Retailers Need to Clearly Stand Out From Restaurants

February 28, 2013

CHICAGO — At the height of the economic downturn, many consumers flocked to convenience stores, supermarkets, mass merchandisers, warehouse clubs and other retailers looking for a deal on prepared food. Now that the economy is recovering from the recession, though, consumers are purchasing retailer meal solutions (RMS) less often than they did just two years ago.

New research from Chicago-based consulting firm Technomic Inc. found that 38 percent of today’s consumers say they purchase RMS from traditional supermarkets each week, down from 42 percent who said the same in 2010.

“These consumers may be reversing the patterns they set a couple of years ago by heading back to restaurants,” said Darren Tristano, vice president of Technomic. “For retailers to gain or maintain their share of foodservice dollars, they’ll need to clearly stand out from restaurants — especially since our data shows that consumers’ expectations are rising for the taste, quality, freshness and appearance of retailer prepared foods.”

To help foodservice executives understand the latest consumer behavior, preferences and attitudes regarding retailer foodservice, Technomic has developed the Retailer Meal Solutions Consumer Trend Report.

This report explores retailer foodservice trends at traditional, upscale or fresh-format supermarkets; warehouse clubs; convenience stores; mass merchandisers and specialty food stores.

Among the report’s findings are:

  • Some of the top RMS menu trends include signature fried snacks; more variety for vegetable sides; higher-quality pizzas; a distinct specialty focus for sandwiches and burgers; and a move toward ethnic flavors.
  • More than two-fifths of consumers who purchase RMS at least once a month (43 percent) say they do so four or more times per month, meaning they purchase RMS at least once a week.
  • More consumers today than those polled two years ago place a high importance on attributes such as value, price, convenience, taste, freshness and quality of prepared foods.
  • Opportunities exist for retailers to leverage their customization options to compete with restaurants; only 38 percent of consumers agree that retail prepared foods allow for more customization than food purchased from a restaurant.
  • At least four out of five consumers who visit each retail chain measured for prepared foods purchase RMS items at these locations at least once a month, reiterating the strong role routine and convenience plays in the RMS purchasing decision.
  • Although half of consumers think the quality of prepared foods has greatly improved since 2010, nearly two-fifths call for more name-brand foods that typically denote a higher quality perception.

Health Is Good Business For Restaurant Chains

February 27, 2013

Growth at fast-food and sit-down restaurant chains is coming primarily from offering lower-calorie chow and drinks, according to a study released today by the Hudson Institute that’s partly funded by the Robert Wood Johnson Foundation.

“Over five years, chains that increased the amount of lower-calorie options they served had better sales growth, larger increases in customer traffic, and stronger gains in total food and beverage servings than chains whose servings of lower-calorie options declined,” according to a press release this morning.

A live-streaming of the formal release of the report — “Lower-Calorie Foods: It’s Just Good Business” — can been seen here from noon to 1:30 p.m. EST today. It analyzes trends at 21 of the nation’s largest restaurant chains, including McDonald’s, Wendy’s, Burger King, Taco Bell, Applebee’s, Olive Garden, Chili’s and Outback Steakhouse.

“The bottom line is, if restaurants don’t get more aggressive behind these low-calorie products, they’re leaving sales on the table,” Henry Cardello, director of the Hudson Institute’s Obesity Solutions Initiative and lead author of the report, tells the Wall Street Journal’s Julie Jargon. “It’s a business imperative.”

Lower-calorie servings are defined as sandwiches and entrees containing 500 or fewer calories, beverages with 50 or fewer calories per eight ounces and side dishes, appetizers and desserts with 150 or fewer calories, Jargon reports.

Federal regulations requiring operators of restaurants with 20 or more outlets to post calorie counts by early next year have no doubt put pressure on the industry to come up with the healthier fare but “many operators are finding that cutting calories, sodium, sugar and fat pays off,” Stephanie Strom writes in the New York Times.

Executives at several chains indicate they are just giving customers what they want.

“When the public starts saying it wants healthier options — and we are hearing that — we have an obligation to help show you what that means in our restaurant and give you choices to help you achieve that,” Pita Pit USA CEO Jack Riggs tells Strom.

“There’s also been a lot of finger-pointing at the industry by the media and others, including customers, that is spurring the movement,” registered dietitian Anita Jones-Mueller, president and founder of Healthy Dining Finder, tells Strom.

The Hudson Institute describes itself as a nonpartisan policy research organization dedicated to innovative research and analysis. The mission of Its Obesity Solutions Initiative is to bring about practical, market-oriented solutions to the world’s overweight and obesity epidemic.

This is all on the heels of a report published in JAMA Internal Medicine that Baby Boomers, despite all the stories that would have us believe they are exercising compulsively and eating healthily in a last rebellious refusal to act their old age — are actually in worse condition than the generation that preceded them.

Examining data from the National Health and Nutrition Examination Survey, West Virginia physician Dana E. King finds that while fewer Boomers smoke, have emphysema or get heart attacks, conditions such as diabetes, high blood pressure and obesity are on the rise.

“Only 13% of people said they were in excellent health compared with 33% a generation ago, and twice as many said they were in poor health,” King tells NPR’s Rob Stein. “And that’s by their own admission.”

King, who is among those troubled by the implications for health care costs as Boomers get ever older, traces the problems to more fat and less exercise.

Meanwhile, Pizza Hut on Tuesday offered free mini Big Pizza Sliders pies in pepperoni and cheese varieties for carry-out or dine-in at participating locations in “one of the largest product giveaways in the company’s history,” Ron Ruggless reports in Nation’s Restaurant News.

Normally, the new “mega mini pizzas” — reportedly 3.5 inches in diameter — come nine to a box for $10, or three for $5, and customers can choose up to three toppings on each, according to a press release from Pizza Hut. A tomato- topped pie contains 230 calories; add beef, pork and Italian sausages and you’re up to 350.

The Los Angeles Times’ Tiffany Hsu reported on the Sliders, as well as McDonald’s short-term Fish McBites promotion for the Lenten repast season, on Monday.

“Pressure from the nutritional disclosure legislation has prompted the food-service industry to reduce calorie counts in meals,” Technomic EVP Darren Tristano says in a statement quoted by Tsu. “As a result, Americans are now more inclined to ‘graze’ throughout the day, seeking snacks that provide fuel between traditional meal parts.”

Grazing (from the Middle English grasen, from Old English grasian, from græs grass, according to Merriam-Webster, and first used before the 12th century,) is a practice popularized by domesticated herbivores and adapted by homo sapiens sometime in the late 20th century. But with cows now munching on “taco shells, gummy worms and fruit loops,” as Andrew Moran reports on Examiner.com, how long will it be before they’re lining up at the trough for a mash of pepperoni, anchovies and mushroom Big Pizza Sliders?


Breastaurants Expanding Into S. Florida

February 26, 2013

breastaurants-boom-orlandoHooters Girls are getting more competition.

At least two new “breastaurant” chains are working on plans to open in South Florida this year, also featuring scantily-clad women.

Next month, the Tilted Kilt Pub & Eatery will open in Hallandale Beach with Tilted Kilt Girls sporting mini-kilts midriff-baring white tops, a sporran and stockings.

And a group of Weston restaurateurs have signed an agreement to open 10 Twin Peaks in Broward, Palm Beach and Miami-Dade counties.The main attraction at the mountain sports lodge-themed restaurants are the “Lumber Jills,” serving in khaki shorts and red plaid tops. They bare their midriff, too.

Owners of the specialty-themed restaurants say the servers are entertainers. Breastaurants don’t hire their employees, they audition and cast them, said Joe Sloboda, a restaurateur behind the upcoming Twin Peaks South Florida franchise.

But the restaurants have more to offer than attractive skimpily-clad servers, the owners say.

The Tilted Kilt pays homage to the old public houses of England, Scotland, Ireland and America, said Mark Hanby, Tilted Kilt’s vice president of development. Customers can even expect “humorous and slightly bawdy limericks,” he said.

“Initially, customers are drawn in for the girls,” Hanby said. “But what keeps them coming back is the great food, the selection of drinks and the unbeatable atmosphere.” he said.

Sloboda is part of the DMD Restaurant Group, which also operates Five Guys Burgers and Fries and VooDoo BBQ & Grill restaurants in the Miami area. Twin Peaks restaurants will have about 150 televisions, cold beer served at 29 degrees and comfort food, Sloboda said.

“The approach is to make sure guests coming in enjoy themselves, whether it’s a bunch of guys, couples, someone celebrating a birthday or watching a football game,” Sloboda said.

There are more than 25 Twin Peaks restaurants open in 12 states, according to a DMD Restaurant Group release. The Tilted Kilt currently has 76 restaurants operating in the U.S. and Canada and plan to have a total of 103 operating by the end of the year, the company said.

The new chains started around the mid-2000s and are rapidly expanding because Hooters “has been dormant,” said Darren Tristano, executive vice president of Technomic, a food industry research and consulting firm based in Chicago.

Hooters has not updated its concept or revamped its brand significantly in recent years, he said, yet they remain the category leader. The chain, which started in Clearwater in 1983, has 365 locations in the U.S. and brings in about $900 million in annual sales, Tristano said.

Hooters declined comment.

Collectively, the breastaurant subsection makes about $2 billion in sales annually, compared with the overall industry sales of $390 billion, Tristano said.

Technomic estimates sales at the new breastaurants are growing at a 40 percent rate annually.

And while they are gaining strength in South Florida, not all are welcoming them with open arms.

“It’s abundantly clear they’re selling sex,” said Meredith Ockman, president of the Palm Beach County chapter of the National Organization for Women. “I don’t blame anyone for making a dollar, but don’t think objectifying someone is the way to do it.”

The “breastaurant” term gained popularity about five years ago and has stuck since then, said Ron Ruggless, southwest bureau chief of the trade publication Nation’s Restaurant News.

“Some of the brands are trying to get away from it because it has a connotation of sex, but that’s basically what the category is selling,” Ruggless said.

Fabio Caro, franchise owner of the upcoming Hallandale Beach restaurant, decided to open in South Florida after visiting a Tilted Kilt in Connecticut, he said.

“Sex appeal sells,” Caro said on Tuesday while meeting with an awnings installation company outside the new location. “The women are treated professionally and with respect. They don’t only have to look good, but also have to be entertainers. It’s tasteful.”

INFORMATIONAL BOX:\ \ The leaders

Brands in the breastaurant category, and 2011 sales:

Hooters $858 million \ Tilted Kilt Pub & Eatery $123 million \ Brick House Tavern & Tap 55.5 million \ Twin Peaks 44 million \ Ker’s Winghouse Bar & Grill 42 million \ Fricker’s $38 million \ Show-Me’s $25.8 million \ Bikinis Sports Bar & Grill $11 million \Source: Technomic Chain Database Informational box at end of text.


Pop-up Restaurants: One-Night-Only Dining in Orlando

February 25, 2013

Pop-up RestuarantEric Hanke didn’t know what he’d be eating when he walked into the ClandesDine restaurant Saturday night.

“That kind of mystery and mystique adds to the whole event,” said Hanke, 38, who went for a date night with his wife, Frieda Lamberg.

The couple were pleased with what they got for $75 each at the one-night restaurant in the back of an ad agency: a five-course gourmet meal with wine but with a kiddie twist. The appetizer featured peanut butter that looked like sand, grape jelly with port and brioche. Royal red shrimp were fashioned into fish sticks. The main course of wild boar meatballs with spinach linguine came on school-lunch trays.

Now that Orlando has embraced food trucks, some promoters have turned their attention to another big-city trend: the pop-up restaurant.

Mark Baratelli, an Orlando events promoter who runs the Daily City website, hopes to make ClandesDine a regular happening. Restaurant critic Scott Joseph recently held his first pop-up and will soon sell tickets for his second. Barbecue restaurateur John Rivers and even the Citrus Club have also experimented with them.

Here-today-gone-tomorrow restaurants have become a way for chefs to get exposure and test new concepts. Adventurous foodies, meanwhile, get a new kind of mystery dining. They buy tickets — usually pricey ones — often not knowing where they’ll have dinner, who they’ll sit with or what they’ll eat.

Baratelli stressed on his website that diners should come with an open mind and a daring palette. “Do not expect white-glove service. Don’t ask for your sauce on the side. Just come and enjoy.”

The novelty is appealing to some Americans who are weary of casual dining and find fine dining too stuffy.

“Today’s consumer doesn’t think of dining away from home as traditionally” as in the past, said Darren Tristano, executive vice president of Chicago-based food-industry research firm Technomic.

Tristano said such concepts can work even in Orlando, which doesn’t have the same heavy concentration of urban dwellers as larger cities such as New York and San Francisco.

Baratelli agrees, although in Central Florida, organizers might have to think more creatively, he said.

“Some cities have hundreds of buildings and crazy spaces, things that are really old and interesting,” he said. “I think Orlando has those. We’re just going to have to dig and look for them.”

Baratelli held his debut dinner in the Mills 50 District, in the same place as his weekend Cardboard Art Festival. A few musicians from the Florida Symphony Youth Orchestra played Beatles tunes as the 36 diners got to know one another among displays of cardboard animals and robots.

Much of the food came from chef Bryce Balluff’s Fork in the Road food truck, parked outside.

Baratelli is getting the word out about his pop-ups through his website, as is Joseph.

For his first pop-up, Joseph chose a chilly seafood-processing room at Gary’s Seafood & Specialties, where the dinner included a fish-filleting demonstration.

“I like the location to be logical, that it has something to do with the food or with the dinner, to help educate [people] about what we eat, what we drink,” Joseph said.

Just a few days before Joseph’s pop-up last year, legendary New York City restaurant Le Cirque opened for one night at the Citrus Club in downtown Orlando. That was one of a series Le Cirque held around the country.

Also last year, 4 Rivers founder John Rivers tried out a new concept called Cowboy Kitchen at Alaqua. Ultimately, Rivers decided to let the idea for a restaurant featuring upscale Southern cuisine wait so he could focus more on his growing smokehouse empire. But he plans more pop-ups, just for fun.

For Balluff, who cooked at ClandesDine, the pop-up is also a chance to expand his horizons.

“I wanted to be able to still do fine dining. That’s my first love,” said Balluff, whose food truck serves up dishes such as braised short rib sandwiches and paella-covered hot dogs. A pop-up, he said, is “kind of my outlet.”


Fast-food chains revamp value menus

February 21, 2013

value_menu_460Wendy’s launched its first value menu in October 1989 — seven items ranging from a junior bacon cheeseburger to a garden side salad to a small Frosty, all priced at 99 cents.

It was the first volley of a revolution that changed the fast-food industry in America.

“I think the Wendy’s 99-cent value menu was a very innovative approach to pricing that has stood the test of time and created a way of life for fast-food-chain customers,” said Darren Tristano, executive vice president of Technomic, a food-industry research firm in Chicago.

And with payroll taxes rising and consumer confidence falling, it’s time for value again. Restaurant chains such as Wendy’s and Taco Bell are making over their value menus to balance customers’ dwindling paychecks with rising food costs.

“In tough economic times, that’s when value is even more important,” said Denny Lynch, a spokesman for the Wendy’s Co. in Dublin.

The fast-food value menu is rooted in value theory — understanding how and why people value some things more than others. In 1989, “value” meant fast food that cost less than a buck, and Wendy’s set the standard.

One thing Wendy’s did not do, however, was cut the price of its premium menu items. “In the late’80s, there was an awful lot of discounting in the industry, not different from today,” Lynch said.“At the time, you would see 99-cent Whoppers (Burger King) and Big Macs (McDonald’s).”

Instead, Wendy’s offered customers the predictability of the same value items every day. “That turned out to be a big hit that resonated with consumers,” he said.

Over time, the definition of fast-food value changed. Consumers decided they also wanted quality and variety for their dollar. “It’s not just ‘fill me up’ anymore,” Lynch said.

That spelled pricing pressure for restaurant operators. So they juggled their value menus, aggressively promoting the lowest-cost items, cutting portion sizes, switching to lower-cost suppliers and moving high-cost items to other parts of the menu.

In mid-2005, Wendy’s experimented with raising the prices of some value-menu items above $1 to compensate franchisees for rising food costs. For example, Wendy’s raised the price on its junior bacon cheeseburger to $1.29 from 99 cents, according to The New York Times.

The pricing move confused longtime Wendy’s customers and was partly responsible for a slump in sales, securities analysts said at the time. Wendy’s went back to a 99-cent value menu within six months.

A few years later, Wendy’s competitor Burger King priced its double cheeseburger at $1, even though franchisees complained they were losing money on the sandwich.

The National Franchisee Association sued Burger King on behalf of the franchisees in 2009. Franchisees settled the suit two years later, winning not higher prices for the cheeseburgers but more say in future value-menu pricing.

Meanwhile, the prices of food, utilities and labor have continued to rise. “All restaurants are dealing with food price inflation,” said Technomic’s Tristano.

Last year’s drought, considered the worst in half a century, is adding to food and fuel costs. New health-care mandates for employers, beginning next year, also could drive up labor costs, Tristano said.

So in recent years, some Wendy’s franchisees took liberties with their value menus, raising prices for some items above $1. That meant one restaurant might have charged 99 cents for a Jr. Cheeseburger Deluxe, but at a different location, the same sandwich cost 30 cents more.

Inconsistent marketing messages, including price disparities at its restaurants, caused Wendy’s to lose market share and traffic in its “price/value” segment over the past 15 months, Emil Brolick, the company’s president and CEO, told investors during a recent conference.

On Jan. 2, Wendy’s relaunched its value menu as the Right Price Right Size menu — 18 items ranging in price from 99 cents to $1.99. Breaking the 99-cent barrier of previous menus could give Wendy’s and its franchisees flexibility to deal with rising costs.

KeyBanc Capital Markets analyst Christopher O’Cull praised the Right Price Right Size menu in a recent research report for its potential to make value pricing more consistent across Wendy’s restaurants.

This potential has yet to be realized. Wendy’s can’t dictate the prices that franchisees charge for their value-menu products, Lynch said.

“We believe that the launch of the Right Price Right Size menu is the first and a very important step in beginning to address that” problem, Brolick said. “The response we’ve seen initially is very, very encouraging.”

The only 99-cent item that remains from Wendy’s original value menu is the small Frosty, Lynch said.

Whatever the evolution of the menu, it continues to resonate with at least some customers.

David Head of Columbus likes Wendy’s new value menu. Head started with one sandwich and french fries on a recent afternoon, then went back for a second sandwich.

“I’ve had two sandwiches and an order of fries for $3,” Head said. “I feel like I’m getting a lot for my money.”


Technomic: Fresh Meal Purchases Slump

February 20, 2013

CHICAGO — Consumers are buying meals less frequently from supermarket foodservice operations than they were two years ago, according to Technomic’s latest research.

Since this could mean that people are returning to the restaurant world for their ready-to-eat meals, Technomic researchers conclude that retailers need to make changes to see that their meal solutions stand out from those offered by restaurants.

The research firm found in its Retailer Meal Solutions Consumer Trend Report that just 38% of consumers surveyed said they purchase meals from traditional supermarkets each week. That’s compared to 42% who said that in 2010.

“These consumers may be reversing the patterns they set a couple of years ago by heading back to restaurants,” Darren Tristano, vice president of Technomic, said in a news release.

“For retailers to gain or maintain their share of foodservice dollars, they’ll need to clearly stand out from restaurants —especially since our data show that consumers’ expectations are rising for the taste, quality, freshness and appearance of retailer-prepared foods,” Tristano added.

Technomic’s research shows that some retailers are already making changes. In fact, in one of the major findings in a study that involved 20 supermarket chains, it was found that some retail meal solution menu trends included signature fried snacks, more variety for vegetable sides, higher-quality pizzas, a distinct specialty focus for sandwiches and burgers; and a move toward ethnic flavors.


Food Industry Vet Betting on Pie

February 19, 2013

Sugar_Cream_Pie 304A hospitality veteran is launching a new pie restaurant — with the hope of baking up a popular franchise.

Ron Wolf, who founded the Georgia Restaurant Association, is opening up a new fast-casual restaurant called That Pie Place.

The first location is set to open this month at 6355 Peachtree-Dunwoody Road in Sandy Springs. The hope is to begin franchising in late 2013, with the goal of having 200 locations by 2020, Wolf said.

He’s banking on the rapid growth of the fast-casual segment, which had about $30 billion in sales last year in the United States. That’s almost 10 percent of the $375 billion restaurant industry, said Darren Tristano, executive vice president of Chicago food industry research and consulting firm Technomic Inc.

“It’s been growing at a double-digit rate since 2000,” Tristano said. Fast casual has a lot of traction because the food quality and service is good, and the price point is attractive, he said.

“It wasn’t a coincidence that I wanted to be in that segment,” said Wolf, who founded the Georgia Restaurant Association in 2003 and served as its CEO until 2010. Also, in the past, he worked for Holiday Inn Worldwide and AFC Enterprises Inc.

That Pie Place will be Wolf’s return to food service after almost 30 years.

“I had the desire to do one last project,” said the 63-year-old. “I believe this can work … We want this to be, perhaps, the next great opportunity for that mom-and-pop operator.”

He’s teamed with franchise veteran Daryl Dollinger, president and co-founder of Raving Brands, now called Big Game Brands. The Atlanta company founded such fast-causal concepts as Moe’s Southwest Grill, Mama Fu’s and Planet Smoothie.

That Pie Place is a side project for Dollinger.

“It’s almost ridiculous how good the product is,” Dollinger said. “We are doing something that nobody else is doing in Atlanta.”

Chef Todd Kazenske, an instructor at Le Cordon Bleu College of Culinary Arts Atlanta, developed the menu.

That Pie Place will serve breakfast, lunch, dinner and dessert. The pies are created before the customer’s eyes, in a format similar to Moe’s Southwest Grill or Chipotle. People can customize their fillings.

Some of the standard pies include egg and cheese, chicken cordon bleu, cheeseburger, salmon teriyaki or Philly cheese steak. Dessert options include pecan, fruit, cheesecake and s’mores.

Pies range in price from $1.99 to $5.99.

It takes three minutes or less to bake the pies. They are easily portable, making the restaurant ideal for college campuses or airports, Wolf said.

“Our whole model is ‘Come play with us,’ ” Wolf said. “What do you like? We have the ability to make an incredible variety of different flavor profiles.”