Snacks are having a moment and food makers cashing in

February 26, 2016

Samantha Bomkamp
Chicago Tribune
February 22, 2016
http://www.chicagotribune.com/business/ct-snacking-boom-0223-biz-20160219-story.html

The market for snacks, sold at Walgreens and other retailers, is growing rapidly, analysts say, and manufacturers are working to cash in on the popularity. (E. Jason Wambsgans / Chicago Tribune)

The market for snacks, sold at Walgreens and other retailers, is growing rapidly, analysts say, and manufacturers are working to cash in on the popularity. (E. Jason Wambsgans / Chicago Tribune)

Three squares are so passe. Snacking is having a moment, and — you’re driving it.

You could be a 25-year-old Instagram-loving foodie, who shares daily updates of your homemade mini-meals and trendy restaurant tapas. Or a 33-year-old budding entrepreneur, who opts for smoothies and meal replacement bars because you don’t have time to shop, but have no time for junk food, either. Or a 41-year-old father, who indulges in a daily Starbucks run with co-workers. Or a 65-year-old retiree who isn’t up to preparing dinner anymore and opts for a bowl of popcorn or ice cream instead.

Consumers are driving food industry players — manufacturers and restaurants — to introduce items that satisfy a rapidly growing appetite for smaller meals that can be consumed on the run, even though it may not be the healthiest way to10 eat. Whether the fear of calories posted on restaurant menu boards is causing us to order smaller meals or hectic schedules are driving us to this new kind of eating, major food companies have caught on in a big way.

“The tradition of a piece of fruit or a handful of nuts as a snack — those are still there, but overall the definition of a snack has dramatically changed,” said Technomic President Darren Tristano.

Snacks spell big opportunity for food companies because they tend to be more expensive than traditional meal components. And one look around a grocery store shows that retailers like their potential too, as snacks get more prominent space on shelves, with some healthier fare being stocked in the produce department.

At cereal powerhouse Kellogg, whose brands include Pringles, Cheez-It, Keebler and TownHouse crackers, snacks have gone from 20 percent of its business in 2000 to almost 50 percent today.

This year, the company expects brands that have been struggling, like Kashi and Special K, to lead the growth. Both saw strong sales in the early 2000s, but fell out of favor when consumers steered away from “diet food,” Kellogg CEO John Bryant said on a conference call last week.

The brands have been revamped, and boxes include buzzwords like “nourish” instead of “diet,” and Kellogg is focusing the brands on hand-held forms, instead of just cereal by the bowl. “The expectation of consumers in the snack market has changed,” he said.

But Kellogg also expects brands like Pringles and Cheez-Its will be strong, and it is hurrying to develop more single-serve packages for its snacks so they become a grab-and-go item in a convenience or drug store.

At Hormel, whose meat brands including Jenni-O and Spam, it’s Wholly Guacamole that’s stealing the show, particularly in single-serve containers, according to CEO Jeff Ettinger. Hormel also recently introduced Skippy PB Bites with either a crunchy peanut butter or pretzel core.

Oak Brook-based TreeHouse Foods used to count beverages as its biggest category, but a 2014 acquisition propelled its snacks category to No. 1, and it now says it’s the largest private-label trail mix maker in the U.S.

Even health care companies are entering the snack market.

Abbott Laboratories, maker of Pedialyte, Ensure and Similac formula, earlier this month launched a line of snack bars called Curate aimed at adults seeking healthier alternatives to chips or cookies.

And last month, Chicago-based Hillshire Brands introduced a line of snacks aimed squarely at the young Instagram-addicted foodie, launched at a VIP event in New York with a former “Top Chef” contestant and Bravo’s Andy Cohen. The snacks include chicken bites with sauces like mango habanero and spicy chipotle and “small plates” of salame, cheese and crackers.

“Consumers are shifting away from this traditional snacking definition to include a more expanded variety of options to satisfy a more sophisticated food palate,” said Jeff Caswell, vice president and general manager of Hillshire Snacking. “This evolving definition is being spearheaded by millennials. … They have a passion for food exploration and like to try new flavors and push boundaries.”

He said sales of the new line have exceeded expectations.

Millennials, the largest segment of the U.S. population, are driving the snacking industry to create more fresh, healthy and protein-packed options, but other generations are partaking as well. People tend to snack more as they age, in part because older adults don’t have young families to cook for, said Darren Seifer, an NPD Group food and beverage analyst. The biggest snackers are those 55 to 64, NPD’s research shows.

But more snacking doesn’t always mean hitting the vending machine for a bag of M&Ms. Americans are eating fewer sweet snacks, choosing to save them for an evening indulgence, Seifer said. Their consumption fell about 5 percent in the past decade, compared with savory snacks like chips and beef jerky, which grew by 7 percent in the same period. Meanwhile, so-called “better-for-you” snacks like yogurt and cottage cheese cups have grown 25 percent.

“We start off the day with the best of intentions and then about 8 p.m., after you put the kids to bed, we’re allowing ourselves a bit of indulgence,” he said.

Deerfield-based Oreo maker Mondelez has seen both sides of America’s snacking obsession. Spurred by slowing sales of sweet snacks, it introduced Oreo thins to cater to those who want a healthier version. Mondelez, which also makes Ritz crackers, Cadbury chocolate, Sour Patch Kids and Honey Maid graham crackers, says it’s also focusing on smaller sizes for its brands to cater to snackers.

The company already derives 85 percent of its sales from snacks, up 10 percent from a year ago, and it sees a great deal of growth potential this year.

“Why do we like snacks so much? Quite simply, because of their growth potential. Snacking is a $1.2 trillion market, and it’s growing everywhere around the world,” said Mondelez CEO Irene Rosenfeld at a conference last week.

Smaller, more frequent meals may appeal to many Americans, but they’re not necessarily the healthiest option.

“Snacking or frequent eating tends to be less satisfying to your brain,” said Georgie Fear, a registered dietician and author of “Lean Habits For Lifelong Weight Loss.” “It’s hard to feel like we’ve eaten if we’ve just unwrapped a bar.”

In general, frequent snacks lead to “more dishes, more calories, and they’ve also hampered people’s decision-making abilities” because people can use snacks as an emotional crutch, Fear added.

There is a place for healthy snacking, Fear said, but she recommends sticking to options like whole fruit and yogurt. “Many people have gone out of their way to shift to smaller, more frequent meals. And then they (get more information) and think, ‘I’ve been washing that much Tupperware and it’s working against me?’ “


The chips are down for Chipotle, but not for long

February 11, 2016

by Todd Wasserman
Campaign
http://www.campaignlive.com/article/chips-down-chipotle-not-long/1383083

In 2013, Chipotle released a haunting animated video featuring a scarecrow that observes the horrors of automated farming. Set to Fiona Apple’s rendition of “Pure Imagination,” the ad went on to win CAA Marketing a Grand Prix at Cannes the following year.

Before the Cannes judges weighed in, though, Funny or Die did with a damning parody changing the tune to “Pure Manipulation” and offering a cynical analysis of Chipotle’s marketing. “We can say what we want. In our world of pure imagination,” went the lyrics. “Just pretend we’re your friends. It’s what we want you to believe.”

Funny or Die’s blistering critique did little to hurt Chipotle’s appeal. Instead, several incidents of food-borne illnesses over the past few months have exposed the chasm between the chain’s brand promise and the realities of running a large-scale restaurant operation. It’s safe to say, at least, that Chipotle won’t be trumpeting its “food with integrity” mantra for a while or criticizing rivals for their factory farming practices.

Because of its healthy financials and sheer size — the company’s market cap is around $14 billion — few expect Chipotle to go the way of Chi-Chi’s, another Mexican chain that closed its doors in 2004 after it unknowingly perpetuated a hepatitis A outbreak that killed four people.

That prognosis for Chipotle, however, assumes that the worst of the crisis is over. Going forward, Chipotle will source more of its food from major suppliers, mooting a prime differentiator from other fast-food chains. The company is also planning to launch a new branding and PR campaign to woo back its Millennial base. Already, a burrito giveaway designed to appease customers after the chain closed its doors briefly Monday for companywide safety meeting has overshadowed concerns about food-borne illnesses, at least on social media. (Reps from Chipotle and agency GSD&M could not be reached for comment.)  Experts predict that Chipotle will likely end up in the clear.

The damage so far
Almost 500 people have gotten sick from Chipotle food since last June, 20 of whom were ill enough to be hospitalized. One such customer, Chris Collins of Portland, Ore., experienced bloody stools and excruciating pain after ingesting E. coli 026 from one of Chipotle’s chicken bowls. At one point, his doctors feared kidney failure. Though that never came to pass, Collins was still weak and “emotionally shaky” in December, according to a cover story in Bloomberg Businessweek.

Such stories have hurt Chipotle’s bottom line and brand image. In early February, the chain said sales at established restaurants fell by a third in January. That news followed a 15% drop in the fourth quarter of 2015. At this writing, the company’s stock price was down about 42% from its 52-week high.

On the brand side, Chipotle’s image has gone from positive to negative. YouGov’s BrandIndex, which surveys 5,000 consumers online every day, rates brands on a buzz score that ranges from -100 to +100, with zero being a neutral position. For most of 2015, Chipotle’s buzz score was around +10, but in January, that sunk to -29 and was at -27 at this writing.

“Chipotle has been playing catch up on this crisis from the start,” says Ted Marzilli, CEO of BrandIndex. “The brand was slow to respond to the initial incident. [It has] just not been able to get out ahead of this crisis, and fairly or unfairly, is paying the price in both public perception and decreased sales.”

The six-month rule
Despite the challenges though, few people see this as a fatal blow to the chain. In a research note to clients, Wells Fargo analyst Jeff Farmer cited previous incidents of food-borne illnesses at other national chains to demonstrate same-store sale declines can be cut in half six months after the incidents occur (assuming that there are no more incidents). Farmer added that same-store sales of such affected companies can also rise 12-15 months after the incident.

In an interview with Campaign, Darren Tristano, president of Technomic, food industry consultancy, cited the same rule. “Our research indicates that in six months, most consumers forget about these food-poisoning issues that come up,” he said.

The Blue Bell Effect
In Chipotle’s case, that’s a pretty safe bet. Jonathan Bernstein, a crisis PR expert, says that Chipotle has built up so much good will with its branding efforts that it can withstand this major PR setback. He compared Chipotle to Blue Bell, the ice cream brand that is so beloved by its fans that many were able to overlook a recent outbreak of listeria linked to the brand.

“Customers’ loyalty to a brand can make a huge difference in overcoming even food illness-related crises and people really stuck with Blue Bell a long time after many would have done the same — given a choice of other ice creams,” he said. “With Chipotle, they created such good will before these problems that although that’s been eroded, it’s not terminal at this point.”

Rebeca Arbona, executive director at Interbrand, unconsciously echoing Funny or Die’s critique, noted that brand loyalty is based on a relationship that mimics real friendship. “You have many impressions and interactions,” she said. “That works in your brain like knowing a person. If you know a person really well and you like them, you’re going to forgive them a lot.” Arbona said that she was surprised, for instance, that Toyota not only weathered its 2009-2010 slew of recalls — issues that were linked to the deaths of some consumers — but has nearly doubled its brand value since then.

That said, Tristano said that it’s likely that some customers will never return to Chipotle. Most will though. “Younger customers will return,” he said. “They tend to be more trusting and more brand loyal. If we look at this, it is clearly a setback for a brand that has had nothing but success in the industry.” The fact that this happened to a brand whose credo is “food with integrity” is ironic, Tristano said, but won’t prompt the masses to label it hypocritical.

Fixing the brand
As Marzilli noted, Chipotle didn’t deal with the crisis effectively at first. Though the company closed 43 restaurants in the Northwest after the E. coli outbreak that affected Chris Collins became public, some 234 customers and employees contracted norovirus at a Simi Valley, Calif., location in August. That same month, some 64 people in Minnesota fell ill from salmonella-tainted tomatoes.

It wasn’t until Dec. 10 that Chipotle CEO and founder Steve Ells appeared on the “Today” show to apologize to customers who had gotten sick from eating at the chain. On the operations side, Chipotle hiredMansour Samadpour, head of IEH Laboratories & Consulting Group in Seattle, to overhaul the company’s food safety efforts. Among the changes: More food will be prepared at commissaries, rather than on site, undercutting Chipotle’s “food with integrity” mantra since often the food won’t be local and fresh. Food will also be given high-resolution DNA-based tests, a measure that will weed out smaller suppliers who can’t afford that expense. On the PR side, Arbona said closing all the stores for a few hours was a good move. “It was a symbolic act,” she said. “They were hitting reset.”

Allen Adamson, a branding consultant, said that Chipotle will have to ditch its previous brand communication, which struck a lighthearted tone and presented a somewhat holier-than-thou image related to food quality. “You want to see the CEO on screen talking about what they’re doing, not an actor saying ‘Trust us,’ ” Adamson said.

Bernstein said Chipotle should focus on transparency, training its personnel in the new food safety protocol and setting realistic expectations “that they’ll do their best to prevent illness, but particularly with norovirus, it’s not always possible.”

What might be fatal, aside from more outbreaks, is any communication that smacks of arrogance. As we’ve seen in recent years, consumers will overlook safety issues, even ones that result in deaths, as long as the company doesn’t talk down to them. As a counter example, Arthur Andersen, the financial consultant, was drummed out of existence after it got caught up in the Enron scandal in 2002. While that was a huge blow, execs at the company exacerbated the damage by behaving arrogantly during a Justice Department grilling. “They got tried in the court of public opinion,” Bernstein said.

Chipotle is unlikely to make the same mistake. “Ultimately it comes down to humility,” Bernstein said. “If they can express sufficient humility, people will forgive them.”

Read more at http://www.campaignlive.com/article/chips-down-chipotle-not-long/1383083#AVGB4yq6reisiIhh.99


EXCLUSIVE: First Watch to buy The Egg & I restaurants

June 10, 2015

http://www.heraldtribune.com/article/20150527/ARTICLE/150529735

Jpictureustine Griffin
Copyright © 2015 HeraldTribune.com — All rights reserved.

In one of the largest corporate deals in Southwest Florida’s history, First Watch Restaurants will become the nation’s largest and fastest-growing breakfast lunch and brunch cafes in the country after doubling its size by acquiring The Egg & I Restaurants.

First Watch, based in Manatee County’s University Park, will add 114 new restaurants from the acquisition of the Colorado-based chain, taking it to 267 restaurants in 26 states, with 18 more under development.

The deal also increases the reach of the First Watch chain, which has expanded aggressively in recent years through the Northeast, Midwest and even into Colorado and Arizona.

The terms of the deal were not released.

The Egg & I restaurants will not immediately be rebranded with the First Watch name, but some restaurants will change during the next two years, executives said.

“First Watch has a fresh new look and they have a certain brand recognition and strength among consumers,” said Darren Tristano, executive vice president of Technomic, a Chicago-based restaurant research firm. “People go there because they know what to expect from the brand.”

The First Watch and The Egg & I chains are similar in a lot of ways, both in the products and services they offer as restaurants, but also in their history and growth as companies.

“The Egg and I is a wonderful concept with a loyal following that has experienced tremendous growth, particularly over the past several years,” First Watch president and CEO Ken Pendrey said. “We saw this acquisition as an opportunity to immediately and significantly expand our presence in markets where we don’t currently operate.”

The Egg & I — founded in 1987 in Fort Collins, Colorado — is a chain known for its laid back dining atmosphere. Like First Watch, it does not serve alcohol, and the hours are limited from 6 a.m. until 2 p.m. most days. Most of its restaurants also offer private meeting rooms.

“The culture of both companies is very similar,” said Chris Tomasso, First Watch’s chief marketing officer. “The deal made perfect sense to us in a lot of ways. The top priority being that we would immediately and significantly expand our scope and reach.”

The Egg & I has eight restaurants in Florida, the closest to Southwest Florida in Riverview, south of Tampa

“First Watch doesn’t consider themselves competition with big chains,” said Brian Connors, of Conners Davis Hospitality, a global food and beverage consulting firm based in Fort Lauderdale. “Instead, they think of the chef-driven local concepts and mom-and-pop restaurants as competition.”

Owned by franchisees
Like First Watch, The Egg & I company has a strong recruitment of franchisee owners.

Each franchisee-owned restaurant generates nearly $1 million in sales each year, according to The Egg & I’s franchise inquiry packet. The cost to get started ranges from $120 to $160 per square foot.

The Egg & I has accumulated a number of accolades through the years, including a No. 12 on a list of the fastest-growing chains in the Technomic, and third on a list of the fastest-growing full-service restaurants.

“It was always apart of our strategy, that if the right deal came along, we would sell,” CEO Don Lamb said. “But it had to be right for our associates, our customers and our franchisee owners. First Watch is that right deal.”

First Watch has been on a growth trajectory since 2011, when the chain was acquired by Los Angeles-based private-equity firm Freeman, Spogli & Co. It was the second time in the company’s history that it sought out private equity. The first acquisition was in 2004.

Prior to the acquisition of The Egg & I, First Watch had more than 120 restaurants in 17 states, including 45 in Florida and 20 restaurants under The Good Egg name in Arizona.

“First Watch is in a space that’s trending,” Tristano said. “They are as nationally known as anyone else. They’ve looked for the right opportunities to expand and have aggressively acquired reach chains and rebranded them.”

The Southwest Florida company bought Nashville, Tennessee-based Bread & Co., late last year, which included two restaurants and all the company’s recipes, marks and intellectual property.

In January, First Watch signed its largest franchise development agreement to date: 15 restaurants in the Dallas-Fort Worth market in the next five years.

The deal will be the chain’s debut in Texas, with the first restaurant to open at the end of this year.

“Chains in this sector grow pretty quickly and there’s a lot of opportunity for continued growth,” Tristano said.
First Watch began in California in 1983, but, by 1986, the chain moved to Southwest Florida.

Pendery, the CEO, had owned restaurants in Denver and other markets with founder, John Sullivan, before. Both agreed that Florida was a smart place to start a new venture.

“And to raise a family,” Pendery said.

First Watch plans to have 300 restaurants open around the country by 2017, which does not include those under The Egg & I name.

First Watch will maintain its corporate headquarters in University Park in a Benderson Development Co.-owned office park.
The restaurant company, which moved to the space off Cooper Creek Boulevard in late 2011, already has outgrown it and is looking to expand into nearby unoccupied space in the same park.

First Watch also will maintain The Egg & I’s corporate headquarters in Denver, Colorado.

“As you grow, the challenge lies in the scale. It’s harder to keep the same quality and service when your cost is increasing,” Connors said. “You know it’s the right thing to do but it’s not always the easiest.”


Touting Philly Steaks, Charley’s Posts Record Year

March 17, 2015

New signs, brighter decor help CHARLEY’S post record year, impressive same-store sales growthcharleys

By JD Malone
http://www.dispatch.com/content/stories/business/2015/03/13/touting-philly-steaks-charleys-posts-record-year.html
(c) 2015 Columbus Dispatch. All Rights Reserved.

In the bustling world of mall food courts and retail strip centers, if you’re slinging sandwiches, you need to stand out.

On a recent afternoon at the Mall at Tuttle Crossing, Charley’s Philly Steaks’ new location had the most striking signs and the longest lines.

Last year, the Columbus chain adopted a new look, with red as its dominant color and giant, high-definition photos of baskets of french fries and sweating cups of lemonade floating on a background of gleaming white subway tile.

The crowd at Tuttle was no aberration.

Last year was the best ever for the Columbus-based, 540-unit chain. Same-store sales, a key figure, jumped 10 percent from 2013, said Kris Miotke, vice president of marketing at Charley’s. The company added 40 locations — including at Tuttle and Polaris Fashion Place — and plans to add 40 to 50 this year.

“(The new look) made a big difference,” said franchisee Sally Saad, who has 29 stores across the Midwest. “Before, folks didn’t really understand who we are. Now, they do.”

Part of the rebranding was recognition that Charley’s former tagline, “Grilled Subs,” didn’t grab consumers. So the chain went back to its origins, touting “Philly Steaks” in big capital letters.

The change boosted business in two ways: overall sales and items ordered, with steak edging even with chicken.

“We are selling more steaks than ever,” Saad said. “It is insane what that signage is doing.”

The sandwich segment of the restaurant industry is hot, and Charley’s new look helps capture customers, said Darren Tristano, executive vice president of Technomic in Chicago.

Charley’s can’t beat sandwich-chain giant Subway on price, but Charley’s wins with higher quality items in a market that is rewarding brands for quality, Tristano said.

It doesn’t hurt that the American economy has been humming along, and malls, where most Charley’s stores are located, have picked up as retail rebounds and hiring increases.

“All of the economic indicators are trending positively,” Tristano said. “The low cost of gas is putting a lot of money into the pockets of lower- and middle-income people, and they are spending it. So why not go to the mall?

“Not everyone shops on the Internet.”

The company doesn’t have a geographic focus for expansion or targeted markets, Miotke said. Charley’s is on five continents and opened a pair of stores in Russia last year. One of the company’s biggest markets is U.S. military bases, where there are about 100 restaurants.

One spot Charley’s doesn’t plan to go into, though, is the home of its sandwich: Philadelphia.

Step outside the City of Brotherly Love, and Charley’s is the top Philly-steak brand. Connecting to an iconic regional food helps the brand attract attention in a food-court arena. Differentiation works these days, Tristano said.

“Letting consumers know what to expect is a good idea,” he said.

Jim Novak has been through three store designs with Charley’s at his four locations in Arizona. When he bought his first franchise in 1999, the chain’s look was a white-and-green pattern and it was called a “steakery.”

Then Charley’s rolled out the earth-toned era of grilled subs that is giving way to the splash of red.

Novak said his entire year-over-year sales lift of 18 percent last year occurred after his stores were remodeled in October.

“It is eye-appealing,” he said. “We need to be noticed.”

The change also ends an identity crisis. Novak used to field a lot of questions about the nature of grilled subs. He no longer needs to explain the food.

“We don’t have to convince people that Philly steak is good,” Miotke said.

A cheesesteak needs no introduction.


Uno Chain Putting Pizza First Again

March 2, 2015

tlumacki_pizzeriauno_business375-001Pizza First ; Uno, once deemed the healthiest chain restaurant in America, ditches its nutritionist and goes back to its high-calorie roots to stand out from its rivals

By Taryn Luna Globe Correspondent
http://www.bostonglobe.com/business/2015/02/27/uno-chain-putting-pizza-first-again/Idbh31HEj5KahzIpPxZk7I/story.html
© 2015 The Boston Globe. Provided by ProQuest Information and Learning. All Rights Reserved.

Uno Pizzeria and Grill, the deep-dish pizza restaurant chain that switched years ago to a menu emphasizing pages of healthy food, is returning to its cheesy roots. Calorie counters beware.

In 2008, the West Roxbury company had happily embraced a new title, bestowed by Health magazine: healthiest restaurant chain in America.

Now Uno’s traditional fare — including its 2,300-calorie Chicago Classic individual pizza — is back near the front of the menu.

Said Dee Hadley, chief marketing officer at Uno:

“If you came into our restaurant and tried to find pizza on our menu, you would have had a hard time because we hid it in the back. It’s about going back to what made the brand great to begin with.”

Hadley and a new team of executives have spent more than $10 million to remodel dozens of restaurants and start a rebranding campaign. The goal is to emphasize Uno’s pizza heritage, a way to stand out in a waning casual dining business teeming with big competitors like Applebee’s, Chili’s, Ruby Tuesday, TGI Friday’s, and Red Robin.

Uno was founded in Chicago in 1943, serving thick-crust pizza that curved up the sides of its deep metal pan. The pizza was so unusual that the original owners, Ike Sewell and Ric Riccardo, gave away samples to entice people to try it, Chicago historian Tim Samuelson said.

It paid off, and the restaurant became wildly popular.

In 1979, a Boston restaurateur, Aaron Spencer, became the first franchisee and opened an Uno on Boylston Street. Spencer continued to expand the chain in Boston and beyond. Over time, Uno grew to more than 200 restaurants.

But the company began to distance itself from its pizza roots in the early 2000s. Like many other casual restaurant chains, it expanded the menu to appeal to as many customers as possible, said Darren Tristano, an executive vice president at the food industry research firm Technomic in Chicago.

In an increasingly health-conscious time, people weren’t flocking to Uno for pizza that often topped 1,700 calories for an individual serving. Every restaurant, from McDonald’s to Applebee’s, looked for ways to cut calories.

Around 2005, Uno began a campaign to cultivate a healthier image. The brand, which had already changed its name to Uno Chicago Grill from Pizzeria Uno, eliminated trans fats from the menu and listed ingredients and calories on touch-screen kiosks. The new menu featured pages of salads.

Uno hired a full-time nutritionist and started a nutrition advisory board, which included a cardiologist from Brigham and Women’s Hospital.

“Creating a menu with delicious health-conscious options is one of our priorities,” Frank W. Guidara, then Uno’s chief executive, said a few years into the process. In an April 2006 Boston Globe article, Guidara said sales were up almost 2 percent because of the changes.

But the menu changes turned Uno into another Applebee’s, with a broad range of dishes and no emphasis on anything, Tristano said. At one point, the menu stretched to 22 pages. The restaurant’s deep dish pizzas appeared on page 18.

“They really changed the menu and mimicked what other casual restaurants were doing,” Tristano said. “Today we’ve learned that menus are too big, and casual dining brands are too ubiquitous.”

Uno discovered that the hard way. The company faced heavy debt and declining sales during the recession, when people ate out less frequently. Uno suffered net losses of $22 million in 2009 and filed for bankruptcy protection the following year.

Now, a new team of executives is trying to move forward with more than a nod to the past. The main objective: Give customers what they want.

Hadley said that when she joined in May 2013, the company went back through consumer studies for the prior five years to understand what people liked about Uno. Not surprisingly, the answer was deep dish pizza.

“We’ve really made a commitment to send a message to our consumer base that we’re bringing back the soul of the brand that we’ve lost,” Hadley said.

The first step was to rename the restaurant Uno Pizzeria and Grill, followed by a redesign of the restaurants. About 40 of the chain’s 82 corporate-owned restaurants have been remodeled, starting last year, at a cost of $100,000 to $200,000 per eatery, Hadley said.

At an updated restaurant in Braintree, the yellow and white checkered tablecloths and Tiffany pendants that dangled from the ceiling have been replaced with wood tables and modern light fixtures. Construction crews removed a wall in the bar and took down glass partitions in the dining room for a more open-concept feel. The restaurant added a new bar top and high tables, doubling the size of the bar.

Daily specials are written on chalkboards, and simple art adorns the walls with phrases like “We owe it all to a man and his pan.”

Uno says the remodeling is starting to pay off. Updated restaurants have experienced a 10 percent sales growth, she said.

The timing isn’t ideal for a return to high-calorie pizza fare, however. The federal government will require chains to list calorie counts on their menus by the end of this year.

Some diners won’t care. But others may choose smaller portions or different dishes when they realize the high calorie count of a favorite item.

“The calories on the menu will be really an eye-opener to the consumer,” said Joan Salge Black, a professor in the nutrition program at Boston University.

While gluten-free and low-fat items haven’t disappeared from the Uno menu, the nutrition advisory board isn’t active, and Uno no longer employs a nutritionist.

“We want to make sure healthy choices are available, but if you’re looking for those things you’re not thinking about us,” Hadley said. “Strong brands have to stand for something that is different from the rest of the pack. Our heritage is deep dish pizza.”


Does Taco Bell’s Fast-Casual Entry Have a Chance?

April 24, 2014

Taco Bell is following the lead of its YUM! sister brand KFC, which entered the fast-casual market last year. KFC Eleven features hand-crafted food—flatbreads, rice bowls and KFC Boneless Original Recipe Chicken—in a more contemporary environment.

1

Taco Bell’s new fast-casual concept, U.S. Taco Co. and Urban Taproom, provides the chain an opportunity to move into fast casual while maintaining its identity and value positioning with existing customers in the quick-service segment. Many brands today are trying to shift toward a more upscale menu, food and atmosphere positioning, but this strategy can confuse loyal customers and make it difficult to stay true to the brand identity. Taco Bell’s strategy makes sense and supports its goal to increase sales from $7 to $14 billion in the U.S. market.

2

So what are the challenges this new brand faces?

Competition: In addition to a strong independent Mexican restaurant market, today’s Mexican grill segment features strong category leaders like Chipotle Mexican Grill, Qdoba Mexican Grill and Moe’s Southwest Grill. And there are more than 50 other fast-casual chains competing for share of stomach, many of which are growing aggressively.

Also within the landscape are successful taco shops that are growing from regional roots in California and Texas like Fuzzy’s Taco Shop, Torchy’s Tacos and Chronic Tacos. The 2013 limited-service Mexican category totaled $18 billion in sales with more than 18,000 restaurants. With so many competitors in the space, finding room for U.S. Taco Co. will be a challenge for Taco Bell’s young “intrepreneurial” team.

Price: With price points per-person pegged at $11.50‒$12, many economically challenged consumers may not be able to afford to eat at U.S. Taco Co. on a frequent basis. Average fast-casual price points are still south of $10. And with average prices of fast-casual burritos in the $6‒$7 range, consumers will continue to see pound-for-pound value at Mexican grill concepts. Recent Technomic research with consumers indicated that the optimal price at fast casual for lunch was $7.60, with a high price threshold of about $10. At dinner, consumers indicated that $9 was the optimal price, with $12.50 providing the upper threshold limit. As a result, consumers will likely see this U.S. Taco Co. as a place to go for dinner, as its lunch prices are too high for many consumers on weekday occasions.

Menu: Many American consumers have come to expect high levels of “authenticity” around both Mexican and Southwest dishes, sides and beverages. The menu at U.S. Taco Co. will feature the following tacos:

  • The One Percenter, featuring fresh lobster in garlic butter with red cabbage slaw and pico de gallo on crispy fry bread.
  • The “Brotherly Love,” a nod to the Philly Cheesesteak, with carne asada steak, grilled peppers and onions, roasted poblano queso and cotija cheese (rather than Cheez Whiz), and fresh cilantro in a flour tortilla.
  • The “Winner Winner,” which features Southern-style fried chicken breast with “SOB,” or “South of the Border” gravy, roasted corn pico de gallo with fresh jalapenos, and fresh cilantro in a flour tortilla.

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And on the side, guests can get “papas fritas,” which resemble steak fries, coated with habanero dust and served with housemade dipping sauces such as ghost chile ketchup or roasted poblano crema. Guests can also order their fries loaded with taco ingredients sans tortilla as a “secret menu” option.

Taking a page out of Red Robin’s play book, the menu will include shakes spiked with beer, and the brand will eventually offer tap, can and bottled craft beer.

So how will consumers react?

Patience and education will be important to getting consumers to consider an even more Americanized version of a traditional, authentic Mexican taco. Replacing the American burger with a taco served with fries and a shake will be a new behavior for many Americans. Although this new offering will likely have great appeal for Millennial consumers age 21‒36, Gen X and Boomers will likely continue to lean toward more familiar and traditional meals. As innovation and thinking outside the box (or bun in this case) is essential for filling white space, this new format may be a bit ahead of its time.


On the Horizon: Five Trends for U.K. Restaurants

January 24, 2014

The trends driving restaurant growth and innovation are driven by consumer demands for transparency, quality, flavour, and flexibility.

The U.K. foodservice scene continues evolving in unique and interesting ways. Looking forward to next year, Technomic’s analysts and consultants have identified five key trends that expected to play major roles at British restaurants.

Catering to the Millennial customer

As the influence and collective spending power of the U.K.’s Millennial generation grows, expect to see restaurant operators amplify efforts to target these consumers via foods and brands that appeal more directly to a Millennial demographic.

For instance, consumers aged 18–34 display the strongest interest in ethnic flavours. And a greater proportion of younger than older consumers indicate that it is important to them that cafés offer a variety of side options and seasonal menu items, according to Technomic’s U.K. Café Consumer Trend Report. Further, 31% of consumers aged 18–34 strongly agree that they would order limited-time offerings (LTOs) at cafés, compared to just 22% of all consumers polled.

Also watch for new mobile apps and digital tools that integrate seamlessly into Millennials’ lifestyle. Offering free WiFi in-store and letting customers place orders online are great starting points for connecting with these on-the-go, always-connected guests. Leading operators are also going beyond these steps.

Last spring, Wagamama partnered with Blippar, an image-recognition mobile application, to introduce augmented-reality place mats. Guests who downloaded the free Blippar app could hold their mobile device over (aka “blip”) the special place mats to access promotional information about the Wagamama Lounge, a pop-up concept featured at London-area summer music festivals.

Domino’s last September rolled out the free Pizza Hero app in the U.K., giving customers the chance to play professional pizza maker, rolling out pizza dough virtually, adding tomato sauce and then sprinkling on cheese and assorted toppings. A direct link takes users to the ordering page on Domino’s website.

And Apple’s Passbook lets iPhone users group their coupons, loyalty/rewards cards and more in one quasi mobile wallet—giving them quick access to their most-used or most-important passes. Last fall, casual-dining chain Harvester Salad & Grill became one of the first U.K. restaurant concepts to offer Passbook integration, and gave diners who used the app at Harvester £5 off when they spent £30.

The evolution of pubs

Classic British pubs will push even harder in 2014 to transform and grab market share from conventional restaurants by focusing more attention on creating upscale, premium food and drink (particularly speciality coffee and American craft beer); launching repositioned outlets in nontraditional sites; introducing web-enabled ordering systems that emphasise convenience and speed of service for guests; and promoting low-price-oriented menus and new loyalty programmes designed to spur customer traffic and strengthen the value perception.

Die-hard traditionalists might scoff at the idea of having a coffee and working on a mobile device at the pub, but a customer-centric evolution can help pubs maintain their relevance with a new generation of consumers.

Throughout 2013, we’ve seen examples of how pubs and pubcos are tackling the task of serving consumers who have higher expectations for food/drink, amenities and service at pubs. We expect the focus on this imperative to be that much keener in the year ahead.

For example, Orchid Group—whose approximately 250 pubs are now up for sale—realised that those establishments best positioned for success in Ireland and some U.S. cities after smoking bans took effect there were those that emphasised attractive food offerings. Orchid re-evaluated its menus and added pizza and Thai food, among other items, driving increases in food’s share of the sales mix. The company also took efforts to appeal to women.

Similarly, Marston’s PLC announced at the beginning of the year that it would install free Wi-Fi at about 550 pubs under its managed pub estate, Marston’s Inns & Taverns. The Prince George pub in Brighton, East Sussex, offers an all-vegetarian menu and a vegetarian-friendly wine list. And in August, Wetherspoon announced a new initiative pairing craft brewers from the U.S. with U.K. brewers, as part of an effort to seize upon U.K. consumers’ heightened interest in craft beer. The U.S. brewers produce their beers in the U.K. for sale at Wetherspoon pubs.

Honest chicken

Thanks in part to the recent crop of “better chicken” concepts opening in London, emerging chicken-focused concepts will flourish in 2014, a trend closely tied to growing consumer interest in sourcing, preparation and menu transparency. Pret a Manger, for instance, touts that its chicken is starch-free, phosphate-free and sourced from a higher-welfare supplier in Suffolk. Expect to see chicken increasingly described as “free-range,” “locally sourced” and “hand-battered.” We’ll also see more American influences in the form of barbecue chicken and buttermilk fried chicken, as well as simpler cooking techniques that let the quality of the chicken speak for itself.

KFC in the U.K. touts that its chicken on the bone comes from only British and Irish chickens, and that chicken goes from the refrigerator to a breading of flour and the chain’s 11 signature herbs and spices and then to the fryer within two minutes. Little Chef touts that its Crispy Chicken Platter features 100% chicken breast fillet.

Other takes on fried chicken include Scream’s Southern-Fried-Style Chicken fillets served with barbecue seasoned chips, Jubo’s Chicken Roll with Korean fried chicken fillet, kimchi slaw and gojuchang mayo, and Clutch’s Love Me Tenders, fried chicken tenders in a peanut and chilli crust.

These dishes also illustrate U.K. consumers’ growing appetite for spicy heat, also evidenced incurries that pack a little more punch than chicken tikka masala; the rising popularity of Mexican cuisine; and the cult-like following of London-based Nando’s, the fast-casual concept specialising in flame-grilled piri-piri chicken. Neutral-flavoured, food-cost-friendly chicken offers an ideal protein platform for showcasing the vibrant flavours and colours of chillis from around the globe.

Migration of street food

Fueled by younger consumers’ demand for authentic and unique offerings, chefs are looking to global street foods for menu inspiration for their brick-and-mortar restaurants. Trendy street-inspired dishes starring on menus include Venezuelan arepas, Chinese jian bing and bao, Taiwanese hirata buns and Italian arancini.

KFC U.K. got in the game last year, introducing a limited-time Streetwise Sweet Chili Wrap featuring a chicken mini-fillet, sweet chili sauce, lettuce and cheese wrapped in a tortilla. And London-based fast-casual chain Leon introduced a Thai Green Chicken Curry box, featuring slow-cooked shredded chicken thigh, roasted aubergine and bamboo shoots served on brown rice.

Looking ahead, ethnic beverages like Mexican aguas frescas and horchata will carve out a wider niche on the menu. Also watch for dynamic flavour mashups from different cuisines and the continued growth of food trucks serving ethnic and fusion street foods.

Telling the sourcing story

Transparency is now top-of-mind for operators who want to keep customers confident in their brand. Use of eco-friendly food packaging, such as recycled or reusable cups or stemware, is increasing along with a growing commitment to ethical food sourcing. Next year will bring a surge in brand campaigns communicating quality and traceability. Watch for package logos denoting animal welfare standards, in-restaurant signs documenting supplier sourcing, and marketing initiatives focusing on the use of British and Irish products.

A good example is the Olive Branch Pub in Clipsham. Its website highlights a story about head chef Sean Hope’s recent lobster fishing trip, to source the freshest lobster for dishes such as grilled lobster Thermidor and a fresh lobster claw and tail meat with lobster tortellini. The site also provides a list of the pub’s suppliers and producers—not just the names of the farms but also the actual farmers with whom the Olive Branch works.

For its part, McDonald’s U.K. invited three young British farmers to get a behind-the-scenes look at operations inside McDonald’s stores as the part of its Progressive Young Farmer Training Programme. The mentoring-focused programme, according to McDonald’s, “aims to help young people looking to work within agriculture kick-start careers in the industry by providing them with the blend of farming and business acumen needed to succeed in today’s modern farming sector.”

The programme has the added benefit of providing a fresh, interesting supply-chain story that McDonald’s—which also announced in April that it was switching to serving 100% Freedom Food pork raised on farms that meet strict animal-welfare standards—can share with consumers.

Similarly, fast-casual burrito specialist Chipotle, whose Food With Integrity philosophy/sourcing model has won acclaim in the U.S., notes on its U.K. website that it uses Freedom Food chicken, Farm Assured beef and free-range pork.

Key Takeaway

The trends driving restaurant growth and innovation are all driven by consumer demands for transparency, high-quality and -flavour, and flexibility. Restaurant operators should examine and pay attention to these trends but follow the lead of their own customers and those they are trying to attract.