Smashburger boasts the fastest quick-service start in U.S. history

January 30, 2013

06a.smashburger2 280Smashburger will open its 200th restaurant in early February, just six years after it cut the ribbon on its first location — making it the fastest-starting quick-service restaurant chain in American history.

The Denver-based chain is taking advantage of several factors, including a consumer migration away from traditional burger restaurants to “better burger” stores that’s been one of the most significant trends in fast food for 10 years.

But it’s also achieved its record by following the growth model that CEO David Prokupek laid out from the start: Go big quickly to get the jump on other newcomers looking to become a national player.

“Getting to a couple hundred restaurants in about five years was basically the big goal,” Prokupek said recently while munching on lunch in the chain’s newest Denver-area location at 6305 E. Hampden Ave. “It was a very aggressive strategy. But I wanted to get us as national as soon as possible so we would deter others from doing the same.”

Smashburger was the brainchild of former investment manager Prokupek, chief concept officer Tom Ryan, and Rick and Richard Schaden, the father/son team that invented and grew Quiznos before selling the sub chain.

They saw a fast-food burger market dominated by behemoth chains that had started to lose fans, and they decided to capitalize on it. They’re now in 30 states and five countries, including Costa Rica, Kuwait and Saudi Arabia.

The growth strategy has been two-pronged. Smashburger owns its restaurants in Denver and in the country’s 10 largest metro areas — including Miami, Chicago and Los Angeles — but operates in the next 50 largest metro areas through franchisees, a model it went to about three years ago.

That allows the corporate office to handle marketing in areas where it could set up 20 to 40 restaurants, and lets local operators take charge of communities where there may be a maximum of 10 Smashburgers, Prokupek said.

There’s a backlog of about 400 stores that franchisees have agreed to open in the coming years, plus the company plans to open 20 to 30 corporate-owned stores a year, Prokupek said. He expects that Smashburger can grow to several thousand units, he said.

While there are a lot of regional better-burger chains, Smashburger has one primary national competitor — Five Guys, based in Lorton, Va., which began franchising in 2003 and now has more than 1,000 locations open and roughly 1,500 in development.

Darren Tristano, vice president of Technomic Inc., a restaurant industry research and consulting firm in Chicago, said Smashburger has the potential to be competitive with Five Guys in terms of revenue and locations because it has a broader menu and an interior design that’s more likely to attract people to stay for dessert and drinks.

“They were very smart because they got into the right segment at the right time,” Tristano said of Smashburger leaders. “This was made to be a growth chain.”

Smashburger is beginning to redesign all of its corporate-owned stores — changes that franchisees will be encouraged to make around the time their stores hit their fifth birthdays, Prokupek said.

Using consumer feedback, which it seeks, Smashburger has expanded the waiting area for people who come in to order burgers to go — a larger segment of the customer base than was expected, Prokupek said.

It’s also putting up digital menu boards that make the variety of sandwich and salad options easier to read, and story boards explaining its smash-cooking method, which many people ask about.

Smashburger also is testing new menu items that Prokupek said are meant to give more variety, to help attract customers who want something other than a burger. He notes his two daughters both are vegetarians, yet they’ve become regular customers of the black-bean burgers and salads.

The chain continues to attract a lot of attention from potential franchisees, and the company remains very profitable despite the large capital outlay required, Prokupek said. The average store costs less than $500,000 to build and open, but average annual revenue is more than $1 million per location.

It’s understandable that Prokupek doesn’t know which store will become No. 200. The stores are opening so quickly — 60 units in 2012 and another 60 to 70 planned for 2013 — that he couldn’t identify, during a Jan. 11 interview, whether there were 194 or 195 operating Smashburgers. (The chain has closed six stores so far — primarily due to location, he said.)

“The key to retail is staying fresh,” he said. “I think we’re doing to burgers what Starbucks did to coffee. We’ve taken a very familiar product, and we’ve romanced it.”


Marketers, Retailers to Feel Sting of Consumer Paycheck Pinch

January 29, 2013

012113-air-jordan-graphicAs payroll taxes rise, the middle and lower classes will spend less at stores—and the corner bar.

Already moody from the uneven economic recovery, consumers are about to get a lot grumpier. The first pay period of the year ushered in higher Social Security taxes, which are expected to suck more than $1 billion from spending in 2013, presenting marketers with yet another challenge as they seek to pry precious dollars from shoppers.

Paychecks began shrinking Jan. 1, when the tax rate jumped to 6.2% from 4.2%, ending a temporary break that began in 2011. For a household making $50,000 a year, that means a loss of about $83 a month, or $1,000 a year. The payroll tax applies only to wages up to $113,700. Various analysts have projected anywhere from a $113 billion to $120 billion hit to the economy, with most agreeing the keenest pain will be felt in the first quarter as consumers adjust. IHS Global Insight cited the higher taxes when lowering its first-quarter consumer-spending growth projection to 1.4% from 2.6%.

For the middle and lower classes, “any hit to their income will affect their spending patterns,” said Greg Daco, an IHS Global economist, adding that consumers could shell out less for groceries, clothing, toys and more. “They are going to, wherever possible, limit their spending to essentials if their budgets are tight.”

For industries that rely on spending from blue-collar workers, the hit could not come at a worse time. Look no further than the corner bar, where beer sales had begun to stabilize after a multiyear slump thanks to the decreasing unemployment rate. But in the fourth quarter, as fears rose of higher taxes and the fiscal cliff, sales slumped again. The number of beers sold at bars and restaurants in the quarter fell 2%, compared to a modest 0.5% drop in the first nine months of the year, according to GuestMetrics, which tracks the hospitality industry.

“The initial sticker shock of having your paycheck go down will affect beer demand,” especially in the first quarter, said Harry Schuhmacher, editor of Beer Business Daily. As a result, marketers will face more pressure to keep sales steady with effective ads and in-store marketing, he said. “There’s going to be a real big focus on retail execution—getting big displays out there,” he said. “Beer is not going to be on the grocery list. So to overcome that, they’ve got to generate impulse buys.”

In a report last week, Bernstein Research stated that the tax hike will hurt middle-and-upper income consumers the most because low-income households typically derive a share of income from nonwage sources such as government assistance. As such, Bernstein projected that discount retailers, such as dollar stores and Walmart, will be insulated and might even stand to benefit as consumers trade down. But department, general-merchandise, apparel and home-furnishing stores face higher risks, Bernstein stated, citing marketers such as Target, Best Buy and Williams-Sonoma.

Morgan Stanley took a slightly different view, saying that marketers catering to lower-income households will suffer the most. In a report last month, it projected that the tax hike would decrease “discretionary-spending capability” by 6% for people who make less than $40,000, noting that “most households at this level spend all that is available to them.” As a result, Morgan Stanley projected headwinds for retailers that cater to the teen market, such as Aeropostale, as well as restaurants that target the low end, including KFC, Pizza Hut, Taco Bell, Domino’s and McDonald’s. This might explain the rash of value-oriented marketing in the sector of late. “Many consumers will be faced with making hard choices about where to eat and how much they have to spend at restaurants,” said Darren Tristano, exec VP at Technomic, a restaurant consultant.

Conversely, packaged-food brands could benefit as people eat at home more often. That was the case when the recession took hold in 2008, noted Todd Hale, Nielsen’s senior VP of Consumer & Shopper Insights. “I would expect that we are going to see some return to that, but not completely, because things are not as dire as they were back then.” But in the short term, at least, shopping patterns are likely to change. Sales of private-label products—which have been relatively flat—could rise some, Mr. Hale said. Also, consumers, at least for a little while, might use more coupons after cutting back on them last year as the economy rebounded, he said.

The question is how much of the tax-rate hit will be blunted by positive factors, such as the improving unemployment rate, rising housing market and fairly stable gas prices. David French, senior VP-government relations of the National Retail Federation, noted that when the tax cut was put in place two years ago, the organization’s members did not report much of a boost largely because of higher energy costs, which ate up the new consumer cash. “Today, ironically, we kind of have a mirror-image situation: As the tax cut has lapsed, energy prices have fallen,” he said. The tax hike, he said, is “probably going to be somewhat lost in the wash of other economic factors.”

Either that, or consumers are about to take marketers to the cleaners.


Technomic Presents First-Ever Chain Restaurant Consumers’ Choice Awards

January 28, 2013

consumers_choice_award_140x148NEWPORT BEACH, Calif. — Technomic presented the winners of its first-ever Chain Restaurant Consumers’ Choice Awards on Jan. 16 at the Consumer Trends & Directions Conference in Newport Beach, Calif. Consumers themselves selected the winners, the company said.

Technomic asked consumers to rate 115 restaurant chains on more than 60 different attributes as part of its comprehensive Consumer Restaurant Brand Metrics program, which records 80,000 consumer visits annually. The Chain Restaurant Consumers’ Choice Award-winners were selected based on analysis of consumer ratings in four key areas: food and beverage, service, atmosphere and brand image. The winners are:

  • Service
    Quick Service: Chick-fil-A
    Fast Casual: Firehouse Subs Full Service: Outback Steakhouse
  • Food & Beverage
    Quick Service: Culver’s ButterBurgers & Frozen Custard
    Fast Casual: McAlister’s Deli
    Full Service: Cracker Barrel Old Country Store
  • Atmosphere
    Quick Service: Caribou Coffee
    Fast Casual: Panera Bread Co.
    Full Service: LongHorn Steakhouse
  • Brand Image
    Quick Service: Jamba Juice
    Fast Casual: Qdoba Mexican Grill
    Full Service: Red Robin Gourmet Burgers

“Technomic is pleased to recognize these leading chains for their success at satisfying customers,” stated Technomic Executive Vice President Darren Tristano . “But it’s important to point out that it’s the consumers who rated the chains and selected the winners. In essence, this award is from the customers themselves.”


Jersey Mike’s Seeks Bite of North Jersey

January 23, 2013

subRolling up his shirt sleeves and tucking his tie in his shirt, Peter Cancro got behind the counter to prove that he can still make a mean submarine sandwich.

The head of Jersey Mike’s Subs was showing off his skills at a franchisee’s shop in Whippany. The chain started out as a mom-and-pop sub joint in Point Pleasant in 1956. Today it has 560 outlets in 31 states, with roughly two dozen of them in Ocean and Monmouth counties.

“We’re a company of operators,” said Cancro. “We all came from behind the counter. I’m one of the few owners of a company that actually grew up in it, sliced the subs and can take anyone out on that slicer right now.”

Jersey Mike’s — whose shops bake their bread on premises, and slice meat and cheese to order — is part of a wave of new upscale sub chains that are in expansion modes. The company is identifying franchise territories and aims to open 20 to 25 shops in Bergen, Hudson and Morris counties in the next two to three years, said Cancro, who is chief executive officer of Jersey Mike’s Franchise Systems Inc. The Manasquan-based company is looking for sites in towns such as Ridgewood and Franklin Lakes, and may hop over to Manhattan.

Burgeoning so-called fast-casual sandwich shops such as Jersey Mike’s are offering higher-quality food — fresh bread and freshly sliced top-grade meat — at a higher price point, courting upscale customers. It’s a fast-growing segment of the $24.1 billion sandwich market, said Darren Tristano, executive vice president at Technomic Inc., a Chicago-based food industry consulting and research firm. These eateries are positioning themselves as an alternative to quick-service sandwich restaurant giants such as Subway.

In addition to Jersey Mike’s, the field of fast-casual sub players includes Champaign, Ill.-based Jimmy John’s Gourmet Sandwich Shop, which has an outlet in New Brunswick, and Jacksonville, Fla.-based Firehouse Subs.

“What Subway has done with 25,000 restaurants in the U.S. is to pave the way for a better-quality product to come out on the market,” Tristano said. “You have higher-quality bread. You have higher quality, different toppings and ingredients and flavors. … Just like Five Guys created better burgers, and they’re doing well against McDonald’s, these chains are creating better sandwiches, and they will play with a different kind of consumer than a Subway.”

Jimmy John’s last year generated $895 million in sales, according to Technomic’s estimates. Firehouse Subs posted $284.6 million in revenue, while Jersey Mike’s had $210 million, Technomic estimated. Jimmy John’s and Firehouse subs saw just over 20 percent sales growth from 2010, according to Technomic, while Jersey Mike’s was at 11 percent.

Like Jersey Mike’s, Firehouse Subs has started its development process and is scouting sites in the tri-state region, including Bergen County, said Greg Delks, director of franchise development. Founded by two firefighters, the chain has 543 units. Its signature is to steam its meats and cheese before putting them on a toasted roll.

“We have a franchisee who has been looking in Paramus, one of our target markets,” Delks said. In the next four to six years, Firehouse Subs plans to have 30 to 50 shops in Bergen, Essex, Union, Rockland and Westchester counties, he said.

The first Mike’s Subs, opened by now-deceased Mike Ingravangrallo, built a following with Shore visitors and locals and for its sandwiches, dressed with its trademark blend of red wine vinegar and olive oil.

The original shop changed hands several times over the years, and Cancro began working there when he was 14. When he was 17, he heard the store was for sale and his football coach, a banker, got the teen a loan to buy Mike’s.

In 1987, Cancro began franchising the sub shop, adding “Jersey” to its moniker, seeing an opportunity to accommodate customers who had moved out of the area and craved the subs in places such as Ohio. Cancro says Jersey’s Mike’s focus on one product, subs, gives it an edge in the competitive market.

“We cook our own certified Angus beef in the oven,” he said. “We’re using all the top meats that are out there. … We use red-wine based vinegar, not just red vinegar.”

Tristano said he eats at a Chicago Jersey Mike’s on a regular basis. “They stack up very well,” he said.

Fast casual sandwich franchises on average generate more sales volume than Subway, Tristano said.

Last year Jimmy John’s volume was $725,000 per unit, with Firehouse Subs at $657,000 and Jersey Mike’s at $435,000, according to Technomic estimates. Subway’s average was $469,000.

The cost to open a Jersey Mike’s franchise ranges from $216,000 to $400,000, with an initial franchise fee of $18,500, according to Jersey Mike’s website. Franchisees pay a 6.5 percent royalty on gross revenue, Cancro said.

How they stack up by volume; (ranked by sales for 2011); Chain Sales No. of Avg. vol. shops per shopSubway $11.4 billion 24,722 $469,000; Arby’s $3 billion 3,484 $865,000; Quiznos $921.6 million 2,503 $345,000; Jimmy John’s $895 million 1,329 $725,000; Jason’s Deli $525 million 232 $2.5 million; McAlister’s Deli $381 million 308 $1.3 million; Firehouse Subs $284.6 million 477 $657,000; Jersey Mike’s Subs* $210 million 511 $435,000; Source: Technomic Top 500 Chain Restaurant Report, data for 2011.*Jersey Mike’s ranks 13th in this category


Wendy’s Tests Updated Look at Detroit Location

January 22, 2013

Fast food chain cooks up something new

The redesigned Wendy’s that reopened Monday on Detroit’s near west side is not only a gleaming place with more workers. It’s also a key experiment as Wendy’s tests several interior and exterior looks in an effort to stay ahead of Burger King as the nation’s No. 2 fast-hamburger chain.

After a 50-day closure, the Wendy’s at Grand River and Livernois Avenue opened again sporting a more contemporary look, one of four designs that Dublin, Ohio-based Wendy’s is testing nationwide. It eventually will select one or two looks for its nearly 6,600 U.S. franchised and company-owned restaurants. Wendy’s has 162 restaurants in Metro Detroit and 286 in Michigan.

Forty-four staffers work at the Detroit outlet that used to employ 27. The new design removes the iconic exterior copper facia and replaces it in part with a straight roof line and an awning, as well as large, floor-to-ceiling greenhouse windows.

Wendy’s also has elevated one of its old tag lines, “Quality Is Our Recipe,” and given it prominence outside. Inside, the location features metallic paneling, walnut-hued floors, WiFi access, lounge seating in front of a fireplace and the first flat-panel TV for customers of any Wendy’s in Michigan.

“Everyone in the quick-serve-restaurant space is modernizing buildings and upgrading their people and trying to carve out a niche to meet the increasingly competitive landscape out there,” said John Zielinski, vice president of Wendy’s Great Lakes division, who was at Monday’s opening. “So we studied every aspect of the customer’s restaurant experience, and based on that feedback, Wendy’s totally overhauled the interior and exterior of our restaurants.”

The chain is testing the three other new looks — which it calls “traditional,” “ultramodern” and “urban” — at other Wendy’s around Michigan and the nation, Zielinski said. Wendy’s eventually will rollout nationwide the two designs that “best resonate” with customers.

“We have a vision that we want to provide our guests a restaurant experience that is truly a cut above other quick-serve restaurants, and we believe that what we call ‘image activation’ through redesign goes a long way toward making this happen.”

While prices remain important, fast-food companies are looking for another edge over competitors, a leading quick-serve expert said.

“Pricing among all the fast-food leaders seems to be somewhat competitive, and they’re all trying to boost the quality of their ingredients and make them fresher,” said Darren Tristano, executive vice president of Technomic, a restaurant market-research and consulting firm based in Chicago.

“Experience is what consumers are looking for, especially younger consumers. They don’t want to go to old, beat-up restaurants. McDonald’s, Burger King and now Wendy’s are all doing more to attract new customers into the four walls of their restaurants. For a long time it was about drive-through efficiency, but now more consumers are looking for a place to go.”

Wendy’s is contesting with the sit-a-spell designs of Starbucks, Panera and other “fast-casual” outlets, as burger chains such as Five Guys and Smashburger — which have Metro Detroit outlets — catch on with consumers.

The quick-serve choices for Metro Detroiters are mushrooming — ranging from an expanding Penn Station submarine sandwich chain, to startups the Big Salad and Zoup!

The intensified competition explains why Wendy’s makeover includes far more elements than just store redesign, including new premium menu items such as Dave’s Hot ‘N Juicy Burger and a quartet of new entrée salads featuring ingredients such as strawberries and blueberries; a Mobile Nutrition smartphone app; a TV-advertising campaign featuring Wendy Thomas, daughter of founder Dave Thomas; and the first updated logo in nearly 30 years.

In the new logo, the cartoon rendering of “Wendy” has been updated to simplify her pig-tailed hairdo.

But new isn’t necessarily better on the logo, said Kyle Lin of 99 Designs in San Francisco. He likes the new girl figure because “she’s sort of modern and friendlier,” he said. But the “new handwritten direction” for Wendy’s name, Lin said, “looks sort of cheap to me.”


Bubba Burger Adds to Frozen Food Line

January 22, 2013

JACKSONVILLE — Months after closing most of its short-lived restaurants, Bubba Burger is going back to its roots in grocery store freezer cases in search of new avenues of growth.

Three months ago the company released a new line of products called Bubba Grillers that include a center cut pork loin chop, hot Italian sausage, mild Italian sausage and bratwurst. There is also now a Bubba steak line that includes a beef sirloin filet wrapped in applewood bacon.

In January Bubba Burger will release a line of frozen barbecue products, starting with a Carolina pulled pork that may be expanded based on the initial product’s success, said company spokesman Andy Stenson.

The company opened four restaurants last year, three of which have already closed. Stenson said because the restaurants were a very small part of the company’s overall revenue stream to begin with, it has done little to hurt the company’s revenue growth, which has been in the single digits in 2012.

“We were hoping to expand the brand that way, but we just made the decision that it wasn’t the growth that we expected,” Stenson said. “Now we’re just taking care of our core business.”

Bubba Burger, based in Jacksonville, is best known for its frozen burger products that are sold nationwide and through the U.S. Military Commissary System to bases all over the world.

The company garnered attention last year after it acquired the four former Times Grill restaurants in Jacksonville and reopened them as Original Bubba Burger Grills.

It was the company’s first foray into the restaurant business and executives said then that they expected to open the restaurants nationwide. Now, only the restaurant on Normandy Boulevard remains open. Stenson said the Normandy restaurant had always been the most consistent performing restaurant of the four. He said the company is still monitoring sales there closely and will determine whether or not to keep the restaurant open based on continued sales.

The company now has a new focus for expansion: college campuses. Stenson said the company is negotiating with several local colleges and colleges in other parts of the South and the U.S. to start serving as a vendor on campus.

Darren Tristano, an executive vice president at the research and consulting company Technomic Inc., said that while the better burger concept, which is characterized by a more gourmet burger, is growing increasingly popular in the restaurant industry, it’s not as easy as just opening a burger restaurant.

“Even if you have a good product, it doesn’t necessarily translate into a good restaurant,” Tristano said. “It can be very difficult.”

Tristano noted that it would be easier for a restaurant to add retail products, such as TGI Friday’s frozen line of appetizers or IHOP’s frozen line of breakfast items, than for a retailer to go into an entirely different business.

“But I applaud them for trying,” Tristano said of Bubba Burger. “If you have a good burger, it makes sense to give it a try.”

Stenson said the company continues to test other possible products, such as a line of Bubba barbecue sauces, and continues to expand its vendor relationships with professional sports teams and sponsorships of race cars.

“You never know where we’re going to go next,” Stenson said.


Peru, Bastion of Fast Food

January 21, 2013

LIMA — There are more North American fast-food restaurants in China than any other emerging market, which isn’t much of a shocker. The surprise is the country with the greatest concentration of the eateries: Peru.

Considering that it’s a nation so well-known for its cuisine that it exports its own restaurants to other countries, it’s interesting to note that hungry Peruvians in populated areas have to travel, on average, just 1.1km to find a fast-food joint, according to data compiled by Bloomberg.

This is all good news for fast-food companies, which are increasingly counting on Latin America for growth after thriving in China.

“We’re starting to see the emergence of Brazil and South America being a hotbed for US restaurant franchises to go and open up,” said Darren Tristano, Executive Vice-President at food industry consultant Technomic Inc. “Now that Asia has already started, I think South America is really going to be where the growth is.”

The first American chain opened in Peru in 1981 and the result is evident. KFC and Burger King are doing a brisk trade, as is Bembos, Peru’s biggest burger chain.

Peru is finally reaping gains from free-market policies adopted in the 1990s. Peruvians now spend more time shopping and eating at a growing number of malls and new shopping districts, increasing demand for fast food. That market grew 15 per cent last year, according to data from the Peruvian Chamber of Franchises.

KFC, McDonald’s and Burger King first moved into Peru in the 1980s and 1990s, and have since branched out beyond Lima to the other thriving cities. Today, US chains have 60 per cent of the market.

“Foreign brands have much more experience and they have a structure and operating capacity that brands in Peru haven’t been able to develop,” said Diego Herrera, President of the Lima-based chamber. “They’re brands that have studied their marketing, their customers, their processes almost to perfection. They come here and advance very quickly, filling gaps at a sort of pace that Peruvian businesses can’t match.”

Local entrepreneurs are also tapping into foreign interest in Peruvian cuisine to develop new fast-food concepts. Peruvian outlets increased sales by 26 per cent last year, compared with 15 per cent for foreign brands, according to the chamber. The restaurant industry as a whole grew 9.4 per cent last year, according to the statistics agency.

“The market is going to become more favourable for Peruvian brands, as long as they are sustained by a solid corporate structure,” Herrera said. “This is only the beginning.” BLOOMBERG


Fast-Food Companies Find a Market for Growth in Peru

January 21, 2013

KFC, McDonald’s and others are looking to Latin America for future expansion.

There are more U.S. fast-food restaurants in China than in any other emerging market, which isn’t much of a shocker. The surprise is the country with the greatest concentration of the eateries: Peru.

Hungry residents of Peru’s populated areas have to travel, on average, just two-thirds of a mile to find a U.S. fast-food joint, according to data compiled by Bloomberg. This is all good news for fast food companies, which are increasingly counting on Latin America for growth after thriving in China.

“We’re starting to see the emergence of Brazil and South America being a hotbed for American restaurant franchises to go and open up,” said Darren Tristano, executive vice president at food industry consultant Technomic Inc. “South America is kind of becoming the next window. Now that Asia has already started, I think South America is really going to be where the growth is.”

The first U.S. chain opened in Peru in 1981, and the result is evident. Eight fast food counters line the walls of the Jockey Plaza mall in Lima — half of them Peruvian brands and the other half U.S.

Yum! Brands Inc.’s Kentucky Fried Chicken, the largest U.S. fast-food chain in Peru, and Burger King are doing a brisk trade, as is Bembos, Peru’s biggest burger chain.

After three decades blighted by dictatorships, terrorism and hyperinflation, Peru is reaping gains from free-market policies adopted in the 1990s that fueled the fastest economic growth in Latin America in the past decade. Economic stability is spurring a consumer boom that has gathered steam during the past decade.

Peruvians now spend more time shopping and eating at a growing number of malls and new shopping districts, increasing demand for fast food. That market grew 15 percent last year, according to data from the Peruvian Chamber of Franchises.

U.S. chains such as KFC, McDonald’s Corp. and Burger King Worldwide Inc. moved into Peru in the 1980s and 1990s and have since branched out beyond its capital, Lima.

U.S. chains have cemented their domination in the past decade and today have 60 percent of the market. McDonald’s and Burger King led the expansion in sales last year, followed by Bembos. In more developed markets such as Brazil and Mexico, local brands account for 92 percent and 70 percent of sales, respectively, according to the chamber.

“Foreign brands have much more experience, and they have a structure and operating capacity that brands in Peru haven’t been able to develop,” said Diego Herrera, president of the Lima-based chamber. “They’re brands that have studied their marketing, their customers, their processes almost to perfection. They come here and advance very quickly, filling gaps at a sort of pace that Peruvian businesses can’t match.”


Ale Yeah! Queens’ Only Hooters is Out

January 18, 2013

HUNGRY diners looking for a side of well-endowed waitresses with their beer and wings will now have to find a new watering hole to satisfy their appetites. Queens’ only Hooters was transformed last week into Bud’s Ale House, a sports bar and restaurant, after a franchise dispute between the owners of the Fresh Meadows restaurant and Hooters of America. The Atlanta-based parent company sued the Strix Restaurant Group, which owned four Hooters in Queens and Long Island, last month for not making franchise payments. Strix plans to countersue before Nov. 7. “We can do a much better job of providing a good quality, affordable meal…without providing the girls in uniforms,” said Strix attorney Ed McCabe. McCabe said the Hooters menu was “stale” and the scantily clad waitresses were actually hurting business – so Strix converted its beer-and-boob joints into sports bars and restaurants. “Eighty percent of the population wouldn’t go into a Hooters,” he said.

“For the average man, it’s not worth explaining to his wife.” Hooters opened its first store in 1983 and has 430 worldwide locations. The company plans to open in Manhattan next year and is in negotiations to open five more in Long Island, a Hooters official said. “We are extremely protective of the Hooters brand,” Hooters CEO Terry Marks said in a statement. “In the unfortunate circumstance that a franchisee is not complying with its obligations…we must take actions to protect our concept.” So- called “breastaurants,” which feature greasy food, buxom waitresses and sporting events on TV, are growing, according to Darren Tristano, executive vice president of Technomic, a food industry research and consulting firm. But Hooters, still the industry leader, has stayed flat due to more competition and its reluctance to modernize, he said. “Hooters is becoming a little more tired,” he said. Meanwhile, Bud’s has 20 beers on tap, a wing- and burger- based menu and flat-screen TVs showing sports games. Another location opened last month in Astoria. And at Bud’s, the wait-staff wears jeans and loose t-shirts – instead of orange hot shorts. Bud’s waitress Stefanie DeFlorio, who waited tables at Hooters for four years, said she’s pleased with the change-over. “People think Hooters is a strip club,” she said. But now “a lot more people are coming in.” Hooters patron Cherelle Douglas, 24, of South Ozone Park, said she’ll now come more often. “I wasn’t a big fan of the girls walking around in tiny shorts,” she said. ctrapasso@yahoo.com


Former McDonald’s CEO and ‘Hamburger U’ Founder Has Died

January 18, 2013

Fred TurnerFred L. Turner, one of the first employees of McDonald’s Corp. and the founder of its Hamburger University training program, died of complications from pneumonia Monday night. He was 80.

Mr. Turner wrote the company training manual and is credited with tripling the chain’s restaurant base during his time as CEO. Friends say he was known as “the heart and soul” of McDonald’s.

“His influence on McDonald’s cannot be overstated,” said Mike Roberts, a former McDonald’s president. “Ray (Kroc) was the visionary, but Fred was the heart and the soul, the operational thrust of the company.”

Known for working side by side with restaurant employees, Mr. Turner wrote the company’s first operations and training manual in 1958. It still serves as a basis for restaurant operations — no small thing for a company renowned for its consistency.

Mr. Turner founded McDonald’s Hamburger University, a training program for managers, franchisees and company employees, in 1961. McDonald’s now has seven Hamburger University campuses, including one on its Oak Brook campus that was named after Mr. Turner in 2004.

Mr. Turner, a longtime resident of Deerfield, kept an office at McDonald’s and remained involved in the company until his death.

A Des Moines, Iowa, native, Mr. Turner attended Drake University after a stint in the U.S. Army. He approached McDonald’s founder Ray Kroc about becoming a franchisee. But Kroc was so impressed by Mr. Turner that he persuaded him to join the company in 1956, said longtime friend and business associate Al Golin.

“Then he became a one-man operations department,” said Golin, who began media representation of McDonald’s around the same time. “The first couple of years he was with McDonald’s, I never saw him because he was out opening McDonald’s, personally, every one of them.”

Kroc and Mr. Turner worked closely together until Kroc’s death in 1984.

“Ray was the charismatic supersalesman, and Fred really was the man who made things go,” Golin said. “He was a very hands-on person.”

Golin recalled a trip to Russia about 20 years ago, when McDonald’s was opening its first restaurant there. Company executives attended a party at the Kremlin in advance of the opening, he said.

“I saw Fred the following morning and said, ‘Where were you?'” Golin said. Mr. Turner had been at the restaurant. “While we were eating caviar and drinking champagne, he was worrying about the french fries and the buns being toasted right.”

Mr. Turner was named president and chief administrative officer in 1968. He became president and CEO in 1974, stepping up to chairman and CEO in 1977, and remaining in that role for a decade.

The Oak Brook-based burger giant more that tripled its restaurant base and expanded into new markets around the world during his tenure as CEO.

Ted Perlman, chairman of the Havi Group, a Downers Grove-based McDonald’s supplier, called Turner “a guts guy.” He recalled one afternoon in the 1960s when Turner returned from lunch with a wider, thicker napkin than McDonald’s was making available at its restaurants.

Perlman recalls Mr. Turner asking why McDonald’s wasn’t using them. “I said, ‘Fred, it’s going to cost you two-and-a-half times as much,'” Perlman said, to which Turner responded, “Did I ask you what it’s going to cost?” The napkins were changed shortly thereafter.

Mr. Turner’s style was best suited to the company’s entrepreneurial period and the ’60s, ’70s and ’80s, Perlman said.

“The environment was more conducive back then, when you could cut through things and didn’t have to worry about who got promoted where,” Perlman said.

Putting training systems in place and establishing programs such as Hamburger University for McDonald’s “has been an important pillar for their growth and success over the past 50 years,” said Darren Tristano, executive vice president of Technomic, a Chicago-based food-industry research and consulting firm.

“One of the biggest elements of McDonald’s success has been its consistency, that the customer knows what to expect in terms of food, service and speed,” Tristano said. The chain’s emphasis on training, he added, has been critical to establishing that level of consistency.

Mr. Turner stayed on as chairman of McDonald’s until 1990, when he was named senior chairman. He continued in that role until 2004, when he retired and became honorary chairman.

Outside his career at McDonald’s, Mr. Turner served on the boards of Aon, Baxter, and W.W. Grainger, among others.

He was also a committed philanthropist. He co-founded the Ronald McDonald House Charities, which serves families of children who are seriously ill and provides care for children in underprivileged communities.

Mr. Turner and his late wife, Patty, avid music lovers, endowed a jazz studies professorship at Drake University, which also opened a Fred and Patty Turner Jazz Center in 2011. Turner was involved in the creation of World War II aircraft exhibits at O’Hare International and Midway airports.

The son of a fisherman and biscuit salesman, Mr. Turner was “a larger-than-life character,” his daughter Teri Turner said.

While the executive was in a fishing club whose membership included Gen. Norman Schwarzkopf, “he was more interested in going fishing with the guy around the corner,” she said.

Mr. Turner also told everyone to call him by his first name, including his children and grandchildren. “He’d said, ‘I’m Fred, I’m your friend,'” Teri Turner said, adding that when her daughter occasionally called him Grandpa, he’d say, “You know you can call me Fred.”

Teri expressed gratitude that Mr. Turner was able to spend time with his family before he passed away.

“There was a moment when he looked at us and said, ‘Who had a better life than me?'” she recalled him saying. “‘I did something with my life. I made a difference.'”

Mr. Turner is also survived by daughters Paula Turner and Patty Sue (Bob) Rhea and eight grandchildren. Visitation will be from 3 to 9 p.m. Friday at the Patty Turner Senior Center in Deerfield, with the funeral at 11 a.m. Saturday at Holy Cross Catholic Church in Deerfield. In lieu of flowers, the family has requested donations to Ronald McDonald House Charities or the Patty Turner Senior Center.