No End to the Bacon Trend

April 7, 2015

Bacon stripsEven with health and wellness trends top-of-mind with consumers, indulgent bacon continues to provide opportunities for innovation and appeal to menus. Innovation can be built on preparation, spice profiles and mixing the salty, smoky and savory flavor of bacon with sweet and hot. There seems to be no end to the bacon trend, and we continue to see innovation across the restaurant landscape.

In the quick-service sector, Little Caesars Bacon-Wrapped Crust Pizza places bacon on the pizza and now around the pizza.

In fast casual, Panda Express improves the already craveable Orange Chicken by adding bacon (with a premium price point) for customers who can’t get enough.

Full-service chain LongHorn Steakhouse adds the Triple Bacon Sirloin to the mix, with its Fire-Grilled Sirloin wrapped with bacon, topped with bacon and finished with bacon tomato Hollandaise.

In the recreation segment, White Sox fans at Cellular Field will be able to order bacon flights that include brown sugar, jalapeno, black pepper and barbecue flavors, or just bacon on a stick, improved this year with a maple glaze.

One thing is clear: The trend in bacon continues to drive innovation and growth, and there’s no end in sight. Fans of the smoky salty protein just can’t get enough.


You’ve Probably Never Heard of America’s New Largest Pizza Chain

March 30, 2015

Hunt Brothers rules rural pizza market from lowly gas stations

Associated Press
Business Around the Region
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ANDERSONVILLE, Tenn. –If you’re looking for pizza along the Andersonville Highway between the Museum of Appalachia and a mountain lake created by the Tennessee Valley Authority, your best bet may be the same place where you buy your bait and fill up your car.

Hunt Brothers Pizza is quietly winning over the rural South by slipping into places big-name pizza chains probably couldn’t survive. It has installed its pizza ovens at so many gas stations and convenience stores that it has more U.S. locations than either Domino’s or Pizza Hut.

Located across from a pasture, the Rightway Foodmart in Andersonville sits a little too far from the interstate to get the type of traffic that could support a free-standing fast-food outlet. But it draws plenty of customers who fish or boat on nearby Norris Lake to its pared-down pizzeria, which requires just a few feet of counter space. And the pizza inspires strong loyalty.
“It beats Pizza Hut and Domino’s,” said 23-year-old Brittany Bunch, who buys Hunt Brothers about once a week during breaks from her job at a water damage company. “It’s just got more flavor. It seems like, with the others, you’re getting cardboard.”

While Hunt Brothers may be unknown in many households, it runs television ads during NASCAR races and cable outdoors shows. For several years, it has sponsored Kevin Harvick, who won the 2014 NASCAR Sprint Cup.

On a recent morning at 10:40 a.m., Rightway owner Roy Bruce started sliding pizzas for the lunch rush into a conveyor-belt oven. Each pie starts out frozen, a crust with sauce and a layer of cheese. Employees can add fresh pepperoni, extra cheese and other toppings. The result after about 5 minutes in the 525-degree oven is a bubbling-hot pizza with browned toppings that tastes comparable to the big delivery chains’ pizzas.

In an hour, Bruce sold that first pizza and another one in two-slice $2.99 “hunks” from a countertop warming display near his cash register. Nearby, sits a display of fishing hooks, bobbers and jars of bait. Pizza customers included a UPS delivery driver, a woman on her way to lunch with her daughter and a guy in camouflage who confessed he was just coming from the liquor store.

In a typical Hunt Brothers arrangement, Bruce said he paid about $10,000 for his oven, freezer, display case and other equipment and now just pays the Nashville-based company for the pizza ingredients. Hunt Brothers doesn’t charge franchise fees or require a contract.

The privately owned company fine-tuned this approach starting in the early 1990s when four brothers who’d worked separately in the restaurant industry joined forces to sell pizzas to convenience stores. Hunt Brothers had 750 locations by 1994, said Keith Solsvig, its vice president for marketing.

“Convenience stores in rural areas were the hub,” Solsvig said in a phone interview. “A lot of people coming and going. And a lot of these smaller towns, they didn’t really have a lot of other restaurants or other places to eat.”

Hunt Brothers now has 7,300 locations in 28 states, with some sites the only dining options for miles. Alabama, Georgia, Tennessee and Texas each have more than 700 locations, Solsvig said. Not all locations are isolated, with Hunt Brothers also found at busy highway interchanges. And it’s moved into some urban areas, such as Memphis.

The convenience store model is different from a free-standing restaurant, and a Hunt Brothers outlet is likely to bring in far less than the more than $700,000 an average Domino’s makes a year, said Darren Tristano, a restaurant industry analyst with Technomic.

Tristano noted that 7-Eleven offers pizza in some of its 7,800 U.S. locations and that Little Caesars has also had success in rural areas.

While Hunt Brothers declined to discuss company finances, Bruce says he sells about 500 pizzas a month, much of it by the hunk. Combined with drinks and other convenience items, he estimates pizza customers spend more than $10,000 each month in his store.

Tristano says the simplicity of the setup has helped the company grow. Bruce agreed.

“In a convenience store, you’re doing the register, you’re doing gas. You’re doing so many different things,” Bruce said. “It’s hard to be able to do pizza from the ground up, making the dough and the whole thing.”

Fred England, a food vendor at a furniture factory about 30 miles east of Andersonville, added a Hunt Brothers to his lunch counter about a year ago to keep his customers from looking elsewhere for their pizza fix.

“The problem I had was all these other places were delivering pizza, so I had to come up with something,” he said while stopping at Rightway to chat with Bruce.

Angela Moles came in to get three hunks of pepperoni pizza and drinks to take to lunch with her daughter. The 35-year-old Andersonville resident said she buys Hunt Brothers about twice a week.

“I love it,” she said. “I usually don’t get other pizza.”


Piling It On

March 30, 2015

OhCal Foods rides acquisition to No. 1 in Subway franchising.

Fine, Howard 1500030901a_r100x80
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Once the earl of sandwich in Southern California, Hardeep Grewal is now the reigning king of Subway restaurant franchising nationwide.

Grewal’s OhCal Foods, which oversees Subway franchises in Los Angeles and Orange counties, has just acquired franchise development rights for all of Virginia; Washington, D.C.; and most of Maryland in a deal that makes him Subway’s biggest franchise developer. By far.

OhCal bought the territory from Feldman Group of McLean, Va., in a sale that closed late last month and nearly doubled the size of the company’s hoagie holdings overnight. The Woodland Hills company now oversees about 2,170 Subway locations, or 8 percent of all Subways in the United States.

Put another way, Grewal’s territory now includes one out of every 12 Subways nationwide. That’s more than double the next biggest franchise developer.

For years, OhCal had been battling Feldman for the distinction of being the largest franchise developer for Subway, which is the world’s largest franchise operation and is owned by Doctor’s Associates Inc. of Milford, Conn. But with Feldman’s 1,000 stores now part of OhCal’s kingdom, Grewal has taken the crown.

“This deal put us over the top,” Grewal said.

But the deal is about much more than bragging rights. OhCal’s revenue also figures to grow substantially. As a franchise development agent, OhCal matches franchise operators with sites and helps existing franchisees with marketing, quality control and lease negotiations. OhCal gets a cut of both franchisee ownership transactions and royalty payments that the franchisees make to brand parent Subway.

Grewal said the nearly 2,200 franchisees now under OhCal’s supervision bring in about $1.3 billion in annual sales. Franchisees pay 8 percent of their sales in royalties to Subway, which comes to $104 million a year from OhCal’s restaurants.

Most of those royalty payments go to Subway corporate, but OhCal gets a slice. Grewal would not say exactly how much his company receives, but said it can be up to one-third of total royalty payments.

That would translate to as much as $35 million a year for OhCal in royalty revenue alone, not to mention money it makes from franchise ownership transactions in its territory.

Unexpected path

Grewal, 59, became a Subway magnate almost by accident. Born in Punjab, India, he attended school in Montreal and moved to Los Angeles with his wife. Patwant, in 1986, when he got a job as controller at a subsidiary of Mitsubishi Corp.

He entered the world of Subway franchising not for himself, but for Patwant. who was looking for something to do.

In 1989, he bought her a Subway franchise. The money was good enough that Grewal eventually left his desk job. He opened some stores and took over other underperforming ones until he amassed a total of 24.

But Grewal saw that the more lucrative end of the sandwich business was in becoming one of Subway’s 200 or so franchise development agents. Development agents have a guaranteed revenue stream without many of the overhead costs that franchisees face.

In 2006, Grewal sold most of his Subway locations and purchased OhCal, which at the time oversaw 446 Subway franchise stores in Los Angeles County. He later purchased the development rights for Orange County and part of the province of Ontario, Canada. Today, OhCal oversees 663 Subway stores in Los Angeles County, 246 in Orange County and 260 in Ontario.

OhCal’s purchase of the franchise development rights from Feldman gives it oversight of an additional 760 Subway stores in Virginia, 82 in Washington and 111 in Maryland. The Maryland territory does not include the Baltimore metro area. Add in about 50 stores in that region that only open for the summer tourist season, and the total is just over 1,000.

Grewal said it was the prospect of getting the franchise development rights to the market around the suburbs of Washington that made this deal so attractive. The region has seen explosive growth in recent years, driven by the spread of federal government jobs and an expanding roster of defense and national security contractors.

“There have been so many new buildings going in at universities, hospitals and government-related facilities,” he said. “That means a lot of new locations coming up.”

From Subway corporate’s perspective, putting this lucrative East Coast market in the hands of a development agent with a proven track record was crucial. Subway has to approve any sales of development territory.

“There are many areas of the business that a development agent for the Subway brand must handle, and Hardeep and the OhCal team excel all around,” said Don Fertman, chief development officer with Subway’s corporate office. “Now with the move into another one of our showcase territories–the D.C., Virginia and Maryland area–we are looking forward to what they will accomplish there in making an already great market even better.”

In the family

Grewal has sent his son, Jesse, to manage the newly acquired territories. A nephew already runs the Canadian operations.

He said he intends to add about 30 stores a year, with many of those coming in the Washington area. As a development agent, OhCal scouts out potential sites for stores, then prepares to offer the sites to the nearest franchisee.

But it’s not only about adding stores. Grewal said his other goal is to improve same-store sales at existing franchises, a job made harder in the last couple of years as the sandwich chain’s highly successful “$5 Footlong” promotion has wound down.

“No question that sales growth has been slowing, both because of the overall economy and because that campaign has ended,” he said.

To counteract this, Grewal said he wants OhCal’s marketing efforts on behalf of its Subway franchisees to focus more on the tastes of millennials, who are now in their 20s.

But OhCal’s job won’t be easy. Because Subway has gotten so big–there are now 27,000 Subways nationwide–the rate of new franchise formation in the United States has naturally slowed, said Darren Tristano, executive vice president of Technomic Inc., a Chicago food industry research firm.

Not only that, but Tristano said Subway’s size makes it increasingly difficult to find high-quality locations for new franchise stores, making Grewal’s strategy of focusing on boosting same-store sales all the more important.

“That’s where a development agent like OhCal can be particularly useful, since they can bring to bear the marketing and branding resources that franchisee owners may not have,” Tristano said.

Another pitfall is that OhCal’s business model itself might not survive over the long term. Subway was a pioneer in using franchise development agents, a practice used by other franchised businesses through the years. But that model has lost favor in the franchise industry in general, with Subway one of the last remaining holdouts.

“The trend in franchising has been toward centralized control, both to maintain quality and to cut out the extra cost of development agents,” said Kevin Burke, managing director at Trinity Capital, a West L.A. investment bank that specializes in restaurant deals.

To his point, there have been occasional reports of Subway cutting back on the numbers of development agents in the United States and on the lengths of their contracts.

But Grewal isn’t very concerned. Not only is he now Subway’s largest franchise developer, he also has many years left on his contracts with the chain–about 13 years for his Southern California territory and about 27 years on the newly acquired areas.

“That’s plenty of time,” he said. “Enough so that my son can take over for me.”


How Jonathan Smiga Crafted Barnie Coffee & Tea’s Turnaround

March 27, 2015

Anjali Fluker
http://upstart.bizjournals.com/entrepreneurs/hot-shots/2015/03/21/how-jonathan-smiga-crafted-barnie-coffee-teas.html?page=allbarnies-centerpiece15-304xx3654-2448-42-0
© 2015 American City Business Journals, Inc. All rights reserved.

J onathan 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, Fla.-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.”

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

Source: Barnie’s CoffeeKitchen


Charcuterie, the Meats of the Moment

March 20, 2015

Eric Snider
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Charcuterie, generally served cold, is hot — and getting hotter.

What was centuries ago a means to preserve the entire pig, and thus waste none of it, has evolved into a de rigueur item on the menus of fine dining establishments.

A bevy of restaurants and wine bars in Tampa Bay feature boards of exotic cured and processed meats. They’re often accompanied by cheeses, vegetables — roasted, grilled, pickled — and artisan breads.

At least three top-tier eateries in Tampa have taken charcuterie to the next level by making their own sausages, bolognas, headcheeses, galantines, pates, terrines, pancettas, et al.

The recently opened Haven, which replaced SideBern’s in South Tampa, not only produces its own meats but has made the charcuterie/cheese slicing station a focal point of its dining room. “We’re selling the heck out of it,” said Executive Chef Chad Johnson.

Ava, the rustic Italian place that opened in November just up Howard Avenue from the Bern’s cluster, doles out 30-40 boards of salumi (the Italian equivalent) on weekend nights, said Executive Chef Joshua Hernandez.

Mise en Place moved a lot of charcuterie in the ’80s, then saw it get eclipsed by other trends. “We probably went through a period where we had like two pates,” said Co-owner Maryann Ferenc. About five years ago, Chef Marty Blitz started producing his own meats.

Now Mise en Place is back to offering a full array, Ferenc said, adding, “It’s been about two years since we haven’t had to push it. People ask about it, are naturally gravitating toward it.”

Here to stay?

The charcuterie movement looks to be a more durable trend than a passing fad, say advocates. It fits in with the relatively new dining custom that skews toward shared plates and communal eating.

“I’ve seen four-tops of [women] on their way to the bars on South Howard order the meat board and destroy it,” Hernandez said.

At first glance, gobbling platters of fat-laden meat would seem to run counter to healthy eating. But charcuterie by nature is consumed in small portions, which earns it marks for moderation. It also gets cred for sustainability — using parts of animals that are often discarded.

Also: “The diner who comes in the door of a restaurant with a charcuterie station gets a bit of theater and a visual cue that says ‘freshness,’ which is in high demand,” said Darren Tristano, executive vice president of Technomic, a Chicago-based food industry research firm.

Shared meat boards are enjoying their moment, he says, because “the basic consumer equation, post-recession, has changed from price first to freshness, artisanal values and craftsmanship.”

Passionate practitioners

Producing charcuterie sparks deep passion among its practitioners. As a part of Ava’s rollout charcuterie program, Hernandez served prosciutto that he purchased. That’s because hams take longest to produce — in the two-year range. Once his own, less time-intensive, meats were ready, he dropped the Italian ham so his salumi would be “100 percent house-made.”

“I’ve got a few hams in my chamber,” Hernandez said. “They should be ready in about another year and a half.”

For now, he’s concocting items like red wine and black pepper salami, cinnamon salami, pancetta (cured pork belly) and coppa (cured pork shoulder).

On a recent Friday, Haven’s chef de cuisine, Courtney Orwig, was butchering Wagyu eye-round beef into loins that would turn into Bresaola after about a nine-day process that involved salting and air-drying. Outside, future duck summer sausage was arrayed in a smoker.

It’s these kinds of culinary efforts and quality ingredients that separate today’s fine-dining charcuterie from cellophane-wrapped summer sausage at the mall and suspect mystery meats in the deli cooler.

Tristano, the food-industry analyst, says the restaurant charcuterie boom probably drafted off of consumer interest at food stores.

“As supermarkets got more sophisticated in their offerings and specialty markets gained a foothold in markets like Tampa Bay, people came in to buy the exotic meats and cheeses and wines,” he said. “I think the supermarket demand fueled the restaurants.”

He expects diners to see more and more charcuterie boards. “The trend is moving into smaller markets with less of a foodie reputation,” he said, “and also beyond just high-end restaurants and into places with lower price points.”


Touting Philly Steaks, Charley’s Posts Record Year

March 17, 2015

New signs, brighter decor help CHARLEY’S post record year, impressive same-store sales growthcharleys

By JD Malone
http://www.dispatch.com/content/stories/business/2015/03/13/touting-philly-steaks-charleys-posts-record-year.html
(c) 2015 Columbus Dispatch. All Rights Reserved.

In the bustling world of mall food courts and retail strip centers, if you’re slinging sandwiches, you need to stand out.

On a recent afternoon at the Mall at Tuttle Crossing, Charley’s Philly Steaks’ new location had the most striking signs and the longest lines.

Last year, the Columbus chain adopted a new look, with red as its dominant color and giant, high-definition photos of baskets of french fries and sweating cups of lemonade floating on a background of gleaming white subway tile.

The crowd at Tuttle was no aberration.

Last year was the best ever for the Columbus-based, 540-unit chain. Same-store sales, a key figure, jumped 10 percent from 2013, said Kris Miotke, vice president of marketing at Charley’s. The company added 40 locations — including at Tuttle and Polaris Fashion Place — and plans to add 40 to 50 this year.

“(The new look) made a big difference,” said franchisee Sally Saad, who has 29 stores across the Midwest. “Before, folks didn’t really understand who we are. Now, they do.”

Part of the rebranding was recognition that Charley’s former tagline, “Grilled Subs,” didn’t grab consumers. So the chain went back to its origins, touting “Philly Steaks” in big capital letters.

The change boosted business in two ways: overall sales and items ordered, with steak edging even with chicken.

“We are selling more steaks than ever,” Saad said. “It is insane what that signage is doing.”

The sandwich segment of the restaurant industry is hot, and Charley’s new look helps capture customers, said Darren Tristano, executive vice president of Technomic in Chicago.

Charley’s can’t beat sandwich-chain giant Subway on price, but Charley’s wins with higher quality items in a market that is rewarding brands for quality, Tristano said.

It doesn’t hurt that the American economy has been humming along, and malls, where most Charley’s stores are located, have picked up as retail rebounds and hiring increases.

“All of the economic indicators are trending positively,” Tristano said. “The low cost of gas is putting a lot of money into the pockets of lower- and middle-income people, and they are spending it. So why not go to the mall?

“Not everyone shops on the Internet.”

The company doesn’t have a geographic focus for expansion or targeted markets, Miotke said. Charley’s is on five continents and opened a pair of stores in Russia last year. One of the company’s biggest markets is U.S. military bases, where there are about 100 restaurants.

One spot Charley’s doesn’t plan to go into, though, is the home of its sandwich: Philadelphia.

Step outside the City of Brotherly Love, and Charley’s is the top Philly-steak brand. Connecting to an iconic regional food helps the brand attract attention in a food-court arena. Differentiation works these days, Tristano said.

“Letting consumers know what to expect is a good idea,” he said.

Jim Novak has been through three store designs with Charley’s at his four locations in Arizona. When he bought his first franchise in 1999, the chain’s look was a white-and-green pattern and it was called a “steakery.”

Then Charley’s rolled out the earth-toned era of grilled subs that is giving way to the splash of red.

Novak said his entire year-over-year sales lift of 18 percent last year occurred after his stores were remodeled in October.

“It is eye-appealing,” he said. “We need to be noticed.”

The change also ends an identity crisis. Novak used to field a lot of questions about the nature of grilled subs. He no longer needs to explain the food.

“We don’t have to convince people that Philly steak is good,” Miotke said.

A cheesesteak needs no introduction.


McDonald’s Moves Toward Antibiotic-Free Chicken: Too Little, Too Late?

March 10, 2015

Nancy Gagliardi
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http://www.forbes.com/sites/nancygagliardi/2015/03/04/mcdonalds-latest-move-toward-antibiotic-free-too-little-too-late/

Taking a cue from rival Chick-fil-A, McDonald’s announced Wednesday morning that it intends to stop buying chickens that have been treated with antibiotics that are also taken by humans, seeking to address consumers’ concerns about resistant “super-bugs” resulting from overuse of the drugs. According to the Centers for Disease Control and Prevention, every year super-bugs cause some 2 million illnesses and 23,000 deaths in the U.S., resulting in an estimated $20 billion in direct health care costs. McDonald’s also announced that its U.S. locations would sell milk products only from cows that are free of artificial growth hormones (specifically rbST), but added that it would continue to allow suppliers to “responsibly use” certain antibiotics (called ionophores) which are not used in humans.

The world’s largest fast food chain will spend the next two years working to phase in its news standards with its suppliers, including Tyson Foods which, according to reports, said it would comply with the company’s requests, adding that its chicken production had reduced it use of antibiotics by 84% since 2011. A company spokesperson also commented that it would phase out using antibiotics as early as in the hatchery phase of production (when chicks are injected while still in their shells).

While he may only (officially) be four days into his new role, CEO Steve Easterbrook (who recently said he viewed himself as the company’s “internal activist,” perhaps hoping to ward off the latest wave of activist investors targeting companies that haven’t performed as well as expected) gets to mark this antibiotic-free move under his watch.

But is this really a signal that it won’t be business as usual for the beleaguered fast food giant or is it too little too late?

“I don’t think it is. It’s what needs to happen to McDonald’s right now,” says Darren Tristano, a restaurant industry analyst at Technomic. “In our industry you can catch up very quickly, but if you don’t, doing nothing isn’t an answer or a solution. This clearly is a sign that McDonald’s is willing to improve.”

While the antibiotic ban is making big news here, McDonald’s is already sourcing drug-free chicken overseas. “There are a number of countries where it doesn’t have antibiotics or hormones in its chicken,” says Tristano, including the U.K., where Easterbrook comes from. “But this is a step for them to come back to the leadership position they used to have in this industry.”

While this most likely is the first of many steps by McDonald’s to reverse its recent slide (in interviews, Easterbrook has said it needs to become nimble to accommodate market needs), a comeback will take time. Says Tristano:

First, you have to qualify coming back. I think for McDonald’s that’s getting back to a level of growth that’s nominally keeping up with inflation. I’d expect to see it back to 2.5% to 3%, which puts it into a position where it isn’t losing share, and anything above that would put it in a position where it’s taking share. Look, it was the leader during the recession, driving a lot of the industry growth. While I wouldn’t expect that to reoccur, I think getting back to zero and building, and no longer losing share is important, and we may be looking at 2016 for that to happen. But if it can get back to even, that certainly helps the company grow again.


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