Tazinos offers shares to fund an expansion

October 31, 2011

Tazinos Expansion

Tazinos offers shares to fund an expansion

Menomonee Falls – Chicken bacon ranch or baked ‘tater pizza, creamy cucumber salad, and garlic and lemon butter bow-tie pasta are among the many choices at Tazinos’ all-you-can-eat restaurants.

Now the small Oak Creek-based chain is adding another option: shares of its stock.

Tazinos Inc. on Monday began trying to sell as many as 1 million shares to raise as much as $1 million that would fund the development of two more restaurants in the Milwaukee area.

“Do you want to own a slice,” ask brochures at tables of all three Tazinos restaurants – in Menomonee Falls, Oak Creek and Pleasant Prairie.

The company was founded in 2007 by Jim Purcell, a Michigan native who moved to Wisconsin to run PepsiCo Food System’s second-largest distribution center. From a family that lived in a farming area and owned restaurants, Purcell learned more about the business by supplying meat, cheese, napkins and supplies to Taco Bell, Pizza Hut and other restaurants.

The result is Tazinos, which Purcell says is trying to create an “all-inclusive family experience.”

Adults pay $6.99 at lunch and $7.99 at dinner for all-you-can-eat pizza, salad, pasta, soup and desserts. If any of the chain’s 17 pizza types aren’t on the counter, customers can request they be made on the spot, Purcell said.

Although the chain doesn’t advertise itself as healthy, Purcell says he’s focused on providing the best, least-processed ingredients. That means the pizza dough is made in each store every day with unbleached, unbromated flour, the tomato sauce comes from local grower/manufacturers, and there’s no modified food starch in the cheese and bread, he said.

“No high fructose corn syrup, no MSG, no trans-fat and the lowest sodium possible. I thought it would be a sustainable business model, and that’s how we eat at home,” Purcell said.

It’s “very smart” for Tazinos not to try to market the healthy aspect because consumers often equate healthy with bad-tasting, said Darren Tristano, an executive vice president at Technomic Inc., a Chicago food industry consultant.

Rather, the chain can teach people about its food as they come through the doors, Tristano said.

Private offering
Tazinos’ offering document values the company at $3.5 million before the offering. It has no long-term debt, and revenue for the 10 months ending Oct. 31 will be up 31%, to $1.5 million from $1.1 million a year earlier, according to the document.

The company lost $569,775 for that period, compared with $997,542 a year earlier, the document says.

“The individual restaurants are profitable, but the corporate overhead required to grow and to potentially take it to franchising requires the investments in computer systems software and product development to grow the brand,” said Purcell, who owns 79% of the company.

Tazinos, which has 72 employees, tried to get bank financing, but banks are lending only to existing customers or companies that have been in business for long periods of time, Purcell said.

So the company turned to its customers and other individuals.

Private offerings typically require that investors have a net worth of at least $1 million, not including their home. But the state allows companies doing offerings to sell shares to no more than 100 investors who have either a net worth of at least $125,000 or annual income of at least $45,000.

Tazinos won’t pay a dividend, and there’s no public market for its shares. The money would allow Tazinos to open two more restaurants and put it in a good position to begin selling franchises, Purcell said.

In the competitive arena of franchise restaurants, it’s important to gain brand recognition and maintain quality as a company grows, Tristano said. Ceci’s, a lower-cost pizza buffet restaurant, has one store in the Milwaukee area, and it will be important for Tazinos to grow quickly before Ceci’s puts more stores in the market, he said.

Tazinos has already sold 20% of the available shares, said Michael R. Palmisano, a senior vice president and investment adviser in Allied Beacon Partners’ Milwaukee office. Palmisano said he agreed to work on the deal because of the company’s lack of debt and his confidence in management.

He also has a soft spot for the salad bar and certain Tazinos pastas. Purcell understands that quite well.

“If food is really important to people, then this business model is going to work – and it’s going to work better and better over time,” Purcell said.

View the full article on JSOnline


Global Talent War Means 6-Month Wait for Domino’s Pizza: Retail

October 30, 2011

Global Talent War Means 6-Month Wait for Domino’s Pizza: Retail

Leslie Patton and Jeff Green
Oct. 14, 2011 (Bloomberg) — Domino’s Pizza Inc. can get a pizza to your house in less than 30 minutes. It took the company six months to find the right person to lead its international expansion.

Restaurant chains including Domino’s, AFC Enterprises Inc. and Dunkin’ Brands Group Inc. are hunting for executives who can adapt menus to international tastes and navigate foreign regulations. Such changes may accelerate as chains expand overseas amid slowing U.S. growth, said Guy Cote, who leads restaurant-executive searches for Heidrick & Struggles International Inc. in Miami.

“We’re twice as busy as we were 18 months ago, and there’s a war for talent right now,” Cote said in an interview. U.S. restaurant sales declined 2.8 percent in the two years through 2010, while sales at dining establishments in China jumped 46 percent in the same time, data from researchers Technomic Inc. and IBISWorld Inc. show.

Demand for talented executives is so high that Domino’s had to go outside the restaurant industry for its newest international executive, former Bain Capital LLC partner Richard Allison. The pizza chain searched for six months and closed the deal during a Valentine’s Day dinner at The Chop House restaurant in Ann Arbor, Michigan, where the company is based, Chief Executive Officer Patrick Doyle said in an interview.

Allison, 44, will help the chain, which has more than 4,500 stores outside the U.S., open as many as 300 stores annually, with most being overseas, Doyle said. “In 2012, we will reach the point where we have more stores and more sales outside the U.S. than inside,” Doyle said. The company is seeking additional executives to build out its international team, he said.

Popeyes Recruiting
FC’s Popeyes Louisiana Kitchen is recruiting a new team to focus on international growth, especially in Singapore, Chief Executive Officer Cheryl Bachelder said in an interview. The company started by hiring Andrew Skehan, who ran international operations for Wendy’s Co. and the Quiznos sandwich chain.

“The next five to seven years will be a time of investment for most companies in countries with a really strong, growing middle class,” Bachelder said. “Andy just expands our capability with that depth in international.”

Skehan, 50, a former U.S. Navy officer, has spent about half of his career abroad, living in the Czech Republic, the U.K. and Spain. In 2009, he opened the first of 35 planned stores in Singapore with Kopitiam Group, bringing shrimp burgers to locals there. He also led the chain into Russia, where Wendy’s sells beer alongside its classic burgers.

Taking on KFC
“If you look around the world, KFC has pretty much had it to themselves” for 20 years, Skehan said in an interview.

Popeyes may grow 10 or 15 times beyond the 425 stores it has overseas now, said Sam Yake, an analyst at BGB Securities in Arlington, Virginia, who advises buying the shares.

Introducing a brand to a new country is difficult, which is why Dunkin’s Baskin-Robbins chain has sought executives with marketing experience for its international team this year, said Cote, the recruiter for Chicago-based Heidrick & Struggles.

The world’s largest ice cream brand hired Paul Reynish, CEO of a Subway unit that handled advertising outside the U.S., January and promoted him to chief marketing officer of Dunkin’ Brands international last week. Reynish had previous marketing jobs with Burger King Holdings Inc. in Asia, the U.K. and Ireland.

In May, Dunkin’ tapped Panera’s president, Neal J. Yanofsky, for its coffee-and-ice-cream shop overseas expansion. Canton, Massachusetts-based Dunkin’ said last month that Yanofsky is leaving the company and that it’s searching for his replacement.

International Training
Competition for international executives is fierce as many restaurants don’t have programs to train employees to lead overseas. While Domino’s has two leadership development programs, Rising Talent and People Pipeline, the company doesn’t have a program specific to international management, said Tim McIntyre, a company spokesman.

Dunkin’s training for international leaders is similar to programs for those responsible for U.S. operations, said Christine Deputy, chief human resources officer. Both sets of executives attend Dunkin’ Brands University at company headquarters and also work in a store after being hired, she said in an e-mail.

Restaurant leaders need knowledge of countries’ tax laws and local food suppliers to expand internationally, said Fay Voysey-Smit, director at recruiter Boyden’s sub-Saharan Africa office in Johannesburg.

“They really need solid skills in supply-chain optimization,” she said.

Red-Wheat Tortillas
When Chipotle Mexican Grill Inc. began opening stores in the U.K. it had to make sure ingredients there met its standards, said Darren Tristano, executive vice president at Chicago-based researcher Technomic. The company added red wheat to its tortillas because it was available and matched diners’ tastes, he said.

Chipotle and fast-casual spots such as Panera Bread Co. may be the next restaurants drafting executives with international knowledge, Tristano said. Denver-based Chipotle is opening stores in London and Paris, which CEO Steve Ells called a “foundation for the future.”

Domino’s demonstrates how companies need someone with a knowledge of different regional tastes, said Jack Russo, an analyst at Edward Jones & Co. in St. Louis. The company has had success varying toppings in different countries, tailoring pizzas with paneer cheese in India and corn and squid in Asian nations, Doyle said.

‘Localized Knowledge’
“You can’t go in with a standardized product or platform,” Russo said. “You’ve got to go in with localized knowledge.”

Sometimes unusual experience distinguishes a candidate, said Dan Searby, who recruits restaurant leaders for Elliot Associates Inc. in Tarrytown, New York.

One dining executive hired for an international development job had served in the German army where he was required to carry nuclear bomb “suitcases” that controlled tactical weapons, he said, declining to name the person because of company confidentiality.

“That level of responsibility showed that he could handle the pressure,” Searby said.

View the full article on SF Gate


Military partnership benefits restaurant

October 30, 2011

Military Partnership

Military partnership benefits restaurant

Charley’s Grilled Subs’ relationship with the U.S. military is helping it expand and add locations overseas.

The Columbus-based restaurant chain opened its 100th restaurant on a U.S. military base last week.

And so far this year, the company, which specializes in Philly cheesesteaks, opened locations in the Dominican Republic and Brazil and is in talks to enter South Korea, Bahrain, Saudi Arabia and Central America.

The company’s 12-year partnership with the Army & Air Force Exchange Service not only allows it to serve its food to U.S. soldiers and their families worldwide, but also helps to promote the brand in countries it might not otherwise have entered, said Bob Wright, Charley’s chief operating officer.

The company has nearly a quarter of its roughly 400 restaurants on military bases in the U.S. and around the world.

“We see international a significant part of our growth,” Wright said, noting that the company has benefited from the “worldwide shift toward capitalism and the consumerism that goes along with it.”

“Mall development is growing around the world, and you see the same kinds of food courts that exist in the U.S. and the same desire to sit down with your family to eat. It’s been a great growth opportunity for us.”

The company is among the top 100 limited-service sandwich chains in the U.S., according to Technomic, a Chicago restaurant- and food-research group.

Charley’s presence on military bases is a good strategy for the company’s growth, both domestically and overseas, said Darren Tristano, Technomic executive vice president.

“The big challenge in the restaurant industry is to focus more globally, and for a chain like this, a premium sandwich category, it is important to expand internationally,” he said.

“And the strength that (Charley’s) builds with having locations on military bases helps to build the brand with a younger audience of (troops and their families) who will become loyal and continue to buy the brand after their military career is over.”

Charley’s Grilled Subs opened 38 stores last year, a majority of which are in airports, on military bases or in regional shopping malls. The company had sales of $220 million in 2009, a 15 p ercent increase from the previous year, Wright said.

The privately owned company typically adds 40 to 50 units in a year, he said, noting that the company is on pace to open 46 this year.

That’s been accomplished by converting existing restaurants or retail spaces into Charley’s restaurants. Conversions typically cost $130,000, compared with $300,000 to open a location from scratch, Charley Shin, the company’s president, has said.

Most of the stores are franchises, with the Army and Air Force service being the company’s largest franchise partner.

The group has “been a terrific partner to help us leverage the popularity of our sandwiches throughout the world,” Shin said in a statement.

Wright agrees.

“Fresh food really resonates with people no matter where you are in the world,” he said.

View the full article on The Columbus Dispatch


Growth Opportunities in BRIC Countries

October 29, 2011

aiinsight

Growth opportunities in BRIC countries

The quickly emerging BRIC countries — Brazil, Russia, India and China — provide significant opportunities for restaurant chains looking to grow internationally, provided those companies tailor their menus to local tastes.

Chicago-based industry research firm Technomic Inc. said striking a balance between maintaining brand identity and building country-specific menu innovations can allow restaurant brands to gain a foothold in these growing markets. Menu items like chicken and coffee will be growth areas for BRIC countries.

“[U.S. restaurant chains] can take advantage of the worldwide recognition they’ve established, but in order to gain loyal customers in new markets, they need to innovate on the menu and introduce items specifically adapted for local consumer preferences,” Darren Tristano, Technomic executive vice president, said. “Chains are also leveraging their international experience and applying lessons learned to improve domestic operations and innovation.”

Some of the largest U.S. restaurant brands have already begun rolling out such products, sometimes by importing them from the United States or other foreign markets, Technomic said.

Brazil
McDonald’s recently launched a Chicken Bacon Onion sandwich in Brazil, which was originally developed for its European division. The sandwich combines a breaded chicken breast with bacon, bacon-spiked cheese and bacon-flavored sauce on a bun dotted with sesame seeds and bacon bits.

Restaurant securities analyst Mark Kalinowski of Janney Capital Markets noted this summer after meeting with McDonald’s chief financial officer Pete Bensen that market-to-market menu sharing would become more common for McDonald’s. Not only could popular items overseas show up in U.S. McDonald’s restaurants, but domestic sales drivers, like McCafé Real Fruit Smoothies, could soon appear on menus in Brazil and beyond.

Burger King has also announced growth plans in Brazil, Technomic said, with a master franchise agreement with an affiliate of private-equity firm Vinci Partners in a joint-venture deal. Burger King currently has 110 franchised locations in Brazil.

Additionally, Wendy’s said it’s renewing its international growth push, with Brazil and China as key targets. The quick-service chain currently has only a few hundred international units, but projects a potential 8,000 overseas restaurants.

China
Companies including Yum! Brands Inc. and McDonald’s Corp. see China, with a population of more than a billion people, as the top prize in international expansion.

In the first half of the fiscal year, Yum generated an operating profit of $397 million from its nearly 4,000 Chinese restaurant locations, or 48.4 percent of its total $820 million operating profit. While McDonald’s generates only 3 percent of its total operating profit from its 1,400 China restaurants, the brand increased its same-store sales there by 14 percent in the second quarter. McDonald’s plans to open 175 to 200 units in China this year.

Yum is also planning to expand in China with native concept Little Sheep, which specializes in “hot pots,” Technomic said. Yum already owned 27 percent of Little Sheep before making an $863.5 million offer for the rest of the brand this summer.

Russia
In Russia, Yum made a similar move by taking over its Rostik’s-KFC joint-venture in 2010 from Rostik Group, which controls Russia’s largest restaurant chain, Rosinter.

Chicken will be a huge market in Russia in the coming years, Technomic noted. One of the country’s largest poultry processors, Cherkizovo, has broken ground on a new production facility that can process 500,000 metric tons of live poultry per year, a significant upgrade from Russia’s total current capacity of 15,000 to 20,000 metric tons annually, Technomic research showed.

India
In India, coffee will have a large potential for foodservice brands, based on the growth of the country’s largest native coffee chain, Café Coffee Day. That brand, with more than 1,100 locations, is beginning to spin off brands, including Coffee Day Lounge, which it hopes to grow from 19 current units to 100 by the spring of 2013.

India has 1,200 restaurant franchisors, about 25 percent of which are from outside India, according to the U.S. Department of Commerce’s Commercial Service. The service valued India’s current restaurant franchise market at $3.3 billion across all sectors, and pegs its potential to reach $20 billion by 2020.

Baskin-Robbins, Pizza Hut, KFC, Papa John’s Pizza, Ruby Tuesday, Pizza Hut, Subway, McDonald’s and Domino’s Pizza all have a presence in India. Domino’s Indian master franchisee, Jubilant Foodworks, had 339 restaurants across 79 cities at the end of 2010 and planned to open 70 units there in 2011. Jubilant’s same-store sales growth has averaged 18 percent over the past five years.

View the full article on Nation’s Restaurant News


The beat goes on: Music can make or break customer experience

October 29, 2011

Beat Goes On

The beat goes on: Music can make or break customer experience

Restaurant operators strive to create an environment that pleases the senses – taste, sight, smell. What some may overlook, however, is sound.

Background music is common in the restaurant industry. But many brands are now veering from homogeneous, elevator-type tunes in favor of customized playlists meant to optimize the brand, as well as customer and staff experiences.

David Rahn, president of Custom Channels, and Bradley Newberger, founder of Ambiance Radio, have both seen a big uptick in restaurant music customization.

“There is a growing number of brand managers and concept developers taking a hard look at what music they’re playing and making it a part of the overall theme and environment. Music is becoming part of the brand; it’s become more than just something playing in the background,” Rahn said.

Evaluating your playlists

Music has enough power to set the tone for an entire dining experience, Newberger said.

“If a restaurant was dirty, if the food was bad or smelled bad, you probably wouldn’t go back. The same applies to music. It’s a mood driver. Even if the food was right, if the music wasn’t right or too loud, the customer will remember,” he said.

To avoid creating unpleasant auditory experiences, Rahn suggests undergoing a “playlist evaluation,” offering such tips as:

•Mix it up and play a variety. Give your playlist depth and avoid being overly predictable or boring.
•Play music consistent with a restaurant’s energy, theme and atmosphere. What works for happy hour, might not work during breakfast.
•Be consistent. Customers expect consistency with food, service, atmosphere, etc. Why wouldn’t they with music?
•Make sure the music playing has high audio quality.
•Choose music that is hip and reflective of your target audience, but avoid anything that is borderline offensive. “Even if your target audience is young males, always assume a family will walk in at any time,” Rahn said.
Don’t forget about the staff

It’s also important to diversity the playlists. For example, Ambiance Radio’s system changes up the songs every hour of every day for every location. If the playlist never changes, it may not matter much to a customer who is in and out within a half hour, but it will matter to employees working 8-hour shifts.

“When employees are happier, they do better things and they treat your customers better. Music is something that can really help with employee satisfaction,” Newberger said.

This philosophy is the reason the former restaurant operator created Ambiance Radio in the first place.

“Everyday at 2 p.m., I knew exactly what song was going to play. It drove us all crazy. If you talk to any employee in any service area and the music is repetitive, it will affect their morale and attitudes,” he said.

Music moves into the foreground

The right playlist can also be used to boost brands beyond restaurant walls. Industry experts agree that Starbucks is the perfect example a brand that of incorporates music into its DNA.

In 2006, Starbucks really proved its music credibility when it partnered with Apple to collaborate on selling music. A year later, the coffee chain began selling digital downloads through iTunes, something it continues today. The retail aspect complements the in-store music that has always existed at the chain. According to Starbucks’ website, music is what makes a great coffeehouse: “We’re just as passionate about music as we are about coffee. That’s why we handpick all the tunes you hear in our stores.”

Starbucks is a big reason in-store music has moved from the background to the foreground, and similitude has made way for variety.

“Starbucks was definitely a leader in this trend. They took a real approach of making music a part of the entire brand experience. And it is a good way to keep their brand contemporary. Others – like Chipotle and Qdoba – have caught on and are doing the same,” Rahn said.

In fact, Chipotle hosted its first “Cultivate Chicago” festival last weekend to “celebrate food, music and ideas.” Founder Steve Ells said the festival is a celebration of the things Chipotle stands for.

Appropriate for all segments

The fast casual segment has embraced the concept of brand soundtracking, but the concept is applicable across the industry, including drive-thru-heavy QSR.

“There is a lot of potential for QSR, especially as we’re seeing more effort put into interiors and creating comfortable environments by McDonald’s and other brands,” said Darren Tristano, executive vice president at research firm Technomic. “Maybe those flatscreen TVs are important to add, but I think the music will impact the customer more and, importantly, have a positive impact on the staff.”

Tristano said one of the best examples of a brand embracing the musical experience is Yard House, a full-service chain based out of Southern California. Its website includes a music request page, where customers can ask that specific songs be incorporated at specific locations.

“By getting that direct reinforcement from the customer, Yard House is getting the most out of its ambience,” Tristano said. “The model is ideal. It’s not as important to have the right music as it is not to have the wrong music, and they know exactly what their customers are looking for.”

Getting the customer to return

Restaurants that use Internet streaming providers such as Trusonic or Custom Channels, or Ambiance Radio, which delivers feeds based on data pulled from proprietary software, are paying to offer music that has been researched specifically to fit a brand, according to Rahn.

“We’ll do a lot of research and ask a lot of questions about the brand, and what their demographics look like at different times of the day. And we’re able to reshuffle and continuously update songs based on that research. There is a science, a psychology behind this,” Rahn said.

And, although difficult to quantify, Tristano believes that finding the right musical personality can subtly boost a brand and maybe even its bottom line.

“It’s not going to be an obvious ROI, but it’s a key factor in a customer’s intent to return,” he said. “You can destroy that intent with the wrong music.”

View the full article on Fast Casual


Restaurants Redefined

October 28, 2011

Restaurants Redefined

Restaurants Redefined

As the old saw goes, “Necessity is the mother of invention,” and to put it mildly, the Great Recession bred a lot of necessity.

For the quick-service sector, the deprivation cut several ways. There was the “trading down” phenomenon, where some cash-strapped consumers chose fast-casual establishments instead of the full-service experience they might have opted for in better times. But more consumers overall were eating at home as their disposable income dwindled and their anxiety rose, and all segments of the restaurant industry took a hit.

As the commercial real estate market took a nosedive, there also was suddenly an opportunity for franchisors to negotiate better deals on better locations in markets that had previously proved tough to penetrate. This might have been a consolation of the economic calamity, except that credit streams had frozen so solid you could skate on them. In this climate, those in the industry who wanted to expand went begging at one bank after another.

These are sink-or-swim conditions. So it is not surprising that in the last two years, restaurants have been innovating at a pace that is unusual for a historically slow-moving industry. From the food trucks rolling through more neighborhoods to the industry’s late but enthusiastic adoption of social media marketing, restaurants have shown an impressive capacity to adapt in hard times.

Another strategy that has picked up steam during the recession is the mixed-service model, where restaurant brands offer their customers both full-service and quick-service experiences, sometimes under one roof. While this is not an entirely new phenomenon, it is becoming more common as consumer preferences become less monolithic.

“A mixed-service format is probably on the horizon for a number of restaurants,” says Darren Tristano, executive vice president of Chicago-based food consultancy Technomic. “Mixing limited and full service together is a great combination.”

One company that already employs the strategy successfully, Tristano says, is Minneapolis-based Buffalo Wild Wings, which offers fast-casual and full-service options throughout the day. Other brands, like Le Grande Orange Café in Santa Monica, California, a Lettuce Entertain You restaurant, offer limited service during breakfast and lunch and then switch over to a full-service model in the evening.

“It’s kind of the best of both worlds,” Tristano says. “As you move away from that fast-casual need, the full-service picks up and all of sudden it’s like you’re running two completely different restaurants.”

Of course, time was when few operators would have wanted to run two different restaurants under one roof. The goal is brand consistency, after all. Tristano says the trick is maintaining brand identity while adapting to new consumer preferences.

“There’s always that risk of confusing the consumer,” he says. “But this mixed-service model tracks better with consumer schedules.”

People are far more “time crunched” in the morning and during lunch, Tristano says. But in the evening they have time to enjoy a slower meal, and they are willing to pay more for it.

The potential for high ticket averages is what convinced Randy Murphy, president and CEO of Mama Fu’s, a chain of “Asian houses” based in Austin, Texas, to start implementing what he calls “flex casual” service in 2006. Before he took over, Murphy was Mama Fu’s biggest franchisee. He liked how well the fast-casual model did during lunch, but he wanted to find a remedy for the sales drop-off come evening.

So after taking the reins, he decided to turn select Mama Fu’s locations into full-service establishments by night. Now with more than 10 flex-casual locations, Mama Fu’s is “predominantly a dinner-driven concept,” Murphy says.

“We firmly believe that for lunch people do want to get in and get out,” he says. “But at night, whether they are on a date or out with the family, people typically want a higher level of service, and they have a little more time to dine.”

Transitioning to a completely different format of service between lunch and dinner isn’t as laborious as it sound, Murphy says.

“The only thing that changes is the ambience,” he says.

But running a full-service restaurant does entail more than just lowering the lights and switching up the music. For one, it requires having more staff on hand. While paying waiters may make some quick serves give up on the idea of a flex model, particularly in a down economy, Murphy says he pays less for labor during dinner because the servers get tip wage, which is typically about a third to a quarter of hourly wage.

“You do need more bodies, but it does not add up to the amount of pure labor wage you had before,” he says.

Further offsetting the costs of switching to full service are the extras that diners tend to indulge in during a sit-down meal.

“What you’re not going to get in fast casual or quick service is the add ons,” Murphy says. “You’re not going to get alcohol, you’re not going to get appetizers, you’re not going to get desserts, or any of those things that accompany a full dining experience.”

All told, Mama Fu’s ticket average goes up by $4 during dinner. Still, Murphy says he has “no intention of going full service during the day.”

“It’s all about finding the right mix,” he says. “Some places are understandably [one service model] all the time. But I think you’re going to see changes in service models, in terms of flexibility and mobility, simply because you have to differentiate and give customers what they want.”

East Coast Wings & Grill, based in Winston-Salem, North Carolina, is another chain proving the trend is already well under way. By the end of 2010, the company will have opened three on-the-go locations in addition to its 15 full-service establishments, and 10 more are in the works for 2011, says president Sam Ballas.

“With a lot less capital and a lot less projected operating expense, we want to niche into [new markets] with a kind of ‘Mini Me’ of East Coast Wings & Grill,” Ballas says.

East Coast Wings’ approach to mixed service is different than Mama Fu’s in that the on-the-go locations are housed in separate buildings altogether than the full-service locations. The strategy is the result of two years of market research, Ballas says, and the goal is to help area developers grow by introducing East Coast Wings into two market segments.

Ideally, franchisees would first open a full-service location and then branch out into the same area with a quick serve about six months later. If some operators do not want to open a full-service establishment at all, then they would have to contract for multiple on-the-go locations.

Ballas says he was spurred toward the new concept by franchisees who wanted to expand but had only limited access to credit. He felt that the relatively low cost of opening an on-the-go (about $270,000) compared with a full-service East Coast Wings, which ranges between $450,000–$500,000, would make it an attractive option in a bad economy.

View the full article on QSR


The Morning File: Some of us seem a tad slow to desert fast food passion

October 28, 2011

Fast Food Passion

The Morning File: Some of us seem a tad slow to desert fast food passion

It’s been too long since The Morning File staff all went out to a nice fast food lunch together, enjoying the calories, the restroom hand dryers, the playground tunnels to crawl through.

So we’re headed out today to Wendy’s to taste the overhaul of its 42-year-old hamburger, and no one’s going to stop us. Not Michelle Obama, with her emphasis on healthy eating; not McDonald’s, with its insane offering of oatmeal with brown sugar and raisins; and most certainly not our too-smart-for-their-own-good kids, who seemed to eat nothing but fast food for about five years and now, in their late teens, treat it like radioactive waste.

Someone’s gonna need a pretty heavy defensive line today to keep us away from this new 800-calorie half-pound Hot ‘N Juicy double cheeseburger, and we’re pretty confident we’ll be able to talk anyone on such a defensive line into joining our ranks anyway. That’s right, Casey Hampton — we’re talking to you.

Right around the time The Associated Press ran a story recently alerting us to the extensive Manhattan Project-style research that developed the Hot ‘N Juicy, it published another article suggesting all the talk about Americans wanting to eat healthier is just that — talk. Consumers at fast food restaurants are putting their money where their taste buds are, consequences be damned.

“So, while 47 percent of Americans say they’d like restaurants to offer healthier items like salads and baked potatoes, only 23 percent tend to order those foods,” the article said, citing a survey last year by food research firm Technomic. The AP made the point that IHOP’s 1,180-calorie breakfast sampler of eggs, bacon, sausage, ham, hash browns and pancakes (“Excuse me, miss — can I get extra toast with that?”) reigns as its top seller, rather than goody-goody yogurt and fruit bowls.

As another example, before McDonald’s started automatically providing half-servings of both apple slices and french fries this year in its Happy Meals, parents who formerly had the option of picking one or the other for their kids chose the fries 89 percent of the time.

It’s possible, of course, that parents taking their kids to McDonald’s are already a self-selected group of familial gluttons, indifferent if not hostile to government warnings about obesity. Or maybe they feared their children being picked on if they seemed averse to fries, a form of bullying that would be only natural. (“Apples? Your old lady smells like rotten apples, ya little squirt. Now grow up and order some food you can put some salt on, or else.”)

Not willing to be forced down some path of healthy food emphasis by the nutrition police, Wendy’s stuck to its traditional guns on Project Gold Hamburger. The chain has been losing market share to McDonald’s and spent 21/2 years on an effort to remake its bread and butter — which turned out to be a literal as well as figurative change. After extensive taste and marketing tests, the main burger ended up with a thicker beef patty, extra cheese and a buttered, toasted bun.

Oh, and Wendy’s switched the color of its onions from white to red. Let’s see if that keeps their burger-eaters from jumping to Five Guys.

“It’s not about getting real exotic,” a Wendy’s senior vice president told the AP. “It’s about making everything work.”

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Now, we’re not stupid enough to think fast food is our best option when going out for lunch, or dinner, or breakfast — or when we get hungry again right after a healthy lunch or dinner. But gosh, that craving for what is provided by McDonald’s, Wendy’s, Burger King, KFC, etc., is as American as a drive-through window.

We know ourselves that we’ve tried to have good intentions in such places — no, don’t super-size me, please don’t, really, well OK, if you must — but it’s so, so hard.

“There is often a disconnect between consumers’ intentions and their actions,” said Technomic executive Darren Tristano. “Many consumers are actually making substantial changes to their overall habits, even basing which restaurants they frequent in part based on their impressions of the healthfulness of the brands. However, as many of us know from personal experience, diners do not always follow through on their intentions once it is time to order.”

Someday, such behavior might change, due to national indoctrination of people like the young vegan in The Morning File’s own household. But until then, we’re willing to have our buns buttered and discover what is so hot and juicy about the Hot ‘N Juicy.

View the full article on Post-Gazette


Is Flex-Casual the new Fast Casual?

October 27, 2011

flex fast casual

Is Flex-Casual the new Fast Casual?

A new dining category may be emerging as the restaurant industry tries to keep up with what the busy, budget-aware consumer demands.

 

Industry analysts predict that “flex-casual,” trademarked by Randy Murphy to describe his business model at Mama Fu’s, may be the best way to describe the crossover between casual dining and fast casual restaurants.

 

“We’re probably going to see quite a bit more of this hybrid as fast casuals try to pick up speed in the dining segment,” said Technomic’s Darren Tristano, who had not yet heard the term but said it probably best describes the trend. “(Fast casuals) do a great job at lunch – giving a good atmosphere, high-quality food at a good price point also the speed of service — but not many have been very successful in the dinner part.”

 

What is flex-casual?

 

Murphy, who was a Mama Fu’s franchisee before becoming the brand’s CEO in 2008, defines flex-casual as combining fast casual and casual dining into one concept, where the customer gets fast casual during lunch and full service during dinner – at the same price point.

 

“I realized that our revenue split was about 55/45 percent lunch to dinner, and considering our customer base was weighted toward families in the evenings and weekends, I decided to start doing full service at night to increase ticket average and provide a more relaxing and enhanced service experience,” he said.

 

After the move toward flex casual, Murphy’s revenue split changed to 45/55 percent lunch to dinner.

 

“That is a better model than living more heavily on lunches – so we decided to keep that going forward and after acquiring the brand in 2008, we made flex-casual our standard for the brand,” Murphy said.

 

Mama Fu’s eventually added delivery, online ordering, loyalty programs, enhanced food and beverage items and is now planning to roll out a call center to improve the guest experience for call-in orders.

 

Although neither Tristano nor Murphy knew of any other restaurants officially branding themselves as flex-casual, Tristano said Buffalo Wild Wings’ service model is comparable. The restaurant doesn’t split up full service and fast casual into dayparts like Mama Fu’s, but it does feature aspects of both types of service. Customers order at the counter, but a server brings their orders to the table. Each restaurant also has a bar and is known as a gathering place for customers to watch sporting events. It’s basically up to the diner to decide their in-restaurant experience.

 

“I’d say it’s about 50-50 full service and fast casual; if you are looking at a successful model that’s a great model,” Tristano said.

 

Murphy expects it’s only a matter of time before competitors jump on his flex-casual bandwagon.

 

“In general, customers desire a differing service model depending on day-part — in-and-out quick during lunch — and a more relaxed dining experience for dinner,” he said. “Flex-casual satisfies that without dramatically increasing operating complexity.”

View the full article on Fast Casual


More Restaurants Offering Happy Hours

October 27, 2011

Happy Hour

More Restaurants Offering Happy Hours

The Clarmont has finally given in.

For the first time in its 64 years, the steakhouse has a happy hour.

“I resisted for the longest time,” said owner Thom Coffman, “but I realized this is where the industry is going. More and more of my competitors are doing it, so I finally gave in.”

He hopes the move will allow the Clarmont “to reach out to the people who haven’t tried us before, like the people who drive by the restaurant every day but haven’t had the incentive to stop in,” he said.

He also hopes it will help attract more younger diners.

Five new signature dishes have been created for a new happy-hour-only menu at the restaurant, at 684 S. High St. They’re available only from 5 to 7 p.m. every weekday.

The dishes include prime rib sliders with creamy horseradish sauce on fresh rolls; fish tacos made with mahi mahi and served with wasabi sauce; mini meatloaf with mashed potatoes and a chipotle-glazed ketchup; and a steak-tip pizza with fresh mozzarella, roasted red peppers, herbs and balsamic glaze.

Each dish costs $5.

Drink specials include $5 martinis, $2.50 domestic beers and $4.25 wines by the glass.

The happy hour began about three weeks ago and has been well-received by regulars and the employees who had been pushing for months to add a happy hour, Coffman said.

“I just never thought we needed to do a happy hour here, because we make really good drinks, and my cocktails are already so much less expensive than other restaurants. I thought that was value enough.”

But times have changed.

Like others, Coffman realized the late afternoons and other slow times of the day are ripe with the opportunity to increase the bottom line.

Happy hour is seen by the industry largely as a way to reach out to younger patrons.

A recent study by consumer researchers at the Service Management Group in Kansas City, Mo., and the Boston Consulting Group found that 13 percent of patrons younger than 34 are more than twice as likely to visit a restaurant during off-peak hours — meaning not traditional lunch or dinner hours — than are those older than 34.

Other restaurants, both chain and independent, have looked to traditional and late-night happy hours touting low-cost small plates and drink specials as a way to lure in budget-conscious customers since the recession began.

The Refectory recently extended its bar hours, added a lower-cost, earlier dinner option, and began offering weekday happy-hour appetizer specials.

Mimi’s Cafe announced last week that it, too, will have a happy hour, featuring $5 meals and drinks ranging in price from $3 to $5. Mimi’s President Mark Mears said happy hour gives people a chance to go out “while staying within their budgets.”

PF Chang’s told investors that its happy hour featuring $6 drinks and meals was the only growing part of its business in a dismal second quarter in which earnings fell 29 percent from the year before.

Applebee’s added late-night happy hours last year, and they now account for 13 percent of its total sales.

Even chains that don’t serve alcohol, such as Steak N Shake and Sonic, added happy hours with drink and food specials in recent years.

“It’s about filling those nonpeak” hours, said Darren Tristano, executive vice president of industry research firm Technomic. “The goal is to get more traffic in without cannibalizing peak” sales periods.

“There’s a downtime between lunch and dinner where restaurants can really do something to maximize their footprint,” David Henkes, a vice president at Technomic, told Nation’s Restaurant News. “Anything you can do to get consumers to stay for dinner or to buy other drinks will pay off.”

Restaurants are reeling from challenging economic conditions such as high unemployment. Consumers are more focused on deals and cutting back on nonessentials.

Many restaurateurs were certain that many of the woes they had faced since 2008 would start to disappear this year, but “it just isn’t happening,” Coffman said. “So we’ve all had to adapt.”

Off the menu
• Charley’s Philly Steak is to open soon in the former Las Margaritas at 1836 Henderson Rd. on the Northwest Side.

• Spain Restaurant is open at its new location at 76 W. Powell Rd. in Lewis Center. It recently moved from 888 E. Dublin-Granville Rd.

• Chipotle opened its first restaurant in Whitehall last week, at 3822 E. Broad St., near the Town & Country shopping center.

• City Barbeque plans to open a restaurant in January at 2261 Stringtown Rd., Grove City, in the former El Mesquite Baja Grill in the Derby Square shopping center.

• Donatos will donate a portion of the profits of every large pizza sold in October to the Stefanie Spielman Fund in recognition of National Breast Cancer Awareness month.

• Granville Inn has added three new faces to its executive management team. Javier Vazquez is the banquets and events manager, Kathleen Carey is the lodging director, and Daniel Morris is the bar manager.

Obit file
Ruby Tuesday, 1840 Hilliard-Rome Rd. on the Far West Side, has closed, but a Marlin & Ray’s seafood restaurant, which is a division of Ruby Tuesday, will open soon in the space.

View the full article on The Columbus Dispatch


Ai Insite – Fast Food Restaurants Add Alcohol to the Menu

October 26, 2011

aiinsight

Fast Food Restaurants Add Alcohol to the Menu

Some fast food restaurants have added alcohol to their menus in an effort to spike business.
Burger King, Starbucks, and SONIC Drive-In are a few of the restaurants that have started or will start selling alcoholic beverages at select locations.

The move to serve booze comes as limited service restaurants, which include quick-service and fast-casual establishments, face a tough economy and rising food costs. Many fast-food joints are looking to pull people into their locations during typically slower evenings. The quick-service restaurants are also seeking to compete with fast-casual and sit-down restaurants that serve adult beverages.
“The limited service market has become more competitive,” says Darren Tristano, executive vice president of restaurant consulting firm Technomic Inc. “The fast-casual segment is growing and restaurants are trying to tap into the young adult market.”

As part of their SONIC Beach concept, SONIC started selling beer and wine at two south Florida locations this summer. Famous for its carhop service, the restaurants will not serve alcohol to anyone who orders in their car.

SONIC follows Burger King, which recently opened “Whopper Bars” in Miami, Las Vegas, and Kansas City to serve beer.

Last fall, Starbucks started serving regional beer and wine at Seattle locations. With Starbucks in the United States getting 70% of its business before 2 p.m., the coffee chain is targeting evening crowds while attempting to become part of the neighborhood.
“I think the consumers have shown the industry they are willing to pay more,” Tristano says. “Some fast-casual chains are producing strong revenues and higher profit margins, so quick-service are adopting their methods to compete.”

In light of the competition coming from the fast-casual market, Tristano says it is no surprise that many of the quick-service chains are seeking to become more sophisticated. However, he does say there are risks that come from adding alcohol to the mix.

“SONIC is a little more surprising than the others because they are mainly a drive-in, and serving alcohol could encourage drunk driving and disorderly conduct,” he says.

Larry Canepa, a chef instructor in the Culinary program at The Art Institute of Phoenix, agrees the risks may outweigh the rewards for some choosing to serve alcohol. He also says there are restaurant management issues that need to be taken into consideration.

“I think [serving alcohol] will present some challenges,” he says. “What about training staff to sell and serve alcohol? The training has to be extensive and you may have young people who aren’t old enough to drink serving alcohol.”

He also says serving alcohol may take some of the fast out of fast food.
“They will be adding another thing that could cut into the 90-second food delivery,” Canepa says.
Tristano says the trend might be providing consumers with more options than they are looking for from their fast food restaurants.

“We believe consumers give restaurants permission for the types of beverages they sell,” he says. “They may find it easier if they don’t try to appeal to everybody, especially given the ramifications of serving alcohol at their restaurants.”

Ramifications include issues concerning permits and liquor licensing, underage drinking, and alcohol-related altercations and accidents. Many fast-food restaurants have a reputation for being family-oriented and safe places. Some are worried that fast food and alcohol not only sends the wrong message to kids, but may contribute to the obesity epidemic.

Although most of the chains are just testing the waters, Canepa says many should be cautious of jumping the booze bandwagon.

“I have always been somebody who believes restaurants should stay true to their concept and their mission statements,” he says. “Most of these restaurants already have solid reputations. Stick to what you do best.”
Sticking to their kid-friendly theme and not putting their reputation on the line, McDonald’s restaurants in the United States have yet to pursue alcoholic beverage sales. Instead, they are staying competitive by going the specialty beverage route, offering a variety of coffee drinks, frappes, and smoothies that cost more than fountain drinks.

Tristano says serving alcohol usually works for some restaurant categories better than others.
“For Mexican and Asian food, it would work, and some burger chains would also do well serving alcohol,” he says.

View the full article on Ai InSite