Uno Chain Putting Pizza First Again

March 2, 2015

tlumacki_pizzeriauno_business375-001Pizza First ; Uno, once deemed the healthiest chain restaurant in America, ditches its nutritionist and goes back to its high-calorie roots to stand out from its rivals

By Taryn Luna Globe Correspondent
http://www.bostonglobe.com/business/2015/02/27/uno-chain-putting-pizza-first-again/Idbh31HEj5KahzIpPxZk7I/story.html
© 2015 The Boston Globe. Provided by ProQuest Information and Learning. All Rights Reserved.

Uno Pizzeria and Grill, the deep-dish pizza restaurant chain that switched years ago to a menu emphasizing pages of healthy food, is returning to its cheesy roots. Calorie counters beware.

In 2008, the West Roxbury company had happily embraced a new title, bestowed by Health magazine: healthiest restaurant chain in America.

Now Uno’s traditional fare — including its 2,300-calorie Chicago Classic individual pizza — is back near the front of the menu.

Said Dee Hadley, chief marketing officer at Uno:

“If you came into our restaurant and tried to find pizza on our menu, you would have had a hard time because we hid it in the back. It’s about going back to what made the brand great to begin with.”

Hadley and a new team of executives have spent more than $10 million to remodel dozens of restaurants and start a rebranding campaign. The goal is to emphasize Uno’s pizza heritage, a way to stand out in a waning casual dining business teeming with big competitors like Applebee’s, Chili’s, Ruby Tuesday, TGI Friday’s, and Red Robin.

Uno was founded in Chicago in 1943, serving thick-crust pizza that curved up the sides of its deep metal pan. The pizza was so unusual that the original owners, Ike Sewell and Ric Riccardo, gave away samples to entice people to try it, Chicago historian Tim Samuelson said.

It paid off, and the restaurant became wildly popular.

In 1979, a Boston restaurateur, Aaron Spencer, became the first franchisee and opened an Uno on Boylston Street. Spencer continued to expand the chain in Boston and beyond. Over time, Uno grew to more than 200 restaurants.

But the company began to distance itself from its pizza roots in the early 2000s. Like many other casual restaurant chains, it expanded the menu to appeal to as many customers as possible, said Darren Tristano, an executive vice president at the food industry research firm Technomic in Chicago.

In an increasingly health-conscious time, people weren’t flocking to Uno for pizza that often topped 1,700 calories for an individual serving. Every restaurant, from McDonald’s to Applebee’s, looked for ways to cut calories.

Around 2005, Uno began a campaign to cultivate a healthier image. The brand, which had already changed its name to Uno Chicago Grill from Pizzeria Uno, eliminated trans fats from the menu and listed ingredients and calories on touch-screen kiosks. The new menu featured pages of salads.

Uno hired a full-time nutritionist and started a nutrition advisory board, which included a cardiologist from Brigham and Women’s Hospital.

“Creating a menu with delicious health-conscious options is one of our priorities,” Frank W. Guidara, then Uno’s chief executive, said a few years into the process. In an April 2006 Boston Globe article, Guidara said sales were up almost 2 percent because of the changes.

But the menu changes turned Uno into another Applebee’s, with a broad range of dishes and no emphasis on anything, Tristano said. At one point, the menu stretched to 22 pages. The restaurant’s deep dish pizzas appeared on page 18.

“They really changed the menu and mimicked what other casual restaurants were doing,” Tristano said. “Today we’ve learned that menus are too big, and casual dining brands are too ubiquitous.”

Uno discovered that the hard way. The company faced heavy debt and declining sales during the recession, when people ate out less frequently. Uno suffered net losses of $22 million in 2009 and filed for bankruptcy protection the following year.

Now, a new team of executives is trying to move forward with more than a nod to the past. The main objective: Give customers what they want.

Hadley said that when she joined in May 2013, the company went back through consumer studies for the prior five years to understand what people liked about Uno. Not surprisingly, the answer was deep dish pizza.

“We’ve really made a commitment to send a message to our consumer base that we’re bringing back the soul of the brand that we’ve lost,” Hadley said.

The first step was to rename the restaurant Uno Pizzeria and Grill, followed by a redesign of the restaurants. About 40 of the chain’s 82 corporate-owned restaurants have been remodeled, starting last year, at a cost of $100,000 to $200,000 per eatery, Hadley said.

At an updated restaurant in Braintree, the yellow and white checkered tablecloths and Tiffany pendants that dangled from the ceiling have been replaced with wood tables and modern light fixtures. Construction crews removed a wall in the bar and took down glass partitions in the dining room for a more open-concept feel. The restaurant added a new bar top and high tables, doubling the size of the bar.

Daily specials are written on chalkboards, and simple art adorns the walls with phrases like “We owe it all to a man and his pan.”

Uno says the remodeling is starting to pay off. Updated restaurants have experienced a 10 percent sales growth, she said.

The timing isn’t ideal for a return to high-calorie pizza fare, however. The federal government will require chains to list calorie counts on their menus by the end of this year.

Some diners won’t care. But others may choose smaller portions or different dishes when they realize the high calorie count of a favorite item.

“The calories on the menu will be really an eye-opener to the consumer,” said Joan Salge Black, a professor in the nutrition program at Boston University.

While gluten-free and low-fat items haven’t disappeared from the Uno menu, the nutrition advisory board isn’t active, and Uno no longer employs a nutritionist.

“We want to make sure healthy choices are available, but if you’re looking for those things you’re not thinking about us,” Hadley said. “Strong brands have to stand for something that is different from the rest of the pack. Our heritage is deep dish pizza.”


Starting From Scratch With Better Coffee

February 25, 2015

Joan Verdon

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 


February 18, 2015

barnies-centerpiece15-304xx3654-2448-42-0Anjali Fluker
http://www.bizjournals.com/orlando/print-edition/2015/02/13/coffee-culture-how-jonathan-smiga-s-company-plans.html
© 2015 American City Business Journals, Inc. All rights reserved.

Jonathan Smiga wasn’t sure quite what he was getting into when he took over the helm as president and CEO of the then-struggling Barnie’s Coffee & Tea Co. in 2010.

The Winter Park-based firm’s board had just fired founder Barnie “Phil” Jones Jr. after falling from 120 cafes in 15 states during the early 2000s to about 50. Sales also had declined to $5 million-$6 million from a peak of $67.3 million in 2005.

But rather than trying to compete with coffee giant Starbucks by opening new cafes in every trendy city, Smiga instead pared down the store count to just two — the original store on Park Avenue in Winter Park and one in downtown Orlando’s CityArts Factory — and put a heavier focus on branding and expanding its high-quality products that target socially and environmentally responsible consumers. The idea was to put the new Barnie’s CoffeeKitchen into the movement known as the third wave of coffee, where coffee is looked at as an artisanal culinary specialty from production to brewed cup, rather than a commodity.

The result: The company’s products now are available in grocery stores, convenience stores and specialty stores in 22 states. And 2014 was a breakout year for the new-and-improved Barnie’s, where revenue doubled and earnings were up by $2 million year-over-year.

Today, Barnie’s is in its 35th year and expects to see sales back up to about $20 million this year, up 50-80 percent from 2014.

“We’re breaking out from being that regional coffee shop in town,” Smiga told Orlando Business Journal in an exclusive interview. “We bring the nimbleness of a third wave of coffee company — from production to our talent to our intellectual property — married with a mature company which allows for us to take our business to a national scale.”

No pain, no gain

The first year Smiga was top executive at Barnie’s wasn’t easy. Stores had to shutter, employees were let go and revenue dropped by one-third.

And things appeared bleak when stores started to close because of what had happened in Barnie’s history: The company in 2006 sold off 56 shops mostly in malls, cutting sales nearly in half.

But Smiga said the Barnie’s team hunkered down and focused on building its intellectual property, brand and figuring out the best way to shed its former reputation. Rather than being known as the local Starbucks competitor, the firm wanted a more global reach by making its products the first thing people think of when they hear Barnie’s.

“We stayed in that zone a couple of years, but we were not dormant,” Smiga said. “We were figuring out the puzzle pieces.”

It all paid off, as last year the firm achieved positive cash flow without venture funding.

Much of the growth came from signing deals to sell its packaged products in large retail chains. And last year, Barnie’s relaunched its website to capitalize on the growing e-commerce industry with online sales, which today represents about 10 percent of the company’s sales. It has been known to draw buyers fro m as far away as Germany.

Java culture

Along with bringing an analytical look at the coffee business, Smiga also brought a change to the culture at Barnie’s CoffeeKitchen, according to Senior Vice President of Sales and Marketing Sonya Hardy, who has worked for the company for more than 20 years.

Barnie’s originated as a company that celebrated the purity of international coffees, but got away from that as it ventured into growing its store count.

“Smiga really got us to refocus on the coffee and getting us into the third wave of coffee movement,” Hardy said. “Then we were able to work that into the guest experience.”

Reining in growth

Now that the company is back on a growth trajectory, the difficult part is not falling into that same trap of trying to grow by opening a slew of new stores, Smiga said.

Though Barnie’s is looking at potential new stores in strategic areas in the Southeast, Midwest and Texas, Smiga said the focus still will be on Barnie’s coffee and tea products. The firm will continue to create new Barnie’s-branded packaged products, including a new cold-brewed bottled drink expected to hit the market later this year.

“We’re next going to focus internally on strategy in the small business sense,” he said. “When you’re underwater, you only want to get to the surface. You’re focused on surviving. But once you get to the surface, you can start making executive decisions.”

However, there’s still room to add stores, according to Darren Tristano, executive vice president of food industry research firm Technomic Inc.

Making a mark in the highly competitive coffee house industry won’t be easy, but it is possible, he said. About 27,000 coffee houses in the U.S. generated $23.5 billion in sales last year, mostly dominated by mega-chain Starbucks and then Dunkin’ Donuts, Technomic reported. “Barnie’s focus has been more on retail, and they’ve been doing well with the restaurants or stores they currently have,” Tristano said. “They should have opportunities on the retail side as a smaller brand to continue to expand as profitability rises.”

Jonathan Smiga

Title: president and CEO, Barnie’s CoffeeKitchen

Age: 57

Background: Grew up in the food business in Sarasota and Palm Beach; was co-director of education at the Culinary Institute of America in Hyde Park, N.Y.; recruited by Darden Restaurants Inc. to oversee a turnaround for Olive Garden in the mid-1990s; was general manager of a Robert Mondavi Winery-oriented attraction at the 55-acre Disney’s California Adventure theme park in Disneyland Resort

Education: MBA, New York University; master’s in hotel administration, Cornell University

Projected 2015 revenue: $20 million

Employees: 60

Contact: barniescoffeekitchen.com

Barnie’s CoffeeKitchen cafes are no longer the only place to get a cup of your favorite java or tea. Here’s where else you can find your favorite flavors and brews:

On the web: Order any of Barnie’s products on the company’s website at http://bizj.us/1bp5gd or search for coffee and related products on Amazon.com.

In stores: Barnie’s can be found on the shelves in supermarkets and retail locations, including Publix Super Markets, Winn-Dixie, Sweetbay, H-E-B Grocery, Food Lion, Hannaford Supermarkets and Harveys.

In cafes: Two full-service cafes still exist, 118 S. Park Ave. in Winter Park and 29 S. Orange Ave. in downtown Orlando’s CityArts Factory.

Dr. Phillips Center for the Performing Arts: Two Barnie’s coffee bars can be found in downtown Orlando’s arts center.

New products

Some original products created by Barnie’s CoffeeKitchen:

CupUp: A single-cup brewing machine compatible capsule that holds 30 percent more coffee than other leading brands. Features a patent-pending channel design to create a particular extraction of flavor and aroma. Available in several of Barnie’s most popular flavors.

Brewsticks: Single-serve liquid instant coffee that comes in portable packets. Features 100 percent cold-brewed Arabica coffee soluble in hot, iced or bottled water.

Publix Premium Ice Cream: Publix-branded ice cream in Barnie’s CoffeeKitchen flavors, including Barnie’s Coffee and Santa’s White Christmas

Publix Premium Espresso Chip Frozen Yogurt: Barnie’s Santa’s White Christmas coffee-flavored frozen yogurt with chocolate espresso chips

Publix Premium Indulgent Yogurt: Barnie’s Santa’s White Christmas coffee-flavored yogurt with mocha chips

Sources: Barnie’s CoffeeKitchen, Publix Super Markets Inc.

By the numbers

Stats on Barnie’s CoffeeKitchen:

120: Total U.S. stores at its peak

60: Employees

22: States where you can buy its products in convenience, grocery and specialty stores

4: Barnie’s ice cream flavors you can get at Publix supermarkets

2: Remaining stores under the firm’s new business strategy


Asian Cuisine: The Fastest Growing Food in the World

February 10, 2015

Roberto A. Ferdman Washington Post
http://www.washingtonpost.com/blogs/wonkblog/wp/2015/02/03/the-fastest-growing-food-in-the-world/
Copyright (c) 2015 The Hamilton Spectator.

WASHINGTON — In a matter of only 15 years, Asian cuisine has gone from being a niche food obsession to one of the most popular around the world.imrs

Global sales at Asian fast-food restaurants have grown by nearly 500 per cent since 1999, the fastest growth seen in any fast-food category around the world, according to data from market research firm Euromonitor. Fast food here is defined as any restaurant that gets less than half its sales from sit-down meals.

Asian food has grown by roughly the same amount as the next four fast-food categories – Middle Eastern, Chicken, Pizza, and Latin – combined.

The world’s fast growing appetite for Asian food has a lot to do with both population growth and economic development on the continent. Demand has soared in China, where GDP per capita has increased more than ten fold since 2000, and also in Vietnam, Thailand and Malaysia.

Asian food has also benefited from the emigration of Asians to other parts of the world, where people then fall in love with cuisines they might not have encountered otherwise. The United States, where the number of Asian immigrants has grown immensely, is perhaps the best example. Americans, especially younger ones, are deeply enamoured with Asian food (and hot sauce, for that matter).

“They’re looking for bolder and spicier flavours, and something different,” Darren Tristano, executive vice-president of Technomic, a restaurant-research firm, told QSR Magazine.

Sales at Asian fast-food restaurants have grown by 135 per cent since 1999, well outpacing the growth seen in any other segment.

Fast-food sales only tell part of the story, but they’re arguably one of the best indicators of global food trends.

Asian food in particular is unique in that the vast majority of fast-food restaurants that serve cuisine from the region, whether it’s Chinese, Thai, Vietnamese or Malaysian, aren’t chains but independent, small restaurants. Globally, only about 10 per cent of sales at Asian fast-food restaurants come from chains. The remaining 90 per cent (which amounts to more than $135 billion annually) comes from mom and pop restaurants.

In the United States, the story is a bit different, but no less striking. Roughly half of all sales at Asian fast-food restaurants came from chains in 2014. The viability of that model points to a certain level of demand. U.S. chains like Panda Express, which reached nearly $2 billion in sales last year, have proven that there’s a mass-market interest in Chinese food. Even Chipotle has responded to the demand with Shophouse, a fast-casual Thai noodle restaurant.

Asian food is so coveted that even restaurants that are centred on cuisines that aren’t remotely Asian – such as burgers, fried chicken and sandwiches – are increasingly offering Asian-inspired options. There are at least 550 items sold at fast-food restaurants around the United States with either Asian names or an overt Asian influence, according to market research firm Mintel.


Two high-end eateries at Sundial is not lunacy

February 9, 2015

ruthschris-304xx3264-2176-0-136Eric Snider
http://www.bizjournals.com/tampabay/print-edition/2015/02/06/experts-two-high-end-eateries-at-sundial-is-not.html
© 2015 American City Business Journals, Inc. All rights reserved.

Even those of us most bullish on downtown St. Petersburg are inclined to pause when we look at the upper level of Sundial, with its two big swanky restaurants — Sea Salt and Ruth’s Chris Steak House, totaling 22,000 square feet — with relatively high price points.

What manner of rose-colored madness has infected our once-sleepy town, we wonder?

“We’re taking risk knowing the changes going on down here,” said Louie Spetrini, who came from Los Angeles to take the position of general manager at Sea Salt. “We see it through our own eyes; we don’t have the memory of long-time residents.”

A couple of national restaurant consultants with considerable knowledge of the Bay area dining scene don’t think anyone’s gone wacko, as it turns out. Two large-footprint eateries at Sundial fall in line with several nationwide trends.

That the places stare at each other from across a courtyard is more benefit than detriment. “A lifestyle center like [Sundial] having a couple of higher end restaurant makes it more of a destination for upscale dining,” said Darren Tristano, executive vice president of Technomic, a Chicago-based food industry research firm. “It definitely helps that they’re different products and experiences.”

Orlando-based restaurant consultant Aaron Allen figures that, based on square footage, the two restaurants must do about $12 million combined in annual sales to be viable.

Sea Salt and Ruth’s Chris are not so much fine dining, he says, as “polished casual,” which accommodates larger footprints, customer capacities and check averages. That category, along with lower-priced “fast casual,” are two of the most robust restaurant segments.

The new operators are confident in the continuing growth of the downtown residential and office markets. Plus, “I’ve discovered that there is a huge group of people downtown, retired or financially well off, that go out spending nearly every night,” Spetrini said.

He also recognizes the need to pull from beyond the neighborhood. The GM went table-to-table Tuesday night and happily discovered that “45 percent of the 150 covers we did were from outside St. Pete.”


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

February 6, 2015

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

The New York Times

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


McDonald’s is Everywhere, but Doesn’t Stand for Anything

February 5, 2015

pictureBloomberg News

Copyright © 2015 Canwest News Service

by Susan Berfield and Venessa Wong

http://www.bloomberg.com/news/articles/2015-01-30/what-mcdonald-s-problems-say-about-american-taste

McDonald’s practically invented the concept of fast food. It promised meals that were inexpensive and convenient, that could be eaten on the go and even with one hand while driving. The food wasn’t necessarily healthy, but it didn’t need to be – it appealed to Americans’ appreciation for consistency, and took advantage of a thriving car culture. Now, nearly 70 years after the chain was founded, people everywhere – and Americans in particular – have higher expectations about quality and taste. Our aspirations have evolved. That doesn’t mean Americans don’t want food that’s inexpensive and convenient anymore, it’s that more of them don’t want it from McDonald’s.

This is part of the “customer relevance” problem that led to CEO Don Thompson’s resignation. The Golden Arches has sheer size going for it, with more than 36,000 locations, but there are now too many other choices that offer better quality, prices, or sometimes just a better atmosphere. “When it comes down to it, McDonald’s has strong competitors for each of the foods they offer,” said Darren Tristano, executive vice-president of Technomic, a research firm. We can get better burgers (and fries) at Five Guys, better chicken at Chick-fil-A, better coffee at Starbucks, better shakes at Shake Shack. Chipotle uses higher quality ingredients. Panera makes its own bread. Starbucks has comfortable chairs. If we want to try something new, we can have a premium pretzel burger at Wendy’s or a waffle taco at Taco Bell.”

By broadening beyond their core menu of burgers and fries, McDonald’s “opened themselves up to competitors that challenge the quality,” Tristano said. McDonald’s may be everywhere, but it no longer stands for anything in particular.

“You can’t be all things,” said Bonnie Riggs, a restaurant analyst at NPD.

McDonald’s has tried to persuade us that we can eat real, healthful fare at their locations. But few are buying it. McDonald’s has sold salads for a decade and all the crispy noodles, almond slivers, walnuts, and fruit haven’t helped: salads have never accounted for more than two to three percent of sales. Its chicken McWraps (with cucumbers!) have been a disappointment. A campaign to answer questions about the quality of its food backfired. The former “MythBuster” co-host Grant Imahara was filmed explaining what McDonald’s french fries are made of. The answer: more than a dozen ingredients, one of which is potatoes and one of which is Dimethylpolysiloxane. It would have been better not to know.

Many items on McDonald’s dollar menu don’t cost a dollar anymore; they cost more. But if they don’t taste good, it hardly matters either way. Same goes for its recent, small efforts to offer custom-made burgers, locally relevant food, or somewhat better service – which might all be too scattershot and too late to reel diners back in.

McDonald’s has long had a place in the American imagination. It’s diminished. And even with a new CEO described as a “feisty advocate” for the struggling brand, that’s a hard thing to reclaim.


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