Americans Turning to Restaurants, Not Grocery Stores, for Mealtime

April 30, 2015

by Mark Fisher

http://www.daytondailynews.com/news/news/americans-turning-to-restaurants-not-grocery-store/nkxP2/picture

Restaurants cater to younger diners who are leading the trend
The Census Bureau reports that in March, for the first time since such records have been kept, Americans spent more money in restaurants than in grocery stores. Millennials led the charge. Local restaurant owners, including Dan Young owner of Young’s Jersey Dairy, say they’re not surprised about shift occurring in the dining scene in this region and across the country.

For the first time since the government started keeping track in 1992, Americans—led by those in the millennial generation—spent more money last month in restaurants and bars than they did in grocery stores.

This region’s restaurant owners say they’re not surprised at the shift in spending patterns, and they’re taking steps to attract younger diners.

Dan Young, CEO of Young’s Jersey Dairy and the Golden Jersey Inn in Clark County north of Yellow Springs, said today’s families work long and sometimes unpredictable hours and have limited time to spend together.

“Yes, they can get a nice meal from the grocery store, but if your ‘together’ time is limited, who wants to spend that time preparing the meal?” Young said. “Why not meet your family or friends at a local restaurant and enjoy each other’s company while choosing from a much wider selection of food than you typically would at home?”

The U.S. Department of Commerce reported last week that Americans spent $52.3 billion at restaurants and bars in March, and $49.7 billion in grocery stores—the first time grocery spending lagged restaurant/bar expenditures.

The National Restaurant Association reported earlier this month that despite extreme weather in many parts of the country, its “Restaurant Performance Index” (RPI)—a monthly barometer of the the health of and outlook for the U.S. restaurant industry—held steady in February, which also marked the 24th consecutive month in which the RPI signified improvement in key industry indicators.

Hudson Riehle, senior vice president for the restaurant association, said restaurant operators are increasingly optimistic about business conditions and potential sales growth in the months ahead. About 59 percent of restaurant operators expect to have higher sales in six months, compared to the same period in the previous year, up from 57 percent the previous month. In contrast, only 4 percent of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year, restaurant association officials said.

The association offers advice to restaurant managers on its web site on how to cater to the twenty-somethings and early-thirty-somethings who are increasingly likely to let others prepare their meals.

“Millennials view dining out as a social event (i.e. a chance to connect),” the association says on its web site. “They prefer to eat at restaurants with a lot of choices and lower price points. They tend to favor fast food, deli food and pizza restaurants over coffee shops, high-end dining and casual dining.

“Equally important for restaurateurs to remember is that millennials can be moving targets. While they develop brand attractions and support reward and loyalty programs, their allegiances can be very flexible according to their circumstances.”

Young, whose restaurant and ice cream shop are geared toward families, said diners in the 25-to-34 age group are “eager to try new tastes, probably because they have been exposed to more variety growing up.”

“Plus, with today’s amazing technology, it just takes a few tweets or texts and you can be visiting a nice restaurant with family and friends in a few minutes,” Young said. “Spontaneous is so much easier than when most of the 25-to-34-year-olds were born —when the family had one, maybe two phones at home, and families had to plan out the day ahead of time.”

Shanon Morgan, president of the Miami Valley Restaurant Association, agreed that technology — and in particular, social media — are stimulating restaurant and bar business, especially among younger diners.

“It’s much cooler to check in at the local tap room than the local grocery store,” Morgan said.

Jay’s Restaurant in Dayton’s Oregon Historic District has begun advertising more heavily on social-media sites and has launched “happy hour” specials on Tuesday and Wednesday in part to attract more younger diners, according to Amy Haverstick, Jay’s Restaurant’s owner, who is herself the mother of a 2-year-old.

“People my age, the couples are working full time, and they’re finding the easy way out — it’s all about convenience,” Haverstick said. “Life just seems to be a lot more fast-paced for our generation.”

Darren Tristano—executive vice president of Technomic, a Chicago-based food service research and consulting firm—said his company’s research “continues to show that the millennial consumer has integrated dining away from home deeper into its identity compared to older generations. They appreciate the socialization and the lifestyle element that restaurant visits bring to their overall quality of life.”

Tristano said members of the millennial generation “continue to use restaurants with great frequency, and as their spending power builds, so will their dining (expenditures). Favorable employment and disposable income growth trends along with lower gas prices are fueling the return by many younger consumers to restaurants.”

Millennials, Tristano said, “are the future, and along with them, the key to many restaurants’ future.”
________________________________________
Americans’ shifting spending patterns
March 2015
Restaurants and bars: $50.4 billion
Grocery stores: $50.1 billion
February 2015
Restaurants and bars: $50.0 billion
Grocery stores: $50.4 billion
March 2014
Restaurants and bars: $46.8 billion
Grocery stores: $49.1 billion
Source: U.S. Department of Commerce


New Face, Future for Ruby’s Diner

April 24, 2015

nmxdke-b88381735z.120150416173141000gd396457.10The Irvine chain’s new CEO will condense the chain’s menu and craft new concepts

By Hannah Madans, The Orange County Register
http://www.ocregister.com/articles/ruby-658341-restaurant-new.html
(c)2015 The Orange County Register (Santa Ana, Calif.)

Scott Barnett, the interim chief executive at Ruby’s Diner, has only been on the job for a few weeks, but he’s already tried every item on the chain’s expansive menu.

Barnett replaced the chain’s founder Doug Cavanaugh in March, making him the company’s first new CEO in its 33-year history. Cavanaugh will remain as Ruby’s chairman.

A personal friend of Cavanaugh, Barnett has a long history in restaurants. He’s the former president and CEO of Rusty Pelican, founding president and former CEO of Bubba Gump Shrimp Co., and has served as a consultant for investment banking projects in Hong Kong.

Barnett said his goals include improving Ruby’s by condensing the menu while upholding the restaurant’s standards.

The renewed economy and cheaper gas has been a boon for family restaurants like Ruby’s.

Restaurants like Ruby’s saw 3 percent growth in 2014, a “huge improvement” over sluggish gains in the years immediately after the recession, said Darren Tristano, executive vice president at market research company Technomic.

“The low prices of gas are really starting to help the family-style segment,” he said. “It’s giving more low- to middle-income consumers more money to spend, and as long as gas prices remain low, the restaurant business is going to continue to improve.”

He added that low menu prices are something that helps a restaurant like Ruby’s do well.

“They do have good quality offerings in a theme restaurant, which is something that consumers are looking for, and their price points are relatively good for the California market,” Tristano said.

Meanwhile the fast-casual restaurant sector — an area Barnett sees as having tremendous growth opportunity for Ruby’s — grew 13 percent in 2014.

Barnett spoke to the Register about his experience in the restaurant industry and what he hopes to bring to Ruby’s, a chain named after Cavanaugh’s mother. His answers have been edited for length and clarity.

Q. Why did you want to be involved in the company?

A. The brand is extremely strong. It has great brand equity in the markets in which it operates. Many years ago, I almost went to work with Ruby’s as their vice president of operations. I ended up running Rusty Pelican as CEO instead. Doug (Cavanaugh) is a friend, and he really wanted someone who had a significant amount of experience as a professional manager who could help him transition the company from an entrepreneurial style into a more seasoned manner — and given that we’ve had a long relationship and are friends, it made sense.

Q. You have held many notable jobs in the restaurant industry. What did you learn from each of these positions and what will you bring to Ruby’s?

A. At Bubba Gump Shrimp, I was fortunate to be dealing with a well-known brand with tremendous reach worldwide. The challenge was to deliver on that brand in the manner that people were used to it from the movie. It was all about learning about brands that have a lot of power and seeking ways to deliver on the promise of the brand.

At Rusty Pelican, it was also a well-known brand that had encountered a number of issues. I learned a lot about how to act in a capital restrained environment, team building, starting from the ground up and a company turnaround.

In Hong Kong, I learned from the other side what it was like to be involved in restaurant investments and to help restaurant companies maximize their returns based on our investment criteria.

Q. Did you always know you would end up in the restaurant business?

A. No. I started working in restaurants many years ago, while I was going to school, because I had to pay my own way. I was a cook, a bartender, a busboy, a dishwasher, a valet parking attendant.

When I left college, my intent was to go to grad school but I picked a summer job working in a restaurant and the rest is history. Never went to grad school.

Q. What will you change at Ruby’s?

A. We’re going to dramatically reduce the menu. We are looking at some of the internal operations and the internal policies and procedures and see which work and which can be improved upon. I’m trying to bring some methods I’ve used and learned about in the past that I think can improve upon what’s going on here at Ruby’s.

The menu changes are being tested right now in Yorba Linda and Irvine. The test started March 30, right after I started here. I put that in as quickly as possible because I had identified it as a serious shortcoming at Ruby’s. The results so far have been very positive. If the test proves out in about four more weeks, then we’ll do an implementation within the entire system by the end of May.

Q. What other plans do you have for Ruby’s future?

A. We like the look of the classic ’40s diner that Ruby’s is known for and I think that as we move forward we’re not going to lose the roots on which it was built.

We also want to spruce up the looks of many of the restaurants, both the interior and exterior. But we’re operating in a constrained environment, and we have to be economical and creative in how we do that. I don’t want to change a lot about the ’40s diners look. It’s very iconic, almost timeless. I’m talking about repairs, maintenance, things like that.

Q. What aspects will remain the same?

A. So many restaurants and companies over the years cut corners, take shortcuts and in the end sacrifice the most important part of the experience, which is the food and the service. That is one thing Ruby’s has not done and that is not going to change.

Q. It seems like there are a lot of new people coming to Ruby’s, especially from Yogurtland (Ruby’s vice president of franchise development Larry Sidoti is a former Yogurtland executive). Why is this?

A. The fact that many come from Yogurtland is somewhat random. We at Ruby’s have always made an attempt to hire the very best people. And it just so happens that there were a number of people who were available from Yogurtland.

The best way of recruiting is to find people who are friends or have relationships or have recommendations from good people that already work with us. Birds of a feather tend to flock together. Good people want to work with other good people.

Q. Fast casual option Ruby’s Dinette was recently scrapped. Are there any new Ruby’s concepts underway?

A. We haven’t given up on fast casual. I really think it’s a matter of execution and conceptual positioning. We’re reviewing that. It will almost surely be a growth vehicle for the company going forward.

We are still doing fast casual restaurants in airports around the country and a few other places.

Q. When you venture into fast casual again, will you do it at existing Ruby’s locations or open new ones?

A. We would do it in new locations. When people have a Ruby’s, in their minds, it’s their Ruby’s. Most customers like it as it is. It doesn’t make sense to change their Ruby’s into something else. So you look for an opportunity to create a new Ruby’s in a new environment.

Q. What are some of the biggest challenges in making a restaurant chain successful?

A. The restaurant business isn’t that complicated. It’s really about hot food, service with a smile and pleasant, clean, interesting surroundings. If you deliver on those things on a consistent basis with pricing that makes sense, then you’re going to create an experience for your guest. There are also lot of nuances involving location and making sure you hire the right people.

Q. How have minimum wage increases and healthcare mandates affected the business?

A. Increases in minimum wage and health insurance costs and many other employee-related costs are impacting our industry. They’re impacting the industry at a time when most operators have little to no pricing power and the ability to pass on these costs to the customer.

You have to look for creative ways to minimize the costs without impacting the guest experience. And it gets more challenging every year.

Q. Is there something in particular you want to accomplish as interim CEO?

A. I would love to be able to make a difference in terms of the corporate culture. I would like to be able to influence the growth of the company in what is essentially a very capital-constrained environment. I would love to be able to make the Ruby’s experience a memorable one to the guest and that’s not as easy as it sounds.

Q. What is Cavanaugh’s involvement in the company now?

A. Doug is in many ways an idea guy, a concept guy. And he’s highly focused on the marketing side of the business. He’ll continue to be a major contributor in those areas. I’m going to make very few decisions without sounding them off him beforehand. He is the creator of the concept and the guy who is responsible for the success Ruby’s has had over the years.


No End to the Bacon Trend

April 7, 2015

Bacon stripsEven with health and wellness trends top-of-mind with consumers, indulgent bacon continues to provide opportunities for innovation and appeal to menus. Innovation can be built on preparation, spice profiles and mixing the salty, smoky and savory flavor of bacon with sweet and hot. There seems to be no end to the bacon trend, and we continue to see innovation across the restaurant landscape.

In the quick-service sector, Little Caesars Bacon-Wrapped Crust Pizza places bacon on the pizza and now around the pizza.

In fast casual, Panda Express improves the already craveable Orange Chicken by adding bacon (with a premium price point) for customers who can’t get enough.

Full-service chain LongHorn Steakhouse adds the Triple Bacon Sirloin to the mix, with its Fire-Grilled Sirloin wrapped with bacon, topped with bacon and finished with bacon tomato Hollandaise.

In the recreation segment, White Sox fans at Cellular Field will be able to order bacon flights that include brown sugar, jalapeno, black pepper and barbecue flavors, or just bacon on a stick, improved this year with a maple glaze.

One thing is clear: The trend in bacon continues to drive innovation and growth, and there’s no end in sight. Fans of the smoky salty protein just can’t get enough.


8 Takeaways from RLC Day One

April 1, 2015

Peter Romeo
http://www.restaurantbusinessonline.com/restaurant-leadership/articles/8-takeaways-rlc-day-onepicture

In a day that started with go-cart racing and ended with tips from a pro golfer named Woods (Cheyenne, not Tiger), attendees of the Restaurant Leadership Conference were treated to experiences and insights that extended far beyond business. But the core issues of boosting sales, profits and traffics were far from shortchanged. Here are some of the lessons that were served up to the 2,000 industry leaders in attendance on the first full day of the event.

1. How much you pay for a lost employee
The cost for replacing an hourly team member is $1,100, and the expense of filling a vacated manager’s post is $14,000, according to the research firm TDn2K.

2. Turnover is back to pre-Great Recession levels
… which makes those numbers painfully real, said TDn2K Executive Director of Insights & Knowledge Victor Fernandez. Three out of four staff vacancies comes from an employee’s resignation to take another job, a dynamic that also hasn’t been seen since 2008.

3. A hot new market takes form
Technomic christened it “QSR plus,” a group of familiar and emerging limited-service chains that see an opportunity in the market sliver between traditional fast food and pricier fast-casual concepts. It might also be called fast casual lite. The signature features are better, more wholesome food than what’s offered at national high-volume chains like McDonald’s and Taco Bell, but at a price below the double-digit average checks of the fast-casual market.

Think El Pollo Loco, Pita Hut, Chick-fil-A, Culver’s and In-N-Out. “They have an average check of $6 to $9, compared to $12 at Five Guys,” explained Technomic EVP Darren Tristano, who kicked off the education portion of the RLC with colleague Patrick Noone, the researcher’s VP of business development.

4. Not all fast casuals are created equally
The fast-casual segment grew 12 percent in sales in 2014 but build-your-own custom brands like Chipotle and Blaze Pizza grew 22 percent, according to Technomic. It attributed the discrepancy to desire by some guests to have interaction with whoever is preparing their meal, a direct challenge to so-called frictionless service.

5. Ice as a signature
The phenomenon is called “nice ice,” explained Noone, who noted that a new generation of ice machines is turning the ultimate commodity into a point of differentiation.

6. A restaurant’s assessment in social media is the truest predictor of sales and traffic
TDn2K provided several examples of correlations between restaurants’ customer ratings on Yelp and what kind of same-store sales a chain unit is posting.

7. A surprising sales star
The industry’s best performer from the last five years in sales growth isn’t Chipotle, Starbucks or Qdoba, but Little Caesars Pizza, according to GE Capital. The quick-service pizza chain’s compound annual growth rate for the last half-decade has been 10 percent, according to the financial-services giant. “The closest brand is [at] 4 percent,” said CMO Shannon Tolbert.

8. Confronting Big Data
If operators hear the theme music from “Pyscho” whenever they think about all the data that’s available to them, “you got to get over it,” advised TDn2K chairman Wally Doolin, a recovering operator.