Balducci’s, King Foods’ Owner Accepts $75 Million Bid for Gourmet Grocery Chains

August 25, 2020

New Jersey-Based Firm Files for Chapter 11 Bankruptcy Protection During Pandemic – by Linda Moss, CoStar News – August 24,2020


How C-Store Operators Are Innovating the Fountain – New products, promos offer dispensed beverages a way forward

August 17, 2020

How C-Store Operators Are Innovating the Fountain – 

CHICAGO —Over the past year, fountain beverages have been hit from two sides.

For one, an ever-expanding array of packaged beverages in convenience stores’ coolers is providing heavy competition. Meanwhile, this spring, the COVID-19 pandemic forced many operators to shut down their self-serve fountains due to local and state health restrictions. According to preliminary NACS State of the Industry figures, sales of cold dispensed beverages fell 6% in 2019.

However, with cold and frozen dispensed beverages offering healthy profit margins, operators are working to breathe new life into the category, to encourage consumption and attract new customers.

Rutter’s, York, Pa., has kept the self-serve fountain beverage stations open throughout the pandemic, with increased cleaning and sanitizing.

“We were able to maintain fountain sales, which is pretty good as it was struggling,” said Chad White, foodservice category manager for Rutter’s. “The core flavors continue to drive fountain business, but if we can see a 1% or 2% lift from those ancillary flavors, that’s what we’re targeting.”

Almost two years ago, Rutter’s changed up its fountain offerings. It kept the core Pepsi and Coca-Cola products but also added craft drinks from Houston-based Sunny Sky Products’ Pure line. These small-batch beverages, which contain no high fructose corn syrup, include homestyle lemonade, cherry limeade, ginger beer, and cucumber-lime and blood orange options. Rutter’s also offers its private-label tea and Rutter’s Birch beer at the fountain, along with cherry, lime, lemon and vanilla flavor shots.

Much of the momentum on the fountain is coming from noncarbonated beverages.

“The fastest growth is in noncarbonated: juices, teas, cold-brew coffee, nutraceuticals,” said Neil Kelley, vice president of sales for Houston-based Sunny Sky. Sparkling water is also doing well, he points out. “Consumers are looking for things with a health halo.”

Craft drinks are doing well in general, Kelley said. Sunny Sky has its own line, Pure Craft Beverages.

“‘Craft’ is a loose term and we try to define it as products made with real sugar and natural ingredients, natural preservatives,” he said. This trend is buoyed by unusual flavors such as watermelon, hibiscus, cucumber-mint and simple lemonade made with real ingredients. With these products, Kelley said, “you’re telling your consumer this is fresh and clean,” and it helps elevate the store’s offerings overall.

Convenience stores may also want to consider adding healthier options to their fountain dispensers. According to the 2019 Q2 C-Store Consumer MarketBrief from CSP sister research firm Technomic, 59% of consumers said they’d like to see more healthy beverages.

“Today’s consumers increasingly are seeking variety and healthier refreshment,” said Gary Hemphill, managing director of research, Beverage Marketing Corp., New York. “And many are adventure seekers, looking for the next hot and interesting product to try out.”

Rotten Robbie stores in Northern California discontinued its fountain beverage program during the coronavirus pandemic and will likely reopen at the end of California’s shelter-in-place order, which as of press time was slated to last through May.“It really would have been such a big undertaking to dedicate the manpower to operate those machines and follow the guidelines,” said Daniel Moran, category manager for the stores, which are owned by Robinson Oil Corp., Santa Clara, Calif.

“The core flavors continue to drive fountain business, but if we can see a 1% or 2% lift from those ancillary flavors, that’s what we’re targeting.”

Fountain is a category the stores have struggled with, Moran admits, although “there’s always going to be a customer that wants the freshness of that fountain beverage.” The difficulty is the innovation in packaged beverages, which is hard to compete with in fountain, even with a 12-head machine, he said. “You can only create so much with 12 flavors.”

For Rotten Robbie, the best sellers are the standard drinks such as Coke and Pepsi, but it has also had some success with Mexican beverages from PepsiCo’s El Nino line, including horchata and hibiscus-flavored options, Moran said: “We try to put variety in there to see what resonates.”

Other c-store retailers have been busy innovating with better-for-you dispensed beverages. Enmarket, Savannah, Ga., offers 32 flavors at its fountain, including fresh-brewed tea and zero-calorie Sobe Lifewater, as well as chewable ice.

Global Partners, Waltham, Mass., launched its Alltown Fresh concept in January 2019 with a focus on healthy products, including better-for-you and functional offers at the fountain. Dispensed beverages include organic carbonated products and flavors such as lemongrass soda, raspberry seltzer and cardamom-mandarin.

At Rutter’s, the strongest sales growth before the coronavirus hit came from frozen carbonated dispensed beverages. All stores have four to six flavors available, with Coke a big driver, along with cherry and blue raspberry and Mountain Dew. “We rotate in LTOs in the six-barrel stores, and they bring some excitement,” White said. According to NACS figures, c-stores sales of frozen dispensed beverages rose more than 14% in 2019.

Frozen dispensed beverages “are probably the one thing customers are asking for more of,” Kelley said. And while there are noncarbonated and carbonated versions, the latter are winning out. Plus, the flavors are endless, allowing guests to customize. These are great for retailers, too, he points out, with 85% margins not uncommon. And while sales peak between Memorial Day and Labor Day, these products sell well year-round.

Some Rotten Robbie stores have a four-head ICEE machine; Moran plans to test double that.

Rotten Robbie stores offer standard flavors ,but Moran said ICEE “does a great job with rolling out LTO flavors,” which keeps excitement up. “ICEE comes out with about four different LTOs per year, and we always run them.”

Offering fountain beverages “is an expensive investment,” said Frank White, owner of White Knight Marketing, a retail marketing process partner in West Des Moines, Iowa, and former foodservice director for Yesway. But, “when managed properly and priced properly, fountain beverages can get you between a 50% and 70% margin. And every time someone comes in and buys a fountain beverage, they also buy other things, so you’re looking at a $3 to $7 ring.”

Offering frozen carbonated dispensed beverages is more expensive, with often more maintenance and sometimes significant downtime on machines, White said. However, the category brings some theater to the store, plus customization capabilities with flavor shots. Frozen carbonated beverages command a higher price point than cold dispensed options, he said, with prices around $1.49 to $2.

“There’s always going to be a customer that wants the freshness of that fountain beverage.”

Promotions help boost sales of fountain beverages and frozen dispensed drinks. At Rutter’s, White runs Fountain Fridays, with 2 cents off any fountain drink or slushy. He gets the word out at the pumps, through digital signage and social media.

After years of running promos on fountain beverages, Moran of Rotten Robbie has stopped. “We’d see a small bump and we’d do really aggressive pricing and full signage in the forecourt, but that bump wouldn’t continue after the promo,” he said.

Darren Tristano, CEO of Foodservice Results, Chicago, suggests retailers consider more traditional promos such as receipt couponing and suggestive selling at the register, and selling cups near the register “for consumers who may spontaneously decide to purchase a beverage.”

Pairing foodservice items with a fountain beverage has been successful for Rutter’s, White said, and he’s looking to offer more of these promotions.

“Bundling fountain drinks with foodservice items and/or snacks has been a proven way to increase sales,” said Steven Montgomery, president, b2b Solutions, Lake Forest, Ill. “One of the errors we see is retailers often only post signage regarding the bundle in the non-fountain area. Given that the thirst occasion is why many customers come into the store, there should also be signage in the fountain area.

“Every store with foodservice should always have a bundle with fountain,” he continues. “Go outside the box on bundling. Fountain and pastry or breakfast items are more effective than coffee and food bundles.”

And once coronavirus-related restrictions lift, consultant White suggests offering LTO refillable cups. Customers buy the cup and get a refill price every time they use it, or they get a free drink every Friday. “This way the customer is part of a special club the retailer has created,” he said.

Retailers can also draw fuel customers inside the store for a fountain purchase. White points to Family Express, Valparaiso, Ind., which has advertised that its fountain beverages are served at 32 degrees. Other ideas are highlighting the brand with callouts on pure filtered water, crushed or cubed ice, he said. He also points to Circle K, which years ago began offering 69-cent fountain beverages. “Bring in the customer with a hot price on cold drinks,” he said.

What does the dispensed beverage category look like post-pandemic? White of Rutter’s thinks “it will evolve back.” His chain always has a store employee dedicated to helping customers with coffee and fountain beverages but that person, he said, is now “ultra-focused.”

Montgomery of b2b Consulting is not so sure. “Consumers will be cautious about fountain drinks,” he said, though using dispensers for cups and lids can circumvent this. “Retailers who develop a specific fountain drink safety strategy with both employee handling and how customers interact with the equipment can create a winning position and obtain increased loyalty.”

Tristano of Foodservice Results said, “Any messaging that can be placed near the fountain that communicates the intent of the retailer to maintain a safe and sanitary environment would be beneficial and welcomed by consumers.”


Industry experts at LJR Hospitality Ventures, ConStrata Consulting, and FoodserviceResults announced the release of IMPACT! (Immediate, Measurement, Pivot, Actionable, Competitive, Tactics)

June 29, 2020

June 25, 2020 – Industry experts at LJR Hospitality Ventures, ConStrata Consulting, and FoodserviceResults announced the release of IMPACT! (Immediate, Measurement, Pivot, Actionable, Competitive, Tactics) a program developed by the partnership to support multi-unit foodservice operators in assessing their current operations, technology, and positioning as they
emerge from the impact of the COVID-19 pandemic with new challenges and opportunities.

Combining their unique experience and expertise in operations, technology, and data analytics, the joint IMPACT! Offering was the brainchild of industry thought leaders Larry Reinstein, CEO of LJR Hospitality Ventures, Robert Grimes, Founder of ConStrata, and Darren Tristano, CEO of FoodServiceResults.
IMPACT! provides a “holistic” assessment of existing key business processes, technology, consumer connections, digital footprint, and competitive metrics to provide recommendations that are immediately actionable while considering the reality of limited funds, time, and resources available. IMPACT! focuses on key areas that can immediately impact an operator’s ability to survive, take advantage of new opportunities and thrive in the “new normal.” Although uncertainty lies ahead, an operator can quickly implement the recommendations IMPACT! in 100-days.

IMPACT! begins with research followed by executive and departmental interviews, including a review of operations processes and technologies used to connect with the guest, provide service, and offer owners, operators and management key information needed for effective decision-making. This view, when coupled with data on the competitive landscape and market forecasts, provides a unique, clear, and customized view for the operator to act upon, leveraging what they already have in place and have invested in.

“It’s exciting to be working with ConStrata and LJR Hospitality Ventures to provide high-level advisory services through IMPACT! to operators who have be fundamentally disrupted with the current Covid-19 pandemic,” says Darren Tristano of FoodserviceResults. “The strength and expertise of the team at ConStrata in Technology, coupled with Larry Reinstein of LJR Hospitality Ventures’ keen view of operations allows us to provide sound strategic support to any size operator in need of a second set of eyes in a time when scaling back can dampen the customer experience.”
Recognizing the immediate needs of operators, IMPACT! is designed for quick delivery and is provided at a fixed fee. Add-on services are offered for multi-concept operators and those with Franchisees.
For more information regarding IMPACT!: info@forimpact.team, http://www.forimpact.team, or call +1-866-604-7833.

About LJR Hospitality Ventures: LJR Hospitality Ventures works together with restaurant owners and operators to identify opportunities and execute solutions to create profitable business strategies. We partner with our clients to provide an in-depth look at their business to achieve the level of success they envision for their restaurants. For more information contact: Larry Reinstein – ljreinstein@gmail.com, http://www.ljrhospitalityventures.com or call +1-704-661-0006.

 
About ConStrata Consulting: ConStrata’s experienced technology professionals and industry veterans help businesses navigate the challenges of technology investment and chart a winning course to greater efficiency and profitability. For more information contact: Toby Malbec – toby.malbec@constratatech.com, http://www.constratatech.com or call +1 800-287-1811.

About FoodserviceResults: FoodserviceResults is a market research and consultancy based in the Chicago Market. Led by former Technomic President Darren Tristano, the firm relies on deep knowledge and experience in the foodservice industry to develop solutions for restaurant operators, foodservice suppliers, distributors, and other allied organizations. For more information contact: Darren Tristano – darren@darrentristano.com, http://www.foodserviceresults.com or call +1 708-228-1427.

 


The Keys to Guest-Pleasing Fusion Cuisine

June 29, 2020

WHEN IT COMES TO FUSION CUISINE, THERE ARE NO RULES PER SE, BUT AUTHENTICITY AND FAMILIAR FORMATS CAN GO A LONG WAY IN WINNING GUESTS. APRIL 2020 AMANDA BALTAZAR – Link to FSR Story

In 2008 then-unknown chef Roy Choi opened his food truck, Kogi Korean BBQ, in Los Angeles. Serving Korean-Mexican fusion food such as kimchi quesadillas, the concept ushered in a new era of cross-cultural mashups. Choi’s creativity gave chefs of all backgrounds license to push beyond tradition. His work also raised the question: If you can mix Korean food with Mexican, what can’t you mix?

Even a dozen years ago, fusion food was nothing new; Choi and other enterprising chefs simply brought it to prominence. For as long as people from different cultures have been fraternizing, there’s been a melding of flavors, techniques, and dishes. Now such combinations are ubiquitous.

“This is a real marker of a moment in time,” says Kara Nielsen, a food trend expert and consultant based in the Bay Area. “Fusion is how any cuisine functions. People immigrate and bring new ingredients; this is how cuisines evolved. This will flit through and a few things could stick. We’ll just have to wait and see what they are.”

Fusion restaurants can be very enticing to Americans, and it’s important for operators to put a more contemporary spin on items, says Darren Tristano, CEO of Chicago-based consultancy Foodservice Results. “There are so many flavors that are unexplored by American consumers so researching, testing, and offering new ingredients can be very exciting and create continued demand,” he says.

Three years ago Michael Ryan opened Flip Sigi, a Filipino taqueria in New York City. In that time, the concept has become so popular that Ryan is now looking to expand.

The food, he says, is not authentic Filipino but instead focuses on Filipino flavors such as calamansi (a citrus hybrid) and tamarind. The restaurant plays with these flavors but puts them in a format people can understand, such as tacos and rice bowls, because, as Ryan points out, many consumers are intimidated by Filipino cuisine.

Initially Ryan did try more authentic dishes, but it wasn’t a huge success. Staples like sisig, which is made with pig head, “freaked people out,” he says. To that end, he’s unlikely to offer other items, such as balut (fertilized duck egg, thus featuring a duck embryo).

“You have to listen to your guests,” he says. “We’re not looking to cater to the diehard Filipinos; we’re trying to be a little more mainstream.”

To that point, the crowd at Flip Sigi tends to be women aged 18–34. He says those patrons are foodies and often Instagram savants. “They are the ones looking for something interesting, and they’re aware of what’s going on,” he says.

 

Across the country, Gursewak Gill opened the first Curry Pizza House in Fremont, California, in 2012. What started as a single fast casual has now grown to nine locations, including one full-service outpost in downtown Palo Alto.

Gill, who grew up in India and moved to the U.S. in his teens, wanted to combine two cuisines he loved. “The idea was that all cultures can come in, and it’s a blend,” says Neelu Gill, director of operations and Gursewak’s wife.

Curry Pizza House offers traditional pizzas, but by far the most popular, accounting for about nine out of 10 orders, are the craft curry pizzas such as the Curry Chicken Masala and the Palak Paneer.

The traditional pizzas do well with kids and diners who prefer to play it safe, but Gill continues to push the envelope by offering dishes patrons may have never before encountered.

Wes Avila opened his food truck, Guerrilla Tacos, in Los Angeles in 2012. A classically trained chef born to a Mexican father and raised in L.A., he offered unorthodox fusion dishes such as foie gras tacos and sujuk sausage (a Middle Eastern food) with fried egg, arbol chile salsa, and sumac onions.

Avila now operates Guerrilla Tacos as a fast casual, but he has also transitioned part of the business to full-service, in the form of omakase dinners. Every Thursday, Friday, and Saturday, Guerrilla Tacos transforms into a fine-dining experience. For $95, guests are treated to a seven-course meal featuring ever-changing, fusion dishes.

At these dinners, Avila has free rein to flex his culinary muscles. His guiding post in creating new dishes? “To be authentic to me, to represent Los Angeles, and to interpret Mexican food through the eyes of an Angeleno,” he says. “It’s more important for me to enjoy making the food than try to replicate what someone else is doing.”

 

Shalom Japan in Brooklyn, New York, is a fusion of Jewish and Japanese food, reflecting the respective heritage of the husband-wife owners. Sawako Okochi trained at the New York Restaurant School before working as sous chef at Anita Lo and then head chef at The Good Fork. Her husband, Aaron Israel, previously worked under some of New York City’s most acclaimed chefs, including Tony Liu at August and Andrew Carmellini at A Voce.

Robert Sniffin worked with the couple as a server just after they opened in fall 2013 and recently returned to the restaurant as general manager.

“It’s important to know the rules and when to break them,” he says of Shalom Japan’s culinary mashups. “You can always find different ways to do things.”

Still, the menu isn’t exclusively fusion. Some dishes are simply Japanese (scallops with maitake mushrooms and miso butter) while others, like the Jew Egg (with hummus, spinach, pine nuts, currants, and feta) are more reflective of Jewish cuisine.

“I think when you get locked into fusion as an idea, you think it must be 50-50, but you can lose the essence of what you’re trying to do with your food if you do,” Sniffin says, adding that the couple has also experimented along the way. “We’ve done fluke dishes—steak dishes, schnitzel, duck—but we’ve streamlined the menu to make sure we’re providing the most ‘us’ dishes.”

A balancing act

Guests who gravitate toward fusion dishes tend to be curious and eager to learn more about different foods and cultures. With a captive audience, chefs have the enviable opportunity to bring old ingredients and cooking traditions together in new ways. In a sense, they are culinary ambassadors who welcome guests into new territory without overwhelming them.

“Diners still need education and bridges to new experiences, so chefs create those bridges,” Nielsen says. “The dishes often end up not as authentic as those intended for native diners.”

Still, there are limits to the combinations and applications of fusion. In some cases, the seasoning of one may clash with the spices of another. Other times, the cooking techniques are too dissimilar to reconcile. “There are fundamentals to how you build taste and flavor so one thing doesn’t drown out the other,” Nielsen says. “You can’t just slap together so many things that don’t taste good.”

That said, if something has proved too difficult to mesh in the past, it doesn’t mean an inventive chef might not finally crack the code. At the end of the day, the final product—and guest reaction—will determine which mashups work. Beyond that, anything goes.

“You can mix any cuisine types as long as the outcome is appealing,” Tristano says.


Future of Restaurants – Corona Time – June 10th Air Date

June 16, 2020

6/10/2020

How many restaurants will close for good? Thirty year restaurant industry analyst Darren Tristano with FoodserviceResults joins show host/broker Michael Bull to discuss the state of the restaurant industry.

Listen to the Michael bull CCIM and Foodservice Results CEO and Industry Expert Darren Tristano discuss the ramifications of our industry, real estate and the Pandemic.

Future of Restaurants – Corona Time


Devastated US Restaurants Look to Landlords for Rescue

June 16, 2020

Food and Beverage Industry Seeks New Rent Structures, Partnerships to Survive COVID-19

By Linda Moss
CoStar News

June 12, 2020 | 4:17 P.M.

Link to Original Story

Some U.S. restaurants are going to great lengths to try to protect patrons during the pandemic. In Ohio, tables are partitioned by clear vinyl shower curtains in an attempt to create a safer haven for diners. In Ocean City, Maryland, a restaurant rolled out tables that look like large inner tubes so customers maintain appropriate 6-foot social distancing. And an upscale eatery in Virginia is using mannequins to fill empty seats as it keeps diners apart.

(The first of two parts examining the future of restaurants in the commercial real estate industry.)

While these initiatives may prompt chuckles, they also reflect serious business issues that run to heart of the survival of the food-and-beverage industry, a key component of the U.S. economy. Restaurants are trying to lure customers back in a public health environment in which officials say crowds risk increasing exposure to a potentially fatal illness like the coronavirus. And it’s an open question how long it will take for diners to feel comfortable enough to return.

Until patrons return, restaurant owners and landlords must figure out how to make ends meet. Some are considering lease changes making them joint-venture partners, or allowing payments to change with income or just not opening until they can reasonably expect customers will come.

Few are immune. National chains face challenges and independent restaurants — from high-end eateries to mom-and-pop operations — are ill equipped to survive monthslong shutdowns and, when they reopen, operating at less than 100% capacity. Many have already, or will, close permanently.

“This is the equivalent of the asteroid hitting Planet Restaurant,” said Phil Colicchio, Cushman & Wakefield executive managing director and co-lead of its food, beverage and entertainment consulting practice.

The numbers show the devastation to the industry. More than 8 million restaurant workers were laid off or furloughed, and the industry lost roughly $80 billion in revenue in March and April, according to the National Restaurant Association. Restaurants fail because of lack of cash flow, and COVID-19-related shutdowns have virtually stripped them of that, said Jeff McNeal, president of the hospitality consulting firm Fessel International.

For the commercial real estate industry, at the very least, permanent restaurant closings will leave landlords with vacant space that experts said won’t be easy to fill, at least immediately. The effects could be worse because, pre-pandemic, developers often cited restaurants as the must-have amenity, the secret sauce, to add vibrancy and appeal to shopping malls, office and apartment properties, and mixed-use projects that tout their “live-work-play” environments.

In the coming months and perhaps years, until there is a COVID-19 vaccine or other solution, those restaurants may not be able to survive paying fixed rents under traditional long-term leases. Some restaurateurs are looking for their rents to be adjusted as they are financially squeezed, struggling because they must operate dining rooms at smaller capacities to observe social distancing and invest in costly COVID-19-related safety measures such as face masks, design changes, temperature checking and more frequent cleaning to keep employees and customers as safe as they can be.

Restaurants have devised creative ways to help their customers feel safer. Kim Shapiro, the owner of the Twisted Citrus cafe in North Canton, Ohio, uses clear plastic shower curtains hung from rolling racks as protective barriers for her seated customers. Revolution Event Design in Baltimore created the special bumper tables that debuted at the restaurant Fish Tales in Maryland, and the firm will customize them for other eateries to use. And The Inn at Little Washington, an upscale restaurant in Washington, Virginia, has seated mannequins at some of its table so its dining room looks occupied, even with social distancing in place.

Even when restaurants across the nation can reopen, restaurateurs don’t know how quickly sales will return to prior levels. When Georgia first allowed its restaurants to reopen their dining rooms in April by allowing only 10 customers per 500 square feet, large numbers of patrons weren’t flowing in, according to Anita Summers, an architect and principal in the Atlanta office of the Johnson Studio at Cooper Carry, a design and architectural firm specializing in hospitality and restaurants. A coalition of local restaurateurs even balked at the Peach State’s early timetable for reopening eateries.

When the Chipotle Mexican Grill chain had several outbreaks of food-related illnesses that sickened more than 1,000 customers in several states, it took time for people to return, said Darren Tristano, CEO of consulting firm FoodserviceResults. He predicted a similar scenario will play out because of the ongoing pandemic.

“Consumers are very forgiving, but it took them [Chipotle] 18 months before things started to get back on track,” he said. “This is affecting all of us, and those that are older, those who are affluent, those who have underlying health risks are probably going to wait three to six more months.” And, he added, “I think they’ll be a lot of consumers that just hold out for the next 12 months because they fear for losing their life.”

Revenue Sharing Versus Rent

For restaurants, options such as short-term leases and paying landlords based on revenue sharing instead of having to fork over a set monthly rent could be the lifeline they need to weather the current coronavirus pandemic, and a potential second wave of infections. In some cases, the typical landlord-tenant relationship will need to evolve into a partnership, a joint venture with developers willing to invest in tenant improvements to give eateries a lift, according to Colicchio, an attorney as well as consultant who has advised more than 50 James Beard Award-winning chefs and restaurateurs.

“From our experience and data, and seeing it working already prior to the pandemic, it’s going to be the commercial real estate industry that is going to be able to dictate how quickly and how sustainably the restaurant industry will come back,” said Colicchio.

Restaurants in the United States occupy 1.4 billion square feet, according to an estimate from CoStar. The National Restaurant Association in a letter told Congress in April that 15% of the nation’s restaurants had closed permanently or were at risk of closing shortly. Based on CoStar’s data, that would equate to more than 200 million square feet of empty retail space. Other forecasters have far more dire predictions. In April, a report by UBS said as many as 20% of U.S. restaurants may end up permanently shuttered.

About 7 of 10 U.S.restaurants are independent, not affiliated with a franchise brand, and as such are the most vulnerable, according to food and beverage industry data.

“You will see a lot of independent full-service restaurants closing permanently,” Tristano said. He pegged overall permanent U.S. restaurant closings this year between 12% and 13%.

But even big chains are at risk. The likelihood of publicly traded restaurants defaulting on their debt has jumped since the start of the year because of the pandemic, according to a recent report by S&P Global Market Intelligence. As of mid-May, the chance of default was 24%, compared with 5% in the early months of 2020, S&P said. That calculation is based on the odds that a company will default on its debt within the next year based on fluctuations in its stock price and other risks based on its country and industry.

Perhaps one of the biggest reality checks from the COVID-19 crisis has been that the public, and some business sectors, never realized how vulnerable the restaurant sector was, some industry executives said. Independent restaurateurs often get their financing from friends and family, and have limited or nonexistent cash reserves, leading to the devastation and massive layoffs the food and beverage sector has seen.

“I think landlords have been very forgiving [to restaurants] in the short term,” Summers said. “And in the long term, I kind of think this has been eye-opening for landlords and everybody else to see” the financial fragility of the restaurant industry.

Short-Term Vacancies

The reopening rules make up a patchwork, varying state to state, with the National Restaurant Association and the Centers for Disease Control and Prevention also issuing their own health-safety guidelines for eateries. In some cases, restaurants were initially allowed to reopen dine-in business at only 25% capacity, while others have been allowed to reopen at 50%.

Under state restrictions, restaurants can increase that capacity as time goes on, but the reality is that they must be able to hang on until there is some semblance of normalcy. And that math just doesn’t work financially for some restaurateurs, who have opted not to reopen yet as a result.

“That is the biggest concern I am hearing,” Summers said. “We have gotten to a state where before all this, pre-COVID, the profit margins were just razor thin already — food costs and staff costing more and more. Most restaurants are trying to provide more benefits for their staff, which never used to happen, back in the day, so that’s costing more. And then leases are more. They’re just out of touch with what a restaurant can afford and so, especially a fine-dining place with higher food costs, it’s tough. It was difficult pre-COVID-19 to make a profit. Now, you’ve got 50% less table or even less than that.”

Danny Meyers, CEO of Union Square Hospitality Group in New York City, has said he won’t reopen his fine-dining eateries while capacity limits are still in place and there is no COVID-19 vaccine. The company, which laid off more than 2,000 employees in March, owns eateries such as the Gramercy Cafe, Union Square Cafe, The Modern and Marta.

Tristano said such decisions make sense because “most [fine-dining] restaurants need to fill 80% of their tables in peak time to stay afloat. With these restrictions, it’s going to be hard.”

Landlords will end up with vacancies when restaurants can’t hold out, and it may be hard to find tenants for that space initially, several executives said.

“What this does mean is that we’re going to have more vacant restaurants, and it will be in the short term more difficult to back fill them for a number of reasons,” said James Cook, real estate firm JLL’s director of retail research for the Americas.

“The restaurateurs out there that are closing, they’ll eventually be able to [do] whatever it is — work through bankruptcy — and then start a new restaurant eventually,” he said. “But you have to find new backers. It doesn’t happen overnight. Long term, I think it’s an opportunity for a lot reinvention for these small restaurants. But in the short term, it’s going to be tough for landlords to backfill these spaces because tenant improvements are really expensive for restaurants.”

The obvious candidates to lease that space will be other restaurants, tenants that can use the features and equipment already in place, according to Cook. Restaurant space has features such as pipes, grease traps and kitchens that make it harder for a landlord to shift it to a different type of use, Tristano said. But the battered restaurant industry is in no position for a quick rebound where it can swiftly snap up and lease vacant space.

Partnering Up

In order for restaurants to survive despite the challenges of the COVID-19 outbreak and its aftermath, they are going to need an assist from landlords, said Cook and others. And it makes sense, because in some cases restaurants almost serve as loss leaders for developers, an attraction for other tenants and a way to build foot traffic at a property, according to Cook.

“Restaurants are a key component of mixed-use development, ground floor of multifamily and office,” he said. “A lot of developers look at them as amenities, not as money makers, which is actually good news if you own a restaurant in one of those locations, because the landlord is much more likely to cut you a break because they’re making their money on the apartment rents. They’re making their money on the office rents, depending on what kind of projects we’re talking about. So they get rent premiums [on those rents] because they have the cool restaurants in the lobby.”

Several large real estate investment trusts are giving strapped restaurant tenants one to three months of rent forgiveness, according to McNeal.

Savvy developers have already been partnering with their restaurants, at locations such as Hudson Yards in New York City, the much-celebrated mixed-use project from Related Cos. on Manhattan’s West Side, according to Colicchio.

“The restaurateur and the real estate developer have to get much more comfortable with the joint-venture model,” Colicchio said. “Those restaurants at Hudson Yards in New York are effectively joint ventures between the restaurateurs and the developer.”

In partnership scenarios, landlords can build out a restaurant space for its occupant, or perhaps fund the restaurateur’s working capital costs, according to Colicchio. Landlords can then craft a deal in which they will be repaid for their investment, perhaps taking a percent of revenue.

Related didn’t respond to several emails seeking comment. But CEO Jeff Blau recently told CNBC that Hudson Yards has startup companies and restaurants that are going to have a difficult time paying their rent.

The firm will work with them on a payment plan or “whatever needs to get done,” Blau told CNBC, “and hopefully our lenders and partners will work with us so we can accommodate them.”

The Wall Street Journal reported that some retail tenants at Hudson Yards pay Related a percentage of their sales, not a fixed monthly rent.

Rents Eat Into Sales

In the pre-coronavirus environment, fixed-rent costs didn’t typically cause a restaurant to fail, according to Colicchio.

“It is rarely rent that puts a restaurant in its grave, usually the murder weapon of a restaurant failure is poor labor management, poor food-cost management and failure to achieve top-line revenue,” Colicchio said.

But that was before COVID-19. While rents traditionally were some 8% of a restaurant’s sales, now rent has ballooned to as much as 20% of sales with eateries operating at a fraction of their usual capacity, according to McNeal.

Colicchio sai, in general, he doesn’t believe restaurants should have fixed-rent leases like other kinds of retailers.

“The idea of treating a restaurant tenant the same way you would treat a sneaker store makes no sense,” he said. “It never made sense to me, but that’s me. The expense of operating a restaurant and the business of operating a restaurant, even though it might be in the same square footage as the sneaker store, is a completely different thing. A sneaker store has a moderate labor force, a fixed cost of goods and is usually a business that has cash reserves. Yet sometimes getting a person to the sneaker store requires having a restaurant in your space, because it’s the amenity” that consumers like.

Going forward, Colicchio said, there may be a silver lining to the coronavirus outbreak.

“My deepest hope is that a more efficient, more effective profitable restaurant model can come out of this,” he said. “My instinct says that it will. My firm belief, as opposed to a hope, is it will be the commercial real estate industry that brings that resurrection.”


Restaurants Could Adapt to Coronavirus Era as Food Halls, Parisian Parlors

June 16, 2020

Large Common Spaces Give Patrons Sense of Safety Amid Outbreak

Architect Ed Eimer is a food hall advocate who maintains that the model could be an important recovery vehicle for the U.S. restaurant industry, hard hit by the coronavirus pandemic. And he’s not alone.

(The second of two parts examining the future of restaurants in commercial real estate. Read the first part here: Devastated US Restaurants Look to Landlords for Rescue.)

Eimer is president of Eimer Design, a Philadelphia-based architectural firm. He has been involved in some capacity in the design of 40 food halls and said some real estate projects are now changing course. His work includes the Inner Rail Food Hall in Omaha, Nebraska, as well as an outdoor mall project in Miami called The Oasis.

“We actively are having developers who were developing projects as full-service restaurants pivoting on that and moving to a collective environment because it gives them a lot more protection,” said Eimer. “A well-designed food hall has so much more flexibility than full-service or fast-casual restaurants and offer a much higher level of safe socialization.”

It can seem counterintuitive that food halls, designed to lure big crowds in an indoor space, might be an answer, but Eimer and other architects argue that the large spaces provide flexibility for social distancing in the pandemic. In addition to working on food halls, Eimer and other architects have been called on to incorporate health and safety features in existing or planned eateries. The challenge is to seamlessly install those new elements so they are not intrusive but still make diners and restaurant employees feel safe, according to design experts.

The number of U.S. food halls was dramatically rising before COVID-19 struck this year. Cushman & Wakefield released a report in May that identified 223 open and operating food hall projects, pre-coronavirus, with over 165 announced as in development. Some critics have claimed the category was approaching saturation. But now Cushman & Wakefield sees food halls as a more important, sustainable and permanent part of the dining scene.

“Large swaths of the independent restaurant community are going to need a rebuilding mechanism; one with lower inherent risks for all, a better operational model that allows for higher profit margins, and low barrier-to-entry,” the report said. “Food halls will be where the industry rebuilds first.”

While food halls often seemed crowded before the pandemic, limiting the number of people can mean added space. Amid the pandemic, seating in food halls can be easily switched around. In the projects he’s working on, Eimer is including more seats per vendor, so those extra chairs can act as place holders to separate patrons from other diners. The large common dining areas that are the hallmark of food halls can give patrons a sense of being in a safe yet social setting, with less risk of contracting the coronavirus, according to Eimer.

“We have to remember that food halls are the purveyors of lifestyle and community,” he said. “That’s why they’re popular. We can go back and socialize again, but we want to do it in a safer environment. The socialization environment of a food hall will become even more popular.”

Compared to a full-service restaurant, a food hall is “a larger space, so there’s the ability to spread out and have 100 people in a 10,000-square-foot space instead of 100 people in a 3,500-square-foot space,” Eimer said.

Of course, Eimer has a vested interest in promoting food halls as a solution for reopening in the wake of the arrival of the coronavirus: His firm would benefit. And he has worked on projects with Phil Colicchio, a Cushman & Wakefield executive managing director who co-authored the food hall report.

Even so, they say the financial model for food halls is obvious to others in the industry who aren’t food hall builders because the model helps independent restaurateurs in terms of capital expenditures and other costs, according to Colicchio.

“If a developer will build out a food-hall space, the overhead required for the restaurant to participate in that space as a vendor is very modest, minuscule when you compare it to a standalone restaurant,” he said.

Cushman & Wakefield’s report went into more detail.

“The economic model of a food hall operates most efficiently on an all-inclusive percentage rent,” according to the report. “Revenue generated by the food hall vendors is shared, then distributed by the owner and venue operator of the food hall to resolve operating expenses (including a rent component), with heightened attention on revenue sharing of beverage sales.”

Projects Forge Ahead

Restaurant design firms across the country, including the Johnson Studio at Cooper Carry, are responsible for preparing dining rooms for the COVID-19 era. The restaurant projects that company has “on the boards are moving forward fast and furious,” according to Anita Summers, an architect and principal in the firm’s Atlanta office.

“I think a lot of the people we are working for are just thinking there’s going to be a vaccine,” she said. “Most of our clients are just moving forward thinking there is going to be an ‘after,’ [when] we’ll be able to open at the same density that we have opened before. A few of ours have asked for planning for immediate purposes to space everything 6 feet apart. So we are seeing that.”

The challenge is to incorporate safety features — be it acrylic partitions, sanitizer stations, sneeze guards or using plants and mirrors to space tables — that appear to be seamless design elements, according to Summers. Wider aisles and more defined queuing spaces may be part of the equation, designers said.

“It will different,” Summers said. “There will be less energy in a dining room with tables spaced apart, but I do think with mirrors and open kitchens it can be done.”

Restaurants make most of their profits from beverages, not food, and bars on premise will no longer be allowed to have crowds three-people deep for cocktails during Friday happy hour. One way to address that issue is to create an area at the center of a bar where patrons can stand in line to order drinks, according to Eimer.

For bars, Summers said, she envisions a whole new kind of setup.

“It just seems to me maybe we go back to kind of a Paris parlor, like a salon, where there are beautiful little areas where four people or six people can be together, but they’re 6 feet apart from the next group,” she said. “And it’s a luxe kind of environment, and your drink might cost twice as much.”

With the pandemic still posing a danger to the public, restaurants are looking to expand their permitted capacity by offering outdoor dining, making up for revenue they are losing from their indoor dining rooms, which have been closed by the pandemic. New York City Mayor Bill de Blasio just unveiled his “Open Restaurants” plan, which will expand the areas outside where eateries can seat and serve their patrons, including parking spaces and the miles of streets the mayor has closed to vehicular traffic for pedestrians.

“Any possible area outside the restaurant that is fair game for adding tables should absolutely be leveraged during this time, as outside dining is preferred for air circulation and lower risk for transmission,” Summers said.

“For example, we’re consulting with a local restaurateur to determine how he can repurpose an existing courtyard to cater to guests in creative new ways,” she said. “In some cases, restrictions are also relaxing on sidewalk seating to help restaurants add seats in a safe way. Even for guests that want to dine indoors, restaurants can still use outdoors spaces to create waiting areas that are designed for having a drink in groups of twos, fours and sixes, each spaced away from the next party while they wait for a table.”

Some industry analysts predict COVID-19-related regulations on restaurants will be in place for some time. Darren Tristano, CEO of consulting firm FoodserviceResults, expects the precautions to last “until we have a vaccine,” or at least until there aren’t any additional outbreaks.

“Twelve to 18 months would probably be reasonable,” Tristano said.

James Cook, JLL director of research and retail for the Americas, predicted restaurant safety measures will be phased out slowly. And even after some of those restrictions are lifted, a coronavirus flare-up could result in them being reinstated, according to Cook.

“Two years down the road, after all this is over, I do think that some of these measures will remain in place,” Cook said. “It will not be the masks but it will be a focus on visible cleanliness. And what I mean by that is that you can’t see a virus but you can see all the other things in a restaurant, how clean they keep the floors, how tidy the uniforms are.”


Crafting a New Route for Artisan Foods

May 12, 2020

Small-batch artisanal products poised to strengthen, sources say

Food is increasingly part of the craft movement.

Today’s consumers increasingly want their food to be artisanal, small-batch, healthy, organic and local, as well as from a supply chain that’s transparent and from a farm or plant that treats its employees fairly and takes care of the environment and the livestock involved.

“Craft, in general, is about variety and nuance. If you know where your food is coming from, that gives you a lot more comfort knowing what you’re putting into your body,” says Ethan Lowry, co-founder of Seattle-based Crowd Cow, an online marketplace for high-quality meats. “Plus, it usually tastes much better, too.”

Craft foods are anything made in small batches rather than mass-produced, says Darren Tristano, founder and CEO of Foodservice Results, Chicago. “Anyone who’s doing this is really trying to leverage the demand by younger consumers, who are the ones driving this and are willing to pay more for these products,” he says.

As we amble into 2020, which craft foods are we going to see, eat, drink and buy?

“The hype around Impossible and Beyond Burgers has certainly proven that nonvegetarians and nonvegans are willing to try, and are interested in, plant-based alternative burger options,” says Maeve Webster, president of foodservice consultancy Menu Matters, Arlington, Vt. “The issue with the top brands right now is that they are hyperprocessed products that largely fly in the face of the clean-label, transparent, natural movement.” Webster expects to see burgers shaped by new technologies, ingredients and techniques that will have a cleaner profile than many products on the market right now. She also thinks retailers with back-of-house skills will handcraft their own plant-based burgers “to create unique, nonbranded options.”

Craft Cheese

For the first time, an American-made cheese last year won the top prize at the World Cheese Awards in Bergamo, Italy. Rogue River Blue hails from Rogue Creamery, Central Point, Ore., and Americans are poised to scoop up more artisanal cheeses in the coming year. According to Innova Market Insights, based in Arnhem, Netherlands, product launches of cheese, semihard and hard, described with terms such as “craft” or “crafted” were up 110% annually from 2016 to 2018.

Organic, Natural and Biodynamic Wine

If you thought wine couldn’t get more natural, think again. Wine touted as “natural” has nothing added to the grapes, and nothing taken away. Bars such as 8arm in Atlanta and 320 Market Cafe in Philadelphia are offering only natural wines, and grocery delivery company FreshDirect, based in New York, believes there will be a greater assortment of these wines this year.

“Natural wines are a growing trend among millennial shoppers, and the trend is heading higher,” says Keith Wallace, founder of the Wine School of Philadelphia. “Giving shelf space to these wines is a great way to draw in wine consumers. It also has the added benefit of communicating positive ideals of freshness and health to the consumer.”

Plant-Based Cuisine

Plant-based foods will continue to evolve and expand into more categories, according to FreshDirect, with cauliflower remaining a favorite gluten substitute and oat milk coming to the fore. The company expects to see more products being launched this year. Lizzy Freier, senior managing editor of Chicago-based Technomic, WGB’s sister foodservice market research company, points out that with dairy milk production on the decline, and built off the meteoric rise of nut and seed milks, “the next nondairy milks will be oat milk and fruit and vegetable milks.”

Salt

As shoppers become more savvy, picking up a container of iodized salt will no longer cut it. From kosher to Maldon and Himalayan, there’s a salt for every occasion. SaltWorks in Woodinville, Wash., uses its Perfect Smoke technology to add extra flavor to salts that are “harvested from the world’s cleanest oceans.” Flavors include alderwood, applewood, hickory and mesquite sea salt.

Crafted Nonalcohol Spirits and Mixers

Check out any urban bar these days and you’ll find a range of low-alcohol or alcohol-free cocktails. Younger consumers especially are looking to enjoy several drinks and still be able to walk in a straight line.

Webster of Menu Matters expects to see an expansion of low- and no-alcohol spirits such as Seedlip, “but spanning a far broader range of spirit categories, such as whiskey, bourbon and rum, as well as interesting low-/no-[alcohol] mixers to support continued innovation in this category.” She also expects to see more drinks such as bottled or canned cocktails with low- or no-alcohol, which will increase the convenience of this category.

Crafted Spice Blends

Dukkah, berbere, za’atar, baharat: This may sound like an invented language, but it’s actually a list of spice blends, all from the Middle East. As Americans travel more and eat out more, they want to eat the flavors they experiment with at home.

Webster thinks in 2020 manufacturers will consider unique spice blends “that set their spice product line apart.” She also expects to see retailers creating their own. “As consumers become more familiar and comfortable with spice blends and their many uses, it’s likely they’ll start experimenting with creating spice blends at home and look for solutions at retail that help them,” Webster says.

Craft Dog Food

From 2016 to 2018, product launches of dog food and dog snacks/treats were up 52% and 51%, respectively, according to Innova. “It makes a lot of sense given how consumers treat pets like a member of the family and are prepared to shell out good money to dote on their pets,” says Tom Vierhile, VP of strategic insights, North America, for Innova.

Craft Meats

Product launches of craft meat jumped 59% from 2016 to 2018, according to Innova, which “shows meat producers may be trying to fend off challenges from plant-based innovators by going upmarket to appeal to meat lovers,” Vierhile says.

“The craft movement is spilling over into meat and it’s high time,” says Lowry of Crowd Cow. Especially with beef, consumers are recognizing different cuts and different breeds. “It matters what it was fed, and pasture-raised beef matters too. It makes a big difference what went into the animal,” he says.

While Angus is the dominant breed, Lowry also expects to see much more wagyu as consumers cross over. This is particularly resonating with consumers, who love a story and a sense of connection to where their meat comes from. However, he says, the main reason people are switching to wagyu is the taste. “Then it has to be healthy; then, is it good for the animal, the planet, the farmer? People love to check all the boxes,” Lowry says.

Low-Carb Adult Beverages

As the low-carb craze continues, consumers are looking for carb-free beverages as well as food. Hard seltzers such as White Claw from Mark Anthony Group are gaining in popularity, and craft beers are also part of this trend, with fuller-flavored styles, such as the ever-popular IPAs, and reduced carb content.

Underdog Produce

Expect to see more collard greens, red cabbage, Brussels sprouts, fiddleheads, cardoons, ramps, parsnips and their brethren in 2020, says Suzy Badaracco, president of Culinary Tides, Tulatin, Ore. “There is a movement to praise the overlooked, undervalued produce. Cauliflower is the poster child for this trend and has opened the door to others. Each stands apart and really has no direct competition within its category,” she says.

Freier of Technomic expects to see “new vegetables being created through natural or purposeful breeding techniques.” Hybrids that could become more mainstream include kalettes (kale and Brussels sprouts), lollipop kale (Russian red kale and Brussels sprouts) and caulilini (baby cauliflower).


2020 Future of Fast Casual Report

May 12, 2020

Which brands and categories are best positioned to recover after the pandemic?

 

A decade ago, fast casual underwent a genesis. Once a niche category with a few players spread across a handful of cuisines—say, Chipotle and Baja Fresh covering Mexican and Panera Bread and Corner Bakery tackling the bakery-café space—fast casual suddenly became the hottest thing in foodservice. The Great Recession pushed casual customers to trade down, while the rise in foodieism drove young consumers—particularly millennials—to seek out higher-quality eats.

Fast casual stood right at the intersection of value and quality, and for the last 10 years has filled in every corner of the U.S. with every manner of food served quickly and affordably.

But, just like any other trend, fast casual has also worn thin on some. And with mobile ordering and off-premises experiences giving quick-service chains a boost in competition for market share, could it be that fast casual isn’t the darling it once was? 2020 Future of Fast Casual Study – Final Tristano, CEO of FoodserviceResults, says that, prior to the coronavirus, the fast-casual segment was experiencing lower growth rates compared with years past, especially as oversaturation in restaurants created difficulty for expanding chains to find opportunities to drive unit volumes necessary to building sustainable restaurants.

QSR partnered with Tristano in this first-ever Future of Fast Casual Report, which explores consumer sentiment toward the fast-casual industry prior to the coronavirus outbreak. The report offers valuable insights into customer preferences and ordering habits within fast casual. And while the pandemic and resulting economic downturn will drastically alter the restaurant landscape, the report’s findings offer a glimpse at what customers wanted from their favorite restaurants before the coronavirus—and what they will likely want once it’s in the rearview mirror.

“Although great uncertainty exists from the COVID-19 crisis, insights from this report will help suppliers and operators plan their strategy and manage scenarios for the current year,” Tristano says. “The report data and insights remain relevant as the industry prepares and plans to navigate the new normal.”

Here, we’ve dug deeper into six menu categories within the fast-casual space to explore how brands were innovating—pre-coronavirus—in an effort to rise above the competition. Take a glimpse at some of the data below, and click on the category links to get a deeper dive into the state of fast casual, including insights from Tristano on each of the six categories.

Future of Fast Casual 2020 Cover pageFor more information about purchasing the full report, which includes an 85-slide deck and a 20-page PDF appendix of Top 250 rankings, please contact Greg Sanders at Greg@FoodNewsMedia.com.

 


What Does the Future Hold for Hooters and Twin Peaks?

September 17, 2019

Historically, chains like Hooters and Twin Peaks, and their scantily clad waitresses, established a niche audience, of mostly men, in the sports-bar restaurant space. But industry consultants suggest that although they’re holding their own, times have changed, and they need to adapt in order to keep pace.

Showing how challenging the category can be, the Arc Group, which owns Dick’s Wings, acquired 34-unit Tilted Kilt in November of 2018 for $10. That price was low based on Tilted Kilt’s $1.8 million burden of debt and $1.5 million in additional payments due.

Today, standing out means bucking the tide against sexism, updating menus beyond chicken wings, and appealing to more than men in search of sporting events.

Hooters and Twin Peaks have had disparate results in terms of revenue. In a ranking of revenue at the top 500 U.S. restaurants, Hooter’s, the largest of the two with more than 300 locations, saw its revenue fall 1.7 percent in 2018, while Twin Peaks’ 83 locations spiked 7.3 percent. What is Twin Peaks getting right, and what does Hooters need to do bounce back?

Darren Tristano, CEO of Foodservice Results, an Oak Park, Illinois-based food industry research firm, says these chains are still thriving, but they need to make improvements to catch up with “casual dining bar and grills that have contemporized.” He says competitors have enhanced food quality, and now offer local craft beer, as well as improved wine and spirits selections.

Consumers still frequent Hooters, Tristano says, for their “inexpensive and affordable food and that remains a value play.” But millennials are seeking “independent burger bars where they can watch sports and enjoy food and be in the company of each other,” he says.

Twin Peaks has done a solid job of enhancing its menu options. Many of the Twin Peaks locations have outdoor spaces, large settings with ample square footage, and its “food and ice-cold beers are differentiators compared to Hooters,” Tristano says.

These restaurants with sultry waitresses attract 65 percent or higher percentages of men, and that means they’re having a tougher time wooing women and families, Tristano says. He suggests hiring more male servers, which could appeal to a more varied clientele.

HOOTERS

Hooters has seen a jump in delivery sales over the last year.

Yet it’s not just restaurant chains in this specific category that are feeling the pinch. So are a host of casual-dining bar and grills, says Roger Lipton, president of Lipton Financial Services, which specializes in the restaurant industry. “It’s a very competitive space, and they’re all battling for market share,” he says.

The alluring waitresses create a mixed message, Lipton says. Some men want to ogle them, but “some guys won’t bring their wives or kids. You lose some customers who are offended,” he says.

Since Hooters was acquired by two private equity firms, Nord Bay Capital and TriArtisan Capital Advisors in January 2019, Tristano expects they will focus on “improving the balance sheet first, and when they’ve made some success at the unit level, they’ll look to invest money for renovation.” Each renovated location usually spikes revenue by 10–15 percent the next year, he adds. Tristano also predicts that under-performing locations will be closed.

Hooters’ concentrating on delivery to spike sales

Recently in the press, Hooters CEO Terry Marks discussed the chain’s need to make some changes. He’s stepped up Hooters delivery, which has been a revenue booster for many chains.

Marks said Hooters’ delivery revenue has grown by more than 30 percent in one year. The brand has also improved its menu by offering smoked wings and more craft beer options.

Tristano believes Twin Peaks will continue to expand, grow its market share, and take market share away from Hooters.

Twin Peaks has grown to 83 eateries, located in 26 states, with 28 company-owned units and 55 franchised. It opened two new outlets in 2018 and is slated to debut four locations in 2019.

Twin Peaks knows its clientele: 74 percent are men.

Secret of Twin Peaks’ boosting its revenue

The secret to Twin Peaks’ success, says CEO Joe Hummel, who is based in Lewisville, Texas, outside of Dallas, is, “We understand our DNA and what makes our brand what it is. We’re not everything for everybody, but we understand our demographics.”

And that demographic is very clear: 74 percent of its clientele consists of men. Hummel says Twin Peaks appeals to “all kinds of men from millennials to Baby Boomers and everything in between.” Its audience frequents Twin Peaks, he says, for “bold and craveable food options, bar offerings, sports viewing packages, and a casual setting that includes cigar bars and large communal tables.”

Most locations contain 65–75 TVs and that covers a plethora of sports packages. “We have hockey fans sitting next to football fans, and we want to accommodate both,” Hummel says.

The chain’s menu consists of food items, made from scratch, fresh in the kitchen. Hummel says because of all the food networks on TV, “people have a more sophisticated palette. And you can’t fool the eater the way you could in the 80s.”

Patrons at Twin Peaks can choose among “spicy ribs, chicken tender basket, hangover burger [burger with eggs over easy, bacon and cheese on top] and smoked chicken wings,” he says.

Asked if there’s been any backlash over the Twin Peak waitresses (it doesn’t hire male servers), Hummel says not at all. He describes Twin Peak girls as “valuable team members that we know are someone’s daughter, girlfriend or wife or sister. We expect our guests to have the utmost respect.” Providing a safe and fun environment at work is critical to its mission.

Women patrons are major sports fans as well and come to Twin Peaks for salmon, ribeye, cobb salad, the hangover burger and great wine, margaritas and mimosas, he says.

The brand is also known for selling the frostiest beer in town, which Hummel says is based on a proprietary approach that includes “the chilling of the beer and the mug and serving it as the right temperature.”

Since it relies heavily on franchisees, Hummel, who was a former COO of La Cima Partners, Twin Peaks’ largest franchisee, says its selection process “runs deep and wide. We want to ensure that they take the same passion and care as we do.”

Hummel sees growth in Twin Peaks’ future and expects it to reach about 100 locations in the next two years or so.