Buffalo Wild Wings Soars Under Sally Smith

November 24, 2014

By Nancy Gondo, Investor’s Business DailyUntitled-1

When Sally Smith worked as a waitress during college, she had no idea that she would one day run a big, national restaurant chain.

“It was really hard work — balancing, having four or five tables, so time management, remembering things — that hospitality component,” she told IBD. “It was not for a long period of my life, but having that, I have a lot of empathy for what happens at every restaurant.”

That experience has been one of the factors helping her lead Buffalo Wild Wings from a 35-restaurant chain 20 years ago to a 1,050-location behemoth in America, Canada and Mexico, with annual revenue of nearly $1.5 billion.

The stock has rocketed alongside that growth — by a stratospheric 1,300% since its IPO in 2003.

“Sally has maintained a consistent performance and track record in an industry where executive leadership turnover has been very high,” said Darren Tristano, an executive vice president at food-industry tracker Technomic. “Retaining key leadership team members and with consistent strategic planning and execution, she has built a solid foundation for success and continued expansion and sales growth opportunities.”

How has she kept the Minneapolis-based chain on a growth track?

Smith, 56, looks way down the road. She figures out what the sports-bar company needs to do in order to keep expanding over the next three to five years vs., say, three to six months.

 

Hello Columbus

Buffalo Wild Wings opened 32 years ago in Columbus, Ohio, and has been public for 11 years.

The restaurants are part sports bar, part casual eatery, with TV screens showing sporting events from around the globe.

And it still considers itself a growth play.

“We’re not a dividend payer, we’re not doing stock buybacks right now, but rather, we’re investing in our growth,” Smith said. “When we were smaller, it certainly was a lot easier because it’s a lot easier to double when you have $10 million in sales vs. a billion in sales.”

Amid that challenge, Buffalo Wild Wings is a force in the restaurant industry. After Smith joined in 1994 as chief financial officer, she closed underperforming units, changed the chain’s name from BW3 and updated the logo.

She took over as CEO in 1996. Under her reign, Buffalo Wild Wings has expanded to all 50 states and across both borders, broadened its menu and added technology for ordering and entertainment.

She also brought structure to what had been a rather rudderless company.

“We were so small that it really had no infrastructure. In a way, it was like starting a business,” Smith said. “We didn’t have a marketing department, we didn’t have a talent management department.”

Smith also helped set up an advisory council for franchisees. Her prior experience at Dahlberg, maker and franchiser of Miracle-Ear hearing aids, helped her define what kinds of franchisees Buffalo Wild Wings wanted to attract.

Growing up in Grand Forks, N.D., she didn’t know what career path to take. But she always heard her father, who worked in banking, talking shop at home. So business became quite familiar to her.

In her first job as a 16-year-old, Smith filed checks for a bank and performed bookkeeping duties, rising to become a teller.

She enjoyed economics classes in high school and the University of North Dakota. Seeing her prowess with numbers, a professor suggested a career in accounting.

Smith went for it, joining the accounting-consulting firm KPMG.

That move turned into an 11-year post with Dahlberg, where she served as chief financial officer. After the firm was acquired, she stayed on for a year, then heard from Buffalo Wild Wings, which was still called BW3. She was all in.

It turned out to be the right decision — for Smith and the wings-and-beer chain.

After setting up infrastructure and steering the company onto a growth path, Smith took B-Dubs (a moniker it sports on its website) public in 2003, raising more than $50 million in the initial public offering. As shares continue to advance — up 10% this year — the company has scored compounded annual revenue growth of 27% and net income growth of more than 34% the past decade.

With a 98 Composite Rating, Buffalo Wild Wings is a leader in IBD’s Retail-Restaurants group. Its five-year earnings growth rate and sales growth rate are 23% and 25%, respectively.

 

Cheers

“Her leadership has shaped the brand by remaining true to who they are and where they came from,” Tristano said. “By expanding the menu to be more relevant (burgers), and by keeping pace with technology and entertainment platforms, BW3 has continued to shine in an industry that has been struggling with low growth and weak performance since the recession.”

Aside from her nine-month stint as a waitress 15 years prior to joining the company, Smith didn’t have direct restaurant industry experience. But she has excelled by drawing on her financial background, speaking with other industry executives and studying what has worked for them.

Smith has what she calls a collaborative management style. When she meets with team members, she tells them that there’s enough work for everybody. Teamwork, not territorial behavior, helps advance the company.

“I think the more people that can be exposed to other areas, not just their own, they each would have a much better understanding of what everybody is trying to achieve,” she said. “So I’m big on collaboration and working together to solve a problem, whether it’s in your specific area (or not).”

 

One For All

When Smith goes on the road, she visits restaurants and interacts with management and employees to find out everything from what’s working to details about hiring and distribution to what would make the job easier or more fulfilling.

“I’ve always been a curious person,” she said. “I do a lot of reading, and I have since I was very young. So being able to ask questions helps me learn, and I think sometimes you ask questions to help the other person learn.”

Clearly, exploring fresh possibilities matters to Smith. While advising college students interested in a career at the executive level, Smith encouraged them: “Don’t be afraid to take a lateral move to learn another aspect of the business, or a lateral job. It isn’t all about up, up, up. And don’t be afraid to take a job that’s undefined. Most of mine have been.”

Take her start at Dahlberg. Her position was new, and it was a small company. Then there’s Buffalo Wild Wings, which was a fledgling, local firm when she joined.

On the personal front, Smith dives into newspapers’ business and technology sections, belongs to a book club, bikes, golfs and enjoys cooking with her two kids.

What’s next for Buffalo Wild Wings? Smith still sees big opportunities in America in terms of unit growth and individual restaurant growth. She also sees international expansion, with plans to reach the Middle East and the Philippines.

Technomic’s Tristano would agree. “BWW likely has greater opportunity to expand outside the U.S., in North America and other major international food-service markets across the globe,” he said. “There continues to be strong opportunities for expansion in the U.S. in smaller suburban and rural markets where wings and sports are in high demand.”

Meanwhile, said Smith, “I love going into the restaurants and hearing that someone’s been with us for five years or seven years, or they’ve been on 10 new-store-opening teams, or that they love working at Buffalo Wild Wings.”


With a Wink and a Nudge, ‘breastaurants’ Consider Milwaukee

October 17, 2013

b99111943z.1_20131010160657_000_gj52ren1.2-0Milwaukee could soon get a taste of the new breed of “breastaurants” that have emerged to challenge Hooters in the beer-and-babes dining category.

A Texas-based group has signed an agreement to open two Twin Peaks (get it?) restaurants in the area, and has been actively scouting locations.

Eyeing Milwaukee as well is Tilted Kilt Pub & Eatery, which also dresses its waitresses in skimpy, cleavage-emphasizing outfits, but with a Celtic theme rather than Twin Peaks’ mountain-lodge look.

Both chains are relatively small. But they’ve been expanding by providing a fresh approach to a restaurant industry segment long dominated by Hooters.

“There are definitely opportunities for growth and, certainly, demand,” said Darren Tristano, executive vice president at food industry research firm Technomic Inc. “So I think we’re going to expect three to five years of continued growth, and that’s partially because there are a lot of markets like Milwaukee that don’t have these restaurants.”

Furthest along in Milwaukee is Twin Peaks, which developer David Schmille touts as “kind of the Cadillac” of the segment. Schmille, a Dallas-area resident, operates Fish City Grill restaurants in Texas and Arkansas, and is a former top executive with the Romano’s Macaroni Grill chain.

“I’ve already been up there a few times,” he said of Milwaukee. “We’ve got one opportunity that we’re looking at right now. We like the Mayfair mall, Brookfield mall corridors.”

“We’re hoping to have something in the market by next year,” he said.

Focus on skin

Based in Dallas, Twin Peaks has grown from seven restaurants in 2008 to 44 now. The chain touts its “made from scratch” cooking, and longtime restaurant industry consultant Malcolm Knapp gives Twin Peaks high marks for its food.

Ample servings of skin, though, seasoned with suggestive wordplay — “well built sandwiches,” “smokin’ hot dishes,” “scenic views” — are essential ingredients in the marketing recipe.

But forget the double-entendres. The first sentence of the chain’s franchise disclosure document — required to be provided to potential franchise buyers — makes the business model clear:

“You will establish and operate a lodge-themed, full service restaurant with a full bar featuring the ‘TWIN PEAKS’ Girls, who are attractive women dressed in theme-related uniforms that enhance the sex appeal of the women,” the document begins.

Swap Twin Peaks’ deep-cleavage plaid tops and short shorts for Tilted Kilt’s deep-cleavage tartan bras and mini-kilts, and the waitresses at the two chains look pretty similar.

But Tempe, Ariz.-based Tilted Kilt doesn’t seem to favor Twin Peaks’ wink-wink marketing approach. Kilt president Ron Lynch doesn’t even want his places called “breastaurants” — and not simply because yet another chain, Bikinis Bar and Grill, trademarked the word last year.

Lynch’s view, according to a Tilted Kilt spokeswoman: “He thinks that term demeans and objectifies his employees.”

Among Tilted Kilt’s 85 locations — up from 14 in 2008 — are restaurants in Green Bay and Oshkosh, and a third that opened this year in Kenosha, in a former Old Country Buffet.

“We’ve been in pretty steady growth even with the down economy,” said Paul DiBenedetto, who heads a group that holds Tilted Kilt development rights for Wisconsin and seven other states.

DiBenedetto’s group doesn’t yet have a franchisee for the Milwaukee area, which puts Tilted Kilt a step behind Twin Peaks and Schmille, who already has connected with a local real estate broker and is searching for space.

Waitresses as performers

At the moment, the nearest Twin Peaks is in Wheeling, Ill., a northwest suburb of Chicago. The company-owned restaurant opened in March and is huge — 450 seats, 64 TV screens as large as 80 inches, and 110 employees.

Among them are 55 “Twin Peaks Girls,” who might address customers as “sweetie” and “honey” or sit down beside them to chat. It’s all part of their instruction in what one waitress described as the restaurant’s Three S’s: Sit, Schmooze, Sell.

“They’re considered performers,” general manager Ignazio Colella said. “We hire them on as performers.”

As Colella explained it, the girls are encouraged to “flirt without intent…have a couple playful innuendos.”

Said waitress Kelli Koch, a 19-year-old community college student who hopes to become a paramedic, “I can sit down with you. I can talk with you. I can mess around with you, play with you a little bit.”

But no touching.

“When guys touch us, it absolutely is not tolerated,” she said.

She acknowledges being “a little shy” at first about showing herself in the skimpy Twin Peaks costume. Now it’s merely the uniform she wears at work — at a place where she regularly earns $100 a shift in tips alone.

“We look at it as nothing but a job,” she said. “I am going to school, I’m making car payments, I’m making credit card payments…. We’re just normal teenage girls who are trying to make good money to get ourselves set up.”

Colella takes pride in Twin Peaks’ food, but said there’s no shortage of decent restaurants with lots of TVs showing sports.

“But when you throw in great-looking girls who have a great attitude, who are going to give you an experience…it sets you apart,” he said.

Limits to strategy

The breastaurant strategy, though, has limits.

Hooters of America is a case in point. The Atlanta-based chain finished last year with 417 restaurants, down from 455 at the end of 2010, according to the firm’s franchise disclosure document. Among locations that closed was one in Greenfield.

Overall sales fell by about 7% over the same period, Technomic estimates.

Hooters pioneered the segment but has “been on stasis for about 10 years,” said Knapp, creator of the Knapp-Track count of monthly restaurant sales and traffic. “They just weren’t growing and they had internal fights…and they weren’t responding to changes.”

Now, new management under an ownership group that took over in 2011 is “working on making it more relevant again,” Knapp said. “The T-shirts never went out of relevancy, but the food really wasn’t what it should have been.”

And while Tilted Kilt has expanded overall, several outlets also have closed over the last few years, including locations in Madison and Stevens Point.

An issue all of the chains face is the limited appeal of the testosterone-drenched atmosphere to one very large demographic group — women.

Schmille said about 90% of Twin Peaks’ customers are men. The lunch crowd at the Chicago-area restaurant last Thursday bore that out: five women among roughly 100 men.

Later that afternoon in Kenosha, a 30-ish woman hesitated at the door of the Tilted Kilt, with its stained-glass likenesses of the chain’s waitresses.

“Oh God,” she said, “please don’t tell me that’s how they’re dressed in there.”

“C’mon,” said her male companion. “We were here for football.”

In they went.


Meet the King of the Breastaurant™ Empire

October 14, 2013

bikinis_hall_of_fameToday MTV has loosed upon the world  Big Tips Texas,  a faux-reality show about the buxom waitresses of Lewisville’s Southern-stripper-themed restaurant, Redneck Heaven. Judging from  the promos, the fourteen-episode arc will focus primarily on drinking, cussing, screwing, and fighting, with frequent subplots involving betrayal, name-calling, applying to Harvard, and other cable-friendly degradations of contemporary Gomorrah. It could be worse.

It makes perfect sense to choose Texas as the show’s locale. Our state has recently become a sort of corporate headquarters for breast-n-something themed eateries, due in large part to the state’s rising breastauranteur, Doug Guller. While others in his very specific line of food-service prefer to play footsie with innuendos, Guller would much rather skip the foreplay. “Bikinis” is his restaurant. And in it there is nary an allusion to the Marshall Islands or atomic bombs. As if to bring home the point, this spring Guller applied for—and was granted—a trademark on the ubiquitous portmanteau, “breastaurant.” Legally speaking, Bikinis really is the “World’s only breastaurant.” And in his quest for continued breastaurant domination, Guller bought a “town” this year, renamed it Bikinis, Texas, and is banking on the idea that an actual Redneck Heaven can arise just beyond the city limits of Fredericksburg.

The idea that a heterosexual male would pass up an easy opportunity to attend the grand opening of a town explicitly dedicated to breasts and beer is ludicrous. Of course I went. After an hour and half of driving in the July heat, at the end of a snaky, narrow country road just off U.S. 290, I found a place where determined travelers would be welcomed with cold libations, a bikini contest, and a glimpse of the world-famous beauty—such as she is—Carmen Electra, the inaugural inductee into the Bikinis Bust of Fame. The cost of entering paradise, without proper credentials, was $40.

Carmen’s presence in town was unmistakable. Her white limo was parked between a small cemetery and the “town” of Bikinis, a 1.67-acre plot of land once known as Bankersmith (though that point is debatable). Beyond that lay a field where a fawn was seen bounding toward the cover of trees and a pristine hillside. Before Guller purchased the land, a move that garnered the attention of the media—and, unsurprisingly, the ire of his new neighbors—there was only an abandoned general store on the country property.

But Guller remodeled the humble shack into a saloon, built a gazebo-like porch extending out the back to accommodate the lingerie pageant and quickly raised a barn-style concert hall for the inaugural musical act, Jerry Jeff Walker. With the infrastructure complete and the newly arrived citizenry, Bikinis seemed to be simultaneously hosting a stripper convention, music festival, bike rally and—by proximity to civilization—a Boy Scout jamboree. Blues standards were the noise ordinance, and bra-clad women operated a beer stall. Whatta boomtown.

It had a mayor to match, too. Guller, declared to be one of Austin’s “most eligible bachelors” by Austin Monthly, introduced himself to me by saying “Dude, why are you buying?” before proffering three drink tickets. A fit man flanked by a smartly dressed woman, Guller wore a cowboy hat over his bald head, a nice watch, and a red shirt that read “BFD: Bikinis Fire Department” with an official looking emblem. Except for strutting purposely through the town, Guller looked like another a chill dude waiting for a bikini contest to commence.

By the time the competition started, about two hundred people had packed into Bikinis’ city limits. The six contestants were very pretty. And pretty naked. Suddenly captivated, the crowding men deposited their beers and leveled camera phones like trumpeters at a coronation. One took an extreme closeup. He bonded momentarily with a stranger who admired the photo’s angle and asked to be sent a copy, immediately, via text. Even the camera-less women seemed to be enjoying themselves. There were no losers. Particularly since no winner was ever officially announced.

Then Guller mounted the stage with Carmen, a smile super-glued to her face. Whatta pro. Like her cut-off jean shorts, Carmen was shockingly tiny in real life, wearing a Texas-inspired outfit: boots, a hat, the straw components of which were forced into a cowboyish shape, and a vaguely western shirt tied above her pierced belly button. She looked like one of the Bikinis bartenders, though perhaps better rested. Cameras were once again hoisted, this time frantically, as Carmen unveiled her Bust-of-Fame, a bronzed cast of her chest. After her brief appearance onstage, fans who purchased wristbands had the chance to meet the Baywatch star inside the saloon. Roughly eighty people paid more than $60 for the privilege. This included one conspicuous older gentleman, a Bikinis regular/photography hobbyist wearing a homemade shirt featuring eleven iron-on images of Carmen Electra and a fanny pack. Guller stood by, clearly pleased, as someone who understands the scope of his own success and knows there’s more to come.

“I think you have to be pretty light-hearted getting into the type of restaurant with a sports bar and grill and having, you know, bikini-clad waiters,” said Guller, who is refreshingly upfront about his business. In 2012, revenue from the Bikinis empire totaled more than $20 million. Doug opened his first Bikinis five years ago in Austin, and now there are twelve in Texas, one in Oklahoma, and one in North Carolina. Teen-friendly titty bars, in general, are a boom industry. During the Great Recession (2008 to 2012), the Big Five—among them Dallas-based Twin Peaks and Bikinis—increased both the number of respective locations and total sales, according to the food industry research and consulting group, Technomics.

This expansion took place during a time when casual dining restaurants suffered big losses, and people warned of the “ death of the American chain restaurant .” Bennigans, Fuddruckers, Friendly’s—and numerous other chains with names suggesting mandatory joie de vivre—all suffered or shuttered.

When eaters finally did venture out again, all chains were competing for the limited market share. The gimmicky breastaurants upped their game, focusing on improved menus and desirable customer service unrelated to the surface area of cleavage. Perhaps obsessively so. When I emailed Kristen Jones Colby, a spokesperson for Twin Peaks, about the distinction between a quality restaurant and a quality breastaurant, she responded, “We definitely don’t consider ourselves a ‘breastaurant,’ but a high-quality casual restaurant.” With twice as many locations as Bikinis spread across nineteen states, the mountaineer-themed restaurant has done well for itself. According to Colby, even if the “signature assets” were removed, “we would still have a successful concept that guests would love.”

If this seems like a dangerous claim, it’s not only because Twin Peaks without the “scenic views” would be reduced to a desert dunescape of bald men. It’s dangerous because Hooters has been attempting to do just that by de-emphasizing its own assets and rebranding itself as more family friendly (which, apparently, means more televisions). Results have not been promising. Hooters has seen more than $1 million in sales lost, 48 locations closed, and a four-percent drop in revenue. To be fair, Hooters was already beginning to sag. The primary reason, said Technomics analyst Darren Tristano, is that Hooters—with 365 outlets worldwide—stretched itself too thin, allowing service and vibe to slack.

“The restaurant industry isn’t growing, it’s stealing shares from one another,” said Tristano, who is, by dint of citation, the country’s foremost breastaurant expert. (Seriously. No reputable article about the niche market is written without first seeking Tristano’s comments for the record.)

Tristano noted Hooters has started seeking turf historically ruled by places like Applebee’s, one of the family friendly chains to survive the recession. With Hooters trying to muscle in on this territory, the younger boobs-and-beer crowd has been driven to places like Bikinis and Twin Peaks. It’s all part of the food-chain chain.

And these restaurants are all too happy to capture that audience. “It’s Darwin’s theory,” said Guller, who, like the other breastaurant insiders, emphasized the importance of service. No amount of cleavage can make up for warm beer and cold women. But Guller has evolved his plan by diversifying his interests. His parent company, ATX Brands, has acquired a variety of establishments in recent years, each one targeting specific “experiences.” As he said, “Hey, you want craft beer, go to Chicago House. You want Tex-Mex, go to Pelons. You want a tequila bar, go to 508.” And if you want bikini-clad women serving beer in the middle of nowhere, there’s now an entire town just for that.

Which is what distinguishes Guller from the pack of businesses grabbing for boob profits. A schtick like buying a town dedicated to the revealing swimwear and the women who love it is a testament to Guller’s unparalleled media prowess and marketing savvy. So was successfully applying for the “breastaurant” trademark while the competitors distanced themselves from the phrase. Their loss. (Actually, Tristano sounded slightly bemused at Guller’s ability to have pulled off the breastaurant™ victory, considering Tristano himself was “probably the first person quoted as using that term if you were to research it.”)

Guller will clearly stop at nothing. He’s even attempted to rewrite bikini history. The town’s grand opening on July 13 was advertised as a coinciding with “National Bikini Day,” never mind that the bikinis invention and celebration occurred the week before, on July 5.

And Guller spares no expense when it comes to expanding his empire. Internet estimates, for example, say a Carmen Electra appearance costs about $20,000. Then there’s the bikini contest. Guller plans to turn it into a big event with a “rifle or shotgun contest … different things the girls are going to be doing.” It’ll be like  Fear Factor  or Wipeout, he said. And it’ll blow Twin Peaks’ All-Star Bikini Contest out of the water. Maybe literally, if explosives are involved. And another item on Guller’s agenda is to buy the rights to Miss Bikini USA, formerly owned by Hawaiian Tropic. What’s next? A weekly waitress giveaway?

The only question now is how big Guller’s empire will get before it begins to fall. History is nothing but predictable. In the cutthroat world of breastaurants, it’s difficult to continuously satisfy even the most loyal patrons. After the pageant and Carmen’s appearance, the town emptied steadily. Even the older Bikinis regular/photography hobbyist with his Carmen Electra t-shirt and fanny pack was ready to leave. Like Guller, the gentleman didn’t skirt around the issues. He much prefers Hooter’s fare and in his assessment of the new town, one felt the strong sense of disappointment.

“I thought I was going to come to a small city,” he said, “not one building.”

Give it time. These things aren’t built in a day.


Hooters is chasing women — as customers

May 15, 2013

pictureHooters has always been known for tank top-wearing “girls.” Now, faced with declining sales, it’s wooing women — as customers.

The chain’s waitresses are as buxom as ever but its sales have “flattened out,” said Darren Tristano, executive vice president at research firm Technomic, Inc. Revenue peaked in 2007 at nearly $1 billion but had fallen to around $850 million last year, he estimated. (The privately-held company doesn’t release sales figures.) The brand recently announced an overhaul aimed at making Hooters more mainstream than man-cave, adding more salads to its menu, remodeling stores and rolling out a series of ads last week to tout the changes.

These efforts have only made the brand a little more popular, a new consumer survey shows.

According to market research firm YouGov’s BrandIndex, both men and women think slightly better of Hooters than they did prior to its overhaul, but men’s impression barely squeaked into positive territory, and women’s overall perception remained sharply negative. BrandIndex CEO Ted Marzilli said the small gains were encouraging for the brand, but “it’s not a brand that appeals to everyone.”

Hooters’ PR agency declined to make a spokesperson available for comment, and messages left with the company’s chief marketing officer were not returned.

The Atlanta-based chain and founder of the unfortunately termed “breastaurant” trend is trying to keep its core customer — the guy for whom the chain’s signature wings are a secondary attraction to the scantily-clad wait staff — from defecting to newer competitors like Tilted Kilt or Twin Peaks, while at the same time appealing to their girlfriends or wives.

“Restaurants can increase their base if they can negate the ‘veto vote’… Women are the driving force on our everyday eating patterns,” said Harry Balzer, chief industry analyst at research firm NPD Group. “Traditionally, when you want to appeal to more women, you’re going to bring in issues that have to do with diet. It will be salads, things that are fresher.”

“The food had not kept pace over time,” CEO Terry Marks told Nation’s Restaurant News in August. “By broadening the menu and introducing items that are better for you, we can get both new people and lapsed guests who might have outgrown our core items.”

In January, Hooters debuted its first redesigned location, which the company said gives customers “a more open and brighter appearance,” thanks to higher ceilings and lighter colors.

“They’re moving it forward, but it’s a larger brand, so in order to move the needle, it’s going to take some time,” Tristano said.

“They developed a niche and by some standard were certainly successful in establishing that niche,” Marzilli said, but the chain’s focus on sex appeal has some inherent limitations. “There are some women who will say it’s a sexist theme or I dont like what the brand stands for.’”

In good economic times, that might not be an issue. But the recession pummeled the casual dining sector, and Hooters’ core customer, young men, have been disproportionately affected by unemployment.

“The overall casual dining space… has been undergoing a lot of turmoil over the last four to five years,” said John Gordon, principal and founder at restaurant consulting company Pacific Management Consulting Group. “Hooters had an even more difficult situation,” he said, because ownership turmoil distracted management from reinvesting in and reinventing what was becoming a dated brand.

NPD data found that Americans went out to eat, on average, 74 times last year. That’s the lowest number since the company began tracking it in 1984. “They’re appealing to a behavior that’s decreasing in this country,” Balzer said.

“The question is, mathematically… how do I keep my base while growing and attracting logical new users?” Gordon said. For Hooters’ management, the answer seems to be greater inclusivity.

But Tristano questioned whether catering to women is really in the brand’s best interest. “I think they need to stay true to their brand,” he said. “To try to make Hooters more female-oriented will move away from what has attracted men to the concept… It may be as harmful to target them as it is helpful to bring them in the doors.”


Breastaurants Expanding Into S. Florida

February 26, 2013

breastaurants-boom-orlandoHooters Girls are getting more competition.

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

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

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

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

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

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

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

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

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

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

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

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

Hooters declined comment.

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

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

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

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

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

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

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

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

INFORMATIONAL BOX:\ \ The leaders

Brands in the breastaurant category, and 2011 sales:

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


Ale Yeah! Queens’ Only Hooters is Out

January 18, 2013

HUNGRY diners looking for a side of well-endowed waitresses with their beer and wings will now have to find a new watering hole to satisfy their appetites. Queens’ only Hooters was transformed last week into Bud’s Ale House, a sports bar and restaurant, after a franchise dispute between the owners of the Fresh Meadows restaurant and Hooters of America. The Atlanta-based parent company sued the Strix Restaurant Group, which owned four Hooters in Queens and Long Island, last month for not making franchise payments. Strix plans to countersue before Nov. 7. “We can do a much better job of providing a good quality, affordable meal…without providing the girls in uniforms,” said Strix attorney Ed McCabe. McCabe said the Hooters menu was “stale” and the scantily clad waitresses were actually hurting business – so Strix converted its beer-and-boob joints into sports bars and restaurants. “Eighty percent of the population wouldn’t go into a Hooters,” he said.

“For the average man, it’s not worth explaining to his wife.” Hooters opened its first store in 1983 and has 430 worldwide locations. The company plans to open in Manhattan next year and is in negotiations to open five more in Long Island, a Hooters official said. “We are extremely protective of the Hooters brand,” Hooters CEO Terry Marks said in a statement. “In the unfortunate circumstance that a franchisee is not complying with its obligations…we must take actions to protect our concept.” So- called “breastaurants,” which feature greasy food, buxom waitresses and sporting events on TV, are growing, according to Darren Tristano, executive vice president of Technomic, a food industry research and consulting firm. But Hooters, still the industry leader, has stayed flat due to more competition and its reluctance to modernize, he said. “Hooters is becoming a little more tired,” he said. Meanwhile, Bud’s has 20 beers on tap, a wing- and burger- based menu and flat-screen TVs showing sports games. Another location opened last month in Astoria. And at Bud’s, the wait-staff wears jeans and loose t-shirts – instead of orange hot shorts. Bud’s waitress Stefanie DeFlorio, who waited tables at Hooters for four years, said she’s pleased with the change-over. “People think Hooters is a strip club,” she said. But now “a lot more people are coming in.” Hooters patron Cherelle Douglas, 24, of South Ozone Park, said she’ll now come more often. “I wasn’t a big fan of the girls walking around in tiny shorts,” she said. ctrapasso@yahoo.com


Income Influences Patronage and Attitudes

October 18, 2012

High-income consumers not only use foodservice more often than lower-income consumers do, they also have a different set of demands.

Consumers’ household income—particularly as it relates to their disposable income—strongly impacts many areas of their life, including where they live, where and how they shop, their daily priorities and intrinsic motivations—essentially their overall lifestyle.

Wealth also influences how and why consumers use foodservice. High-income consumers are about twice as likely as lower-income consumers to use foodservice at least once a week, making them an important demographic for the industry. However, it would be remiss to not examine patronage and purchasing decisions among middle- and lower-income groups to determine how to build incremental sales with these consumers as well.

Technomic’s recent Influence of Income Consumer Trend Report polled consumers of all stripes, then broke them down into Working, Lower-Middle, Upper-Middle and Affluent income groups.

  • Working—Generally consumers who earn an annual household income of $34,999 or less. Those earning up to $44,999 were also included in this group if their household size was larger than two individuals. Those in high-cost areas such as major cities were also included in this group if they earned up to $54,999 and had an even larger household size of three or more individuals.
  • Lower Middle—Consumers who report an annual household income of roughly $45,000 to $74,999. Consumers with even lower income ranges, such as those earning $35,000–$44,999, were included in this group if they lived in a low cost-of-living area or if their households included just themselves or one other individual.
  • Upper Middle—Generally consumers who earn $85,000–$104,999 annually. Those in smaller households, or in lower cost of living areas such as rural, suburban or small city areas, were included in this group as long as they reported an income of at least $65,000–$84,999.
  • Affluent—Generally consumers who report an annual household income of roughly $125,000 or more. Consumers who live by themselves and earn $105,000–$124,999 were also included in this group, while households in this income bracket but with a larger household size or in higher cost of living areas fell into the Upper-Middle income group.

Foodservice Patronage

Affluence is tied to greater foodservice usage; nearly twice as many Affluent consumers as those in the Working group use foodservice more than once a week. Wealthier consumers also source a greater portion of their meals away from home than lower-income consumers, with the greatest gap at lunch. On average, more than two-fifths of Affluent consumers’ lunches, compared to just a third of Working consumers’ lunches, are purchased at restaurants.

Base: 2,000 consumers aged 18+
Source: The Influence of Income Consumer Trend Report

The fact that away from home lunch purchases vary so widely based on consumers’ level of affluence speaks to the importance consumers place on convenient foodservice options at lunch, and a preference to source lunch from restaurants regularly if they can afford to do so. Many lower-income consumers likely can’t afford to purchase food away from home for lunch as often as their higher-income counterparts, choosing to eat at home or bring meals from home more often. Operators may be able to increase incremental traffic and sales at lunch by varying their menus to offer options for consumers on a tight budget. This could be through options that provide greater value, such as combos, or items that are offered at absolute low price points, such as value meals. However, when doing so, operators will want to be sure that these items do not cause core customers to trade down from their usual, higher-priced offerings.

Takeout and delivery usage skews to lower-income consumers, while a significantly greater proportion of meals purchased by Affluent consumers are for dine-in. Consumers with a higher disposable income are also more likely to use technology such as a cell phones or smartphones to place their takeout and delivery orders.

Different Priorities

Low prices are the highest priority for Working and Lower-Middle income groups when choosing a limited-service restaurant for dine-in occasions, while Affluent consumers place greater importance on a convenient location. Low prices are also more important to lower-income groups than higher-income groups at full-service locations, as the chart illustrates.

Affluent consumers place a higher priority on convenience of location than any other income group, for both limited- and full-service restaurant occasions. This data suggests that lower-income consumers sometimes need to go out of their way for the low-cost items they seek, while higher-income consumers are willing and able to pay higher prices to visit a convenient location.

Base: 952 consumers aged 18+ who dine in at these locations
Source: The Influence of Income Consumer Trend Report

Consumers with different levels of affluence cope with time constraints in different ways; lower-income consumers are more willing to trade health for convenience, while higher-income consumers are more likely to multi-task during meals and eat on the go.

Slightly more Affluent than Working consumers say an appealing taste and the use of fresh ingredients are important for limited-service dine-in occasions, suggesting that, to some degree, lower-income consumers associate these qualities with higher prices. Lower-income consumers may assume to some extent that taste and freshness cost more, and as a result likely rate it lower because of their priority on low prices. Meanwhile, for full-service dine-in occasions, Affluent consumers emphasize taste and freshness, while lower-income consumers are more likely than higher-income consumers to place a high level of importance on menu variety.

Higher-income consumers are more likely to seek restaurant recommendations from friends and family; a third of Affluent consumers, compared to a fifth of Working consumers, say they often ask for such recommendations. Higher-income consumers are also significantly more likely than lower-income consumers to utilize computers and smartphones to research restaurant menus online. And twice as many Affluent than Working consumers say they often consult online review sites and blogs when choosing a restaurant.

Priorities do not always differ by income group. Two out of three consumers overall agree that order accuracy and food that tastes just as good as for dine-in are highly important for takeout and delivery occasions; the fact that there are few significant skews by income indicates that these are must-haves for takeout occasions regardless of consumers’ level of affluence.

A Change in Attitude

Just half of Affluent consumers, versus three-fifths of Working consumers, view eating out at full-service restaurants as a special treat. This indicates a significant difference between Affluent and Working consumers’ perceptions and motivations for dining at full-service restaurants. Working consumers have tighter budgets and do not visit full-service restaurants as frequently as Affluent consumers, which is likely why lower-income consumers view these occasions as special events.

Additionally, more than a quarter of Affluent consumers, compared to just a tenth of Working and Lower-Middle consumers, say they eat out at restaurants more frequently than they prepare food at home, confirming that Affluent consumers have a high reliance on and preference for restaurant meals.

Base: 898 (a special treat) and 934 (whenever I want to) consumers aged 18+; responses were randomly rotated
Respondents indicated their opinion on a scale of 1–6 where 6 = agree completely and 1 = disagree completely
Source: The Influence of Income Consumer Trend Report

Wealthy consumers also appear to use restaurants to a greater extent than lower-income consumers as a place to socialize. Seven out of 10 Upper-Middle income-group consumers, and just three-fifths of Working and Lower-Middle consumers, say restaurants are a great place to get together with friends.

Although few consumers actively follow restaurants through social media, those who do are most likely to be from Upper-Middle and Affluent households. Facebook, the leading social media site consumers use to connect with restaurants, appeals to consumers from all levels of wealth. However, Twitter and Groupon, in particular, are used regularly by Affluent consumers.

Two-fifths of Affluent consumers, compared to a quarter of Working consumers, say they prefer restaurants with new or innovative menus, suggesting that unique offerings may help attract higher-income consumers. Several ethnic cuisines, including Japanese, Spanish, Greek and Thai, are especially appealing to Affluent consumers.

Base: 914 (willing to try new foods) and 933 (new or innovative flavors) consumers aged 18+; responses were randomly rotated
Respondents indicated their opinion on a scale of 1–6 where 6 = agree completely and 1 = disagree completely
Source: The Influence of Income Consumer Trend Report

Key Takeaways

Consumers’ level of affluence strongly impacts when and how they use restaurants, and it would be easy to focus on these frequent diners. But while they are very important to the foodservice industry because of their high patronage, they account for just a small proportion of consumers. Therefore, it is important for operators to consider their lower-income customers as well.

Understanding the preferences of consumers at different income levels is key to developing strategies that meet the various needs of consumers, regardless of income.

Darren Tristano is Executive Vice President of Technomic Inc., a Chicago-based foodservice consultancy and research firm. Since 1993, he has led the development of Technomic’s Information Services division and directed multiple aspects of the firm’s operations. For more information, visit www.technomic.com.