Panera Bread: How Fast Can a Hot Eatery Expand?

January 31, 2012

How Fast

Panera Bread: How Fast Can a Hot Eatery Expand?

By GARY M. STERN, FOR INVESTOR’S BUSINESS DAILY
Posted 01:50 PM ET

Grow too fast and restaurant chains can fizzle like shooting stars. Expand too slowly and they can leave growth opportunities on the table.

Big eateries usually have two big ways to boost revenue: increase same-store sales or open new outlets. But expanding too quickly can drain resources, spark management and customer service issues, and undermine growth. When a stock is on the ascent like Panera Bread (PNRA), deciding how many new outlets to open is crucial to its long-term success.

Panera started as a small St. Louis bakery and has morphed into a powerhouse. Its stock price has surged about 32% since Oct. 20, and it’s on target to generate nearly $1.6 billion in revenue in 2011, up from $1.5 billion in 2010. But with 1,504 outlets as of Sept. 27, 2011, can it handle opening 110 new cafes or about 7% of its total eateries on an annual basis?
Stephen Anderson, a New York-based senior analyst with Miller Tabak, says that Panera’s decision to open 110 outlets last year was modest vs. a more rapid expansion of 10% to 15% in the early part of 2000.

Slowing its expansion made sense for Panera. “Management sought to address decelerating sales at existing units rather than expand rapidly, as was the case with other restaurant companies,” Anderson said.

In fact, Panera recently announced plans to step up its presence in Canada, where it has three cafes in Toronto. It plans to open about six or seven more cafes in 2012; four company-owned and three franchised.

“They have room to build 80 to 100 stores in the next few years,” Anderson said. Tim Hortons (THI) and McDonald’s (MCD) are its two big rivals in Canada, but Panera’s fast-casual style is expected to fill a void.

After so much success, Panera is just now launching in Manhattan, with plans to open three outlets in that urban hub in 2012. “They’ve been less aggressive than Chipotle in Manhattan,” he noted, which has built multiple outlets there.

Anderson says Panera’s move on the Big Apple is part of a threefold strategy. In the future, he says the chain is planning: 1. an “urban assault” on high-traffic urban areas like New York City, 2. building new outlets in malls and strip centers, including drive-through units, and 3. firming up growth in Canada.

With eateries located in only 40 states, Anderson says Panera also has more room to grow domestically. He reckons Panera would likely thrive in Anchorage or Honolulu, where the chain doesn’t have any outlets yet.

Halo Effect

Anderson credits Panera’s competitive edge to its ability to offer quality food while charging only a couple of dollars more than fast-food outlets. “They’re perceived as having a halo effect of being healthier and better,” he said.

Compared to rivals Starbucks (SBUX) and Dunkin’ Donuts (DNKN), Panera has focused on food, not just beverages, says Darren Tristano, an executive vice president at Technomics, a Chicago-based food industry research firm.

But a restaurant chain that grows too fast can skid. “When you grow too quickly, you focus on the next restaurant and can lose track of the ones already open,” Tristano said.

Another factor that could derail growth is higher commodity prices — especially for wheat, Anderson says. If large fast-food chains like McDonald’s, Burger King or Wendy’s copied the healthier sandwiches that Panera sells, it could also hurt sales.

But Panera’s playing it safe. In a tough economy, the chain’s going easy on consumer wallets. Most of its sandwiches and salads are priced from $7 to $9. It also introduced a deal in 2010 where consumers can add a beverage or baked goods for an extra 99 cents with any lunch or dinner entree.

When Anderson visits Panera for lunch, he favors its barbecue chicken salad. It’s filling, and yet only contains 500 calories. He noted that Panera was one of the first restaurant chains to post calorie counts nationwide.

Quality Across The Board

Panera owns 716 of its bakery/cafes and franchises 788 of them. Most of its franchises are owned by large groups that operate 30 to 40 eateries. This helps quality control. Most consumers couldn’t tell if they were dining at a company-owned cafe or a franchise, Anderson says.
Opening a new outlet is costly. The average size of a Panera cafe is 4,600 square feet and costs about $750,000 to build.

Restaurant chains need to be strategic about where they introduce new outlets. Stacking five new eateries in a city where there are already 25 cafes can cannibalize sales, says Tristano.
Opening new outlets is more than about real estate but also demands training employees, says Tristano. Panera is known for hiring friendly employees and creating a warm, comfortable ambiance. In expanding, it must focus on retaining top managers and training employees to maintain its level of customer service.

Panera also tinkers with menu items to please customers and reach new ones. For example, in 2011 it introduced a Thai chopped chicken salad that contains only 390 calories and low-fat wild berry smoothies. Moreover, it’s been making an effort to expand catering services to break open another revenue stream.

“What builds a brand is the emotional attachment a guest has,” Pearce said. “If I take care of the people and deliver great food, then the brand will be wildly successful.”

View the full article on Investor’s Business Daily


Pretty Food, Fast and Still Fairly Cheap

January 31, 2012

Pretty Food

Pretty Food, Fast and Still Fairly Cheap

LOS ANGELES – Fast-food eateries are in the throes of drive-through Darwinism as more upscale upstarts, such as Chipotle Mexican Grill and Panera Bread Co., grab market share from the likes of Taco Bell, Subway and Wendy’s.

Chains that are fancier than fast-food options but cheaper than sit-down alternatives are part of a hybrid sector known as fast-casual that is maturing into one of the food industry’s strongest.

That category is tapping into growing demand for more healthful, specialty foods that are still speedily served and moderately priced. Fast-casual is steadily poaching fast-food customers looking for better quality and sit-down diners seeking cheaper prices, NPD analyst Bonnie Riggs said.

“There’s no end in sight to their growth,” Riggs said. “They’ve delivered on consumers’ value expectations far more than most fast-food places.”

The evolution is happening as the rest of the restaurant industry fights for a shrinking customer base amid a slow economic recovery and high food prices.

Fast-casual is still only a small segment of the industry. But it tripled its market share in roughly the past decade to about 6 percent of restaurants and is the industry’s only segment to grow in the past five years, analysts said. In 2010, major fast-casual chains pulled in $18.9 billion — a 6 percent increase, according to research group Technomic.

“This category has essentially blown through the recession without skipping a beat,” Technomic Executive Vice President Darren Tristano said in a statement.

Formerly known as adult fast food, fast-casual generally includes restaurants that have limited table service and no drive-throughs. They are also often perceived to have higher-end decor, food quality and prices.

But the boundaries are blurring. Eateries such as Carl’s Jr., with its Six Dollar Burger, and foodie favorite In-N-Out straddle the line between fast-casual and fast food.

Drive-throughs are appearing at Panera locations. Some fast-casual chains are experimenting with delivery, usually an option provided by sit-down restaurants.

“We’re going to continue to see more fuzziness in how to define these restaurants,” said Robert L. Sandelman, chief executive of food service research group Sandelman & Associates.

Panera, which has about 1,500 outlets nationwide, is turning in especially impressive numbers. In the third quarter its profit was $28.8 million, up 27 percent compared with the same period in 2010. In late November, the company’s stock price hit a 52-week high of $143.38.

On days when Rancho Cucamonga, Calif., resident Jason Seliskar, 38, doesn’t have time to cook, he and his wife swing by Panera.

“We can get in and get out and still have a relatively nice experience,” the elementary school teacher said. “I can walk away without thinking I gave myself a gut bomb and damaged my body.”

Bakery-cafe restaurants, such as Corner Bakery Cafe, are leading the fast-casual charge, analysts said, followed by so-called better-burger chains such as Five Guys, the Counter and the Shake Shack.

Other fast growers include Asian restaurants, noodle shops and Mexican eateries.

Perceived food quality is key to fast-casual’s rise, according to a survey measuring meal quality by the MarketForce research firm. Customers ranked Panera, Chipotle and Five Guys high while pushing fast-food companies Burger King, McDonald’s and Taco Bell to the bottom.

In the same study, fast-casual restaurants also scored among the best for atmosphere, healthful options and eco-friendly business practices.

BurgerFi, a Florida-based chain, and French chain Planetalis, which opened its first U.S. location in downtown Los Angeles in December, have vegetarian burgers and decor made with recycled materials.

Chipotle recently released popular advertisements touting family farms and emphasizing sustainable and humane practices.

Fast-casual chains also tend to have distinctive decor, such as the international-cafe feel of the Cosi sandwich chain and Pei Wei Asian Diner’s glossy vibe.

“These restaurants offer a more pleasant experience — unlike a fast-food place that’s less clean than you’d like it to be, smelling like grease and small too,” said Jason Moser, a restaurant analyst for Motley Fool. “It’s just the evolution of eating out in general.”

Fast-food chains are far from helpless. McDonald’s, for example, continues to see hefty revenue.

But many chains are feeling the heat. Wendy’s Chief Executive Emil Brolick recently spoke of his company going through an “identity crisis.”

“I’m not for a moment suggesting that we want to try to pretend to become a Five Guys or a Smashburger or something like that,” Brolick said on a call with analysts. “But I do believe that there is a significant opportunity in the market for high-quality products that are fresh and made to order.”

Some fast-food chains have already made shifts in that direction.

Ads from Burger King, KFC and Taco Bell have switched focus from gimmicky characters and low-price guarantees to lush images and descriptions of fresh ingredients.

“Fast food is going to be making a slow but very methodical change toward healthier eating simply out of necessity, or else they’re going to risk becoming marginalized by fast-casual,” Moser said.

Other companies are expanding their specialty and premium offerings, with McCafe and Angus burger lines from McDonald’s, Artisan Pizza from Domino’s and a Steakhouse burger from Carl’s Jr. White Castle is testing alcohol sales as well as an Asian noodle concept, a barbecue joint and a grilled sandwich shop.

And several fast-food chains are upgrading their looks. Subway has begun opening eco-restaurants with recycled materials and solar panels. Wendy’s has new store prototypes that take design cues from Frank Lloyd Wright and allow patrons to watch their food being prepared.

But it may take more to win back customers such as Pasadena, Calif., photographer Justin Saiki, 30, who grew up eating fast food but said that “things are different now.”

Now that he’s more health-conscious, he eats at Five Guys about once a week and occasionally at Chipotle, where the food seems fresh instead of “pre-made and sitting on a warmer,” he said.

“It all goes back to quality,” Saiki said. “You just don’t feel as guilty.”

View the full article on Portland Press Herald


Let Them Eat Cupcakes

January 31, 2012

Let Them Eat

Let them eat cupcakes: Trend hits the region in a big way

Vanilla to red velvet, mini to jumbo — the cupcake craze is going strong in the Mohawk Valley, and for some, baking means big business.

Nationwide, cupcakes have been a hot item. Between 2006 and 2010, cupcake sales increased between 9 and 13 percent each year, according to the Perishables Group, a Chicago-based fresh food consulting firm.

“Cupcakes are thriving because they meet many current consumer hot buttons — indulgence, single-serve and convenience,” said Perishables Group spokeswoman Kelli Beckel. “They make cake an everyday eating occasion and allow shoppers to try new flavors.”

Locally, the confection has not only given rise to new specialty shops but also has increased the sales of established businesses.

Saving time and dough

The emergence of cupcakes began in 2008, around the time the economy started to struggle, said Darren Tristano, executive vice president of Technomic, a food-industry consulting and research firm.

Sweet desserts are similar to alcohol in that sales tend to increase with difficult financial times, he said.

“It’s still an affordable luxury,” Tristano said.

In spite of a struggling economy, specialty stores continue to open.

Candies N Cupcakes on North Madison Street in Rome, owned by Liz Davis opened Halloween weekend and had its grand opening the first weekend of December.

Davis, 26, was working out of her home for two to three years, selling cupcakes at farmers markets and for special events, she said.

It wasn’t until she was approached by Rome Mayor James Brown that she thought about opening a retail location, Davis said.

The city’s small business program and a matching loan from the Small Business Administration helped to make her store a reality, Davis said.

“People are purchasing them for weddings, baby showers, birthday parties and holiday parties,” she said.

Davis said she already has several weddings scheduled for this summer.

Cupcakes here to stay

Celebrating its 56th year in business, Holland Farms in Yorkville always has sold cupcakes, but they were made to order, said co-owner Marolyn Wilson.

“Now, we’re putting them out every day,” she said. “We’re probably making four or five times more than we’ve ever made before.”

The trend started ramping up several years ago, Wilson said, but it didn’t hit the Mohawk Valley right away. There is no denying the popularity now.

Wilson said this year the bakery will dub January “Cupcake Month.”

The hand-held dessert is not just for kids anymore, with more exotic and adult flavors such as pina colada and mocha chocolate, Wilson said.

“People can take one home and feel as if they are really giving themselves a treat instead of having to buy a whole cake,” she said.

In many areas of the country, specifically in larger cities, the cupcake market has reached saturation, Tristano said, while other areas will continue to see the trend grow.

Mintel Group, a marketing research firm, also expects the fad to continue.

“I would anticipate we will see the cupcake trend continue to develop, with perhaps more options that are better for you … with products that are customizable and with continued flavor variations,” said Jennifer Ballard, public relations coordinator for Mintel.

Locally, independent stores might continue to crop up.

Sugar Babes Cupcakes, owned by Kelli Grimaldi-Vance and Terri Puleo-Donato, is expected to open on Genesee Street in New Hartford in January.

“It started out through a discussion over a glass of wine where we said, ‘Let’s do cupcakes,’” Puleo-Donato said. “The next week we baked for a friend and it just grew from there.”

The largest growth for the business has been in catering for corporate events, she said.

Sugar Babes has been operating by renting local kitchens, but after an entire year and increasing demand, they will open a storefront.

“We’re very excited because we know there’s definitely a need for it,” Puleo-Donato said. “It’s a fun food. It makes people smile.”

View the full article on Observer Dispatch


Miami Subs Rebrands, Offers New Franchising Opportunities

January 31, 2012

Technomic Report

Miami Subs Rebrands, Offers New Franchising Opportunities

Renovate, relocate or terminate. That’s Richard Chwatt’s mantra as the CEO of The New Miami Subs Grill rebrands a concept born when the Bee Gees and white suits with black T-shirts were in vogue.

Chwatt bought Miami Subs Grill for $3.2 million from Nathan’s Famous in June 2007, according to SEC filings. Nathan’s purchased it in 1999 from founder Gus Boulis, who was gunned down in a gang-style slaying in 2001.

Chwatt is revamping the menu and replacing the chain’s Art Deco décor with warmer earth tones.
Chwatt’s company also has been developing a new concept dubbed OMG (Oh Miami Grill), a sports-themed bistro with a tapas-style menu, full bar and “plenty of big-screen TVs,” said Miami Subs VP Frank Baran.

The company wanted its first OMG to be at Fort Lauderdale-Hollywood International Airport, but an expansion and terminal renovations threw a monkey wrench into those plans.

“We had all of the necessary approvals, but were unable to get an agreement going forward,” Baran said. Where the airport OMG will go is uncertain.

Chwatt is in talks to become the signature restaurant at the new Miami Marlins ballpark, though no deal has been inked yet.

The OMG concept’s footprint is about 5,000 square feet, double that of the average Miami Subs. Plans are to grow both concepts to 500 franchised units within five years. Chwatt doesn’t plan any corporate-owned locations.

“I don’t like to compete with our franchisees,” he said. “We want to train them and show them how to operate.”

The franchise fee for both Miami Subs and OMG is $30,000. Total investment for Miami Subs is $300,000 to $600,000, depending on buildout costs. The company did not have a total investment for the OMGs.

Chwatt had no restaurant experience before purchasing Miami Subs. He has teamed with attorney Bernard Vogel and hedge fund manager Bruce Galloway, who formerly owned Arthur Treacher’s Fish and Chips. Chwatt is co-owner of Boca Raton-based financial services company Jericho State Capital.

“I have always managed and consulted to corporations,” Chwatt said during an interview at one of Miami Subs’ newly renovated restaurants on Commercial Boulevard and Powerline Road in Fort Lauderdale. “This was just another business, but it had food as its ingredient.”

The menu is being tweaked to include more healthy choices, including Grandma Robyn’s oatmeal pie (named after Chwatt’s wife) for breakfast. In January, the company will formally introduce a “heart healthy” menu.

“We bought [the company] with the idea of adding heart-healthy food,” Chwatt said.
Although “subs” will remain part of its name, the No. 1 seller is chicken wings, followed by cheese steaks. Baran said subs are just 5 percent of the sales.

A recent report by Technomic, a Chicago-based restaurant consulting firm, found that restaurant operators are rolling out healthier menus for consumers with health and dietary concerns.

Another Technomic report found steady growth in breakfast sales, but plenty of opportunity in an unsaturated market.

Technomic estimates breakfasts are 12 percent of the total restaurant industry, generating about $42 billion in annual sales.

“Breakfast is a very dynamic segment in which consumers are looking for healthier options and place a premium on convenience,” Technomic Executive VP Darren Tristano said.

Since its renovation, revenue at the Commercial Boulevard Miami Subs has more than doubled, which Chwatt attributes to new menu items and a nicer environment that includes Wi-Fi and big-screen TVs.

The average cost of a renovation is about $150,000. He said the company is helping franchisees find financing. Those who do not want to renovate will not have their franchises renewed, Chwatt said.

“Rebranding and reimaging is key to growth,” he said.

View the full article on South Florida Business Journal


Industry Experts Forecast 2012 Trends

January 30, 2012

Industry Experts

Industry experts forecast 2012 trends

Nation’s Restaurant News asked some of the industry’s top trend-watchers to discuss what they expect in the year ahead. Here are their top predictions:

Hudson Riehle, senior vice president, research, National Restaurant Association

There’s no economic rebound to prosperity, but it will continue to be a better environment than it was in 2008, 2009 and 2010.

Restaurants will benefit from pent-up demand. Two out of five American adults said in a recent survey that they are not using restaurants as often as they would like. Even modest employment growth should boost confidence and cash on hand, encouraging consumers to return to restaurants.

Food costs will remain a huge challenge, with wholesale food price inflation running at 8 percent — the highest it’s been in three decades. Operators won’t be able to pass on high input costs on a one-to-one basis, so the focus will remain on driving out costs while hopefully growing sales.

Darren Tristano, executive vice president, Technomic Inc.

Consumers hesitant to spend want twists on the familiar, such as comfort foods with gourmet, ethnic artisanal or wood-fired flare, and innovative sandwiches, wraps, pizza and pasta.

Commodity costs will drive rustic fare made in-house as operators stop buying value-added items in favor of cheaper cuts, beans, grains and produce that require more back-of-house prep to make into honest, home-style food.
Seasonal and local sourcing will continue to grow, driven by a less-is-more culinary trend and the need for a more transparent and efficient supply chain.

Read more: http://nrn.com/article/industry-experts-forecast-2012-foodservice-trends#ixzz1iQqw0cRp

View the full article on Nation’s Restaurant News


Wendy’s Hopes Brand Will Score Hit in Japan

January 29, 2012

Wendy's Hopes

Wendy’s hopes brand will score hit in Japan

Wendy’s newest restaurant opened this week, offering its sea-salt french fries and Dave’s Hot ’n Juicy burgers, along with shrimp patty sandwiches, truffle and porcini mushroom baked potatoes and melon soda.

Welcome to Tokyo.

Wendy’s Co. re-entered the Japanese market after closing all 71 of its Wendy’s restaurants in the country in December 2009.

At the time, Wendy’s cited the then-franchiser’s failure to meet expectations for development growth and reinvestment in the business.

The company announced in March that it is returning to the country with a new partner, Tokyo-based Higa Industries Co. Ltd., a food importer and distributor.

This time around, Wendy’s sees the potential for as many as 700 restaurants, spokesman Bob Bertini said.

The plan is to open 100 restaurants in Japan in five years, said Darrell van Ligten, president, international, of Wendy’s. And the new restaurants will all offer Wendy’s core products as well as feature foods designed to appeal to Japanese tastes, he said.

That includes an avocado wasabi hamburger and a truffle and porcini grilled chicken sandwich, he said.

“We’ve added a bit of the spiciness to the food, which speaks to the Japanese palate and communicates to the Japanese consumer that this concept is for them,” van Ligten said.

Perhaps the most distinctive — and costly — item is a $16.45 burger with foie gras and truffles. It’s not scheduled to show up on Wendy’s menus in the U.S., by the way.

Catering to the local consumer’s taste and food trends is key for any restaurant that looks to take its brand overseas and wants to be successful, said Darren Tristano, executive vice president of Technomic, a Chicago restaurant- and food-research group.

Some restaurant chains have tried to re-create their concept overseas instead of adapting to that particular market, he said.

But that doesn’t always reflect well with consumers, Tristano said.

“Since Wendy’s has been in the Japanese marketplace before, they will have a base understanding of what to expect from consumers there,” he said.

“Consumers, especially younger consumers, are looking for more-adventurous flavors and foods. Restaurant operators have to understand the regional and national flavors, the food types and the consumers in order to optimize success.”

Wendy’s partner in Japan, Higa Industries, is led by Ernest Higa, who owned and operated 180 Domino’s Pizza stores in Japan before selling that business in February 2010, the company said.

Higa Industries will have a 51 percent ownership stake in the venture. Wendy’s International will own 49 percent.

Tristano, of Technomics, said he thinks Wendy’s will do well in its return to Japan.

“Wendy’s, as an American and an iconic brand, has a very high level of visibility as a global brand,” he said. “And Wendy’s has done well in the current environment in the U.S.

“And, like McDonald’s and Burger King, Wendy’s has a great chance to succeed in Japan.”

View the full article on The Columbus Dispatch


Diner to Get New Life as a Y Drive In Building Housed Rock’s in Huntsville

January 28, 2012

Diner To Get

Diner to get new life as Y Drive In

HUNTSVILLE – A rusty sign that reads Rock’s Drive In stands in front of what used to be a thriving diner locals call the “Y.” The vacant two-story diner is run down, with rotting thresholds and flooring, but residents ask regularly when the old diner will reopen, said Darrell Frederick, who bought the building in October.

“I want to bring the place back,” Frederick said.

Frederick plans to use the locals’ nickname – which refers to the Y-shaped intersection of U.S. 412 and Arkansas 72 – when he opens the new Y Drive In this spring, he said.

Nationwide, more people are taking their chances and opening restaurants as the economy recovers, said Darren Tristano, executive vice president at Technomic, a food industry research and consulting firm in Chicago. But in Arkansas, not a lot of people leave stable jobs to start their own restaurants, said Montine McNulty, executive director of the Arkansas Hospitality Association.

That’s just what Frederick, 36, plans to do when he leaves his longtime job with Packers Sanitation Service Inc. in Huntsville to run the diner. The single father said he plans to give up a good income of about $1,600 each week for something he is passionate about – running his family’s former restaurant.

The restaurant first opened in 1965. Frederick’s parents, Dixie and Troy Frederick, bought the diner in 1972 and ran it as Troy’s and Dixie’s until they retired and sold the business in 2006, Frederick said.

The new owners struggled, then closed Rock’s Drive In. A lender took over the property last year, courthouse records show.

Frederick said the diner sat empty for several years. Courthouse records show Dixie Frederick bought the building for $36,000 in July and then the title passed to her son.
The county appraised the building at $77,450 this year, down from $117,950 in May 2008, courthouse records show.

Nationwide, the restaurant industry has churned, with about 4,000 restaurants a year closing since the recession started, Tristano said. Many of those reopened under different owners, he said.

There are about 70 food service establishments in Madison County, Arkansas Health Department spokesman Ann Russell wrote in an e-mail. Restaurants have opened and closed in the county over the past few years, but the number has remained consistent, she said.
Arkansas has roughly 13,500 food-service establishments, about the same as previous years, she said.

The state does not track the number of family-owned diners, McNulty said. Tristano estimated there are only about 5,000 drive-in diners in the U.S. that are family run.

Frederick said he knows he has his work cut out for him. He expects renovation costs to run about $150,000. The diner is in bad enough shape that Frederick calls it “the beast.” On an overcast December afternoon, Frederick opened the diner’s doors to let in light. The cinder-block building hasn’t had running water or electricity for years. Dusty, commercial-grade kitchen equipment is stored with arcade machines that Frederick bought for the second-floor room. He has two jukeboxes he bought in Tulsa and plans to install.

While standing in what will be the game room, Frederick talked about dinner menus that will include fried chicken and hamburgers. He is considering whether to reopen the spots where cars used to park at the drive-in. He said he wants to add a play area with balls for children to bounce in.

He envisions his 7-year-old daughter spending time in the restaurant after school, and Huntsville teenagers making the place a hangout.

“It will be a queen when I’m done,” Frederick said while looking over the old diner. “It will go from beast to beauty.”

View the full article on Arkansas Democratic Gazette


Asian Appetite for Burgers Boosts McDonald’s Sales

January 27, 2012

Asian Appetite

Asian Appetite for Burgers Boosts McDonald’s Sales

By KEVIN HARLIN, INVESTOR’S BUSINESS DAILY Posted 12/08/2011 12:49 PM ET

The world’s largest burger joint posted a better-than-expected bump in November sales, with China and Japan leading the way. Diversified menus helped McDonald’s (MCD) in the U.S. But sales also grew in the tough European market.

Sales climbed 7.4% globally at restaurants open at least a year, with analysts expecting 4.6%. The U.S. and Europe both reported 6.5% gains, with the Asia, Pacific, Middle East and Africa division posting 8.1% hike.

Shares gapped up on the news and traded around 97.60 early in the session.

“We’re listening to our customers and delivering what they expect from McDonald’s by optimizing our menu, modernizing the customer experience and broadening accessibility to our brand,” the chain’s CEO, Jim Skinner, said in a statement.

Fast-food chains, such as Burger King and Wendy’s (WEN), have seen growth muted by the “better burger” segment of the market, including shops such as Smashburger and Five Guys that offer a slightly more expensive, higher-quality burger, said Darren Tristano, executive vice president of restaurant consulting firm Technomic.

“But I think McDonald’s has done a great job of broadening their menu and diversifying away from the burger,” Tristano said.

The company has added chicken sandwiches, higher-margin smoothies and other items in recent years that help it compete outside of the burger category, against chains such as Dunkin’ Brands (DNKN) and Starbucks (SBUX).

McDonald’s in October posted a 14% hike in third-quarter sales, and a 12% rise in EPS. It plans to release fourth-quarter results on Jan. 24. Analysts now call for an 8% rise in revenue, and a 9% gain in earnings.

View the full article on Investors.com


Vojnovic, Bratic Have Big Plans for Little Greek

January 26, 2012

Big Plans

Vojnovic, Bratic Have Big Plans for Little Greek

The former president of Beef ‘O’ Brady’s is back on the Tampa Bay restaurant scene with ambitious plans for a Greek concept.

Nick Vojnovic, who left the family sports pub chain in June 2010, now is president of the Little Greek Restaurants chain.

Vojnovic envisions 25 Bay area Little Greek restaurants in five years and 100 across the country in 10 years. So far he’s sailing on smooth waters with plans to open five restaurants in the first half of 2012.

Vojnovic reviewed various concepts before signing on with founder Sigrid Bratic and becoming a 70 percent shareholder in Little Greek Franchise Development LLC. in May. He saw a promising business model and untapped demand for fast-casual Greek food.

“When I came on board I said I was looking for a small franchise company I can grow,” Vojnovic said.

There are five Little Greek restaurants, including three owned by Bratic. A franchise location owned by Fotis Giannoisis is set to open in Westchase in Jan. 12, and Bratic is on track to open restaurants in Tampa and St. Petersburg in January and March, respectively.

Part of the strategy is that Bratic will open restaurants herself, build them to her specifications and sell to franchisees once established.

“It’s much easier for a franchisee to come in with an existing cash flow,” Vojnovic said.
On the east coast of Florida, a franchisee is scheduled to open a restaurant in the second quarter of 2012.

Little Greek is scouting out space in South Tampa for the possible opening of a company-owned restaurant around the same time.

A niche in Greek

The Greek segment of Mediterranean cuisine feeds Americans’ growing desire for healthy, tasty food, said Darren Tristano, executive vice president of Chicago-based food research firm Technomic Inc.

The “under-penetrated” segment has few national players. The largest is Daphne’s California Greek, a chain based in Carlsbad, Calif.

Competition will come from independent restaurants more than from chains, Tristano said.
In addition, the lower price points and a faster experience of the fast-casual segment continue to be a draw.

It’s an opportunity that if well-executed can fit the needs of American consumers well, Tristano said.

Another part of Little Greek’s strategy is to offer a lower turnkey investment, or total opening cost, of around $150,000.

Vojnovic expects the average location to generate $12,000 to $13,000 a week, making the investment-to-sales ratio about four-to-one.

Little Greek will offer such investment costs in part by targeting “second-generation” restaurant space, or sites that became open when restaurants went out of business.
The Carrollwood location, for example, previously was a Quiznos Restaurant, and a South Tampa site under consideration was a Wingstop.

Restaurants have turned to second-generation space to save costs, said Brian Bern, senior director with Franklin Street Real Estate Services, a Tampa firm working with Little Greek to find space.

“It was definitely a trend that came from the recession with a lot of restaurants that didn’t make it,” Bern said. “The ones who had cash took advantage and were able to expand.”
Retrofitting an old restaurant as opposed to remodeling or building from scratch can save a new restaurant owner impact fees, infrastructure costs and other expenses.

Despite rough economic times, good sites come and go quickly. Bern found out about Little Greek’s Westchase location of roughly 1,050 square feet through conversations with the landlord.
“We’re able to strategize on which areas make sense,” Bern said.

A Little Greek history

Little Greek began in 2004 when Sigrid Bratic bought the Happy Greek restaurant in Palm Harbor. After renaming and updating, she opened restaurants in New Port Richey and Feather Sound in 2008. Little Greek’s first franchise restaurant opened in September 2010 in Richardson, Texas. Three months later Bratic sold the Palm Harbor restaurant to franchisees and it became the second franchise location. Bratic opened a Little Greek in Carrollwood in September 2011.

View the full article on Tampa Bay Business Journal


First at the Jersey Shore; Joe’s Crab Shack Opening at Mall

January 26, 2012

First At

Joe’s Crab Shack opening at Monmouth Mall

EATONTOWN — Seafood chain Joe’s Crab Shack opens its first restaurant at the Jersey Shore on Tuesday, the latest change at the Monmouth Mall in Eatontown.

The 284-seat restaurant, located in a separate building on the ring road across from AMC Loews Monmouth Mall, is the fourth Joe’s in New Jersey. The others are located in South Plainfield, Lawrenceville and Clifton.

Its menu features crab, of course, and shellfish. “Crab’s our middle name,” said Jim Mazany, chief operating officer at Joe’s Crab Shack. With its beach theme, food is served in buckets and steampots with flavors that are reminiscent of a cook-out on the beach, he said. Staff dress in tie-dyed shirts. It also has an enclosed patio that can be opened in warmer weather.

“It is serious food that we serve, but we serve it in a fun, high-energy wave,” Mazany said.
Following the 11 a.m. ribbon cutting on Tuesday, the first 100 customers served will receive a voucher for a free Snow crab bucket every month for a year.

Joe’s Crab Shack is the fourth-largest seafood chain, with $312 million in sales in 2010, according to Technomic, a Chicago-based research firm. Other chains in the industry include Red Lobster, the largest; Bonefish Grill, which earlier this year opened a restaurant in Middletown; and McCormick & Schmick’s Seafood Restaurant.

Once owned by Landry’s Restaurants Inc., Joe’s was sold to Houston, Texas-based Ignite Restaurant Group in 2006. Ignite also owns Brick House Tavern + Tap, which has a location in South Plainfield.

Joe’s has started to reinvent itself, adding new locations, said Darren Tristano, executive vice president at Technomic

“It really is a nice turnaround story in terms of where they have been and where they seem to be heading,” Tristano said. “They have got a fun lively atmosphere.”

Kevin Sargent, a Tinton Falls resident, was at the restaurant on Thursday for lunch as servers trained ahead of the Tuesday grand opening. From Ohio, he has been to Joe’s before.

He liked the atmosphere at Joe’s. During the service, the restaurant’s staff broke into a celebration dance to the 1990s hit by Quad City DJ’s “C’Mon ‘N Ride It (The Train).”

“The food’s delicious, very good.” Sargent said.

Joe’s Crab Shack has opened 10 restaurants this year, including the Clifton restaurant, Mazany said. It expects to open about the same number or more in 2012.

“New Jersey has had a great history as a great place to do business and obviously a great history of success,” Mazany said. “We are looking up and down the coast of New Jersey and inland as well.’’

Its location at the Monmouth Mall “was really a good match up for what we look for in our guest base.”

Monmouth Mall has been a hub of activity this year.

In October, Boscov’s reopened after closing its store after it filed for bankruptcy in 2008, a victim of the deep recession. At the same time, Monmouth Mall completed its interior renovation, including new floors, paint and a color scheme, part of a $30 million investment, which included the purchase of the Boscov’s building.

View the full article on Asbury Park Press