Eatery digests patrons’ feedback

June 6, 2016

Arkansas-based fast-casual restaurant chain Slim Chickens, known for its tenders and wings, is rolling out a chicken-breast sandwich for taste-testing.

Testing is underway at Slim Chickens’ three Fayetteville locations, its Rogers store, and in Broken Arrow, Okla., near Tulsa. The restaurant chain is offering cayenne ranch and buffalo chicken sandwiches in Northwest Arkansas and cayenne ranch and Cajun chicken versions of the sandwich in Oklahoma.

Customers who select the sandwich are asked for feedback in a survey that takes about a minute to complete. That information goes straight to a few select Slim Chicken executives. So far, customers’ feedback has already resulted in changes to one of the sandwiches. The process is expected to continue for the next several weeks.

“Early indicators are positive,” said Sam Rothschild, Slim Chickens’ chief operations officer. “This is why you test.”

While the chain has offered sandwiches in the past, this is the first one made with a whole, premium chicken breast. Rothschild described the test sandwiches as being made from high-quality chicken and “fully dressed” with Slim’s sauce, pickles, lettuce and onions.

“We want our sandwich to stand out,” he said.

Slim Chickens has 35 restaurants — 25 are company owned and 15 are franchise operations — in Arkansas, Texas, Oklahoma, Illinois, Nebraska, Kansas, Louisiana, Missouri and Tennessee, with 21 other stores under construction. With the new stores, Slim’s is expected to have more than 50 restaurants open by the end of the year. The company said it hopes to have 600 stores in the United States by 2024.

Slim Chickens competes in the fast-casual segment, where operations focus on an enhanced dining experience compared with fast-food operations. While they don’t have a wait staff, fast-casual restaurants typically deliver patrons their food after ordering.

According to information provided by Chicago-based Technomic Inc., a research and consulting firm focusing on food and food service, sales at limited-service chains among the top 500 U.S. restaurant chains grew 5.5 percent to $211 billion in 2015. Sales at limited service chicken restaurants was up 9 percent. Limited service chains include fast food and fast-casual concepts.

Sales in the fast-casual segment alone were up 11.5 percent, and unit growth was up 9.6 percent in 2015, according to the report.

Darren Tristano, president of Technomic, said that portability, in the form of a sandwich, is something that consumers are looking for, and that adding a sandwich helps fast-casual operations compete with more traditional fast food’s convenience factor.

“One hand on the wheel and the other on a sandwich,” he said.

He added that Slim Chickens’ efforts to test the sandwiches locally are wise.

“They are getting consumers to validate the quality of the product,” he said. “It’s what successful brands do but not what everybody does.”

Rothschild said the sandwich sells for $3.99 by itself or as part of a combo meal at $6.49. Slim Chickens’ lowest cost combo meal, pre-sandwiches, was $6.99. He said that puts the Slim Chickens’ sandwich and combo meal close to fast food on price.

“We want people to come to us when they want chicken,” Rothschild said.


Bagger Dave’s slide: After multiple closings, missteps, burger chain goes into holding pattern

February 18, 2016
GARY ANGLEBRANDT
February 13, 2016 8:00 a.m.
Crain’s Detroit Business
http://www.crainsdetroit.com/article/20160213/NEWS/302149989/bagger-daves-aims-to-beef-up-outlook-after-closings-missteps

If the past year is any indication, the future of Bagger Dave’s Burger Tavern is anything but in the bag.

The Southfield-based restaurant chain suffered the indignity of two rounds of restaurant closings in 2015. The first came in August, when parent company Diversified Restaurant Holdings Inc. shuttered three locations, all in Indiana, gnawing $1.8 million in writedowns off the corporate books.

Then in December, eight more locations closed, at a loss of about $10.7 million for writedowns and other costs. One of them was its downtown Detroit location. The others were in Indiana.

The Detroit restaurant had been open for two years. One of the Indiana restaurants didn’t last 10 months; two more barely made it to the one-year mark. The oldest of the Indiana restaurants, the one in Indianapolis, was just 3 years old.

Anyone looking for more upbeat signs than these should avoid cracking open Diversified’s quarterly reports of the past year.

The reports start rosily enough. The first, released in March, predicted between 47 and 51 stores by the end of 2017. (There were 24 at the end of 2014.) These numbers steadily fell in subsequent reports. By the time November’s third-quarter report came around, the company had stopped making any predictions at all.

“We will not commit to any further development of Bagger Dave’s,” the company said in the report, released seven weeks before the December closings.

That doesn’t mean the company had given up on Bagger Dave’s. It opened five last year, including one in Centerville, Ohio, as recently as November, its first in that state. Another is set to open near Cincinnati in late March. But that and the 18 Bagger Dave’s (16 in Michigan, one in Ohio and one in Indiana) that survived the closings — and employ 670 people — will be the last for the foreseeable future.

This is a marked about-face for a company normally hell-bent on growth. It opened six Bagger Dave’s in 2014 and seven in 2013. And that pales to its Buffalo Wild Wings franchise operations, the largest in the country. Last year alone, Diversified added 20 more restaurants, 18 of which came from the $54 million purchase of Buffalo Wild Wings restaurants in the St. Louis area. That brought the number of Buffalo Wild Wings locations under its umbrella to 62.

From the end of 2011 to the end of last year, Diversified increased the total number of its restaurants across the two brands from 28 to 80. This year, though, it plans to add just three — the Bagger Dave’s near Cincinnati and two more Buffalo Wild Wings locations.

Familiar taste

Bagger Dave’s has struggled before. Sales took a hit after Diversified embarked on an aggressive growth plan in 2012, opening or buying 16 stores across its two brands. It listed on Nasdaq the following year.

The pace distracted management from everyday operations, and it was the Bagger Dave’s side of the business that took the hit in sales.

To mend things, Diversified beefed up Bagger Dave’s marketing, launched a corporate training program, brought in an employee-assessment firm and began hiring professionals from national chains such as Red Robin. It brought in consultants from the Disney Institute to go over employee retention and recruitment and rolled out new menus — the first one in early 2014 and another last year. The final rollout wrapped up last September.

It included adding more burgers and removing sandwiches that weren’t selling well, switching from a two-patty burger to an 8-ounce one and adding a grilled chicken breast sandwich. Fries are included in the price of a burger instead of added on. The menu’s marketing pitch changed to tell customers about certain points of company pride, such as how it uses prime rib and sirloin in its burgers and carefully sources its food.

“I’m much, much more connected to Bagger Dave’s now,” CEO Michael Ansley said last April in a Crain’s interview.

Things appeared to pay off. In a conference call for last year’s second-quarter results, Ansley said sales at Bagger Dave’s stores open at least two years had increased 2.5 percent compared with the same quarter a year earlier and 4 percent year to date.

Ansley talked about encouraging positive signs showing in things like Facebook “likes” and “net promoter scores,” which measure customer satisfaction. Investments in technology — tabletop ordering tablets, a mobile app, a gift card program, a “RockBot” jukebox app — promised to further brighten the picture.

Nevertheless, Ansley had to acknowledge struggles. “Despite the positives, we fully appreciate the missteps we have made in the past with respect to the brand,” he said.

One initiative has proved costly. Management was determined to maintain a base staffing level at Bagger Dave’s restaurants, even if sales were low. This policy was done to bolster service and coax repeat visits out of customers.

But this, along with minimum wage increases, pushed up the company’s year-on-year compensation costs by more than 25 percent in the second quarter of last year. This came on the heels of a $2 million spike in compensation costs that brought its tally for 2014 to $9.2 million.

Minimum staffing practices like this are rarely used in the restaurant industry, said Darren Tristano, president of Technomic Inc., a Chicago-based restaurant industry research company.

“There’s nothing financially efficient about it,” he said. “You end up with staff standing around.”

In a conference call on Nov. 5, Ansley and CFO David Burke expressed frustration with the slow pace of results. Burke described Bagger Dave’s as a “Dr. Jekyll/Mr. Hyde concept” because of the changes it had undergone.

There were signs of improvement coming out of investments in the menu and training, but “you don’t see an immediate impact in sales from that,” he said.

The financial picture

Diversified’s breakneck growth comes with a heavy capital burden.

Estimated capital expenditures last year were about $30 million. It spent $36 million the year before.

The buildout of a Bagger Dave’s costs $1.1 million to $1.4 million, according to company financial statements. A new Buffalo Wild Wings costs $1.7 million to $2.1 million. Updates to older restaurants cost between $50,000 and $1.3 million.

A listing on Nasdaq in 2013 raised $31.9 million. But much of the company’s expansion has been financed by debt. Total debt rose from $61.8 million at the close of 2014 to $123.9 million at the end of September, pushed up because of the acquisition of the St. Louis stores.

The company’s share price opened at $2.57 the day the closure of the eight stores was announced. The stock was trading just above $1.50 last week.

A pair of lawsuits last year further strained finances. The two cases, brought by the same attorney, alleged employees who work for tips were made to do the work of non-tipped employees who earn a higher hourly rate. The settlement and related expenses cost the company $1.9 million.

For the first three quarters of last year, Diversified booked a net loss of $6.6 million, compared with an $85,000 profit for the same period in 2014. The company lost $1.3 million overall in 2014. The company does not believe it made a full-year profit in 2015. (Annual results are expected to be released in March.)

Preliminary financial estimates for 2015 show revenue growing 34 percent to $172.5 million from $128.4 million in 2014, in line with the company’s guidance.

Same-store sales increased 2.8 percent at Buffalo Wild Wings and 1.3 percent at Bagger Dave’s from 2014 to 2015, but they decreased 7.8 percent year-over-year in the fourth quarter at Bagger Dave’s and increased just 0.8 percent at Buffalo Wild Wings.

The Buffalo squeeze

Bagger Dave’s menu refresh included adding more burgers and removing sandwiches that weren’t selling well.

The 18 Bagger Dave’s stores that remain don’t appear to be on much better ground.

The eight stores shuttered in December generated $5.5 million in revenue, or $687,500 per restaurant, through the first three quarters of last year and had a pre-tax (EBITDA) loss of $600,000. But the other 18 locations brought in $14.1 million, or $783,333 per restaurant, and had a pretax profit of $700,000. That comes to less than $52,000 per restaurant on an annualized basis, a growth rate of 5 percent.

The revenue per restaurant on an annualized basis comes to $1 million, well below the target revenue per store of $1.7 million, the goal stated in a presentation to investors in January.

A profit margin of 5 percent is low, especially for company-owned stores, Tristano said. Franchisee-owned stores typically hit at least 10 percent because of the fees to the franchisor they must pay.

“They’ve got to be doing better than 5 percent to pay down their debt,” Tristano said.

The obvious question that arises is, were the closures enough?

All Bagger Dave’s restaurants are company-owned. (Plans to franchise the brand several years ago were scrapped.) With a massive Buffalo Wild Wings operation cranking away, the Bagger Dave’s “baby brand,” as Ansley has called it, has had a hard time getting the attention it needs.

Diversified has a contractual obligation with Buffalo Wild Wings Inc. to open 42 restaurants by 2021 and has 15 more to go. The company says it’s ahead of schedule.

Ansley also points out that failing to make that obligation bears only a weak cost: Diversified only has to pay Buffalo Wild Wings $50,000 for each store it does not open — far less than the millions it costs to open one. “With our relationship with Buffalo Wild Wings, I doubt they’d charge us the $50,000,” Ansley said.

In any case, the moves Bagger Dave’s has made demonstrate the pressure on Diversified to stay focused on the much stronger Buffalo Wild Wings side of the business.

“In the year ahead, we plan to focus our resources primarily on growing our BWW portfolio, which represents the overwhelming majority of both our revenue and adjusted EBITDA,” the company said in its third-quarter report.

The move toward Buffalo Wild Wings is smart because it’s a more proven brand than Bagger Dave’s, which is “a good brand but not that broadly differentiated,” Tristano said.

“The reality in our industry is that there’s no shortage of optimism. We hear about these ambitious goals, but very rarely do we see brands meet those goals.”

The response

Last year’s closings, which included one Buffalo Wild Wings restaurant in Florida besides the Bagger Dave’s spots, were the first for the company. But they were a long time coming.

“Bagger Dave’s has given us some fits,” Ansley said in an interview. “We knew we had issues with it two years ago. We made a lot of changes — I can’t even count the changes.”

These changes came too quickly and were confusing for guests and employees. “We were too aggressive. That was the problem, and we learned it the hard way,” Ansley said.

Casual dining chains face intense competition throughout the country, not just from each other but also from fast-casual restaurants like Chipotle Mexican Grill and Five Guys Burgers and Fries. The parent of the Max & Erma’s chain closed eight metro Detroit locations in January.

To counter this trend, Diversified needs to do a better job of marketing Bagger Dave’s by doing things such as telling people of premium ingredients that are mostly sourced in Michigan, Ansley said.

He also is heartened to see interest in properties of the shuttered locations. This includes the one in downtown Detroit, which has garnered “a lot of offers,” he said.

The company is holding the line on the minimum staffing levels that have driven up compensation costs. “There will be a little deleveraging from” the minimum staffing levels that drove up compensation costs but “nothing substantial,” Ansley said.

No more Bagger Dave’s locations will be closed, Ansley said. If the prototype stores do well for the rest of the year, “then we will start expanding again,” he said.

The 18 remaining Bagger Dave’s restaurants are profitable, said Ansley, who is especially encouraged by the performance of “prototype” stores. These stores have the new menus and have been redesigned to be smaller and “hipper.” They are in Grand Blanc, Birch Run, Grand Rapids, Chesterfield Township and Centerville, Ohio.

The three analysts who cover Diversified’s stock are encouraged. They express concern at the company’s debt but agree that the Bagger Dave’s changes are on the right track.

“We think much of the ‘noise’ of the past few quarters is behind the company and management can focus on restaurant operations,” wrote Mark Smith, analyst at Minneapolis-based Felt & Co.


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.”


Super Bowl Wings Will Be Fat But Pricey as Chicken Count Shrinks

January 28, 2015

Lydia Mulvany
Bloomberg

Copyright © 2015 Vancouver Sun

http://washpost.bloomberg.com/Story?docId=1376-NILQBC6VDKHV01-2E7MM3M04PF2SQP6R5M335CK8E

On Super Bowl Sunday, expect two things when your order of chicken wings arrives: They’ll be fat, and they’ll be pricey.

First the fat part. American farmers are giving their chickens extra feed, taking advantage of plunging corn and soybean costs to help lift poultry production – as measured by weight – to a record.

But each chicken, of course, still only has two wings, regardless of its size. And the number of actual chickens slaughtered last year fell, causing a drop of about 50 million wings, government data show. That smaller supply is what’s triggering the pricey part of the equation. The cost of wholesale wings sold by processors in Georgia, which sets the benchmark for the nation, has surged 8.2 per cent this month to $1.715 US a pound, the biggest jump to start a year since 2012.

Americans will consume 1.25 billion wings when game day arrives Feb. 1. That estimate, provided by the National Chicken Council, is unchanged from last year’s Super Bowl.

“Wings are just all over menus,” Darren Tristano, executive vice-president at Chicagobased research firm Technomic Inc., said in a recent interview. Demand for wings remains “very high with consumers because they’re customizable,” he said. “There’s a health halo around it, because it’s chicken. There are a lot of flavour profiles, and it’s a fun finger food.”

Buffalo Wild Wings Inc., a Minneapolis-based restaurant chain with more than 1,000 stores, raised menu prices by an average of three per cent in November, CEO Jim Schmidt said this month. The company normally would have raised prices in February, but made the increases earlier partly because of higher wing costs, he said.

Chicken output will rise 2.7 per cent from 2014’s record to an all-time high of 39.21 billion pounds this year, the U.S. Department of Agriculture estimates. Still, fewer birds slaughtered means that wholesale wing prices are up more than 30 per cent from a year earlier.

Americans paid 9.2 per cent more for meat last year, the biggest jump of any food group, USDA data show. The gains were led by increases for beef and veal amid shrinking cattle herds, and that advance helped support prices for other proteins as consumers sought cheaper alternatives to record costs for steaks.

“It’s a good thing the Super Bowl pastime is chicken wings and not hamburgers,” said Andy Wiederhorn, CEO of Beverly Hills, Calif.-based Buffalo’s Cafe, where a pound of wings costs about five to 10 per cent more than this time last year at its 50 locations in the U.S. and Canada. “The prices have been generally reasonable, unlike beef prices, which have skyrocketed to record highs.”

The Super Bowl, which will pit the Seattle Seahawks against the New England Patriots this year, marks the No. 1 wing-eating day in the U.S. Demand peaks in the first quarter of the year, with consumption also high south of the border for the National Collegiate Athletic Association basketball tournament games. An increase in restaurants serving wings is also supporting prices. The number of U.S. chicken-wing franchises grew seven per cent to more than 2,000 restaurants in the five years through 2013, according to Arlington, Va.-based franchise researcher Frandata. Demand for the meat is also rising as pizza chains including Pizza Hut and Little Caesar’s serve wings, Technomic’s Tristano said.

 


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.”


Restaurant Group’s Strategy: Buy Small Chains

May 1, 2013

DicksWings1 304JACKSONVILLE — The parent company of Dick’s Wings & Grill wants to grow by expanding not only that brand, but other regional brands it hopes to acquire around the U.S.

Rick Akam, who became chief operating officer of Dick’s Wings Jan. 22, said the goal is to strengthen the Dick’s Wings brand as the foundation of American Restaurant Concepts Inc. Another goal is to add other brands to diversify the operating company while leveraging top-level management and the possibility of integrated menus, and products to make the new regional brands stronger.

“The opportunities appear to be just like Dick’s,” Akam said. “They’re a good, strong regional brand. The goal wouldn’t be to necessarily make them all a national brand. It would be to make them all regional brands in that region of the U.S.”

The idea behind acquiring small, regional restaurant chains is to keep the popular local flavor in the brands acquired.

The new strategy is the latest change for the company. Based in Jacksonville, American Restaurant Concepts operates 16 full-service Dick’s Wings and two Dick’s Wings Express restaurants, all of which are franchised. In 2010, the company (OTCBB: ANPZ) started trading publicly and in November 2012, money manager and private investor William D. Leopold II became the majority shareholder by acquiring 42 percent of the stock.

Leopold has an investment relationship with Seenu Kasturi, the CEO of a Louisiana-based development and investment firm called Blue Victory Holdings Inc. As part of that relationship, Blue Victory Holdings is now an affiliate company of American Restaurant Concepts, providing financing, management expertise and other resources. Blue Victory is also the franchisee for a portfolio of fast food restaurants in the Carolinas that include 20 Kentucky Fried Chicken restaurants, three KFC/Taco Bells and one KFC/Long John Silver’s.

Akam, who has spent his 35-year career in the restaurant industry with executive roles at Hooters of America LLC, Twin Peaks Restaurants and First Watch Restaurants Inc., said the first step in expanding American Restaurant Concepts is to standardize the flagship brand’s current restaurants and any future restaurants from the inside out. He expects to do that over the next six to 12 months.

Much like the other regional brands the company hopes to acquire, Akam said the company will grow Dick’s Wings regionally at first in the Southeast. He’s not focused on a certain number of restaurants, but on the areas where restaurants will be located.

“Dick’s is a great neighborhood concept and fits into a lot of different neighborhoods,” Akam said. “We’re trying really to evaluate the ideal demographics, the ideal location that it can go into.”

Ketan Pandya, a spokesman for Blue Victory Holdings, said that although initially Dick’s Wings will expand regionally, the company is already fielding interest from international markets as far away as Dubai and China.

Darren Tristano, an executive vice president at the food industry consulting firm Technomic Inc., said that, in general, buying regional restaurant chains could be a good opportunity for American Restaurant Concepts because it opens doors for franchising opportunities.

It also poses risks and challenges, because it means operating outside the segment the company is most familiar with and having to learn about the consumer base in each new region where it acquires a brand.

Akam said his biggest challenge will be to find the best franchisees.

“It’s very similar to some of my experiences with some companies of the same size that have become very successful,” Akam said. “Some of the real brand attributes are really good customer loyalty, very passionate owners and good food. All those similarities are there in Dick’s.”


The Breast of Advertising

July 12, 2012

From Hooters to the cover of ‘Time,’ does the strategy sell or repel?

By David Wallis on June 4, 2012

Sales were “crazy, crazy,” at Sal Ali’s grocery and news shop in Manhattan, where issues of Time magazine featuring a controversial cover on attachment parenting were selling off the rack. It was the rack, of course, that generated so much interest for the May 21 cover story, illustrated with an attractive mom exposing her nearly naked breast to nurse her huge, 3-year-old son standing on a chair. Leafing through the newsweekly’s buzziest cover in recent memory, Ali couldn’t deny he enjoyed the brisk business, though the cover made him wonder: “What will be the difference between Time and Playboy if they exploit like this?”

Though Time executives trumpet the serious news value of their cover photo, the newsweekly was also hopping on a well-worn but reliable bandwagon. Far beyond selling bras, marketers flash young women’s breasts to hawk everything from chicken wings and cars to fishing line and, of course, magazine issues.

Sexual content is everywhere in advertising. A recent study in Advertising & Society Review found that 20 percent of all magazine and Web ads involve sexual images, which falls to just 10 percent for TV spots. The debate over breasts in ads and whether they attract, distract or repel rages on, with numerous studies warning that sexual imagery can be a too-risky strategy that alienates consumers, particularly women. Even some creatives argue that the tactic appeals to the lowest common denominator. Still, a long list of brands continue to use the anatomically blessed to sell their wares.

Unquestionably, Time’s cheesecake recipe succeeded. A spokeswoman for the magazine says the May 21 issue was this year’s best-seller so far. Newsstand sales for the issue were 50 percent higher than average over the last 26 weeks, according to Gil Brechtel, president and CEO of the Magazine Information Network, a research company whose clients include major magazine retailers such as Hudson News. That impressive jump compares to a 20 percent decline in Time’s single-copy sales in the last five years, according to Audit Bureau of Circulations figures.

Sexing up a sober story on parenting is a brilliant market-shocking move, says Sallie Mars, chief diversity officer at McCann Worldgroup and the former director of creative services at McCann New York who coined the term “breast for success” marketing to critique sexist ads. Breastvertising must be “disruptive” to work, she says, likening Time’s cover designers to Renaissance painters showing the nursing mother and child. “They knew the power of the breast.”

A 2007 print campaign for Tom Ford for Men cologne, Mars says, took the strategy to a disruptive yet effective extreme. The ad shows a phallic bottle of cologne lodged between a nude female model’s cupped breasts. Her gaping, lipsticked mouth appears in mid-moan. “Because [Ford] is such an out gay man,” says Mars, he “had to go against the gay stereotype” to prove the scent wasn’t just for homosexuals. Shortly after the ad ran, the company reported overall stronger sales for the brand compared to the year before. (Estée Lauder, which owns Tom Ford Fragrances, declined to comment.)

Many restaurateurs build their businesses firmly on the breasts of bikini-clad waitresses. “Breastaurants” are so numerous, in fact, that there’s an entire uniform company devoted to selling tiny halter tops and hot pants. Breastaurants now gross $2 billion to $2.5 billion per year, up from approximately $1.5 billion five years ago. That startling growth dwarfs the 2.6 percent sales increase of the top 500 restaurant chains during the same period, says Darren Tristano, evp of Technomic, a food industry research firm. The marketing secret, he suggests, is selling the message that “you are going to receive attentive service from attractive servers, and that’s something most men don’t have at home.”

Dominating the category is Hooters, which opened its first restaurant in Clearwater, Fla., in 1983 and now boasts 430 locations in 27 countries, ringing up some $1 billion per year selling chicken wings, booze and merchandise. Though 68 percent of its patrons are male, Hooters offers a kids’ menu and woos women with promotions like free wings on Mother’s Day.

Meanwhile, Twin Peaks Restaurants opened its first sports bar and grill near Dallas in 2005 with a clear, dudes-rule pitch. “Obviously, Twin Peaks is a play on breasts,” says Meggie Miller, the company’s marketing director and self-described “expert in boobs.”

Billed as the “ultimate man cave,” the chain attracts a 90 percent male clientele and will soon open its 24th outpost, buoyed by 55 percent growth in sales in 2011 year over year. The company’s typical server, says Miller, is a “hot girl, but a hot girl next door.” To distinguish itself from Hooters, Twin Peaks’ strategy is to cater even more to men­—if that’s possible. (Hooters sued Twin Peaks over trade secrets in a case settled out of court.)

Scientific studies have documented how breasts­­—and their size—can affect male behavior, according to Florence Williams, author of Breasts: A Natural and Unnatural History. In a study recently reported in the French journal Perceptual and Motor Skills, sociologists arranged for a woman to hitchhike wearing augmented bras that inflated her natural A cups into B, and then C cups. Male drivers were about 60 percent more likely to give a lift to the woman with a C cup than an A cup. Meanwhile, breast size hardly affected women drivers’ decision to stop. Williams refers to another recent study from the Archives of Sexual Behavior suggesting that breasts attract eyeballs, literally. “The male pupil in the eye looks at a woman’s breast within 200 milliseconds,” she says. “It’s the first place they look, and the eyes linger longer on the breast region” than other body parts.

Attracting eyeballs is one thing, but the presence of breasts doesn’t necessarily mean a consumer will have a positive view of a product, or buy it. In his famous 1983 book Ogilvy on Advertising, David Ogilvy advised marketers to handle breasts delicately: “Some copywriters… try to inveigle [consumers] into their ads with pictures of babies, beagles and bosoms. This is a mistake. A buyer of flexible pipe for offshore oil rigs is more interested in pipe than anything else in the world. So play it straight.”

The Ogilvy rule is still important today, says Ben Judd, associate business dean at the University of New Haven, who has conducted several studies pertaining to sexual imagery in ads. Judd calls naked come-ons in campaigns “a complete waste of time” since consumers tend to ogle the breasts, then forget the product. “The more nudity you show, the lower recall of the brand,” he says. For example, a 2001 study sponsored by American Demographics found that 61 percent of respondents who viewed sexualized ads were less likely to buy.

More recently, marketing professors at the University of Wisconsin found that sexy Super Bowl ads from 1989 to 2012 were 10 percent less likeable than other spots. Yet while none of Nielsen’s 10 best-liked 2012 Super Bowl ads were of a sexual nature, one bare-babed spot did rank among the 10 most-recalled ads: the much-buzzed-about spot for Go Daddy featuring Danica Patrick and Jillian Michaels brushing body paint on a near-naked model.

To Chuck Schroeder, partner at marketing firm Senior Creative People, relevance matters most. If brandishing breasts doesn’t flow organically, he says, the message goes wildly off course. A self-described “beer guy” who previously worked on the Strohs and Miller Lite accounts and briefly co-owned Saratoga Lager, Schroeder sees beer and breasts as a particularly stale combination. He recalls a famed spot from 1991, created by Hal Riney & Partners, that fell flat. “Remember the Swedish Olympic Bikini Team? Who did that?” asks Schroeder. “It was typical frat boy beer advertising with big-boobed models in bikinis. I think you remember the boobs.”

That controversial spot for Old Milwaukee, in fact, attempted to rejuvenate a flagging brand the consumer likely viewed as “my father’s beer,” recalls Patrick Scullin, now creative director of Ames Scullin O’Haire in Atlanta, who created the campaign at Hal Riney.  The spots featured buxom blondes parachuting in to surprise buddies fishing or camping. The slogan was “It Doesn’t Get Any Better Than This.” The campaign boosted sales but led to a sexual harassment lawsuit by female workers at Stroh Brewery Co., which at the time owned Old Milwaukee. The company settled out of court and retired the bikini team.

Of course, that didn’t stop brewers from churning out copycat ads ever since. A 2007 Miller Lite ad, for instance, featured a scantily clad Pamela Anderson in a pillow fight. And in a Bud Light Lime Web-only ad (labeled “pornohol” by watchdog group Alcohol Justice), topless UFC model Arianny Celeste cavorted on piles of loose limes as she squeezed the citrus and declared how thirsty she was.

When asked to comment, Paul Chibe, U.S. CMO of Anheuser-Busch InBev, gently chided his company over the ad, which was created before he came aboard last year. “I don’t think it’s ‘pornohol,’ but it’s certainly not in the direction I would have gone in,” he says.

Other companies, meanwhile, are sticking to the male-centric approach—among them, Go Daddy, with its explicit Super Bowl spots. When the Internet company’s founder and CEO Bob Parsons announced that he had purchased time during the 2005 Super Bowl, some bloggers argued that it was a waste of money. Ignoring the critics, Parsons bought a second spot in the same broadcast. The company’s first commercial, created by the Ad Store, lampooned Janet Jackson’s “wardrobe malfunction” the year before, featuring a former porn actress in a slinky tank top emblazoned with the Go Daddy logo. As she testifies before a faux congressional committee—whoops!—one of her spaghetti straps pops off and her breasts nearly spill out. Cut to an elderly committee codger, wheezing into his oxygen mask.

Illustration: Lincoln Agnew, Getty Images

Fox broadcast the spot during the first half of the big game, but a scandalized National Football League pressured the network to pull the second. Go Daddy cried censorship, pocketed a Fox refund and basked in more than $11 million in free media, according to broadcast monitoring service Cision, formerly known as Multivision. Within a week, Go Daddy’s market share jumped from 16 percent to 25 percent. Sticking to its sexy-plus-sophomoric strategy ever since, the once-obscure brand now controls 53 percent of the domain and Web hosting market.

Marshal Cohen, chief industry analyst at NPD Group, is certain that companies flaunting breasts know what they’re doing, pointing to strong sales of intimate apparel, padded bras and silicon breast implants as evidence that women are also buying into bust appeal. Consumers may be unaware of the selling power of the bosom, the analyst says, since they assume they have total control of their buying decisions. “We can deny it all we want,” he says, “but [breasts] are a very subliminal piece of powerful marketing.”

But some brands may unconsciously push away women with such a naked ploy. “How many times have we seen the pair of tits sell the sneaker, the car, bottle of water. I perk up much more with campaigns that use humor,” says Jennifer Pozner, founder and executive director of advocacy group Women In Media & News.

The award for the most tasteless use of breasts in recent memory may go to Fiat, as seen in an outbreak of intense blogger criticism. In a spot by Leo Burnett, Argentina, a woman in a parked Fiat Palio confides to her male partner her intention to get a boob job. Next, the ecstatic man imagines a miniature version of himself diving between his girl’s future stripper-sized breasts. “All right,” he then says, feigning sensitivity, “if that’s what you want.”

The ad went viral, getting global exposure. And perhaps in Argentina and other parts of the world, only brutes buy Fiats. But in the United States, 41.9 percent of Fiat owners are women, according to the auto-data site TrueCar.com. (Fiat did not respond to requests for comment.)

Gratuitous breasts in ads are short-sighted, argues Kat Gordon, owner of the agency Maternal Instinct, which specializes in marketing to women. “Brands assume that men are their target audience when in reality women are doing the buying,” says Gordon, founder of the upcoming 3% Conference in San Francisco, meant to draw attention to the relatively low number of female creative directors, seeing as women account for as much as 85 percent of all consumer spending.

Giving an example of a missed marketing opportunity, Gordon singles out online florist Teleflora’s Super Bowl spot this year by in-house agency Fire Station. In the Valentine’s Day-themed commercial, supermodel Adriana Lima leans toward the camera in a low-cut dress and purrs, “Guys, Valentine’s Day is not that complicated. Give—and you shall receive.”

The stereotype that the gals gossip in the kitchen during the Super Bowl while the boys high-five in the den is, of course, flat wrong, as women comprise roughly 46 percent of the audience for that event. (The NFL licenses team logos to a women’s purse manufacturer for a reason.) Teleflora’s flowers-for-sex premise was among the most-cited on Twitter under the hashtag #notbuyingit, according to Imran Siddiquee, social media and communications manager for MissRepresentation.org, a not-for-profit group that keeps track of demeaning media messages.

As Cindy Gallop, ex-chairman of the agency BBH New York, puts it: “Teleflora presupposed—this is a very Old World Order mind-set—that they are not targeting me, and I say that as a woman who sends flowers to her girlfriends.”

Years after David Ogilvy’s warning and the Old Milwaukee lawsuit, there’s evidence some beer brands may be rethinking their tactics. Miller Lite’s Pamela Anderson pillow fight has morphed into its “Man Up” spots. As for Bud Light Lime, Chibe of Anheuser-Busch promises no more citrus-squeezing topless models. “We’re not going to rely on stereotypes and things that may have played well with a male-centric audience years ago,” he responds. “That old imagery is too limited in its appeal and is not reflective of today’s society and today’s consumer.”

Benj Steinman, editor of the trade Beer Marketer’s Insights, says such softcore campaigns have bitten the dust, by and large. “Traditionally, top-tier brewers focus—too much, I would say—on the male 21-27 demographic,” he says. Today, brewers are more interested in cultivating women beer drinkers, he points out. “It’s called evolution.”