Bloomin’ Brands Struggles in Quarter, as Chain Restaurants Face New Chef-Inspired Concepts

November 9, 2015

Justine Griffin
© 2015 Tampa Bay Times
http://www.tampabay.com/news/business/retail/bloomin-brands-struggles-in-quarter-as-chain-restaurants-face-new/2252436

While the “anti-chain” movement across the U.S. isn’t new, it is slowing down sales at some of the best known restaurant brands, including Outback Steakhouse and Carrabba’s Italian Grill. Bloomin’ Brands, the Tampa parent of Outback and Carrabba’s, is the most muscular restaurant company in Tampa Bay with $4.4 billion in revenue last year and 1,500 restaurants worldwide. But it’s anything but local to consumers here.

The company on Tuesday reported disappointing sales for the third quarter for most of its brands. CEO Liz Smith said casual dining as a segment in the hospitality industry was down from July to September, not just at their in-house brands.
“We knew the trends would be challenged,” Smith said. “And our marketing didn’t break through as expected.”

Bonefish Grill, which was intended to be the engine powering new growth for Bloomin’ Brands’ restaurant portfolio this year, saw the steepest declines, with sales down 6.1 percent for the quarter and traffic down 8.5 percent. It’s the second quarter of decline for Bonefish, which is in a competitive class of “polished casual” chain restaurants, and tends to be more pricey than dining experiences like a TGI Fridays or Olive Garden. The menu quality is more on par with restaurants like Seasons 52 or Carmel Cafe.

Carrabba’s Italian Grill reported a decline in the quarter of 2 percent sales and Fleming’s Prime Steakhouse & Wine Bar saw a 0.6 percent drop.

Outback Steakhouse, which performed well in new international markets like Brazil, was the only brand to report modest growth, at 0.1 percent, this quarter.

Chain restaurants are struggling to meet the changing trends fueled by younger demographics in the U.S., said Darren Tristano, executive vice president with Technomic, a restaurant research firm in Chicago.

“These are the same issues that most casual dining restaurants face today,” Tristano said. “Bloomin’ is no different than Darden” — the Orlando parent of Olive Garden and several other chains — “and most others in this regard.”

Another blow landed this summer when Bloomin’ Brands lost a bid to open an Outback Steakhouse and a Bonefish Grill in Tampa International Airport after $953 million in terminal renovations. The aviation authority board sought to make the airport’s restaurants feel more local, and one board member noted the company’s widely located chains made it feel less so. The Carrabba’s in the main terminal, which opened in 2008, is slated to close next spring.

Millennials and generation X-ers look for value but tend to try locally owned or chef-inspired restaurants rather than a chain, so it’s difficult for the casual dining chain restaurant to stand out in what’s become a very competitive market, Tristano said.

“It’s hard for chains to add more regional flavors to a menu, like local craft beer or local food options that the independent restaurants can do so easily,” he said. “They need to be more innovative and focus on the strengths that they do have, which usually is price, to get the attention of this next generation customer.”

Outback Steakhouse will roll out a new mobile phone app next year, which the restaurant chain has been testing in Tampa Bay. Through the app, customers can add their names to the wait list before they arrive at a restaurant, place take out orders and use to pay at the table.

“We will continue to invest in this kind of innovative tech platforms,” Smith said during Tuesday’s earnings call.

Carrabba’s Italian Grill will debut a simpler menu next year. Fewer items will be available, but the chain will add a new small plates category for tapas-style sharing at the table. Bloomin’ also changed the menu at Bonefish Grill earlier this year, with the same “less is more” theme.

“Too much on the menu overwhelms the customer,” Tristano said.

It also keeps food costs down, said Brian Connors, with Connors Davis Hospitality, a restaurant consulting firm in South Florida.

“Chains are the safe choice. Customers know what they’re going to get there and the restaurants know what they’re good at,” Connors said.

Bloomin’ Brands plans to continue to expand aggressively in new international markets like Korea and China. Much of the company’s growth has come from international openings this year.

“They don’t have to reinvent the wheel this way,” Connors said. But in this country, he suggested, they’ll need to come up with something new to keep attracting diners.

“We’ve entered this new age of adventure eating. Food recipes is one of the highest pinned categories on Pinterest,” Connors said. “People are willing and wanting to try something new.”

Bloomin’s brands: Tough quarter for sales
U.S. sales in the last four quarters
BrandQ3Q2Q1Q4 (2014)
Outback Steakhouse0.1 %4%5%6.4%
Carrabba’s Italian Grill- 2%2%1.9%0.3%
Bonefish Grill- 6.1%-4.6%0.9%0.7%
Fleming’s Prime Steakhouse & Wine Bar- 0.6%3.2%3.0%3.4%
Source: Bloomin’ Brands


For College Students, Healthy Food and Great Taste Matter Most

June 10, 2015

salad bar cafeteria

From Litehouse Foodservice.
http://www.foodservicedirector.com/sponsored-content/featured-content/articles/college-students-healthy-food-great-taste-matter-most

Fifty-eight percent of consumers say that eating healthy and knowing what they’re eating is important to them, according to recent research by Chicago-based research firm Technomic. But at the same time, Technomic also reports that the word “healthy” means different things to different age groups. Millennials, aged 22-37, associate the word healthy with lower calories and less processed and natural foods, whereas Gen Z, aged 21 and under, think it exemplifies foods that are organic, authentic and homemade.

But above all, says Darren Tristano, executive vice president at Technomic, flavor and taste matter most for 70 percent of consumers. This dichotomy is critical for foodservice directors responsible for feeding college students—who fall somewhere within Gen Z and the younger millennial category—because their menus must balance health and flavor in order to appeal to student desires.

What does healthy mean to Gen Z?

“The younger generation has a different definition of healthy. [Healthy] has to fall into the context of affordable, fresh and local, vegan and vegetarian,” says Tristano. He also says that younger consumers seek out menu items that are close to a food’s natural state, such as hand-cut French fries with the skin intact.

Additionally, college students want their food to be prepared in a transparent manner. “They’re used to seeing it and knowing what they’re getting,” says Tristano. “When the kitchen is open view it builds trust through visual recognition.” This is one reason why this group is drawn to build-your-own fast-casual concepts such as Chipotle and Blaze Pizza.

Responding to demand

Angel Alcantar, assistant director of culinary operations and executive chef at University of Wisconsin – Stevens Point, understands well what his student customers want. He oversees a foodservice program that includes a food court with seven different dining concepts, a traditional all-you-care-to-eat dining hall and a convenience/grill option, all of which are responsible for feeding 3,200 students.

Seven years ago, Alcantar’s department transitioned to a self-operated dining facility from a contracted one. After feedback from students indicated they wanted healthier choices, he established relationships with local farmers to provide seasonal produce and meats.

“We have relationships with 12 to 15 farmers to provide all our greens, tomatoes and meats for the deli, including grass-fed beef,” says Alcantar. “Our students care about healthy eating and sustainability, so as we move into the growing season, we use more fresh and local farm products.

Personalized salads

One of the university’s most popular dining concepts is Fresh Cuts, where students can choose from a variety of greens and proteins, seeds, cheeses, beans and other vegetables, which are chopped, tossed with dressing in a bowl, and then served in a fresh crepe shell and stuffed into a cone to go. Fresh Cuts appeals to all diners, including vegans and vegetarians, says Alcantar.

And to appeal even more to students seeking health and flavor, all of the salad dressings used for Fresh Cuts and throughout campus are Litehouse Foods brands. “The nutrition facts are right on the bottle,” says Alcantar. “We have confidence in the ingredients; there’s no MSG, no trans-fats, lower sodium and the students think they’re comparable to homemade. The dressings fall into the overall concept of health on our campus.”

Students can also choose how much dressing they want on their salads, which allows for flexible portion sizes—something that’s very important to them, according to Tristano. “Being involved and having a say in how much is added or included is appealing to this generation,” he says.

Flavor matters most

At first, explains Alcantar, his staff was making dressings in-house, but students wanted more variety, and it was difficult for his staff to keep up. “When we looked at Litehouse, we said, ‘why recreate the wheel?’ This is something proven. Our students are the ones who make the choice, and they gave rave reviews of the Litehouse products,” he says.

As much as they care about the nutritional impact, though, Alcantar points out that taste and variety remain top priorities for the college crowd. “It’s about flavor,” he says. “That generates the volume we have at certain concepts. When they have selections that look appealing and have good flavors, then they will eat it.”


The Gourmet Appeal of Sea Salt

May 20, 2015

https://cargillsaltinperspective.com/the-gourmet-appeal-of-sea-salt/SeaSalt3-1080x390

A look at why sea salt continues to make its way into everyday meals.

Sea salt continues to gain momentum as more products with sea salt flavor or sea salt in the ingredient list, pop up on grocery shelves. The desire for sea salt has likely been buoyed by its perceived health halo, and its presence has increased across everyday meal occasions.

Julian Mellentin, director at New Nutrition Business states, “I think it’s partly that sea salt benefits from a more “natural” and “naturally healthy” image, which results in positive media coverage.” Mellentin points out the visually appealing branding of many sea salts, which often features handsome packaging, use of words like ‘premium,’ and ‘authentic,’ and inclusion of information about the place of origin.

Higher perceived quality may be a driving factor behind the trend. “Consumers want better quality ingredients, and they believe that sea salt is a better ingredient than regular table salt,” says Darren Tristano, executive vice president at Technomic. Tristano notes that some restaurants are placing sea salt in tiny bowls with salt spoons at the table, and gourmet sea salt may be served tableside with a specific appetizer. “Use of sea salt is growing in every restaurant segment, but especially in fast casual, which is where we see a lot of trends begin,” notes Maeve Webster, senior director at Datassential.

Sea salt continues to make its way into everyday meals. Reviewing the company’s MenuTrends database of nearly 5,000 menus, Webster notes that the use of sea salt at breakfast has increased by 80 percent over the past four years. Webster points out that “Breakfast is the only daypart that’s growing in the industry now, so operators figure if an ingredient is popular in one place, why it can’t work at breakfast?”

For food processors, the current clamor for sea salt may continue to inspire an increase in variations on an ever-expanding theme, including the addition of flavoring or smoking, and traditional blends. Webster predicts that the trend could create an opening for exotic spice blends such as shichimi tōgarashi, known as seven-flavor chili pepper in Japan, and duqqah, a Middle Eastern blend of herbs, hazelnuts and spices.

“Even for the risk averse, sea salts are a fun way to discover new foods,” says Laurie Demeritt, chief executive officer at The Hartman Group. “We picture the place it came from, and we imagine unique taste or attributes. It’s like a special version of an everyday food.”


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.


Wings Fly Off the Menu

March 3, 2015

kensfeaturemarchRestaurant Hospitality
http://restaurant-hospitality.com/salad-solutions/wings-fly-menu
© 2015 Penton Business Media. All rights reserved.

The popularity of chicken wings is soaring across the country, fueled by an ever-increasing number of innovative sweet and spicy sauces developed by restaurateurs and manufacturers.

Statistics tell the tale. According to the National Chicken Council’s 2015 Wing Report, Americans were expected to have eaten 1.25 billion wings during Super Bowl XLIX alone. Another study conducted by online food-ordering firm, GrubHub Inc., disclosed that wings now rank as the top-selling takeout food ordered nationally, beating out traditional favorites like pizza and cheeseburgers for the year ended Sept. 29.

In response to growing consumer demand, the total number of operators offering wings increased nearly 6 percent between 2009 and 2011, according to Technomic Inc. in the research firm’s most recent Category Close-Up on wings.

The Technomic study also found the average number of wing sauce/flavor varieties offered by restaurants rose nearly 9 percent since 2009.

Operators are menuing a greater array of sauces and flavorings in response to consumers’ growing desire for choice, says Darren Tristano, executive vice president of Chicago-based Technomic, noting, “Variety is the spice of life.”

The trend toward customization, especially among Millennials, is helping to drive the proliferation of sauces and flavors. “People get bored. They want to be entertained,” says Tom Scalese, chief operating officer of East Coast Wings & Grill, which features 75 different flavors of sauces and rubs. “They want an experience and not the same one all of the time.”

Consumers also are becoming far more adventurous when it comes to the dining out experience. Another Technomic study showed more than half of consumers said they prefer spicy foods. “This is the first time that figure has been over 50 percent,” Tristano says.

According to Datassential, the fastest-growing wing flavors by menu penetration over the past four years are Sriracha, Parmesan and Garlic Parmesan, all of which grew by 100 percent or more. Other top wing flavors are mango, which grew by 80 percent; soy, 80 percent; habanero, 78 percent; hickory, 67 percent; Thai, 52 percent; chipotle, 43 percent; chili sauce and chipotle BBQ, 40 percent each; and bourbon, 36 percent.

In response to customer demand, chain operators have been making the most of nontraditional wing flavors over the past year. For example, Buffalo Wild Wings debuted Smoldering Santa Fe Wings with guajillo, chipotle and jalapeño peppers as an LTO in January, Datassential says. Other chain rollouts over the past year include Godfather’s Pizza with its Sweet Chili Sauced Wings; Mazzio’s, Lemon Pepper Wings; Tilted Kilt, Raspberry Chipotle Wings; Popeye’s Louisiana Kitchen, Ghost Pepper Sings; and Bahama Breeze, Rum and Coke Wings.

However, while chefs and manufacturers are pulling out all of the stops in their quest for innovative flavors, Datassential points out that traditional favorites like hot, Buffalo, barbecue, bleu cheese and ranch are still central to wing menus, as are mild and medium-style hot sauces.

In the meantime, foodservice operators are shaping their menus to provide a variety of wing options for their guests. East Coast Wings & Grill, a 33-unit polished casual-dining chain based in Winston-Salem, N.C., offers guests an extensive variety of wing options in addition to other selections like burgers, salads, chili, soups, sandwiches, quesadillas, wraps and ribs.

Wings, however, still comprise the bulk of East Coast Wings’ sales — in the neighborhood of 25 percent of the menu mix, Scalese says.

Helping to fuel wing sales is the chain’s epic variety of 75 sauces and rubs, which includes Sriracha Ranch, Honey Mustard, Teri Ginger Garlic, Parmesan Peppercorn, Kentucky Bourbon and Bacon Ranch. East Coast Wings also has been testing new flavors as LTOs like Apple Barbecue and Chipotle Habanero.

At the same time, patrons can further customize their wings by selecting one of nine different heat index variations, including mild, medium, hot, extra hot and inferno. Scalese says the chain offers more than 600 flavor combinations of wings.

All of East Coast Wings’ sauces are proprietary, he continues. And while many of those sauces are prepared to the chain’s specifications by a manufacturer, others are made fresh in-house daily. To help ensure consistency among the made-from-scratch sauces, locations are routinely monitored by secret shoppers and a field team, which pays a visit to each unit every month. “It’s important to maintain flavor and consistency,” Scalese says.

East Coast Wing expects to break the 40-unit mark in 2015, and perhaps even have 60 units by the end of 2016.

Atomic Wings, a 35-unit fast-casual wing and boneless tender specialist based in Montclair, N.J., is growing steadily as well, according to founder and chief executive Adam Lippin. But while Lippin says the brand features a dozen proprietary wing sauces, he says he sees no reason to add sauces or flavors simply to bolster the chain’s menu selection.

“People want a certain amount of choice, and we give them that choice without being ridiculous about it,” he says.

Atomic Wings’ sauces include Thai Chili, Garlic Parmesan, Chipotle BBQ and Honey Mustard BBQ, as well as traditional mild, medium and hot sauces. Super hot sauces — Abusive, Nuclear and Suicidal — also are available, although Lippin says Medium ranks the most popular, followed by Hot and Mild.

While all of Atomic Wings’ sauces were developed in-house, most are now prepared for the chain by a manufacturer, with the exception of Abusive, Nuclear and Suicidal, which are customized in-house. In addition to offering wings in its restaurants, Atomic Wings also signed a licensing agreement with Fresh Direct. The Internet retailer merchandises one pound of branded Atomic Wings with Atomic Wings’ medium hot sauce for $8.99.

“I think the arrangement with Fresh Direct is a unique situation,” Lippin says. “And we’re getting the brand out there. It’s a very different market.”

Slim Chickens, a 17-unit fast-casual brand based in Fayetteville, Ark., also is spreading its wings, with plans to almost double its size in 2015. The Southern-flavored wing and tenders concept also offers wraps, salads, macaroni and cheese, fried sides like pickles and okra, and waffles topped with chicken tenders.

The chain, which was founded in 2003, offers a variety of wing sauces and is currently weighing the possibility of testing some LTOs. “We’re constantly looking at evolving the menu,” says director of operations Josh Austin. “We’re discussing adding some more flavors, but we don’t know which ones yet.”

Meanwhile, Slim Chickens offers seven flavors including four on the “Buffalo palette: mild, medium, hot and inferno. Also featured is Honey BBQ, Spicy BBQ, and Teriyaki.

Even though many regular customers tend to find their favorite flavors and stick with them over time, it is important for a restaurant to offer a variety of sauces, Austin says. “Some of our competitors only have one sauce,” he adds. “But our guests want to have a variety of flavors. I think that works best for us.”


Here Are the Only 6 Food Trends You Need to Know for 2015

January 12, 2015

pictureExperts forecast that we’ll be eating more fat and insects, and predict the next sriracha

With all due respect to sports geeks, music freaks, stock jocks, and teenage girls, there is no group more obsessed with The Next Big Thing conversation than food people.
The “restaurant trends for 2015″ predictions aren’t just coming now; they’ve been coming, steadily, since before Halloween. Press releases, slideshows, listicles in trades and foodie zines all aimed at telling us what’s the next kale, sriracha, or quinoa.

Interesting reading, often hunger inducing, but with so many predictions — from so many chefs, flavor-makers, food companies, bloggers— it’s hard to make sense of it all.
So this year, to cut through the tsunami of food punditry, I submit a highly abridged list.

I asked only six experts — all industry people who live and breathe food trends. And I asked these carefully chosen experts to make some carefully chosen decisions. Instead of a top ten list — or even a five-item slideshow — just give me that one big food prediction for 2015.

1. The Rise of Fat
For most health-conscious people, fat ranks right up there on the no-no list with nicotine and smog. But Kara Nielsen, culinary director of the Boulder, CO-based Sterling-Rice Group, believes 2015 could be known as the year that more and more Americans get over their fat phobia.

Nielsen isn’t talking about just any fat — not the trans fats found in highly processed foods. She’s talking about natural, animal-derived fats. Real butter sales are at a 40-year high; cultured butter is surging in popularity; high-end burger joints, like Shake Shack, celebrate fat as an essential part of a better burger. And the trend seems to be broadening: There’s a San Francisco restaurant selling a wildly popular chicken fat rice dish; there’s a rapidly growing Boulder company that only features full-fat yogurt. Nielsen expects more high-fat dairy products, more fat-celebrating meat purveyors, and more higher fat Asian foods to hit restaurant menus and grocery store shelves in 2015. “Americans are recognizing that the fear of fat that we’ve lived under for so long is erroneous,” said Nielsen. And it’s not just because of a foodie quest for flavor. Says Nielsen: “It’s also because of books like The Big Fat Surprise that are making the argument that natural fat is an essential part of a healthy diet.”

2. Local Meat
There’s near unanimity among food trend trackers that the local foods movement will continue to grow in 2015. Darren Tristano is no exception. Tristano, who tracks the restaurant industry for market research giant Technomic, expects more local produce, more local beer, more local grains. But Tristano believes the big local story of next year will be local meat. Californians will see more menus boasting of grass-fed beef from Niman Ranch; Chicagoans will likely see more free-range bacon from Slagel Farm. Diners in DC will see more chicken sandwiches from Polyface Farms. In short, get ready for more restaurants to celebrate the local origins of their chicken, beef, or pork just as zealously as their local Brandywine tomatoes or radicchio.

3. Insect-Powered Foods
Restaurants serving grasshopper tacos and ant guacamole, entrepreneurs peddling cricket-powered powerbars —there’s been tons of media coverage of insect-eating in 2014. Yet most people regard it as a curiosity, more Fear Factor-fad than food trend.

Not Suzy Badaracco. The president of food trend consultancy Culinary Tides believes insects will rise as a foodstuff in the U.S. far sooner than many expect. In picking insects as her “Food of 2015,” Badaracco said that insects draw on not one but three food trends: the growing interest in foraging, the invasivore movement (i.e., don’t kill them, eat them), and, the granddaddy of current trends, the desire for more protein. (Insects are protein powerhouses; grasshoppers, for instance, have about the same protein content as a chicken breast). Full-bodied insects won’t appear in your Safeway this year; get ready for them to arrive in processed form, especially protein-packed power bars, like Chapul and Exo. Badaracco expects insects, processed as flour, to soon become a popular protein sources for bakery and cereal products. Full-bodied insects — tentacles and all? Further off, but coming. Badaracco sent a list of more than a dozen American restaurants that feature insect options, such as the “Grass Whopper” —a burger made from cricket meat.

4. The Next Sriracha is Harissa
A few years ago, it was the unpronounceable hot sauce that you might find in Chinatown. Now, you can get a Subway chicken sriracha melt with a side of sriracha potato chips.

Maeve Webster, a restaurant analyst for market researcher Datamonitor, believes the next sauce to experience a sriracha-like rise is harissa, a spread of dried chiles, garlic, tomatoes, caraway, paprika, coriander, and olive oil that’s as common as ketchup in Tunisia. It’s still largely unknown to Americans, but Webster says all the elements are in place for harissa. “U.S. consumers can’t get enough of spicy foods. Harissa has a flavor profile that is both spicy and familiar,” Webster says. Like sriracha, harissa is also versatile and can work in a wide variety of applications. Last year, Datamonitor found that less than 3% of American restaurants included a harisssa item, but Webster noted that’s a more than 180% leap over three years. If Webster is right, get ready for the chicken harissa melt — maybe not this year, but soon.

5. The Next Quinoa is Millet
Melissa Abbot, director of culinary insights at The Hartman Group, concedes that her pick for “Food of 2015″ is not very sexy. Millet is, after all, best known as the main ingredient in birdseed. But Abbot believes that this avian staple could quite possibly become the next quinoa. Ever since quinoa exploded on the scene, the food industry has been in hot pursuit of the Next Great Grain, and there are plenty of healthful, gluten-free candidates. So why millet, and why not amaranth, sorghum, teff, or fonio? It’s gluten-free, protein-rich, high fiber, and, Abbot says, has a superfood quality all of its own. “It retains its alkaline properties after being cooked, which helps in reducing inflammation ideal for those with wheat allergies and sensitive digestion.” Another plus for millet: it’s local. The Great Plains, especially Colorado, is one of the world’s major millet growing regions.

6. Peas
This pick for “Food of 2015″ will not necessarily be found on restaurant menus or on grocery store shelves. You may even need glasses to notice it.

Barb Stuckey, who is a vice president at Mattson, one of the world’s largest food product developers, describes Americans as being in a “torrid love affair” with protein. While it’s debatable whether Americans should be seeking out more protein, the reality is food companies are responding to our love affair with protein by giving us more protein.

Soy is one of the best, most widely available, efficient ways of fortifying foods with protein, Stuckey says. But whether deserved or not, soy is falling out of favor. Food makers are searching for non-GMO plant-based sources of protein and, Stuckey says, “the newest, hottest kid on the block is pea.” Peas are high in protein and, as people gain more experience processing it, the flavor is improving. “Look for pea protein to show up the ingredient list of bars, cereals, beverages, you name it.”


Should Domino’s and Papa John’s Fear Pizza Hut’s Big Menu Changes?

November 21, 2014

Until now the differences between Yum! Brands (NYSE: YUM) Pizza Hut, Domino’s (NYSE: DPZ), and Papa John’s (NASDAQ: PZZA) have been mostly a matter of personal preference. Aside from the occasional special offer or novelty pie, all three chains offer a basic take on pizza.

That has changed as Pizza Hut, the lagging member of this trio of mediocre national pizza purveyors, has radically overhauled its menu. The company, which in recent years has resorted to stuffing cheese into its crusts, has added a wealth of new choices built on the idea that customers want customization. It’s pizza on the Chipotle model with choices including 10 different crust flavors, six sauces, and a variety of new toppings.

Favorites like the Meat Lover’s Pizza will remain, but customers will now be able to order it with a variety of enhancements. So, for people who want their pepperoni and sausage with honey Sriracha sauce and “Ginger Boom Boom” or “Curried Away” crust, Pizza Hut will have it for them.

Why is Pizza Hut doing this?
Pizza Hut has reported sales declines for each of the last eight quarters and this new menu is an attempt to turn things around. “This is the biggest change we’ve ever made,” Chief Marketing Officer Carrie Walsh told USA TODAY. “We’re redefining the category.”

Pizza Hut needed to do something; as it has struggled, Domino’s and Papa John’s have been chugging along nicely. In the third quarter Domino’s posted 7.7% domestic same-store sales growth year over year and growth of 7.1% internationally, marking the 83rd consecutive quarter of international same-store sales growth. In its third quarter, Papa John’s posted a 7.4% gain in its North American stores while gaining 5.5% internationally.

Will it work?
One industry analyst told USA Today the chain might be trying to do too much too fast. “It would appear that the brand that has lost touch with the consumer is trying to change too much overnight,” Darren Tristano, executive vice president at Technomic, was quoted as saying.

Pizza Hut might be aiming to please customers with a shift to Chipotle-like customization, but it’s going to be a challenge for a Yum! Brands property to gain a similar reputation. Chipotle has succeeded not just because it offers customization, but because it has a well-known commitment to quality food. Neither Pizza Hut nor sister chains Taco Bell and KFC have reputations based on offering good food. Pizza Hut may find that simply adding trendy flavors like Sriracha may not be enough to win quality-conscious millennials.

On the plus side, the chain will be adding new toppings including banana peppers, cherry peppers, and spinach. On the negative, filed under “please don’t insult our intelligence,” the pizza purveyor will be renaming a number of its standard toppings, ostensibly to make them more appealing. The customer who cares where Chipotle sources its beef from may not be fooled by Pizza Hut renaming black olives as “Mediterranean black olives” or red onions being dubbed “fresh red onions,” even though nothing has changed.

Can Pizza Hut be reinvented?
While Domino’s rebuilt its brand by revamping its pizza a few years ago, the company just improved its recipe, it did not radically change its menu. What Pizza Hut is doing amounts to a massive change in direction, an attempt to differentiate itself from its two major competitors.

Pizza Hut’s moves might even send some of its customers running for its rivals. Though the chain will still be selling “normal” pizzas, it runs the risk of confusing people who just want a plain old pepperoni pie and do not want to have to wade through a wealth of options. Those customers may well switch to Domino’s or Papa Johns.

The potential gain however is not in stealing traditional, undiscerning pizza eaters from its rivals, it’s a bigger growth strategy of winning over fast-casual diners not necessarily looking for pizza. Domino’s and Papa John’s have largely penned themselves in to a specific audience — people who want familiar pizzas cheaply.
Pizza Hut is looking to break the mold and widen its potential customer base — a move that could push it ahead of its rivals. That is a huge risk because the company could scare away its existing customers while failing to win new ones. For this to work the brand has to win customers not just from its pizza rivals, but from fast-casual restaurants including Chipotle, which have a higher perceived quality.

To do that, Pizza Hut needs to up its game. It’s one thing to offer more choice, but a lousy salted caramel organic beet pizza with an artisanal cheese crust won’t be successful just because it has a lot of trendy words attached to it.

To make this new offering, which rolls out Nov. 19, work, the company is going to need to actually deliver quality pizza that people want to come back for. Fancily named olives and balsamic drizzles won’t be able to disguise a mediocre pie.


Pizza Hut Revamps Menu, Brand

November 19, 2014

pictureBruce Horovitz, USA TODAY

Pizza Hut is rebooting itself for a new generation of pizza eaters.

Following two years of disappointing sales as consumers sought even more exotic flavors and personalized options, the world’s largest pizza chain on Monday will announce plans to turn upside down almost every facet of its identity.

Pizza Hut will focus on dozens of new flavor options as it mounts the 56-year-old brand’s biggest-ever redo. It will add 11 new pizza recipes, 10 new crust flavors, six new sauces, five new toppings, four new flavor-pack drizzles, a new logo, new uniforms and, yes, even a new pizza box.

For those keeping count, the chain is more than doubling its available ingredients at all 6,300 U.S. locations beginning Nov. 19.

“This is the biggest change we’ve ever made,” Carrie Walsh, chief marketing officer, says in a telephone interview. “We’re redefining the category.”

The ongoing tailspin — eight consecutive quarters of same-store sales declines — recently resulted in a management reshuffle. David Gibbs, who has been U.S president, was named CEO last week. He was not available for this story.

Even the chain’s sister brands at Yum Brands — Taco Bell and KFC — generally have been growing, but Pizza Hut seems to have hit a wall. Will these changes be enough to heal an ailing brand? Or, perhaps, are they too many, too late?

“Pizza Hut may be doing too much too quickly,” says Darren Tristano, executive vice president at Technomic, the restaurant industry research specialist. “It would appear that the brand that has lost touch with the consumer is trying to change too much overnight.” He suggests a more gradual approach because, among other things, all of these changes could particularly confuse the chain’s traditional customers.

Not so, says Walsh. Pizza Hut researched “hundreds” of ingredients, she says. “These are the ones customers told us they want.”

It’s not the first time a major pizza chain tried to quickly reinvent itself. Back in 2009, Domino’s, which had taken plenty of public grief for the taste of its pizza, changed everything in the recipe of its core pizza. New sauce. New crust. New cheese. It turned out to be a hit.

In this case, however, Pizza Hut is not changing its core recipe. Instead, it’s adding many, many more choices.

How many? Who’s counting. But consider this: There will now be about 1,000 ways to customize something as basic as a pepperoni pizza at Pizza Hut, says Walsh.

Among Pizza Hut’s new offerings, it’s going from:
• One crust choice to 10, including salted pretzel and honey sriracha.
• One sauce choice to six, including garlic Parmesan and Buffalo.
• Zero “premium” toppings to five, including sliced banana peppers and Peruvian cherry peppers.
• Zero “drizzles” to five, which are basically sauces like Buffalo and balsamic that are lightly drizzled on the top of the pizza after it’s baked.
• Six special recipes to 22, including 7-Alarm Fire (loaded with peppers and jalapeno) to Giddy-Up Barbecue Chicken (with chicken and bacon and barbecue sauce.)

It also will nationally roll-out a so-called Skinny Slice pizza line — with five offerings at about 250 calories per slice.

To announce the change, the chain will launch its largest-ever advertising campaign dubbed “The Flavor of Now,” says Walsh, though she declines to provide details. There’s even a possibility that the chain, which hasn’t advertised during a Super Bowl in 15 years, is considering such a move for the upcoming big game on Feb. 1.

“We’re looking,” says Walsh. “This change deserves a big statement.”


What Pizza Hut’s Radical New Menu Actually Tastes Like

November 18, 2014

Depends how you feel about honey sriracha crust and balsamic drizzlesPizza Hut Menu Launch Press Event in NYC
The half-dozen servers were dressed in all black, down to the sleek leather gloves they wore as they doled out slices of Pretzel Piggy, Old Fashioned Meatbrawl and Cherry Pepper Bombshell. On the side: balsamic, buffalo, BBQ and honey sriracha sauces, or in Pizza Hut’s new parlance, “drizzles.” All of it was surrounded by a new logo, new delivery boxes, new casual-looking uniforms, and a new motto: “The Flavor of Now.”

This is the new, at times unrecognizable, Pizza Hut. Or, at least, it was the one shown to members of the media Monday afternoon to mark what David Gibbs, the company’s newly installed CEO, calls “one of the biggest moves we’ve ever made in our history.”

On Nov. 19, Pizza Hut will essentially relaunch its entire brand, changing the food it serves, the way its ordered and even the company logo. There are 11 new signature pizzas, six new sauces, 10 new crust flavors and four drizzles — enough options to allow for 2 billion unique pizza combinations. For the company known for trencherman staples like Stuffed Crust, Meat Lover’s and Supreme, the new menu is the fast-food equivalent of a Hail Mary pass.

“It’s a fear of irrelevance,” says Darren Tristano, a food industry analyst at Technomic. “But the potential to negatively influence their current customer base is certainly there.”

It’s a risk Pizza Hut is willing to take, though they’re hedging bets by keeping those old favorites on the menu. Sales at the nation’s largest pizza chain have been dropping for two years, as Domino’s, Little Caesars and Papa John’s—the No. 2, 3 and 4 chains, respectively—have cut into Pizza Hut’s business. Regional build-your-own pizza chains like Blaze and Pieology and customization-heavy fast-casual brands like Chipotle are also luring diners from the pan pizza depot.

“America’s tastes are changing,” Gibbs says. “People are interested in bold new flavors. It’s a pretty natural move to be the one to take the pizza category where nobody’s taken it before with all these new flavors and ingredients.”

Domino’s offered a template in 2009, when the company admitted that its sauce and crust weren’t that great and invited customers to taste the new version. They bolstered their campaign with an updated social media presence and smoother online ordering to cater to millennials. Sales have soared since, which is as much a reason for Pizza Hut drizzling hot sauce on garlic crusts as anything.

So what does the “flavor of now” taste like? Thankfully, better than it sounds (The Cock-a-Doodle Bacon. Why?).

We started with Pizza Hut’s new asiago breadsticks alongside four dipping sauces: balsamic, BBQ, buffalo and honey sriracha. They’re miles from your basic marinara or cheese sauce, but not necessarily for the better. Whether dipping in the sweet but mild balsamic, tangy, molasses-heavy BBQ, unmemorable buffalo or lightly spicy honey sriracha, my asiago sticks longed for a red sauce.

The newfangled pizzas tended to come together better. The Cock-a-Doodle Bacon pie is spread with a creamy garlic parmesan sauce topped with grilled chicken and bacon. The riff on Alfredo is rich enough that you don’t miss the marinara.

The Old Fashioned Meatbrawl is a reasonably restrained update on the classic topping: the meatballs are small enough not to dominate each bite, and a garlic crust adds an extra salty pop.

Cherry Pepper Bombshell is also better than it sounds. The cherry peppers and balsamic drizzle add a sweet punch that goes well with meaty salami. But the shower of fresh spinach on top didn’t add much. It felt similarly unnecessary on the Pretzel Piggy, which is one of the most convoluted combinations on the new signature menu. A salted pretzel crust with the creamy garlic parmesan sauce from the Cock-a-Doodle is topped with bacon, mushrooms and spinach and then finished with a balsamic drizzle. It worked, kind of, though you’d need to be in a particular kind of mood to take one down solo.

The custom crusts are Pizza Hut’s attempt to make choosing your dough as common as picking your toppings. Of the two new ones I tried, the Ginger Boom Boom crust—with regular cheese and marinara—was subtle, a bit garlicky, with only a mildly taste of ginger. The honey sriracha crust (with a pepperoni topping), meanwhile, was sticky and a bit too overpowering.

So is this really what millennials crave? Maybe. Pizza Hut will likely cast off a kicked-up drizzle, flavor-dusted crust or meatbrawl pie if it turns out it isn’t selling. Besides, it’s not as if Pizza Hut is a sauce and dough purist.

“We’ve always been the one taking the category to new places,” says Gibbs, Pizza Hut’s CEO. “Yes, the younger customers are more interested than the older demographics in experimenting with flavor. But I think across all demographics, there’s something on the menu for everybody.”


Wahoo’s Grows Up

August 26, 2014

Ray-wahoosgrowsup-OCBJ-599x1024Paul Hughes

Orange County Business Journal

© 2014 Orange County Business Journal. Provided by ProQuest Information and Learning. All Rights Reserved.

Chain Gets Past Downturn, Puts Corporate Vet in Kitchen

Wahoo’s Fish Taco wants to keep it casual for customers even as it tightens up the way the 61-restaurant chain goes about its business.

That’s a shift for a company with laid-back Orange County roots-its dining rooms are monuments to surf and skate culture, with stickers for various brands dominating the decor.

It also is a response to some bruises sustained during the recent recession.

“Like everyone else, we’ve had a rough couple years,” said Wing Lam, a cofounder who is the chain’s public face.

The recession left behind a new catch phrase for established restaurant chains, he said: “Flat is the new up.”

It’s been up and down for Wahoo’s, according to Lam, with a dip last year. The Santa Ana-based chain’s 61 restaurants-34 company-owned and 27 run by franchisees-accounted for sales of $52 million, a 4% drop.

The chain is back on a growth track this year, according to Lam.

“We’ve had growth every month through July compared to the last two years,” he said.

Most of the restaurants are seeing revenue growth between 2% to 8%, he said.

The aim now is to establish a new approach that provides more structure to a lot of the processes that go into getting food to customers.

Lam and his brothers Ed Lee and Mingo Lee cofounded Wahoo’s with Steve Karfaridis, the company’s chief operating officer, in 1988. It grew into a small roster of restaurants and began franchising in 1993, often to the founders’ friends.

By 2010, it had 54 locations, including 21 franchises in California, Hawaii, Colorado and Texas, and was aiming for 70 in early 2013.

The push for expansion through franchising led to the 2010 hire of Tom Orbe as a vice president, an early step toward a more formal approach for the chain. Orbe was a franchisee himself and still operates a Wahoo’s in Temecula and another in Huntington Beach.

Trying to grow through the economic downturn produced mixed results.

Wahoo’s didn’t make it to 70 restaurants it has closed three since 2012, including one in New York, its first on the East Coast.

Deals in Arizona and Rhode Island also haven’t panned out.

The chain is adjusting, with plans to open a restaurant in Philadelphia in November. It’s rethinking its bid in New York, where the initial location was in Manhattan. It’s now eyeing suburban Westchester and Long Island for another try.

Wahoo’s added a location in Japan last year, and the chain wants more overseas.

It also has a big project in the works in its backyard: a restaurant at the Honda Center.

“Good Hard Look”

The strong start this year hasn’t deterred Wahoo’s from longer-term strategies.

“We’re taking a good hard look at systems and putting most of our resources there,” said Karfaridis.

He said Wahoo’s will bring point-of-sale, labor management and accounting to cloud based hosting.

Wahoo’s also plans to add ordering to its smartphone app, he said.

Another big effort is focused on supplier relationships, a key to containing costs and saving time.

A roasted salsa, for example, is shipped almost ready to Wahoo’s restaurants by a supplier working from one of the chain’s proprietary recipes.

“They create the base, and we finish it,” Karfaridis said.

Another supplier starts the teriyaki sauce, but each location completes it. A meat vendor pre-slices came asada-something that used to be done by Wahoo’s staff in the restaurants.

“As you grow, you come to a decision point,” Karfaridis said. “How do you preserve the spirit of the food while growing? How do you scale Wahoo’s without compromising quality?”

Balancing Act

It’s a balancing act for a chain that’s facing new levels of competition, said Darren Tristano, executive vice president of Chicagobased restaurant industry researcher Technomic Inc.

“They have to build on the menu and flavors without straying too far from the core tastes,” Tristano said. “The fish taco made them popular, but fish tacos are everywhere now.”

Karfaridis said customers often guided menus at individual restaurants.

“They’d say, T want my Maui bowl in a burrito,’ so we created the Banzai Burrito,” he said.

That produced good relations but inconsistent results across the chain.

Karfaridis said Wahoo’s wants to keep the close-up feel of the chain but streamline the process.

Wahoo’s brought on Raymond Martin in January to work on the menu.

He had stints at Huntington Beach-based BJ’s Restaurants Inc. and Calabasas Hillsbased Cheesecake Factory Inc.

Less Complexity

His mandate is to reduce complexity and costs in food preparation and presentation while maintaining or improving taste and service.

“You don’t want to waste steps or product, and customers are looking for new flavors,” Martin said.

He said he got a better price and more consistent product on tortillas through a new deal with Irving, Texas-based Mission Foods, a major supplier.

He focused on fewer ingredients with strong flavors-ginger, garlic and onions for its teriyaki sauce.

Martin cut the cooking time on came asada to retain more meat and juice. The beef continues to cook as it comes hot off the grill, ensuring its still cooked properly when it reaches the customer.

“You keep more meat, use less sauce and get the same amount of product,” Martin said.

He added a table salsa by tweaking Wahoo’s legendary pico de gallo-which is also still available-and is testing a spicy ketchup, a southwestern ranch sauce, smashed beans and seasoned onion rings.

Don’t expect sweeping changes-Lam said fish is still king.

Nearly half of Wahoo’s customers are going to eat something with fish in it, he said.

“You can get a chicken burrito from anyone,” Lam said. “But there’s only so much fish out there, and we have a great relationship with our suppliers.”

Honda Center

Martin estimated 80% of the menu has been improved in some big or small way.

Tristano said Technomic’s research on Wahoo’s consistently reveals high levels of consumer loyalty.

That meets the benchmark set out by the chain’s owners.

“Nothing will be compromised,” Karfaridis said. “We’re adding scalability and leaving the core qualities intact.”

Back in 2010, when Wahoo’s brought Orbe to boost franchising, he said the chain could grow to 400 or 500 locations but didn’t want to do it in “cookie-cutter” style.

Lam used the same term last year to describe what he intends to guard against in the latest push for growth.

“While Chef Ray is working, I’m out there gallivanting in the Wahoo’s (food) truck testing the theories,” Lam said. “Then he and I compare notes.”

Lam said not all of his ideas translate into good-or cost-effective-products on the wider scale that Martin’s been hired to oversee.

“He’s about process and presentation, and I’m about convenience and flavor, and we meet in the middle,” Lam said.

The results of the collaboration will get a showcase when Wahoo’s opens in the Honda Center this fall.

Success there could lead to another growth push and more hires for Wahoo’s management team, Karfaridis said.

“We can bring in people to do that,” he said. “This has been four guys doing all of it on the run for a long time.”

Wahoo’s Fish Taco wants to keep it casual for customers even as it tightens up the way the 61-restaurant chain goes about its business. A roasted salsa, for example, is shipped almost ready to Wahoo’s restaurants by a supplier working from one of the chain’s proprietary recipes. How do you scale Wahoo’s without compromising quality?” Balancing Act It’s a balancing act for a chain that’s facing new levels of competition, said Darren Tristano, executive vice president of Chicagobased restaurant industry researcher Technomic Inc. “They have to build on the menu and flavors without straying too far from the core tastes,” Tristano said.