizzas in town can cost $20, compared with budget deals at chain operations offering two mediums for $15 — with delivery.

“This is like the success of Bonefish versus Red Lobster,” Tristano said, referring to the two seafood chains. “A step above in quality that addresses this big, unmet need.”

Still, fast expansion and franchising isn’t easily done with artisan pizza.

Ask operators of these restaurants their secret, and they will say it’s a technique that takes years to master because there are so many variables.

Compared with a major chain that ships a stock kit of ingredients to local restaurants, artisan pizza shops adjust every ingredient along the way.

Bavaro imported wood from Estonia for six months before finding a steady, quality source of oak in Florida with just the right 7 percent moisture content for his oven.

Wood must burn hot, but also create the right flame to crisp the toppings. Still, the temperature can vary between 800 and 900 degrees, and the pizza maker must adjust accordingly.

It can take years to learn how to perfectly stretch the dough — not too thin — and measure the doneness of pizzas by eyeball. Not to mention how to pace the flow of new wood into the oven based on how many pizzas are coming out.

Even the strain of yeast, the variety of flour, the type of salt, and the mineral makeup of water make a difference.

“You can take a guy who’s been making pizza 20 years, and you put him in front of one of these ovens, and he won’t be able to do it,” said Anthony Bruno, founder of Pompano Beach-based Anthony’s Coal Fired Pizza.

“Every day, the oven is different, different temperatures. You need someone who knows how to clean it, load it, work the pizza, everything.”

Bruno recruited longtime friend and former Miami Dolphins quarterback Dan Marino as a business partner for what is now an operation with 33 locations. Marino may be famous for losing weight through the Nutrisystem program, but he’s a big gourmet pizza fan, too.

“These are a much crisper base pizza,” Marino said Tuesday at the opening of the South Tampa Anthony’s. “We do sell a lot of salads here, and they’re in the Nutrisystem. But some days, you need a pizza.”

Master pizza maker Peter Taylor of Wood Fired Pizza in Tampa so thoroughly dedicated himself to making pizza, it became an all-consuming obsession.

After several years in operation in New Tampa, he is the only one who he trusts to handle the oven, and only this year did he open another location — in downtown St. Petersburg.

YourPie is trying an approach that blends the flavor of artisan pizza with the simplicity of Chipotle Mexican Grill.

Customers walk past a large menu, pick their dough type, pick a pizza or calzone, and then talk with a pizza maker to add toppings. By the time customers pay at the register and pick up a self-serve drink, the pizzas are cooked and brought to the table.

That’s within an overall pizza market with a $30 billion annual revenue that’s basically flat, Tristano said, with major operators either slashing prices to maintain growth, adding chicken wings and chocolate chip cookies to offer more options, or creating their own artisanal pizzas.

“On one hand, you have people who say they can sit in front of their monster plasma screen and order a pizza for delivery,” Tristano said.

“But for a growing part of the market, that’s just not going to be the same as getting a really good pizza.”


www2.tbo.com © Copyright 2012 Media General Communications Holdings, LLC. A Media General company.


Cookie delivery satisfies late-night munchies Delmar Loop shop sells ‘thousands of dozens’ of cookies every month

April 13, 2012

By Georgina Gustin • ggustin@post-dispatch.com > 314-340-8195

25 March 2012

St. Louis Post-Dispatch

Copyright 2012, St. Louis Post-Dispatch. All Rights Reserved.

It has become a pattern. Students from Washington and St. Louis universities start calling in. Bar patrons in the Delmar Loop wander through the door. Sweet-toothed couch potatoes with a craving for something buttery and warm pick up the phone.

“It starts around 9 p.m.,” says Tamika Moore. “We call it cookie-emergency hour.”

Moore and her partner in life and business, Ernest Dixon, had a simple idea: Bake fresh, made-to-order cookies, and then – most importantly, perhaps – deliver them right to peoples’ doors. (With milk if requested.)

They launched their business, Dough to Door, last August on a cross street off the Delmar Loop, at first walking up and down Delmar Boulevard giving samples. Soon the delivery orders started coming. Now the business bakes and sells “thousands of dozens” of cookies a month, Moore says, many in the critical “cookie-emergency” window between 9 p.m and 2 a.m.

“Late-night is big for us,” Dixon said. “We see some weird situations. That’s the fun part.”

The Dough to Door business model strikes directly at the butter-loving heart of anyone who has ever been enveloped by the smell of baking cookies – and needs one right away. The “munchie” market segment – late-night revelers who want a little something after their indulgences – was actually a formal target identified in the company’s business plan.

“It’s a legitimate marketing category,” Dixon said. “The munchie crowd generates a need based on something else they’re doing.”

But the strategy also taps into generational expectations and the American consumer’s growing need for getting what they want, when they want it. The custom delivery market, first pioneered by Domino’s Pizza in the 1980s, has surged in recent years, and now delivery options go well beyond pizza.

“Consumer expectations of delivery have changed,” explained Darren Tristano, a food industry analyst with Chicago-based Technomic. “There’s such an expectation of convenience now. It used to be very limited what you could get delivered, especially late at night.”

Tristano pointed to the expansion of Jimmy John’s Gourmet Sandwiches, which has grown from 354 restaurants in 2005 to 1,329 last year. Even Burger King, he said, is piloting delivery programs in some urban markets.

Cheese-ology Macaroni & Cheese, a few doors down from Dough to Door, now also delivers, seizing on the market for home delivery, which is particularly ripe in university areas.

“We wanted to do delivery because we knew more students would have access to our food if we did,” said Bill Courtney, Cheese-ology’s founder. “I went to the University of Missouri and I ordered pizza three times a week because there was nothing else to order.”

But the landscape has changed. “Any small restaurant coming into this area, especially the Loop, and with a college-likeable menu,” Courtney said. “They’re going to need a delivery service.”

Moore, Dough to Door’s “senior doughologist,” and Dixon, its “cookiemaster,” say they were inspired to start the business when they were home one night, craving something sweet but unmotivated to go out and get it.

“Honestly, it’s the American way,” Dixon said. “That’s why we think this has potential. We want things fast, we want them the way we want them.”

That second piece is key to Dough to Door’s business. Customers can select from five doughs, with three “mix-ins,” which range from traditional, such as chocolate chips, to more esoteric, such as Pretzel M&Ms. A baker makes the cookies based on the customer’s specific mix. (A minimum of 6 is required for delivery, and with a pint of milk, costs $8.75)

The open-ended options mean some customers chose some strange combinations. “We tell people: Mix at your own risk,” Moore jokes.

This on-demand approach is smart strategy, says James Fisher, chairman of the marketing department at St. Louis University.

“Dell didn’t make anything until they had a customer on the other end. That’s kind of what’s going on here,” he said. “You’re not building a product, hoping a customer will buy it. You get paid up front. And because there’s a better fit with the customer, you have the potential to deliver higher value.”

Moore and Dixon’s plan, however, is something of a hybrid – with a delivery business and a storefront where people can walk in and sit at a table. While 70 percent of their current business comes from deliveries, they are cultivating an in-house business that captures foot traffic. One plan is to start a weekly storytime session for moms and children where cookies and milk are served.

Creating a diverse clientele – one comprised of delivery customers and walk-ins – will be essential for success, says Clifford Holekamp, a senior lecturer in entrepreneurship at Washington University.

For Holekamp, Dough to Door’s calling card is its fresh-baked, artisanal approach.

“I would define this as being part of the whole craft movement,” Holekamp said.

“People are seeking higher-quality, more customized goods. People are desiring craftsmanship. They won’t pay a premium over time unless there’s something unique about the product. The delivery is a great service, but I don’t think its their secret sauce.”

photos by Erik M. Lunsford • elunsford@post-dispatch.com Washington University students (from left) Brendan Stone, Mike Merzel, Kyle Engelken, Burt Reynolds, Tim Elliott and Jake Bruemmer have some cookies Thursday at Dough to Door in University City. Ernest Dixon, the co-owner of Dough to Door, prepares cookies for delivery on Thursday at his shop in University City. Delivery, often to nearby college students, is 70 percent of the shop’s business. The exterior of Dough to Door at 567A Melville Avenue in the Delmar Loop area. The shop’s busiest time starts about 9 p.m. Talor Woolfolk dishes out trays of warm cookies Thursday at Dough to Door. The shop, which opened in August, custom makes a variety of cookies for its customers.

St. Louis Post-Dispatch


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