How McDonald’s Easterbrook can maintain momentum

February 4, 2016
Joe Cahill
Crains
January 27, 2016
http://www.chicagobusiness.com/article/20160127/BLOGS10/160129896/how-mcdonalds-easterbrook-can-maintain-momentum

McDonalds-all-day-breakfast-win-for-CEO-Easterbook.jpgAll-day sales of Egg McMuffins did more than reverse a three-year slump at McDonald’s: It has inspired confidence in CEO Steve Easterbrook and buys time for the new chief to lock in the elements of a long-term growth strategy.

Last fall, Easterbrook answered the prayers of many customers who had yearned for years to buy breakfast after McDonald’s long-standing 10:30 a.m. cutoff. This week, McDonald’s credited all-day breakfast for the lion’s share of a 5.7 percent rise in fourth-quarter sales at U.S. locations open more than a year. The quarterly increase, outstripping even the expectations of McDonald’s executives, was the second in a row and a sign that McDonald’s is finally moving in the right direction under Easterbrook, who replaced Don Thompson in March.

A pair of quarterly sales gains doesn’t mean Easterbrook has put McDonald’s on track for long-term sustainable growth. But together with some other recent moves, it shows he understands the challenges facing McDonald’s and will move aggressively to meet them.

If Easterbrook still has a long way to go, all-day breakfast gives him a bit more time to get there. He’ll enjoy a grace period of three more quarters, as extended breakfast hours continue to generate sales increases over periods that predate the change. That cushion will disappear in the fourth quarter, when McDonald’s will lap a quarter with all-day breakfast for the first time. “That will be the telling moment,” says Darren Tristano, president of restaurant consulting firm Technomic in Chicago.

During the next three quarters, Easterbrook must build on the success of all-day breakfast, which is bringing in new customers and others who hadn’t visited McDonald’s in years. Now he needs to turn them into regulars. Strong store traffic is essential to the long-term health of any fast-food chain. Guest counts at McDonald’s declined again for the full year of 2015, but turned upward in the fourth quarter.

Customer traffic will keep rising if Easterbrook gives people more reasons to keep coming back after the novelty of afternoon Egg McMuffins wears off. That requires steady progress in three key areas:

Service. Service slowed as McDonald’s menu grew more complex in recent years. Drive-in speeds lagged those of key rivals. Easterbrook has begun to address the problem by expanding on a menu-decluttering effort launched by Thompson. “Simplifying the process is what people want nowadays, and they’re finally addressing that,” says analyst R.J. Hottovy of Morningstar in Chicago.

On McDonald’s earnings call with Wall Street analysts on Jan. 25, Easterbrook said customer feedback shows improvement in “food quality, order accuracy, speed and friendliness.” But all-day breakfast adds a new layer of complexity, potentially undermining service speed and accuracy.

Ruthless purging of slow-selling items will be essential to keep restaurants running smoothly. Restaurant efficiency also could benefit from new technologies that allow customers to order via kiosks and mobile devices. McDonald’s is testing these systems in the U.S. but hasn’t set a date for national rollout.

Value. McDonald’s is still searching for a successor to the Dollar Menu, the low-price offering that drove its last turnaround, in the mid-to-late 2000s. The company badly needs a compelling deal for budget-conscious customers who faded away during the last recession and its aftermath. Always a bulwark of McDonald’s business, lower-income families matter even more today as affluent consumers migrate to fast-casual chains like Panera. “Value-conscious” consumers now represent about 25 percent of McDonald’s customer base, Easterbrook told analysts on the earnings call.

Early this month, McDonald’s began a six-week test of “McPick2,”which offers two menu items for $2. Easterbrook said initial response has been favorable and acknowledged the need to settle on a permanent value proposition this year.

“Value still has to be at the core of their menu,” Tristano says, noting most of McDonald’s rivals offer a low-price combo. “It’s what a lot of their customers want, and if they can’t get it they’ll go elsewhere.”

Listening. McDonald’s boffo launch of all-day breakfast shows what happens when a company listens to customers. For years, McDonald’s rejected customer pleas to extend breakfast service beyond late morning, citing insurmountable operational hurdles. Easterbrook pulled it off in a matter of months, a clear sign his efforts to winnow bureaucracy and accelerate decision-making based on market feedback are bearing fruit. “That shows the company is much more nimble now than it was before,” Hottovy says.

A streamlined management structure established last summer has “sharpened our focus,” and “removed distractions to speed up decisions and increase our ability to move winning strategies quickly across markets,” Easterbrook told analysts.

Of course, faster product rollouts won’t help if customers don’t like them. McDonald’s has struggled for years to cook up menu innovations that click with consumers. Remember, the Egg McMuffin isn’t a breakthrough innovation but a proven winner that McDonald’s made more available.

Acknowledging that all-day breakfast demand will “settle down” from its initial euphoria, Easterbrook said McDonald’s has more initiatives in the pipeline for 2016. We’ll see if he can come up with a hit new product—the true test of whether McDonald’s has developed an ear for customers’ ever-changing preferences.

“As long as they’re listening to the customer and giving them what they want, instead of trying to force something on the customers, they can be successful,” Tristano says.


Wendy’s to Look Into Dropping Antibiotics

July 31, 2015

wendys-chickenJD Malone
(c) 2015 Columbus Dispatch. All Rights Reserved.
http://www.dispatch.com/content/stories/business/2015/07/30/wendys-to-look-into-dropping-antibiotics.html

Instead of a spicy rub or a slice of artisanal cheese, Wendy’s latest chicken sandwich is getting attention for what it won’t have.

The Dublin-based chain is poised to begin testing antibiotic-free chicken in several cities as it tests both consumer response and its supply chain.

Wendy’s plans to test a new chicken sandwich in mid-August in seven markets, and antibiotic-free chicken in four of those seven — Orlando, Fla., Gainesville, Fla., Kansas City, Mo., and Austin, Texas.

Central Ohio won’t see the new chicken unless it goes nationwide. That move is pretty likely as long as there is enough antibiotic-free chicken available, analysts say.

Further details on Wendy’s plans were not forthcoming.

Still, analysts think it’s the right move to swim with other chains doing similar things. McDonalds, Chipotle and Chick-fil-A have all pledged to remove antibiotics from their chicken. Big producers including Tyson and Perdue also have announced a pivot away from using antibiotics unless medically necessary.

“On the list of bad words, antibiotic had definitely moved up,” said Darren Tristano, vice president at Technomic, a Chicago-based food-service analysis and consulting firm. “The overall trend is taking things (thought to be) harmful out of the supply chain. Consumers want this.”

“The time is ripe,” said Tim Powell, principal of Think Marketing, a Dublin-based food-service consultant. “Today’s consumer is far better-educated on where their food is coming from, and they have shown they will pay more for it.”

The new chicken will also be used in salads and other menu items featuring grilled chicken.

Wendy’s has been looking to tweak its menu lately.

Earlier this year, the chain tested a black bean veggie burger in Columbus and received a lot of attention for trying a nonmeat sandwich. There’s no word on whether that sandwich will join the chain’s menu permanently, but it’s part of a bigger strategy among quick-service chains to keep up with fast-casual restaurants such as Chipotle.

They have to speak the same language to lure similar customers.

“You have to do things like this,” Tristano said. “You don’t want to be one of the last. You want to be one of the first.”


Romano’s Macaroni Grill Has a New Twist to Dining Options

July 10, 2015

pictureMike D. Smith
Copyright 2015. Hearst Communications, Inc. All Rights Reserved. Distributed by NewsBank Inc.
http://www.pressreader.com/usa/houston-chronicle/20150709/281973196325188/TextView

As chain with 147 locations adjusts to desires of millennials, it adds a walk-up express line to its traditional sit-down table service

Fans of Romano’s Macaroni Grill can still walk in, take a seat and wait to order from a familiar-looking Italian-American menu. But diners seeking quicker, cheaper meals now can turn toward a walk-up express line and order from “Romano’s Kitchen Counter.”

The addition of this “fast-casual” option, with lower-priced and easier-to-prepare items, represents the latest shake-up for a chain that has seen its value plummet since 2008. Macaroni Grill’s newest owners are hoping to attract more of the typically younger customers drawn to places like Chipotle, Panera Bread and Zoës Kitchen, while not abandoning the full-table service it has provided for 27 years.

“We decided to play in both spaces,” CEO John Gilbert said recently at the Macaroni Grill at 5802 Westheimer Road.

The makeover comes amid an industrywide shift as restaurants struggle to keep pace with demographic changes, diners’ ever-evolving moods and a post-recession dining landscape that favors new, fresh, quality and quick.

Gilbert took over earlier this year after the sale of the company by Houston-based Ignite Restaurant Group for just $8 million. Ignite had paid $55 million for the properties two years ago, taking them off the hands of a California private equity firm that had given Dallas-based Brinker International $88 million in 2008.

The number of restaurants in the chain dropped as well, to 147 today from 200 at the time of the Brinker sale.

Those 147 locations churn out annual sales of about $350 million, serving about 20 million meals each year.

However, Gilbert saw much room for improvement.

The restaurants had undergone only one makeover once since 1992. That is a far longer interval than the seven years that Gilbert said is ideal.

As the restaurant chain’s brand aged, so did its core customer.

Part of the formula for Mac Grill’s turnaround is a remodel. The dimly lit interiors will undergo changes to make better use of each restaurant’s ample space. The exteriors are being studied for more eye-grabbing details that can capture passing traffic.

Those changes are to complement the most noticeable shift – the mix of express and casual service, cashing in on what Gilbert said is an undeniable industry change toward express service.

Dual-concept mode

The company first tested the dual-concept model in a Cleveland, Ohio, restaurant.

First came express lunch. Customers order at the counter from a different menu more suitable for quicker service, with more “handhelds,” like sandwiches, plus calzones, pastas and spaghetti. Express customers get a number and take a seat.

The chain took its express lunch national in October, then added a dinner express menu in February with a seven-minute guarantee for the $7 lunch and nine minutes for the $9 dinner.

“In the aggregate, it’s working,” Gilbert said, adding that he measures success through dining traffic. “Are we getting more people in our restaurants than we did before? I think, absolutely, that’s true.”

A growing segment

Of the 61 billion American restaurant visits in the year ending in May, fast casual accounted for 5 percent of the market, said Bonnie Riggs, a restaurant industry analyst with NPD Group.

Still, it’s the segment everyone’s talking about. In 2009 and 2010, during the recession, overall restaurant industry growth was negative two years in a row for the first time.

Overall growth has been flat since. The segment bucking that trend is fast casual, which has posted 7 to 8 percent quarterly growth.

All of this is happening as the restaurant industry now features more options for ready-to-eat, fresh food – think, supermarkets and enhanced convenience stores – and sees, increasingly among millennials, more cooking at home.

“It’s been a real battle for market share, and with this one segment growing, everyone is seeming to try and emulate it,” Riggs said of fast casual.

While mixing fast casual with casual is attractive, Darren Tristano, executive vice president of food service consulting firm Technomic, says it can have its pitfalls.

One challenge is the potential for customer confusion. Those who know a restaurant’s brand will expect full service, and there can be a learning curve for others.

There’s also the risk of alienating core customers.

“I think that the mistake many of these concepts are making trying to compete with fast casual is they are losing sight of consumers coming to them for a particular reason, what they’re known for,” Riggs said. “You really have to do your homework and understand what your customers’ needs are. They can go to a fast-casual restaurant if they want fast-casual.”

Some brands have created offshoots to tap the express service market. Examples include Pizza Inn’s Pie Five and Red Robin’s Burger Works. Other brands have tried and failed.

The best use of a hybrid model is to boost lunch sales with more value, convenience and service, Tristano said.

Gilbert said that is happening with Macaroni Grill’s changes to date. Lunch sales, which represent about 30 percent of the chain’s business, have increased by about 20 percent.

Lunch express, so far, is more lucrative than express dinner.

Interior remodeling

Customers will begin to see the other changes soon. A Houston location will undergo the first interior remodel within a few months.

The company continues to explore additional express-service menu items, a new pizza-menu lineup, steakhouse items, additional salads and seafood. The dozen new express-menu items are being evaluated for their popularity, with such items as parmesan truffle fries and brunch offerings being explored.

There also are plans to test a “wine-on-tap” system and an express-only version of the restaurant – all part of the effort to retain its loyal customers and appeal to younger diners.

“The bigger risk is not doing anything,” Gilbert said.

Gilbert said, too, that he admits the chain has to catch up to its competitors.

“There are customers who like us truly because we’re not busy,” he said. “That’s not healthy for us.”


App May Offer Doughnuts on Demand ; Dunkin’ is Exploring a Delivery Service

June 17, 2015

8849e1f883b10fbaf86357823c2ecf69Taryn Luna
© 2015 The Boston Globe. Provided by ProQuest Information and Learning. All Rights Reserved.
http://www.betaboston.com/news/2015/06/09/dunkin-donuts-app-may-offer-doughnuts-on-demand/

At a time when a consumer can use an app on a smartphone to have a bottle of whiskey or an iPad Air delivered to the door in an hour, an instant order of munchkins and a Box O’ Joe might not be far behind.

Dunkin’ Donuts is the latest quick-service restaurant chain to wade into the so-called on-demand economy, acknowledging Monday that it is evaluating delivery services in conjunction with new mobile ordering technology the coffee-and-doughnuts chain is developing.

Dunkin’ is following in the footsteps of two rivals, Starbucks Corp. and McDonald’s Corp., both of which are testing deliveries to homes and offices this year.

Nigel Travis, chief executive of Dunkin’ Brands Group, the parent company, called delivery a “big opportunity” in an interview with CNBC.

The company said delivery might be built into an application currently in development. The app, which Dunkin’ began testing last year, would allow customers to order and purchase coffee and food on a smartphone and pick it up at a store.

Dunkin’ declined to provide details about how a delivery service would work and said it has not begun to test the system.

Dunkin’ Donuts and other fast-food chains face a particular challenge in delivering products: keeping their hot food and drinks at the right temperatures, said Darren Tristano, an executive vice president at Technomic Inc., a Chicago food industry research firm. While things like pizza and Chinese food retain heat during transport, Tristano said, some fast-food products don’t survive as well.

“It might reflect negatively on the brand,” Tristano said. “There’s great risk along with the opportunities.”

Food chains are quickly trying to catch up with the explosive popularity of on-demand delivery services such as Postmates and GrubHub, which can provide nearly anything consumers want, whenever they want it. The chains also hope deliveries will increase sales in a relatively stagnant quick-service industry.

Dunkin’ Donuts’ same-store sales in the United States increased 1.6 percent in fiscal 2014, compared with 3.4 percent the year before. Meanwhile, McDonald’s comparable sales declined 2.1 percent in 2014. Starbucks, the leading coffee and bakery chain in the country, reported a 6 percent jump during the same period.

Earlier this year, Starbucks and McDonald’s said they both planned to work with Postmates, the San Francisco-based 24-hour service, to deliver in select markets. Customers place orders on the Postmates app or website and local couriers pick up the goods from restaurants and stores. An order of a Big Mac and medium fries from McDonald’s, which includes a $5 delivery fee, costs about $11.

Although many consumers already can order a Big Mac or a Frappuccino through the Postmates system, the partnerships allow companies to integrate the ordering process into the food chains’ own mobile applications, control the transaction, and track consumer interests, Tristano said.

Starbucks said it will launch a “Green Apron” program with actual baristas delivering coffee in New York later this year.

Dunkin’s delivery and mobile ordering initiatives are being led by Scott Hudler, global vice president of consumer engagement.

The company said he was not available for an interview.

Tristano said Dunkin’s delivery service would probably increase sales modestly as existing customers shift to delivery. He said the service would appeal to consumers who are physically unable to visit a store, don’t have a car, don’t want to deal with parking, or “are just lazy and don’t want to get up and go.”


Pinkberry Flirts With Self-Serve in Two Southern California Shops

May 27, 2015

By Nancy Luna/Staff Writer

For several months, Pinkberry has been quietly testing self-serve machines in at least two Southern California locations.
http://www.ocregister.com/articles/self-662718-serve-pinkberry.html?page=1

Pinkberry, credited for launching the modern-day frozen yogurt craze, is testing self-serve machines in two Southern California locations.

The do-it-yourself experiment has been ongoing for months at shops in Brea and Burbank. A Pinkberry official played down the test, which comes a few years after Chief Executive Ron Graves said he would never play the self-serve card.

“Leapfrogging the competition requires you to know and be true to your brand as well as deeply understand your competition,” Pinkberry spokeswoman Laura Jakobsen told the Register this week. “This is research – you can only learn so much by observing.”

At the Pinkberry on Imperial Highway in Brea, the store offers 10 flavors at 49 cents an ounce. The front counter has a bar, where customers can choose from an assortment of fruit and candy toppings.

By comparison, a nearby Yogurtland in Brea had a menu of 16 different flavors at 41 cents an ounce.

In Burbank, the self-serve option has been around a year, while Brea converted in December. Jakobsen said Pinkberry has no plans to convert more shops.

“We opened the self-serve stores to gain insights from both a consumer and operational perspective,” Jakobsen said. “We are not considering converting more locations.”

Darren Tristano, a restaurant consultant for market research firm Technomic, said five years ago that premium frozen yogurt chains like Pinkberry “would have great competition from self-serve fro-yo brands” in a post-recession economy.

“There is no surprise that Pinkberry would test and consider replacing or adding self serve to their concept,” Tristano said. “The affordable price points of weigh-and-pay as well as the labor savings is a strong driver for change within the market.”

Though brands such as Golden Spoon Frozen Yogurt have been around for more than 30 years, Pinkberry is considered a pioneer in the category.

When Pinkberry debuted 10 years ago, it elevated the frozen yogurt category with its slick presentation and tart-heavy fruit flavors. Pinkberry now has 250 shops in 21 countries.

Copycat brands have since saturated the market, including Yogurtland, Tutti Frutti and Cherry on Top. To differentiate themselves, many adopted the self-serve model. Their popularity soared among consumers who enjoy controlling how their food is prepared.

“The trend in consumer control demonstrated by build-your-own formats is the next generation of customization,” Tristano said.

Irvine-based Yogurtland launched its first self-serve store in Fullerton in 2006. It now has about 300 stores in the U.S., Australia, Guam, Thailand, Venezuela and Dubai.

When asked in 2012 about the popularity of self-serve froyo, Pinkberry’s Graves told Inc. magazine that he refused to “go self-serve.”

“Why? Because that would be letting the competition define us,” he said.

History shows it could also be brand suicide.

In 2012, Rancho Santa Margarita-based Golden Spoon tested self-serve in a handful of Southern California stores. At the time, the chain said it would eventually convert at least 40 locations to the trendier do-it-yourself shops.

But after its loyal customers balked at the messiness of self-serve, the chain halted those plans.

“Sanitation was a key issue,” Chief executive Roger Clawson told the Register in 2013. “Our core customer demands full service.”


How Jonathan Smiga Crafted Barnie Coffee & Tea’s Turnaround

March 27, 2015

Anjali Fluker
http://upstart.bizjournals.com/entrepreneurs/hot-shots/2015/03/21/how-jonathan-smiga-crafted-barnie-coffee-teas.html?page=allbarnies-centerpiece15-304xx3654-2448-42-0
© 2015 American City Business Journals, Inc. All rights reserved.

J onathan Smiga wasn’t sure quite what he was getting into when he took over the helm as president and CEO of the then-struggling Barnie’s Coffee & Tea Co. in 2010.

The Winter Park, Fla.-based firm’s board had just fired founder Barnie “Phil” Jones Jr. after falling from 120 cafes in 15 states during the early 2000s to about 50. Sales also had declined to $5 million-$6 million from a peak of $67.3 million in 2005.

But rather than trying to compete with coffee giant Starbucks by opening new cafes in every trendy city, Smiga instead pared down the store count to just two — the original store on Park Avenue in Winter Park and one in downtown Orlando’s CityArts Factory — and put a heavier focus on branding and expanding its high-quality products that target socially and environmentally responsible consumers. The idea was to put the new Barnie’s CoffeeKitchen into the movement known as the third wave of coffee, where coffee is looked at as an artisanal culinary specialty from production to brewed cup, rather than a commodity.

The result: The company’s products now are available in grocery stores, convenience stores and specialty stores in 22 states. And 2014 was a breakout year for the new-and-improved Barnie’s, where revenue doubled and earnings were up by $2 million year-over-year.

Today, Barnie’s is in its 35th year and expects to see sales back up to about $20 million this year, up 50-80 percent from 2014.

“We’re breaking out from being that regional coffee shop in town,” Smiga told Orlando Business Journal in an exclusive interview. “We bring the nimbleness of a third wave of coffee company — from production to our talent to our intellectual property — married with a mature company which allows for us to take our business to a national scale.”

No pain, no gain

The first year Smiga was top executive at Barnie’s wasn’t easy. Stores had to shutter, employees were let go and revenue dropped by one-third.

And things appeared bleak when stores started to close because of what had happened in Barnie’s history: The company in 2006 sold off 56 shops mostly in malls, cutting sales nearly in half.

But Smiga said the Barnie’s team hunkered down and focused on building its intellectual property, brand and figuring out the best way to shed its former reputation. Rather than being known as the local Starbucks competitor, the firm wanted a more global reach by making its products the first thing people think of when they hear Barnie’s.

“We stayed in that zone a couple of years, but we were not dormant,” Smiga said. “We were figuring out the puzzle pieces.”

It all paid off, as last year the firm achieved positive cash flow without venture funding.

Much of the growth came from signing deals to sell its packaged products in large retail chains. And last year, Barnie’s relaunched its website to capitalize on the growing e-commerce industry with online sales, which today represents about 10 percent of the company’s sales. It has been known to draw buyers fro m as far away as Germany.

Java culture

Along with bringing an analytical look at the coffee business, Smiga also brought a change to the culture at Barnie’s CoffeeKitchen, according to Senior Vice President of Sales and Marketing Sonya Hardy, who has worked for the company for more than 20 years.

Barnie’s originated as a company that celebrated the purity of international coffees, but got away from that as it ventured into growing its store count.

“Smiga really got us to refocus on the coffee and getting us into the third wave of coffee movement,” Hardy said. “Then we were able to work that into the guest experience.”

Reining in growth

Now that the company is back on a growth trajectory, the difficult part is not falling into that same trap of trying to grow by opening a slew of new stores, Smiga said.

Though Barnie’s is looking at potential new stores in strategic areas in the Southeast, Midwest and Texas, Smiga said the focus still will be on Barnie’s coffee and tea products. The firm will continue to create new Barnie’s-branded packaged products, including a new cold-brewed bottled drink expected to hit the market later this year.

“We’re next going to focus internally on strategy in the small business sense,” he said. “When you’re underwater, you only want to get to the surface. You’re focused on surviving. But once you get to the surface, you can start making executive decisions.”

However, there’s still room to add stores, according to Darren Tristano, executive vice president of food industry research firm Technomic Inc.

Making a mark in the highly competitive coffee house industry won’t be easy, but it is possible, he said. About 27,000 coffee houses in the U.S. generated $23.5 billion in sales last year, mostly dominated by mega-chain Starbucks and then Dunkin’ Donuts, Technomic reported. “Barnie’s focus has been more on retail, and they’ve been doing well with the restaurants or stores they currently have,” Tristano said. “They should have opportunities on the retail side as a smaller brand to continue to expand as profitability rises.”

Background: Grew up in the food business in Sarasota and Palm Beach; was co-director of education at the Culinary Institute of America in Hyde Park, N.Y.; recruited by Darden Restaurants Inc. to oversee a turnaround for Olive Garden in the mid-1990s; was general manager of a Robert Mondavi Winery-oriented attraction at the 55-acre Disney’s California Adventure theme park in Disneyland Resort

Education: MBA, New York University; master’s in hotel administration, Cornell University

Projected 2015 revenue: $20 million

Employees: 60

Contact: barniescoffeekitchen.com

Barnie’s CoffeeKitchen cafes are no longer the only place to get a cup of your favorite java or tea. Here’s where else you can find your favorite flavors and brews:

On the web: Order any of Barnie’s products on the company’s website at http://bizj.us/1bp5gd or search for coffee and related products on Amazon.com.

In stores: Barnie’s can be found on the shelves in supermarkets and retail locations, including Publix Super Markets, Winn-Dixie, Sweetbay, H-E-B Grocery, Food Lion, Hannaford Supermarkets and Harveys.

In cafes: Two full-service cafes still exist, 118 S. Park Ave. in Winter Park and 29 S. Orange Ave. in downtown Orlando’s CityArts Factory.

Dr. Phillips Center for the Performing Arts: Two Barnie’s coffee bars can be found in downtown Orlando’s arts center.

New products

Some original products created by Barnie’s CoffeeKitchen:

CupUp: A single-cup brewing machine compatible capsule that holds 30 percent more coffee than other leading brands. Features a patent-pending channel design to create a particular extraction of flavor and aroma. Available in several of Barnie’s most popular flavors.

Brewsticks: Single-serve liquid instant coffee that comes in portable packets. Features 100 percent cold-brewed Arabica coffee soluble in hot, iced or bottled water.

Publix Premium Ice Cream: Publix-branded ice cream in Barnie’s CoffeeKitchen flavors, including Barnie’s Coffee and Santa’s White Christmas

Publix Premium Espresso Chip Frozen Yogurt: Barnie’s Santa’s White Christmas coffee-flavored frozen yogurt with chocolate espresso chips

Publix Premium Indulgent Yogurt: Barnie’s Santa’s White Christmas coffee-flavored yogurt with mocha chips

Sources: Barnie’s CoffeeKitchen, Publix Super Markets Inc.

By the numbers

Stats on Barnie’s CoffeeKitchen:

120: Total U.S. stores at its peak

60: Employees

22: States where you can buy its products in convenience, grocery and specialty stores

4: Barnie’s ice cream flavors you can get at Publix supermarkets

2: Remaining stores under the firm’s new business strategy

Source: Barnie’s CoffeeKitchen


Pizza Hut Risks Becoming ‘Pizza What?’ with Bold Rebranding Effort

December 31, 2014

© 2014 Central Penn Business Journal. Provided by ProQuest Information and Learning. All Rights Reserved.

Go big, or go home.

It’s a catchy phrase. It glorifies the daring move, making a splash, going all in for the win. It even concedes that it might not work. And it’s a risky strategy for an established brand like Pizza Hut.

Here’s a quick summary: Pizza Hut same-store sales have declined for two years. Its parent company, Yum Brands, has seen growth for its Taco Bell and KFC units, but Pizza Hut hasn’t kept up. Archenemy Domino’s seems to be eating Pizza Hut’s lunch with decent sales increases, even though it does not have a sit-down casual dining option.

So, Pizza Hut has launched a rebranding effort that consists of a new logo (more on that later), a completely revamped menu, with a much wider range of toppings and crust flavoring options, and a tongue-in-cheek ad campaign called the “Flavor of Now,” in which its new pizza combos are tested by Old World Italians and flatly rejected as “not pizza.”

Pizza Hut seems to be counting on millennials to bite on the classic reverse psychology presented in the spots as a joke.

“This is the biggest change we’ve ever made,” Carrie Walsh, chief marketing officer of Pizza Hut, said in an interview with USA Today. “We’re redefining the category.”

But, in changing so much about the brand in one fell swoop, is it trying to do too much? After all, this isn’t just adding stuffed crust as an option. This also takes away a great deal of what makes the brand familiar to its core audience.

Darren Tristano, executive vice president at Technomic, the restaurant industry research firm, responded in the same USA Today story in this way: “Pizza Hut may be doing too much too quickly. It would appear that the brand that has lost touch with the consumer is trying to change too much overnight.”

All told, Pizza Hut will add 11 new pizza recipes, 10 new crust flavors, six new sauces, five new toppings, four new flavor-pack drizzles, that new logo, new uniforms, a new pizza box and a partridge in a pear tree.

That Pizza Hut is going big, there is no doubt. But there are risks, starting with its core customers. This isn’t New Coke, but will its loyal customer base be thrown by so much change?

While I’m not sure Old World Italians would think that Pizza Hut’s previous offerings were any more worthy of their blessing, it is a product that’s been more or less established for decades. So, there is some risk that the new menu, which replaces some items, will alienate a percentage of its customers and drive them to try other options.

Let’s say that number is 5 percent of sales. That’s a big chunk to overcome with sales from new customers just to break even on this venture.

The second risk is that, with so much change, will it be possible to tell what’s working and what’s not? The chain has more than doubled its available ingredients at all of its 6,300 locations. Will it be possible to tell which combinations are working well when there will be so many possibilities? Maybe not.

But maybe it won’t matter. If the pizza-makers at the country’s leading pizza chain can manage all the extra ingredients and make what will be essentially custom pizzas for anyone who wants one, Pizza Hut could be on to something. Personalized menu items are working for Chipotle and Panera, so why not take a shot at riding the wave? It can always moonwalk its menu back to where it came from if it doesn’t move the needle. It’s got Pizza Hut Classics in its back pocket just in case, right?

Now, about the new logo. It’s great to signal a rebranding effort with an updated logo. People take notice. It makes them curious. And this one uses a mark that resembles a pizza, or, more accurately, the sauce of a pizza, which puts the product front and center.

The part that gets me is that the roofline “hut” image from the old logo has been dropped in the middle of the sauce. Now it looks like a hat, not a roof. Unless it’s supposed to be one of the new toppings, it just looks like pieces of the logo have been redistributed.

Pizza Hat, anyone? Or Pizza What? In a few months, we’ll know whether this little pizza rebrand went to market or if it went all the way home.

But there are risks, starting with its core customers.