Max & Erma’s Goes Back to Roots to Attract Diners

December 28, 2012

Columbus-based restaurant chain battles back from bankruptcy with store makeoverspic

The Beavercreek location of Max & Erma’s chain is the first of the three corporate- owned Dayton area restaurants to undergo an extensive renovation. Brandi Whitmer, a server at the restaurant, brings food to Jean Haus of Beavercreek and her son Tom Haus of Dayton and his daughter Karina, 3.

The venerable Max & Erma’s restaurant chain is battling back from bankruptcy with new leadership, a back-to-basics approach, and a little freshening up.

Nearly all of the 73 restaurants in the chain are getting some type of a makeover. The Max & Erma’s in front of the Mall at Fairfield Commons in Beavercreek, which opened 19 years ago, held a ribbon-cutting and grand reopening last week after shutting down for a week in mid-November for extensive renovations.

The Max & Erma’s on Miller Lane in Butler Twp. is in line for similar remodeling in mid-January, with the Springboro location off Ohio 741 likely to follow later in 2013, according to Max & Erma’s President Steve Weis. Renovation plans are not yet finalized for a franchise-owned Max & Erma’s inside the Dayton International Airport.

Weis, who has held the top job at Max & Erma’s for about seven months, said the makeover is “long overdue.” The restaurants are adding new tables and chairs, a gas fireplace to the dining room, more flexible seating arrangements in the bar and new carpet throughout. Across the chain, Max & Erma’s will spend about $3 million on the upgrades this year, and while the costs vary by store, many locations will spend “a couple hundred thousand (dollars) at least” on the renovations, the company president said.

Customers are warming to the changes: Max & Erma’s same-store sales have been up for eight consecutive months, and the Columbus-based chain is outperforming its competitors in the casual dining category of the restaurant industry, Weis said. “People are coming back,” he said.

Max & Erma’s competes against some industry heavyweights in the bar-and-grill portion of the “casual dining” segment, including a “big three” of Applebee’s, Chili’s and T.G.I. Friday’s, according to Darren Tristano, executive vice president for Technomic, a Chicago-based food service research and consulting firm.

The last five years have been a struggle for most restaurant chains in this casual-dining category, with sales declining quickly as the economy slid into recession, Tristano said. Most chains’ sales flattened out following the decline and have now started to bounce back. But even those higher year-over-year monthly sales figures that Max & Erma’s and some of its competitors are showing are not all that impressive because they they are “against comparable numbers from a year ago that were not very good,” Tristano said.

The type of exterior and interior renovations that Max & Erma’s has undertaken will help retain its most loyal customers and will give “lapsed” former customers and those who have never visited a reason to dine there, Tristano said. But the makeover can’t do the job alone. “You still have to have the right menu, the right service, and the right experience” to ensure long-term success, he said.

Weis knows a little something about his competition in the casual-dining segment: he was serving as regional vice president at Thomas & King Inc., one of Applebee’s largest franchisees, when he was hired away in July 2011 to serve as Max & Erma’s vice president of operations. He was promoted to president in May 2012.

The casual-dining chain’s parent company is Denver-based American Blue Ribbon Holdings, which bought the company out of bankruptcy for $27.5 million in September 2010 and which also owns restaurant chains Village Inn and Bakers Square.

It was a long, hard slide for Max & Erma’s, which four decades ago was one of the two pioneers of the casual dining segment along with TGI Friday’s. Over the years, chains such as O’Charley’s, Ruby Tuesday, Bennigan’s, Buffalo Wild Wings, Applebee’s and Chili’s crowded into the casual dining pool, sparking intense competition.

Once a publicly traded company before it was purchased in April 2008 by Pittsburgh entrepreneur Gary Reinert Sr., Max & Erma’s had more than 100 corporate-owned and franchised stores in 2006, but had dropped to about 80 by the time it filed for Chapter 11 bankruptcy in late 2009. It closed its first Dayton-area restaurant on Kingsridge Drive behind the Dayton Mall in Miami Twp. just a few weeks after the bankruptcy filing. Today, Max & Erma’s operates 73 restaurants — 52 corporate-owned, 21 franchise — in nine Midwestern states.

Weis said Max & Erma’s strayed from its roots under previous owners.

“We started as a neighborhood gathering place,” Weis said. “They got away from the neighborhood gathering space, and the restaurants started looking more formal” — and more like many of its competitors. The current renovations reflect a back-to-basics approach, with a more open feel, with high-top tables in the bar replacing four-person booths and allowing customers to move tables together to accommodate large family gatherings or office get-togethers.

The company president said he recognizes his task will be difficult. In addition to the stiff competition within the casual-dining segment, Max & Erma’s is feeling heat from “fast-casual” chains such as Panera and Chipotle, from “better-burger” chains such as Smashburger and Five Guys Burgers and Fries, and from independent bar-and-grill owners. But he is buoyed by the chain’s recent successes and remains optimistic.

“The greatest thing about Max & Erma’s is that our customers really do love us,” Weis said. “They had been disappointed with how it was run under the previous ownership. Now we are just focused on serving our customers and executing our plan.”

Many New Yorkers Were Opposed to the Sugary Beverage Ban

December 27, 2012

12-12_0Our athletes went to the Olympics, our science went to Mars, and our people went to the polls. But what of the restaurant industry in 2012? These dozen items from the year had the biggest impact on the foodservice landscape and shaped the industry for a potentially game-changing 2013.

An Economy in Flux

The economic recovery isn’t lighting a fire under anyone’s feet, but the economy did at least improve, albeit slightly.

As of August, the National Restaurant Association’s (NRA) Restaurant Performance Index had been positive for nine consecutive months. It has since been weakening, however, indicating operators are less optimistic about economic conditions going into 2013.

“In the winter quarter [of 2012], we started to see things looking good,” says Bonnie Riggs, restaurant analyst with NPD Group, a Chicago market research company. “We thought we turned the corner. But then gasoline prices increased and people pulled back.”

The Congressional Budget Office’s outlook is for the economy to grow less than 2 percent in 2013. The Conference Board, a business group, is slightly more optimistic, estimating growth at 2.2 percent.

However, if Congress fails to avert a series of tax hikes and budget cuts due in January—the so-called “fiscal cliff”—analysts warn another recession could ensue, which could undo any kind of progress quick-service operators have made.

Health Headaches and Solutions

Health issues continue to impact restaurants, both in menu development and how operators deal with the Patient Protection and Affordable Care Act (PPACA), also known as “Obamacare.”

The U.S. Supreme Court this year upheld the constitutionality of most of PPACA.

Many restaurants may need to undergo some significant cost analyses next year to prepare for a wide range of regulations scheduled to begin in 2014.

“We’re going to see a lot of financial modeling going forward, and deciding how to manage the costs,” says Dennis Lombardi, executive vice president of foodservice strategies at WD Partners, a Columbus, Ohio, design and consulting firm. “It seems the way it may be playing out is to find ways to keep employee hours down and make more of them part-timers.”

One portion of the act that may go into effect in 2013 requires chain restaurants with 20 or more locations to display calories on menuboards.

Many companies have decided not to wait for the law’s implementation, though, including McDonald’s. In September, all of McDonald’s 14,000-plus U.S. restaurants began listing calorie counts on menuboards.

The proactive move by McDonald’s “is a real positive,” says Darren Tristano, executive vice president of Technomic Inc., a Chicago consulting and market research firm.

The calorie numbers “may be more of a shock at first, but when [consumers] return, they will still want to indulge,” Tristano says. “That’s what you do when you go out.”

Meanwhile, all types of limited-service operators began offering better-for-you alternatives, from oatmeal to sweet potato fries.

The Big Soda Ban

Any consumer who plans to visit a restaurant in New York City in March or after shouldn’t expect to buy sugar-sweetened beverages larger than 16 ounces. They’re outlawed.

In a stated bid to combat obesity, the city’s Board of Health instituted the ban at eateries, movie theaters, and other venues.

Restaurants call the action unfair, in part because it still allows larger drinks to be purchased at retail outlets and convenience stores. Whether the ban sweeps across the country, like the city’s earlier action against trans fats, is still up in the air.

“We’ll have to take a wait-and-see approach,” Technomic’s Darren Tristano says. “I suspect if history serves us, it will likely become a political issue … and likely will spread to other cities.”

Commodity Costs Rise

The most severe drought in a quarter century has had a serious impact on U.S. agriculture and food prices. The damage done to corn and other crops was extensive and resulted in higher direct and indirect costs.

Many ranchers are running out of grass. Unable to grow enough feed crops—or unwilling to pay for higher priced feed—they are thinning their herds by selling cattle early. That will likely result in fewer cattle going to market next year, making beef and other proteins more expensive, according to the U.S. Department of Agriculture (USDA).

Wholesale beef prices were already up 10.5 percent by 2012’s third quarter, while poultry prices increased 11.5 percent. Heat stress and higher feed costs are expected to reduce pork production as well, the department says.

“If you look at the USDA forecast for a year ago, there was no contingency for a drought of this severity and duration,” says Hudson Riehle, senior vice president of the NRA’s Research and Knowledge Group.

Interactive Imitation

Consumers increasingly want to know more about what’s in their food, and also desire the ability to customize their dishes more than ever before. For years, quick-service concepts such as Chipotle and Subway have capitalized on this desire by giving guests the ability to craft their own dishes, choosing from an array of fresh ingredients.

In 2012, this build-your-own strategy continued to become more rule than exception, expanding into categories like pizza and even ethnic concepts. Newer brands, such as Pie Five, Atlanta’s Uncle Maddio’s, and Washington, D.C.’s Amsterdam Falafelshop, are now thriving on the model.

“We expect to see this basic model growing,” Tristano says. “Customers want to be part of the process, and the visual impact is important. Interactivity engages the customer. This is an emotional connection that makes loyal fans of these restaurants.”

A New Kind of Trade Down

Most of the restaurant industry suffered during the recession, but fast-casual restaurants still performed well. Folks may not have been eating out as often, but when they did, they were looking for quality and value. Many found those attributes at Chipotle, Panera Bread, and their fast-casual peers.

Numerous full-service restaurant companies took notice.

“Casual-dining chains continue to look at whether they have a limited-service opportunity,” Lombardi says. “It allows them to extend the reach of their brand, and in some cases move into areas where full service may not work as well.”

Abuelo’s Mexican Restaurant is one of the latest casual chains to open a fast-casual offshoot, which it did this year with its Abuelo’s Taqueria in Lubbock, Texas. The menu items and pricing are focused on promoting frequent dining.

The opening comes on the heels of several new ventures launched by casual chains in late 2011, including Red Robin’s Burger Works and Pizza Inn’s Pie Five.

Pie Five, which makes handcrafted pizzas in five minutes, has more than a half-dozen corporate-owned locations in the Dallas area.

“We will be looking at other markets [in 2013] from a corporate standpoint, as well as domestic and international franchising,” says Madison Jobe, senior vice president and chief development officer for Pie Five and Pizza Inn.

Other chains launching fast-casual units included Steak ‘n Shake, with its Signature unit in New York; Shoney’s, with Shoney’s On the Go; FATZ, with Tablefields Market Kitchen; and global beef bowl giant Yoshinoya, with Asiana Grill Yoshinoya.

Ethnic Flavors Gain More Exposure

Americans have made Italian, Mexican, and Chinese cuisines their own, so why not something like Vietnamese or Indian?

Pho, a noodle soup, and banh mi, a sandwich typically made with French bread, are some of the latest cultural dishes to hit the mainstream, often with a U.S. twist.

“People were drawn first by the pho, but now banh mi is very popular, especially as a reimagined American sandwich,” says Melissa Abbott, senior director of culinary insights for The Hartman Group, a research and consulting firm in Bellevue, Washington.

“You have a sandwich on really good French bread filled with really fresh ingredients,” she notes. “It has a flavor that is heightened by various fresh herbs and vegetables.”

Tin Drum AsiaCafé, which has 11 units in the Atlanta area, serves cuisines from around Asia, including pho. Owner Steven Chan says the chain had banh mi on the menu a decade ago and may bring it back “because it’s getting popular again.”

Giving an American twist to Indian food is what Qaiser Kazmi is doing in Washington, D.C. His restaurant, Merzi, features Indian-inspired cuisine with U.S. touches. For example, Merzi serves tandisserie chicken, which is tandoori chicken cooked rotisserie style.

“Our cuisine is not directly from India,” Kazmi says. “We would never leave skin on chicken back there. But I fell in love with rotisserie chicken and wanted to combine that with something that has Indian flavors.”

The Reverse Food-Truck Trend

For Kim Ima, opening the Treats Truck Stop in Brooklyn last year was the logical next step for the owner of a popular food truck.

“I like that I had established my business before opening the storefront,” she says of her truck, the Treats Truck, which has served treats and drinks since 2007. The restaurant offers homey comfort food for breakfast, lunch, and dinner.

Food-truck operators across the country, from Boston to Los Angeles and Houston, are similarly turning to brick and mortar.

In the five years since the gourmet food-truck phenomenon began on the coasts, thousands of these vehicles have hit the nation’s streets, giving budding restaurateurs a relatively inexpensive entry into the business. But it’s not easy.

“You’ve got this small space, gas costs, repairs, weather, licensing—all kinds of issues,” says David Weber, president of the NYC Food Truck Association. “So a lot of food-truck entrepreneurs, once they develop a brand, are looking for more stability. It’s logical to take their concept and give it a home.”

The Future of Social Media is Here

Now that many restaurants have found ways to take advantage of Facebook, Twitter, and YouTube, they’ve moved on to other, newer social media platforms, such as Pinterest.

Pinterest is akin to a visual bulletin board, where images can be “pinned” to virtual boards. They can be downloaded to the board or can be taken from (and linked to) other websites.

Dunkin’ Donuts, for example, uses photos on Pinterest to link to various events, as well as products, including limited-time offers.

“Pinterest seems a way for the social media strategy to involve more of the customer and the community,” Tristano says. “Instead of pushing out from the company, this is trying to draw customers in to be part of it, to have a shared experience.”

Don’t Forget Boomers

While focusing on Millennials is all the rage, many restaurant operators also understand that Baby Boomers still make up a lot of the nation’s buying power. Members of the generation are looking to dine at places that feature unique flavors and provide plenty of value.

“It’s really the Boomers and those over 65 that are keeping the [restaurant] industry from experiencing a decline,” NPD’s Riggs says. “Boomers are increasing their visits to all restaurant types, but particularly quick service … and fast casual.”

Of course, younger diners typically will be the first to hear about new and exciting limited-service restaurants.

“The Millennial kid knows where the cool stuff is and will tell mom and dad to try it,” Abbott explains. “They are more tapped into the social network. But the parents are increasingly curious to try new places. In the past, that may not have been so.”

Exploring the IPO

One major quick-service restaurant company went to market this year with a big stock deal, while another chain’s plans to go public didn’t get off the ground.

Burger King took its crown back to Wall Street. The Miami-based company’s shares began trading publicly through an unusual deal in which investment firm Justice Holdings paid $1.4 billion to acquire a 29 percent stake from owner 3G Capital.

CKE Restaurants, the Carpinteria, California, parent of Carl’s Jr. and Hardee’s, had planned a $200 million public offering but delayed it. Concerns were raised about the impact of required health-care costs and rising commodity prices.

“The market was willing to give restaurant companies a premium valuation early in the year,” says R.J. Hottovy, restaurant industry analyst with Morningstar in Chicago. “A lot of them were operating at peak margins. Since then, there have been some concerns about the industry’s fundamentals.”

Brand Evolution Continues

Quick serves are always tweaking their images, but there were some major changes in store for menus at some larger chains in 2012.

One of the most notable chains to do this was Burger King, where an array of new menu items, including smoothies, salads, chicken wraps, and specialty coffee drinks, were added to broaden the brand’s customer base. That was the first part of a four-pillar, $750 million strategy Burger King announced in the spring.

Taco Bell also welcomed major menu innovations. The Irvine, California–based brand launched the highly successful Doritos Locos Tacos, featuring shells made with the taste and flavor of Doritos snack chips. Then the chain rolled out a Cantina Bell line of upscale burritos, bowls, and sides created by noted chef Lorena Garcia.

Taco Bell also introduced breakfast at about 800 West Coast locations.

“What Taco Bell has done is a testament to product innovation,” says restaurant analyst Hottovy. The chain “remains in its core competency, broadens its appeal, and takes the pricing point upward.”

This is Sweet; Forever Yogurt Feeds a Fad that Just Won’t End: Self-Serve Frozen Yogurt

December 26, 2012

(c) 2012 Crain Communications, Inc. All rights reserved.

Truth be told, Forever Yogurt co-founders Mandy Calara and Ahmad Yilmaz don’t even like frozen yogurt all that much. Luckily for them, a lot of Chicagoans—and investors—do.

Forever Yogurt, which has six Chicago-area locations, one in Madison, Wis., a seasonal trailer at North Avenue Beach and a Chicago food truck, plans to open 32 more stores throughout the country in the next four months. The company also has signed a 20-store franchise agreement to bring Forever Yogurt to Pakistan and is in advanced talks with a private-equity firm to raise $6 million and expand even further, both domestically and in China.

For skeptics who have watched frozen yogurt shops proliferate across the city, often within sight of competitors, Forever Yogurt’s expansion seems to defy logic. A brief spin through yields at least 24 similarly named purveyors, from Berrymoon to ZBerry, that serve nearly identical flavors and toppings in generically bright, modern stores. Mr. Yilmaz, Forever Yogurt’s chief brand officer, says the company has at least 20 competitors.

But the probiotic-tinged craze, which started in 2007, is still trending upward. For the year ended in September, 138 million servings of frozen yogurt were ordered at food-service outlets, up 12 percent from last year, which was up 8 percent from 2010, according to NPD Group, a market research company in Port Washington, N.Y.

Some of those sales are coming at the expense of ice cream, says Darren Tristano, an executive vice president at Technomic Inc., a Chicago-based food industry consultancy. Frozen yogurt sales are at roughly $1 billion in the overall $6 billion frozen-dessert market, he says.

“The marriage between the health benefits of frozen yogurt—one-third less fat, lower sugar, active cultures—and the experience of self-serve created this mushroom cloud,” says Tom Vogel, director of sales at YoCream, a Portland, Ore.-based manufacturer of yogurt used by many chains.


Though tart frozen yogurts from chains like Dallas-based Red Mango already were established in Chicago, Messrs. Calara, 36, and Yilmaz, 29, were the first to allow customers to control the amount of their serving. The result? At least one customer who shelled out $14 for a cup that weighed almost 2 pounds.

Mr. Calara, the company’s franchise CEO, says he plans to open 50 corporate locations and 250 franchises nationally over the next three years. Because there’s so much competition in the frozen yogurt and ice cream industry, Mr. Calara acknowledges that Forever Yogurt has to move quickly. He also hopes to persuade struggling mom-and-pop ice cream shops to convert to Forever Yogurt franchises and unify the fragmented market.

So far, the money is good. Each store, he says, costs about $300,000 to build out, including about $100,000 to install the seven yogurt machines that allow people to serve themselves. But each pulls in $500,000 to $1 million annually, according to Mr. Calara. After doubling its locations and revenue in each of the past two years, Forever Yogurt raked in more than $4 million in 2012 and employs 89 mostly part-time workers. Mr. Calara projects $19 million in revenue next year.

Messrs. Calara and Yilmaz met through mutual friends seven years ago. Mr. Calara was a University of Illinois at Chicago alum and a former professional poker player; Mr. Yilmaz was a political science graduate student at the University of Chicago who had a passion for graphic design.

In 2007, they launched, a social networking site that encouraged people to sign in to nightlife spots so users could see a location’s male/female ratio before arriving. Though checking in online has become almost instinctive today, the idea hadn’t gained traction five years ago. “I think we had seven or eight users and $49 in revenue” in less than a year in business, Mr. Calara says half-jokingly.

They encountered the self-serve frozen yogurt phenomenon in Scottsdale, Ariz., where they had a vacation rental business. They set up their first shop on North Avenue in Bucktown in 2010.

Mr. Tristano says frozen yogurt will continue to grow for at least a few more years. That’s not forever, of course, but it’s long enough to build a good-size chain.

Crain Communications, Inc.

National Restaurant Association Partners with Technomic to Bring Adult Beverage Expertise to Members

December 21, 2012

To strengthen its commitment to providing business-enhancing resources to its members, the National Restaurant Association (NRA) has partnered with Technomic to provide actionable information on adult beverages and restaurant bar programs.
“Wine, spirits and beer can be a profitable part of a restaurant’s offerings. Having the latest information at their fingertips will help operators maximize profitability and provide guests a selection of adult beverages to meet their increasingly sophisticated palates,” said Dave Matthews, executive vice president of Innovation & Membership Advancement for the National Restaurant Association. “Technomic is a recognized leader in the adult beverage information space, and we are confident that our strategic partnership will provide ready-to-implement expert advice and insights to help restaurants succeed.”

“Adult beverage is a dynamic element in the hospitality business, now and for the foreseeable future, and numerous opportunities exist for operators and suppliers to build sales and revenue,” said Darren Tristano, executive vice president, Technomic. “We are pleased to bring our adult beverage information and expertise to NRA members and contribute to their success in 2013 and beyond.”

Technomic will provide content for the NRA’s website and e-newsletters on adult beverage topics to help NRA members strategically plan their bar programs. Additional content will be provided in the form of subject matter experts for webinars and seminars at the 2013 International Wine, Spirits & Beer Event, to be held May 19-20, in conjunction with NRA Show 2013 in Chicago. In addition, Technomic provided a special adult beverage report that was included in the NRA’s .

Technomic is a leading research and consulting firm serving the food and foodservice industries. The company has over 40 years of experience and specializes in benchmarking studies, customer satisfaction and need assessments, organization effectiveness programs and trade channel research.

Founded in 1919, the National Restaurant Association is the leading business association for the restaurant industry, which comprises 980,000 restaurant and foodservice outlets and a workforce of more than 13 million employees. We represent the industry in Washington, D.C., and advocate on its behalf. We operate the industry’s largest trade show (NRA Show May 18-21, 2013, in Chicago); leading food safety training and certification program (ServSafe); unique career-building high school program (the NRAEF’s ProStart, including the National ProStart Invitational April 19-21, 2013, in Baltimore, Md.); as well as the Kids LiveWell program promoting healthful kids’ menu options.

Parents, Children Want Seafood on Kids’ Menus

December 20, 2012

WeatherVane_KidsMeal_LobsterOnly 20 percent of kids’ menus at restaurants currently include seafood despite consumer demand

Figuring out what kids like to eat that also pleases their parents has long been a challenge for restaurant operators. Parents want healthy fare for their growing offspring, but kids want something fun and tasty. Seafood is one item that can easily fit the bill, but has yet to widely infiltrate kids menus.

“There’s a tremendous missed opportunity with most of the industry,” said Julie Casey, aka The Restaurant Mom, founder of online kids’ dining resource “Kids and parents are agreeing they want to see seafood on kids’ menus.”

According to the 2012 Kids and Parents Discovery Survey, conducted for Kidzsmart Concepts with The Restaurant Mom and Cincinnati-based Directions Research, both kids and parents want to see seafood on kids’ menus. For example, when asked what food items from the adult menu they would like to see on the kids’ menu, more than a quarter of kids surveyed said seafood. When asked what items from the adult menu their kids ordered or would order if they were on the kids’ menu, nearly a quarter of parents surveyed said seafood.

But while seafood presents a big opportunity for restaurants, only 20 percent of kids’ menus currently include seafood, down from 21 percent in 2011, according to foodservice research firm Technomic. Of kids’ menus that do include seafood, shrimp appears the most. Other seafood dishes frequently showing up on kids’ menus are fish and chips, salmon, fish sticks and fried fish.

“[Seafood] is perceived as healthier. [But] there seems to be some type of stigmatization around fish,” said Darren Tristano, executive vice president of Technomic. He also cites the higher cost of seafood compared to other proteins and the fact that kids’ menus are often loss-leaders as other reasons operators may not be taking advantage of the fresh, not fried, seafood opportunity.

Restaurateur Aaron Noveshen has long had success offering seafood dishes on the kids’ menus at his four Pacific Catch restaurants in California’s Bay Area. “Kids a lot of times are very aspirational—they want to eat like their parents,” said Noveshen. “Kids don’t want to be talked down to.”

That’s why Pacific Catch’s kids’ menu largely features junior versions of the items that are part of the adult menu. Among the choices are California Rolls, fish tacos, coconut shrimp and salmon teriyaki bowls.

“We sell kids California rolls to two-year-olds,” said Noveshen. “That’s kids’ food now. It does quite well.”

Across the country, Weathervane Seafood Restaurant, a 43-year-old family owned and operated seafood house with 13 locations throughout New England, recently revamped its entire kids menu to include more healthy choices. “We saw a need and a request from parents for healthier options,” said Jeremy Gagner, chief operating officer and the third generation of Gagner’s to operate the restaurants. “Families with children are one of our target markets, so appealing to them is something we try to do on a regular basis.”

So now instead of all fried, all the time, Weathervane’s kids’ menu features healthier seafood choices, including the claw meal: two whole lobster claws and a choice of two sides, plus a cup the restaurant’s signature seafood chowder. While fried clam strips and fried native shrimp are still the top seafood sellers, Ganger says the new items rank in the top five and have been performing very well.

Operators wary of adding seafood to their menus should consider not just adding it, but making it a fun experience as well, says Casey.

“Any mild fish that can be baked or broiled, not fried, with some sort of sauce on the side — that’s a win-win,” said Casey. “Build-your-own, dunking, sharing … The dipping and the fun and the interacting encourages tasting and eating of healthy things.”

Fun and interactively is a key part of the kids’ seafood experience at both Pacific Catch and Weathervane. At Pacific Catch, guests are greeted with snacks of edamame and goldfish crackers, and little guests are given chalkboards to write on while their parents peruse the restaurant’s daily changing chalkboard menu.

At Weathervane the new claw dinner for kids is served in a whimsical, red, lobster-shaped basket with a bib and a cracker. In addition, parties can request Lobster Lore, a three-minute tableside presentation that gives young guests the low-down on the crustacean, from how to tell its sex to where they live and what they eat.

“The idea of getting kids to eat seafood in a fun way—that’s part of getting kids to eat seafood,” said Ganger. “You have to put a fun spin on it.”

Ethnic Foods Push Roller Grill Sales

December 19, 2012

Roller grills, the backbone of many convenience store foodservice programs, continue to provide chains with an inexpensive, labor-friendly foodservice concept that allows store operators to expand their fresh food offering.

By Howard Riell, Associate Editor.

Discussions about trendy ethnic roller grill items require participants to learn a number of words in Spanish. Now, as retailers continue to push the envelope in the race to be the first to market with new products, it may also be time to brush up on your Yiddish.

More than a year in the planning, 7-Eleven debuted its first-ever kosher grill this August at a store in the heavily Orthodox Jewish enclave of Monsey, N.Y. The good fortune of franchisees and brothers Anthony and Michael Mendicino is twofold: the concentration of consumers with very specific dietary requirements and the relative lack of kosher restaurants and other prepared-food options.

The Mendicinos held a Customer Appreciation Day on Aug. 5 offering free samples of their kosher grill offerings: beef frankfurters, hot and spicy beef links and Polish sausages, as well as knishes and kosher condiments—along with kosher Slurpee drinks for sale, face-painters, music and clowns.

As part of the store’s remodel last year, 7-Eleven added a second grill, which lit a light bulb over the brothers’ heads. Since eight out of 10 of their customers keep kosher, why not meet their needs?

The store had long sold kosher pre-wrapped sandwiches, milk, baked goods and frozen meals, but nothing hot and ready to eat. They hired a pair of Orthodox Jewish chefs and ordered the food product from kosher purveyors.

“This is something our guests have wanted for years,” Michael Mendicino said. “‘When will we have hot dogs too?’ they kept asking. We have some packaged kosher sandwiches and snacks, and we tried a kosher hot dog vending machine once. That worked for a while, but when the company servicing the machine was sold, it became a problem. Now the community is really buzzing about the kosher grill.”

Community Buying In

Rabbinic oversight of kosher food standards—a requirement for the items—was assigned to Rabbi Zushe Yosef Blech. “We thought it would do very well and the response from the community has been phenomenal,” Mendicino said. “Sales have been through the roof.”

Indeed, the store quickly sold 400 hot dogs in a single day, and the kosher dogs have outsold the standard ones, by a 10-to-1 margin. Blech said the kosher items have had enormous crossover appeal to non-Jewish customers because of their perceived healthier ingredients.

The grill items are available for both lunch and dinner. An overhead sign reads KOSHER HEAVEN AT 7-ELEVEN and informs customers about the kosher supervision.

The Mendicinos reached out to 7-Eleven zone merchandiser Robin Murphy about the need to separate the kosher and regular grill. “I visited their store multiple times and saw residential developments being constructed where the primary residents were of the Hasidic Jewish faith,” Murphy said. “In addition, a new synagogue and yeshiva (religious school) were being built about two blocks from the store, and a girls’ school was nearby as well.”

Murphy knew the hurdles that had to be cleared. “We needed to have a ‘glatt’ kosher product, which is the designation necessary to gain rabbinical supervision,” she noted. “It took us several months to find the right vendor and products.”

Globex Kosher Food Inc. of Brooklyn created exclusive recipes for the Monsey store, while most of the condiments are being sourced by Heinz. Aside from the dedicated grill and condiment bar, a separate storage area for the kosher products has been designated.

Ethnic Opportunity

The potential of adding new ethnic fare to a store’s roller grill offering comes at a good time, according to Chicago-based research and consulting firm Technomic Inc. In late August, the company released findings showing that consumers’ desire for ethnic food away from home hasn’t slowed one iota.

Better still, Technomic executive vice president Darren Tristano noted, “Chain restaurants aren’t meeting current consumer demand for new foods and flavors.”

Only a quarter of consumers polled as part of a recent survey said they are satisfied with the availability of ethnic offerings at limited-service and full-service chains. “This translates into opportunities for operators to differentiate their menus and gain market share with globally-inspired offerings,” Tristano said.

But authenticity is crucial when it comes to making an ethnic food purchasing decision—a factor that seems perfectly suited to the kosher world, where consumers are not only acutely aware of, but insistent upon authenticity.

Technomic also found that three out of four consumers purchase ethnic foods and flavors away from home at least once a month. Not surprisingly, the trend is strongly driven nationwide by Asian and Hispanic respondents, with 90% and 88% of these consumers, respectively, buying ethnic food or flavors away-from-home at least once a month. Nor does “ethnic” have to mean international. Nearly nine out of 10 consumers surveyed they consider regional U.S. cuisines, such as Cajun (89%) and Creole (86%), to be ethnic.

The growing Hispanic population appears to be driving the spicy trend. As a result, new products are hitting the market to meet the demand. “We believe the Hispanic market is the average consumer buying from the roller grill, so I think everybody is focused on it as much as we are,” said Paul Servais, retail foodservice director for Kwik Trip Inc., which operates more than 360 c-stores in Wisconsin, Minnesota and Iowa.

In addition, more retailers are adding breakfast sausages to the roller grill to entice hungry customers in the morning who stop for coffee on the way to work.

Steps to Success

Retailers can help keep their roller grill program enticing to consumers by keeping it fully stocked with fresh items and by bundling meals, such as a roller grill item, a bag of chips and a fountain drink at a discounted price.

More than ever, consumers are looking for value and QSR restaurants are meeting this desire with cheaper daypart options, like the dollar menu deals offered at McDonald’s, Wendy’s and others.

Today, customers desire a large array of options, but also want to know that their store sells their favorite products. Talking to customers is a great way to get feedback on what’s working, although retailers say customers are not shy about being vocal if their product is missing. Many retailers are sticking to tried-and-true brands and flavors, but meeting the demand for variety with an extensive condiment bar nearby, which allows customers to dress their brat or hot dog to fit their preferences.

Chevron, for example, began rolling out its ExtraGood To Go foodservice program at its ExtraMile stores, which makes foodservice a strong destination within the store.

Banner advertising with beauty shots of daypart items greet customers at the pump. Inside the store, uniform signage and strategically placed spotlights draw customer focus to the roller grill, food warmer and menu board.

The oil company has focused on emphasizing the brands consumers know, and all roller grill items have a designated place on the roller grill, so customers can locate their favorites quickly during repeat visits. In addition, all roller grill items are precooked, which ensures the meats are served safe and heated to the optimal temperature.

As a result, what customers see is ready to eat rather than a sign asking them to come back in 15 minutes, as some chains do when cooking items directly on the roller grill.

Fresh Food Fixation Becomes a Business Green Bean Restaurant Founder, a WU Student, is Finalist for National Entrepreneur Award

December 18, 2012

Copyright 2012, St. Louis Post-Dispatch. All Rights Reserved.

On a recent weekday afternoon, Sarah Haselkorn sat table-side at a restaurant in the Central West End, wearing shorts, a T-shirt and running shoes, with her hair pulled back in a ponytail and a backpack at her side.

She looked a lot like a typical college student — which she is. Sort of.

Haselkorn is, in fact, a senior at Washington University. But, between classes, exams and the demands of a her systems engineering major, she has also managed to co-launch and run Green Bean, a quick-service restaurant that serves fresh salads and wraps.

In the process, she’s tapped into a growing national trend — and an exploding market for fast, healthy food.

Haselkorn and her concept have, in fairly short order, caught the eye of a prestigious national entrepreneur organization, and a week from Monday she’ll give a presentation to its members on the floor of the New York Stock Exchange. She has another non-restaurant concept in development, and probably a lot more floating around in her head.

Oh, and she’s a triathlete. And she’s only 20.

Haselkorn moved to St. Louis from her hometown of Washington when she was 17, and soon determined the city’s food landscape was missing something.

“I noticed quickly there weren’t very many healthy restaurants in St. Louis where you could get something fast,” she remembers.

Healthy and fast are important attributes for a busy student who happens to run the odd triathlon. So rather than complain about the lack of quick-service, healthy restaurants, she opened one herself.

Haselkorn got in touch with a friend from her hometown, Nick Guzman, who had recently graduated from Amherst College, and the two started developing a business plan via email.

After a couple months trading ideas and doing research — Haselkorn spent hours watching customers come and go inside other area restaurants — the two had a formal pitch.

Based loosely on salad-centric restaurants they’d been to in New York and Washington, Green Bean would be fast and healthy.

It also would go a step beyond that: Green Bean, the concept went, would use recycled materials in all its packaging, reuse building materials, compost and recycle everything, and order food daily, tailoring it to the ebbs and flows of daily traffic to minimize waste.

“We wanted to have real, whole food and transparent nutrition,” Haselkorn says. “But we also wanted to focus on sustainability. We wanted to be better, different. We wanted it to be Green Bean.”

The two were confident in their concept, Haselkorn says, but were less so about their menu. So they approached James-Beard-award-winning chef, Peter Pastan — who is the father of one of Guzman’s friends — and asked him to develop a menu.

“I was 18 when I went to him,” Haselkorn remembers. “He said: Are you sure you want to do this?”

A few months later, they had found a space in the 200 block of North Euclid Avenue, and a few months after that they were tearing the place apart. Acting as their own general contractors, Haselkorn and Guzman oversaw the renovation and did much of the work themselves, using materials recovered during demolition.

Today Green Bean employs eight people, with Haselkorn and Guzman doing much of the work themselves, from maintenance to ordering.

When asked whether there’s anything she’s not involved in, Haselkorn says: “No. Not really. Well, maybe. We have a tax accountant.”

The restaurant does a steady business, mostly from health-conscious customers in the neighborhood and medical students from Wash U. It has been in business for about a year, and Haselkorn is already thinking about expansion possibilities.

“I think there’s room in the market in St. Louis, but the other option is to franchise,” she says. “We want to make sure it’s perfect first. You don’t want to replicate any imperfections.”

Analysts see more potential, too.

A “fast casual” restaurant — the category that Green Bean finds itself in — serves food that’s a notch or two higher in quality than typical fast food, but is not a full-service restaurant. Food usually is ordered at a counter, with a server sometimes delivering it to a table.

The category has boomed in the past decade as people seek out healthier, convenient food.

“Fast casual continues to outperform the rest of the industry,” said industry analyst Darren Tristano of Chicago-based Technomic. “ The drivers are from customers moving up from fast food, and diners moving down from full-service.”

Technomic estimates that the fast-casual category represented about $27 billion of the $370 billion restaurant market in 2011.

“It’s still very small,” Tristano said. “But there’s growth at double digits for the past 10 years, and it’s growing. We’re going to see more ethnic food concepts, and more healthy concepts.”

On Nov. 12, Haselkorn will present the Green Bean concept to a group of judges with the Entrepreneurs’ Organization’s Global Student Entrepreneur Awards. She’s one of 30 finalists from 42 countries.

Haselkorn — to her surprise — was selected to compete in a regional competition earlier this year, taking first place and earning the spot in New York.

That she won comes as no real surprise to her Wash U professor, Clifford Holekamp. He teaches a highly popular class for entrepreneurs called The Hatchery, which has launched dozens of successful businesses.

“Part of the award is based not just on the business, but on the entrepreneur,” Holekamp explained. “She’s a very talented young lady. She’s balancing an engineering curriculum, minoring in entrepreneurship and running a successful business, and that is just extraordinary.”

J.B. Forbes – Sarah Haselkorn, 20, puts together a potato chip display stand recently at her restaurant Green Bean in the Central West End. The Washington University student opened the restaurant one year ago.

FREEBIRDS named fastest-growing fast casual chain

December 17, 2012

FREEBIRDS has topped the Technomic Top 150 Fast Casual Chain Restaurant Report as the fastest growing fast casual chain of 2011. In 2011, FREEBIRDS saw a 63.2 percent year-over-year growth, adding 24 …

FREEBIRDS has topped the Technomic Top 150 Fast Casual Chain Restaurant Report as the fastest growing fast casual chain of 2011. In 2011, FREEBIRDS saw a 63.2 percent year-over-year growth, adding 24 restaurants to its existing 38 for a total of 62 locations. By the end of this year, FREEBIRDS will have opened an additional 28 company restaurants and three franchised restaurants, which should make it among the fastest-growing fast casual chains again in 2012, Darren Tristano, executive vice president of Technomic, said in a press release.

“In spite of difficult economic times, the Fast Casual Mexican Grill restaurant segment has continued to grow at a very rapid pace over the past five years through exciting regional brands,” he said. “FREEBIRDS World Burrito continues to be one of the fastest growing brands led by their rebellious energy, a fresh made-to-order menu and broad range of flavors. With the introduction of a franchising program this year, FREEBIRDS is poised to become a major national player in the U.S. Fast Casual Mexican segment.”


Since Tavistock Restaurants purchased FREEBIRDS in 2007, the brand has quadrupled in size, doubling at the end of 2010, and doubling again by the end of 2012.

FREEBIRDS focused its 2009-2010 growth in Texas, and then started to expand to California in 2011-2012, opening 11 Southern California locations and 10 Northern California locations during that time.

In 2009, FREEBIRDS introduced FREEBIRDS World Works, the charity arm of the brand that inspires staff and guests to become active in their local communities by giving back through volunteer efforts. Each FREEBIRDS location is partnered with local, non-profit organizations to create awareness and help out where needed. The idea of activism resonates with guests and team members, and ultimately builds brand loyalty.

In 2012, FREEBIRDS began franchising for the first time in the brand’s 25-year history. FREEBIRDS signed its first franchise partner, FB Midwest Development, in March 2012. By committing to 27 restaurants, FB Midwest holds exclusive rights to territory that includes Kansas, Nebraska and Missouri. FB Midwest has had two successful openings this year, and is slated to open three additional locations in the next four months.

This tremendous growth has required the company to open several restaurants in a single month, often opening two to three restaurants within a week of each other in different markets. In the last 30 months, FREEBIRDS has done it 17 times.

“Our ability to grow at this pace is really a testament to our people,” said FREEBIRDS President Jim Mizes. “Beyond building systems and infrastructure, we have invested in a talented team of construction, development, recruiting, operations and marketing people who work together to open in new and existing markets rather seamlessly.”

Massive Trend Watch: Franchise Direct Food Franchise Industry Report 2012

December 14, 2012

ATLANTA, GA–(Marketwire – Nov 15, 2012) – Franchise Direct ( has delivered the Food Franchise Industry Report of 2012, bringing accessible industry analysis of 60 franchise concepts into one central location. This annual trend spotting report provides extensive sample franchise analysis in thriving food franchise sectors, which comprise one third of franchise establishments and are part of a great leading industry creating nearly $1.7 billion in the United States daily.

Compelling shifts in full service and fast food industries are shaping franchises across the board in 2012 due to a remarkable emphasis on healthier eating concepts. Ongoing health legislation and growing consumer awareness prompt adjustments throughout the food service world. The report highlights major food franchise players creating healthier eating concepts, including pizza and ice cream industries. Dating back to the 1940s, pizza and ice cream eateries maintain strong roots in American culture, with customization of product offerings and the redesign of atmosphere for patrons holding fast as two firm industry trends. Both have been consistently upholding relevancy by adapting model and menu concepts to meet changing demands.

Strong technology trends highly influence food franchising, with simplicity and customization perks uniting mobile technology and franchise business. Technology and everyday life are more interwoven than ever before and food franchises have ramped up mobile applications in 2012 with a continued focus on video and purchasing apps to sync customer orders with mobile lifestyle trends. Technomic executive vice president and restaurant analyst Darren Tristano shares this point on generational shifts: “Flexibility and customization is very important to Millennials (those born between the early 1980s and late 1990s).”

Ever expansive food-based franchise concepts are also the focus of this report delivering in-depth research content focused on emergent and time-honored industries experiencing an upsurge, including food-gifting franchises with 2012 sales expected to reach over $11 billion. With at least 70 franchise brands offering smoothies on their menu and over 80% of Americans as coffee consumers, the smoothie industry and coffee establishments continue to pull their weight as mainstay features for American consumers. Also experiencing an even greater demand are vending machine franchises, due to even greater accessibility features for a busy and active populace.

Fancy Fast Food

December 13, 2012

fancy-fast-foodQuick serves focus on contemporary interiors and premium menu items for a more sophisticated feel.

The days of dingy, dull, and outdated fast-food joints may soon be a thing of the past. Quick serves are meeting the demands of an evolving consumer base to remain competitive with the fast-casual sphere, using everything from sleek interiors with comfortable booths and flat-screen televisions to healthy, fresh food and drink offerings.

“Consumers’ expectations are growing … and therefore their demands grow,” says Denny Lynch, senior vice president of communications at Wendy’s. “They are more mobile than they have ever been. They travel and see different parts of the country, they see different cities and restaurant chains, so they have a lot more touch points and things to consider.”

To meet this demand, Wendy’s last year introduced a $10-million-plus prototype, which it considers the future store model. The first restaurants were built to act as laboratories to perform consumer research and measure consumer attitudes toward upgrades and transformations.

The units feature a contemporary design, multiple seating options—including lounge chairs next to a fireplace—and technology like WiFi and flat-screen TVs.

“It’s all about staying relevant with today’s consumer,” Lynch says. “If you have two restaurants within a block of one another—one is brand new and the other is 20 years old, and you like the food at both places—which one do you think you will visit more often?”

According to Technomic, a Chicago-based consulting firm, Wendy’s evolution is a result of the shift in market share between limited-service and full-service segments over the last decade. Limited-service restaurants, which owned about 47 percent of the market 10 years ago, now control 53 percent of the market.

This trend has caused fast-food restaurants to work “overtime to upscale their menu and concept positioning—not only to keep pace, but to compete directly with fast-casual leaders,” Technomic states in a recent report that explores the blurring of fast-food and fast-casual restaurants.

“The key to limited-service restaurant growth is differentiation,” says Technomic executive vice president Darren Tristano. “Many limited-service restaurants that have demonstrated growth have a broad consumer appeal, yet each has a discerned approach. Consumers are looking for fresh, better-quality ingredients, a contemporary décor and ambiance, and interactive service formats to offer something unique and enhance the customer experience.”

Evidence of this trend can be found throughout the quick-service restaurant landscape as huge players in the market upscale their menu. Taco Bell’s Cantina Bell menu, for instance, consists of higher-quality items such as gourmet bowls and burritos.

Taco Bell partnered with celebrity chef Lorena Garcia for the menu initiative, which includes new ingredients—like whole black beans, citrus and herb–marinated chicken, and cilantro rice—all to satisfy a consumer base that has become more sophisticated.

“We are constantly listening to our consumers, and one of the things they told us is that they want a more relevant Taco Bell,” says Taco Bell spokesman Rob Poetsch. “This, along with the key insight that consumers are increasingly looking for food as an experience, not just food as fuel, will further drive our business.”

Other large quick-service chains, such as Arby’s, Burger King, and McDonald’s, have focused on upgrading their menu, their stores, or both. Burger King recently launched a Fall Premium Chicken Menu, while McDonald’s is continuing its billion-dollar makeover of the majority of its stores.

“We’ve seen McDonald’s do a tremendous amount inside and outside the restaurant to contemporize,” Tristano says. “We are going down to that inside-dining experience, which will make [quick service] more competitive with fast casual.”

Though it’s routine for quick serves to upgrade stores and menus, it occurs largely on an incremental basis. The McDonald’s makeover isn’t expected to be complete until 2015, and Wendy’s will gradually build new restaurants in the coming years.

The next phase of the Wendy’s project involves building about 50 restaurants, costing nearly $750,000 a piece, that will reflect consumers’ interests, needs, and desires.

“It’s an ongoing process. You don’t get it all done in one year,” Lynch says. “It takes a fair amount of time to build them, to do the necessary consumer research, and determine what the elements are that you are going to go forward with and what the elements are you are going to pass on.”

One of the overriding factors in deciding whether to upgrade stores and menus is franchising. Given the capital investment needed to complete the project, franchisees pose a wrinkle in the process of redesigning stores.

Other factors that play a role in a store’s upgrade are the age of the existing unit and the financial health of the chain, Tristano says. McDonald’s has gone with remodeling existing restaurants, while Yum! Brands has built new locations because of the age of some of its units.

“It’s across the board, but I think the most common is the remodel versus the rebuild … because it’s less expensive and a bigger bang for the buck,” Tristano says. “With the 20-plus-year-old restaurant, there are incredible efficiencies that you create by rebuilding the restaurant from logistical, space, planning, and new equipment [standpoints].”

As major chains upgrade their menus and stores, Tristano says, they must remember that they’re still fundamentally in the quick-service business. “Consumers are going to make choices on price as to what is and isn’t affordable to them,” he says. “Customers’ expectation of [quick service] is still going to be a one to three minute mark. … Fast casual will always have the advantage of quality of food, and [quick service] will always have the advantage of price and convenience.”