Ignite Restaurant Group Inc., parent to the Joe's Crab Shack and Brick House Tavern+Tap casual-dining chains, this week amended its intended initial public offering and priced it at $12 to $14 a share.
Ignite said it would offer 5.8 million shares on the Nasdaq exchange, and proceeds would be used to pay down debt and other purposes. At the $13 midpoint, Ignite would have a market value of about $322 million.
The company said it would use $1 million to pay a management-agreement termination fee to Connecticut-based J.H. Whitney Capital Partners, which bought Joe’s Crab Shack in 2006 from Landry’s Restaurants Inc. J.H. Whitney is selling 1 percent of its stake in Ignite and will control about 70 percent of shares after the offering.
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The company said Credit Suisse, Baird and Piper Jaffray are bookrunners on this deal.
For the quarter ended March 26, Ignite in SEC documents said it had a profit of $2.5 million, up 108 percent from the prior-year period, and revenue of $103.4 million, an increase of 18 percent over last year’s quarter.
Ignite has 138 restaurants in 31 states. Of those units, 122 are Joe’s Crab Shacks and 16 are Brick House Tavern+Tap units, which the company developed in 2008.
Quaker Steak & Lube has named foodservice veteran Debra Koenig chairman of the board.
Koenig succeeds president and chief executive John Longstreet, who served as interim chairman since July 2011. Longstreet will continue to serve as president and CEO of the Sharon, Pa.-based casual-dining chain.
Koenig, who most recently was president of B2A LLC, a management consulting company, had previously served as president of McDonald’s Southeast division. She also held the post of chief executive at Vicorp Restaurants.
“Debra is a strong leader and her appointment was a natural fit for the brand…and I’m confident she will help the brand flourish in the upcoming months,” Longstreet said in a statement.
“It’s an honor to be appointed as chairman, and I’m devoted to serving and leading the brand moving forward,” Koenig added. “My past experiences within the foodservice industry will be leveraged to serve our franchisees, employees and Lube Nation.”
All of Quaker Steak’s current board members were re-elected.
Founded in 1974, Quaker Steak & Lube is a motorsports-theme chain that specializes in wings and beer and has grown to 47 locations in 15 states. The company opened six new locations in 2011, and plans to 12 more in 2012.
Starbucks has appointed former U.S. Defense Secretary Robert Gates to its board of directors, the coffeehouse chain said Wednesday.
Currently the chancellor of the College of William & Mary in Virginia, Gates was elected to Starbucks’ board and will serve on the nominating and corporate governance committee.
The move comes at a time when Starbucks is rapidly growing its presence overseas, particularly in China.
“We are honored and humbled to be adding this distinguished American leader to Starbucks’ board of directors,” said Howard Schultz, Starbucks’ chair, president and chief executive, in a statement. “Secretary Gates has devoted his life to serving our country and our next generation of leaders and public servants. His unique global perspective and more than four decades of distinguished public service will complement and strengthen our board as we accelerate our global growth and expand our commitment to the communities where we do business all around the world.”
Gates, a Presidential Medal of Freedom winner, served as Secretary of Defense from 2006 to 2011. He was the first defense secretary to serve under presidents representing both political parties: George W. Bush and President Obama.
He also served as president of Texas A&M University between 2002 and 2006, and was head of the Central Intelligence Agency from 1991 to 1993.
Gates, in a statement, said, “I have Starbucks to thank for keeping me caffeinated through many long days and nights during my years in Washington and couldn’t be more proud about the opportunity to play a part in helping the company navigate our increasingly complex world in the years ahead.”
Papa John’s domestic marketing has helped drive positive results in the first quarter, as a Super Bowl tie-in not only drove traffic during the big game but also advertised its Papa Rewards online loyalty program and increased enrollment, executives said during an earnings call with investors and analysts.
Chief marketing officer Andrew Varga said online sales now account for more than 35 percent of Papa John’s orders.
Additionally, as they have done in previous calls, Papa John’s executives credited the long-term effort to own its “better ingredients, better pizza” positioning for allowing the chain to stay at the $11 price point without hurting traffic while its largest competitors compete largely against one another for deals between the $5 and $10 price points.
“Everybody wants to own our position or a Chick-fil-A position of high quality,” Papa John’s founder and chief executive John Schnatter said. “But the problem with owning quality is it takes time and costs money, and most companies aren’t willing to do that. At Papa John’s we have taken the time, we have spent the money, and our brand perception is very good.”
Schnatter added that the company’s recent acquisition of 50 restaurants in Minneapolis and Denver from a bankrupt franchisee holds vast potential for Papa John’s, due to the strength of the brand’s corporate operators.
Steve Ritchie, senior vice president of North American operations, said the two new corporate markets, as well as the domestic franchise and international systems, would benefit from best practices in operations and local-store marketing that have been driving higher same-store sales at corporate restaurants for several of the past few quarters.
“Our corporate operation is leading the charge for our brand, and our team excels at almost every key metric,” said Tony Thompson, the chain’s executive vice president of global operations. “We see that as a really big opportunity for us still domestically for us within our franchise organization.”
For the March 25-ended first quarter, Papa John’s net income rose 1.9 percent to $16.7 million, or 69 cents per share, compared with $16.4 million, or 64 cents per share, a year earlier. Revenue rose 6 percent to $331.3 million, from $312.5 million in the first quarter of 2011.
Same-store sales rose 1.1 percent in North America, reflecting gains of 3 percent at company-owned restaurants and 0.5 percent at franchised locations. International same-store sales rose 8.4 percent.
Papa John’s two-year same-store sales increase for its international franchised system of 838 restaurants was 14 percent in the first quarter, and officials expect that sales strength to continue. The company updated its full-year guidance for international same-store sales to rise between 2.5 percent and 4.5 percent, compared with a previous range of 1.5 percent to 3.5 percent.
Papa John’s robust sales in foreign markets occurred even as many European economies struggle with high unemployment, austerity measures and low consumer confidence.
As with the domestic franchised system, the international restaurants’ opportunities for driving more sales lie in adopting many of the operating practices behind the domestic corporate restaurants’ success, Thompson said.
“We’ve been focused on consistent steady growth,” he said. “We’re also focused on the Papa John’s way and how we operate, and that’s back to our corporate domestic team leading the charge, domestically and globally."
He added, "We’re focused on making sure the model is the way want it for the future, and there’s been a lot of emphasis on that specifically in China. So we’re bullish on international, specifically the emerging markets.”
Schnatter agreed that there is “no doubt we have to be successful in the Asia-Pacific region, with China and India.”
“With that being said,” he added, “we don’t want to put all our eggs in one basket that could bust. China does look like a bubble.”
As such, Schnatter said he was comfortable with an international growth plan that is diversified and steady, meaning the company is likely to hit its new estimate for same-store sales in that division.
“The last thing you want to do is miss your number,” he said. “We probably tend to err on the side of conservative, but we’re not overly conservative by any means.”
Papa John’s operates or franchises 3,933 restaurants worldwide, and has agreements to open 300 more domestic units and another 1,200 international locations over the next six years.
Editor's Note: A previous version of this article incorrectly reported that Papa Rewards has been key to increasing the company's online sales.
On-site foodservice operator Bon Appétit Management Company launched this week a new restaurant concept within Starbucks’ Seattle headquarters called Sodo Kitchen, which, unlike most corporate dining halls, is open to the public.
Sodo Kitchen, named for the property’s south-of-downtown location, is on the third floor of Starbucks’ corporate offices, the company’s only floor that is open to the public. Starbucks officials wanted the restaurant available to both employees and those outside the building because there are few restaurants in the area, and a number of businesses are located nearby, said Danielle Custer, Bon Appétit project manager for Sodo.
In addition to Sodo, Bon Appétit has also opened two private restaurant concepts on a separate floor that will remain exclusive to Starbucks employees: a tacqueria and a sushi/noodle concept, Custer said.
Bon Appétit is also developing a grilled cheese food truck called Monte Cristo that will serve as another dining option at the Starbucks property and for other Bon Appétit clients in the area, including the offices for online retailer Amazon and the Bill & Melinda Gates Foundation.
The food truck will also be available to the public.
Like other Bon Appétit venues, Sodo and the other outlets will focus on using sustainable ingredients, such as local meats and produce, when possible. They'll also use seafood recommended by the preservation-minded Monterey Bay Seafood Watch program and cage-free eggs.
The 12,648-square-foot restaurant is open for breakfast and lunch. Unlike most restaurants, however, Sodo is closed in the evenings and on weekends, a disadvantage of making a corporate dining location public.
Sodo will feature six hot food stations where guests can choose from rotisserie meats, a salad bar, and a grill featuring burgers and seafood. Also featured is an international station with a tandoori oven that will offer dishes from Indian to Thai cuisines, a sandwich deli and a pizza oven.
Dishes at each station will change seasonally, Custer said, because with an on-site operation, “You have to have a lot of variety and change often.”
She added, “We’re trying to make sure our guests are happy and not bored and come to us three times per week.”
Guests order at the various stations, collect their food and pay at the cashier. The average check is about $8.39.
Sodo also offers catering services for the building.
Palo Alto, Calif.-based Bon Appétit Management Company offers foodservice management to corporations, private universities and other specialty venues in more than 400 locations in 31 states.
Racial discrimination claims against Darden Restaurants Inc. and its Capital Grille steakhouse chain have been dropped by a group representing restaurant workers, a spokesman for the Orlando, Fla.-based casual-dining company said Wednesday.
Rich Jeffers, Darden’s director of media relations and external communications, said the discrimination allegations in a lawsuit filed in January by Restaurant Opportunities Centers (ROC) United were dropped but claims of wage improprieties remained. He had said earlier that the company intended to continue defending against the claims.
ROC originally said it was focusing its complaints against The Capital Grille units in Chicago, New York City and the Washington, D.C., area. Darden is also parent to the Olive Garden, Red Lobster and LongHorn Steakhouse chains.
In the initial federal class-action lawsuit filed in the U.S. District Court for the Northern District of Illinois, Eastern Division in Chicago, ROC United had alleged “violations of the Civil Rights Act that are reflective of a corporate-wide policy of racial discrimination and the federal Fair Labor Standards Act and state wage and hour laws for wage theft against all workers.”
ROC had cited figures that Darden restaurant workers are paid as little as $2.13 per hour for tipped employees and $7.25 per hour for non-tipped employees, with no paid sick days.
Attorneys for the workers-rights group told the Orlando Sentinel that the claims will be filed on a state-by-state basis.
This video post is part of Sullivision on NRN.com, a resource center for restaurants looking for service, leadership and sales-building techniques from industry expert and NRN columnist Jim Sullivan.
Every foodservice operator understands that service is an invisible product. But service quality—like food quality—must be consistent in order to acquire and maintain more customers.
Most operators have all kinds of controls and processes in place to insure consistency in their food and beverage, but the majority of these very same operators allow their service to vary from shift to shift, manager to manager and guest to guest.
This short video from the DVD 60 Second Lessons in Leadership explores the dollar cost and retention impact of inconsistent service, selling and menu merchandising. Show it to your managers, servers and kitchen crew to help them understand the impact of quality and consistency in every facet of operations, not just food and beverage.
Jim Sullivan is chief executive and founder of Sullivision.com, which designs leadership, service and sales-building products, programs and services for the Top 200 restaurant and retail brands worldwide. Clients have included McDonald’s, American Express and Walt Disney Company. More information on Sullivision and its products and services can be found at Sullivision.com.
New York food celebrities, from Food & Wine magazine editor Dana Cowin to television personality Anthony Bourdain, helped raise more than $200,000 to feed hungry children at the New York City Taste of the Nation event, held on Monday to benefit the nonprofit organization Share Our Strength.
About 1,000 people attended the fundraiser at 82 Mercer in Manhattan to sample the food and drink of more than 50 restaurants and cocktail bars. Dishes included steamed chawan-mushi egg custard from Brushstroke; house-made ricotta with sugar snap peas, fava beans, English peas and pine nut granola from Il Buco; and lobster Thermidor on zucchini tuiles from The Water Club.
“We make food every day for people who have a lot of money, while the majority of people don’t have access to basic needs” said Seamus Mullen, chef-owner of Tertulia in Manhattan. “To donate a little bit of my time is the very least I can do.”
Mullen served jamón Ibérico with marinated asparagus and smoked egg aïoli.
“People support us, therefore we should support people less fortunate than us,” said Justin Warner, chef-owner of Do or Dine restaurant in Brooklyn, as he served up foie gras doughnuts with strawberry-cumin jam. “This is a luxury tax I’m more than delighted to pay,” he added.
Food personalities conducting book signings during the event included cookbook author Melissa Clark, chefs April Bloomfield and Aaron Sanchez, and Brooklyn Brewery brewmaster Garrett Oliver.
“We sincerely thank our talented chefs, honorary chairs, national and local sponsors, and our volunteer committee without whose dedication, generosity and passion the event would not have been possible,” said Emily Huebner, senior manager for Northeast region culinary events for Share Our Strength. “With their continued support we are certain we can achieve the goal of Share Our Strength’s No Kid Hungry Campaign: to ensure all children have the access to the healthy food they need to live, learn, and play."
Cinco de Mayo has been growing as a promotional holiday for restaurants and bars, getting an added boost this year with May 5 falling on a Saturday and coinciding with the Kentucky Derby.
The holiday, which was first observed in the United States after the Civil War, celebrates Mexican heritage and commemorates the Mexican army’s victory over French forces in the state of Puebla in 1862.
Falling in the middle of the dry April-May holiday period, Cinco de Mayo gives restaurants and bars a reason to lure patrons into a celebratory mood. The means vary from the promotion of drink specials, such as those at Ruth’s Chris Steak House, to gift-card prizes, such as those at Twin Peaks Restaurants.
Image may be NSFW. Clik here to view.Chili’s Grill & Bar, the Brinker International division, has tied its Margarita Madness promotion to Cinco de Mayo for years, using it to feature its signature brandy-added Presidente Margarita.
Edithann Ramey, senior director of marketing for Chili's, said, “At Chili’s, we’re constantly looking for a reason to celebrate with our guests, and Chili’s Southwestern roots coupled with our variety of margarita offerings are perfect reasons to commemorate the annual cultural celebration of Cinco de Mayo.”
This year, Chili’s extended the Margarita Madness promotion through April.
“As part of Chili’s ‘Countdown to Cinco,’” Ramey explained, “the brand has featured one delicious margarita every week during the month of April, leading up to the big day.”
Chili’s also tapped into social media by offering guests “badges” corresponding to the special drink offering in each of the promotion’s five weeks. “If a guest comes in and orders the margarita of the week, they simply scan a QR [quick response] code available on the menu to claim a weekly virtual Cinco Badge, shareable via Facebook and Twitter,” Ramey said.
Ruth’s Chris Steak House plans to piggy back its Cinco de Mayo cocktail promotion onto the running of the 138th Kentucky Derby. The 130-unit chain is offering the tequila-based La Paloma cocktail along with its new Derby Peach Tea.
“Our version of La Paloma is the perfect combination of sweet and citrus,” said Helen Mackey, Ruth’s Chris’ director of beverage strategy. It contains premium tequila, fresh lime and Ruby Red grapefruit juice, and is garnished with edible flower.
Addison, Texas-based Twin Peaks Restaurants will be rewarding its most frequent visitors on Cinco de Mayo with a chance to win a $50 gift card. The chain is asking guests to track their visits by checking in with the location-based social media platform Foursquare. The "Mayor," or guest with the most check-ins, at each Twin Peaks location by 5 p.m. on May 5 will receive a gift card.
Below are some other Cinco de Mayo promotions planned at restaurants and bars around the nation:
California Tortilla: The 37-unit fast-casual chain, based in Rockville, Md., is extending Cinco de Mayo into a two-day fiesta by offering customers a coupon for a free taco with any purchase May 4 and 5. The company said Cinco de Mayo is one of the chain’s busiest days each year.
Taco Beach Shack: This intercoastal waterway spot in Miami Beach is offering an “over-the-top fiesta” with beer specials and $5 Mexican food deals along with live music and a mariachi band on Saturday.
MGM Resorts International: The Las Vegas company is offering a variety of traditional Mexican dishes and cocktails at its various restaurants and bars beginning Friday, May 4, and extending through Saturday. Revelers can indulge in the Buffet at the Bellagio or specials at the Border Grill at the Mandalay Bay. Other specials are planned at the Circus Circus, Luxor and Monte Carlo properties.
Las Vegas Hotel: This property, formerly the Hilton Las Vegas Convention Center, plans an all-weekend celebration with offerings of free Mexican beer and margaritas. On Sunday, May 6, from 11 a.m. to 8 p.m., it will host the Univision Radio Cinco de Mayo Fiesta and Concert in the Paradise Event Center. Ticket prices are $10 at the door.
Border Grill Downtown Los Angeles: On Friday the restaurant is offering what it calls “Countdown to Cinco De Mayo with 5 Courses, 4 Chiles, 3 Tequilas, 2 Tamales, 1 Spicy Chef.” Monique King, executive chef at the restaurant, is pairing chile-infused dishes with margaritas and tequilas. The price is $55 for general admission.
The Belltown Pub: This Seattle spot, occupying space formerly used as a sleeping-bag factory, will have mariachi bands and feature Mexican menu items created with recipes from the families of the restaurant’s kitchen staff.
Pioneer Tavern Group: This Chicago hospitality company, which includes Lottie’s, The Pony and Frontier, will host its second “Cinco de Mayo Trolley Crawl” to each of the three venues beginning at 7 p.m. Saturday. The free trolley will be stocked with Mexican beers and serve until midnight. Each of the locations will have featured specials.
Porkchop: This Chicago restaurant is combining the horse races and the cultural holiday into “Cinco de Derby” on Saturday with half-priced mint juleps and Hornito’s tequila shots. Patrons can also dine on Southern-style cuisine, including fried chicken and waffles, pan-seared catfish and peach cobbler.
La Calle Doce/El Ranchito: The three-unit group of Dallas restaurants is high-fiving the holiday on Saturday with $5 margaritas as well as the #5 sour cream enchiladas at La Calle Doce and #5 beef enchilada, chicken enchilada and beans at El Ranchito for $5.
Prompted by widespread dissatisfaction with the federal menu labeling regulations that were passed in 2010 as a part of the sweeping health care reform package, a coalition of major pizza chains have banded together to form The American Pizza Community.
The association, which represents about 20,000 locations across the country, was established to raise the profile of pizza operators with lawmakers and others, and to advocate for programs that will enable the segment to grow and continue to create jobs.
Founding members of the group are Domino’s Pizza, Godfather’s Pizza, Hungry Howie’s, International Pizza Hut Franchise Holders Association, Little Caesars and Papa John’s Pizza.
“The pizza community has a great story to tell,” said Lynn M. Liddle, chair of The American Pizza Community and executive vice president of communications, investor relations and legislative affairs for Domino’s Pizza in Ann Arbor, Mich.
“We are an entrepreneurial industry that provides a fresh, wholesome and customizable product,” she continued. “The American Pizza Community is launching to tell that story and to set the stage for continued success in the years ahead.”
The group is planning to kick off its efforts in June by visiting with members of Congress and their staffs in Washington, D.C. “The first step is to make legislators understand what our industry means to the American economy,” Liddle said. “We want them to know who we are, what we do and whom we touch. We want to tell them as they think about legislation, try to keep us in mind and help us to grow.”
Lobbying also could play a bigger role for the association in the future, she said.
General discontent with national menu labeling regulations helped to galvanize pizza operators to form their own organization, Liddle said. Major pizza brands earlier had agreed to support national menu labeling regulations in an initial iteration of the bill — the Labeling Education and Nutrition, or LEAN Act — which would have provided them with more flexibility concerning the posting of nutritional data.
“We said let us do it online or in a brochure in the store — we’re fine with that. We’re already doing it,” Liddle said. “But it’s too hard for us to do menu boards. The menu is too variable. If you do the calculations, you’ll find there are 34 million ways to prepare a pizza.”
Nevertheless, the final measure — called the Menu Education and Labeling, or MEAL, Act — required that all information be posted on menus and menu boards.
“We intend to push for more flexibility in the law,” Liddle said, adding that once the association is up and running, it will continue to grow. “I feel confident that once we gain some traction, we will attract more members,” she said.
The Coffee Bean & Tea Leaf has named former Panda Express executive John Theuer as chief financial officer, the Los Angeles-based chain said Thursday.
Theuer was previously chief financial officer for Rosemead, Calif.-based Panda Restaurant Group Inc., where he worked for 16 years as that company grew the Panda Express chain from 90 units to more than 1,300 locations.
His previous experience includes stints at The Walt Disney Company, as well as Acapulco Restaurants and Hilton Hotels Corp.
After leaving Panda Restaurant Group last year, Theuer was replaced by David Landsberg, its current chief executive.
At Coffee Bean & Tea Leaf, where the CFO role is a newly created position, Theuer will be responsible for overseeing the accounting, finance, treasury and IT departments.
“John is a great addition to our executive team,” said Mel Elias, Coffee Bean & Tea Leaf’s president and chief executive. “He brings a wealth of experience in the restaurant and hospitality industries and lends a dynamic perspective that is in line with the core tenants of our brand.”
Rita’s Italian Ice has awarded a master licensee agreement to a New Delhi-based multiconcept franchisee to open 50 Rita’s units in India over the next several years.
South Asian Food & Hospitality Pvt. Ltd., which also franchises Quiznos Subs, an Australian concept called Muffin Break, and domestic brands like Wagh Bakri Tea Company, will open its first Rita’s Italian Ice in New Delhi in the fourth quarter.
“India’s booming economy and growing market make the country an excellent strategic fit as Rita’s furthers its global reach,” said Jonathan Fornaci, Rita’s chief executive. “We are thrilled to partner with South Asian Food & Hospitality, who has more than a decade of hospitality and management experience in India, and a successful, well-established infrastructure.”
The frozen-treat chain also recently struck separate master licensee agreements for China and the Caribbean.
India has held particular appeal for several restaurant companies looking to enter emerging markets like Brazil, Russia, India and China, commonly referred to as the BRIC nations.
Most recently, frozen-yogurt chain Pinkberry said it would open in Mumbai, India, this year in a franchise agreement with JSM Corp Pvt. Ltd., which also operates California Pizza Kitchen, Trader Vic’s and Hard Rock Café locations in India.
Earlier this year, Starbucks Coffee — whose chief executive Howard Schultz is a member of Pinkberry’s board — announced a partnership with India’s Tata Coffee Limited that would allow for expansion in that country.
Also late last year, Yum! Brands Inc. spun off its 175 Pizza Hut units and 100 KFC locations in India to form a separate operating division, Yum! Restaurants India, signaling the market’s potential to reach the strength of Yum’s other powerhouse international division, Yum! Restaurants China.
Trevose, Pa.-based Rita’s Italian Ice has more than 550 units in 18 U.S. states.
Einstein Noah Restaurant Group Inc, parent to the Einstein Bros. Bagels, Noah’s New York Bagels and Manhattan Bagel brands, said Thursday it will explore strategic alternatives, including a possible merger or sale.
After reporting a near doubling of net income for the April 3-ended first quarter, Lakewood, Colo.-based Einstein Noah officials said revitalization efforts for the company’s three bagel brands were taking hold.
“Over the past several years, we have been working diligently to build a stronger foundation and enhance value for our stockholders by shifting to an asset-light expansion strategy, de-leveraging our balance sheet, inaugurating a dividend and embarking on a comprehensive cost-savings program,” said Jeff O’Neill, Einstein Noah’s president and chief executive.
“After careful consideration,” he continued, “our board of directors believes that it is now an opportune time to review strategic alternatives available to the company, including a possible business combination or sale of the company, as the next step in its efforts to maximize value for all stockholders and positively position Einstein Noah for the future.”
As of March 31, about 64 percent of Einstein Noah’s common stock was owned by Greenlight Capital LLC and affiliates. The company noted that Greenlight has sufficient voting power, without the vote of other stockholders, to determine a change in control of the company.
For the first quarter, Einstein Noah reported net income of $3.2 million, or 19 cents per diluted share, a 174-percent increase compared with $1.2 million, or 7 cents per diluted share, a year ago.
The per-share income for the first quarter included 2 cents in restructuring expenses related to the closure of four commissaries. Last year’s per-share income also included 1 cent in restructuring expenses related to recruitment and relocation of a senior development executive, the company said.
Systemwide same-store sales increased 1.1 percent, reflecting a 5-percent increase in average check, primarily driven by growing catering sales. It was the fourth consecutive quarter of positive same-store sales for Einstein Noah.
The same-store sales results, however, were offset by lower transactions as the company lapped discounting activity from the year-ago quarter.
Total revenue grew 3.6 percent to $104.9 million.
O’Neill credited the positive results to the new Smart Choices menu at Einstein Bros. and Noah's, as well as the chains’ new specialty beverage platform that includes espresso-based coffees and fruit smoothies.
Catering sales also grew by 19 percent during the quarter, O’Neill said, “and will remain an important contributor to raising our average check on a go-forward basis.”
Einstein Noah ended the quarter with 777 locations under the three brands, of which 447 are company owned. Five units opened during the first quarter.
For the year, the company expects 60 to 80 openings, including eight to 12 company locations, 12 to 14 franchised and 40 to 54 licensed units.
For its strategic review, Einstein Noah has hired Piper Jaffray to serve as financial advisor and Bryan Cave HRO as legal advisor.
Pimiento cheese — a spread made of grated Cheddar or American cheese mixed with chopped pimientos and mayonnaise — is a staple in much of the South, eaten on crackers throughout the region.
Chef Vicky Moore uses that spread as her inspiration for this more upscale preparation that uses canned, roasted piquillo peppers, cream cheese and feta cheese.
She combines the cheeses in a food processor until the mixture is mostly smooth, but with a few chunks of feta remaining. Then she adds the peppers and pulses them briefly, just to chop them.
She scoops the spread into a bowl, serves it with toasted ciabatta and charges $5 for it.
OSI Restaurant Partners LLC said Friday that David Deno will be the company’s new chief financial officer and executive vice president. He will also hold those positions at OSI’s parent company, Bloomin’ Brands Inc.
“David is a seasoned global executive with extensive finance, operations and business development experience and will be an excellent addition to the executive leadership team,” Liz Smith, OSI’s chairman and CEO, said in a statement. “We’re committed to expanding our world class team to accelerate our long-term growth strategy. David’s background and experience will be invaluable in that process, while we also maintain continuity as Dirk transitions to the new role of chief value chain officer.”
Deno previously worked at Best Buy, where he was its Asia president and chief financial officer of the company’s international division. Prior to that he worked with two private equity firms and also spent 15 years with PepsiCo and its restaurant spin-off Yum! Brands, holding CFO positions at Pizza Hut, Yum! Restaurants International and Yum! Brands.
“I have spent my career in the retail and restaurant businesses. I have also been fortunate to be able to work on businesses throughout the United States and the world,” Deno said in a statement. “I’m looking forward to joining one of the largest casual-dining restaurant companies in the world and building upon the company’s positive momentum.”
The filing marked the second restaurant company to consider going public in 2012. In January, Del Frisco’s Restaurant Group LLC—operator of the Del Frisco’s, Sullivan’s and Del Frisco’s Grille brands—filed its initial public offering, expecting to raise $100 million.
Bloomin’ Brands owns and operates 1,248 restaurants under the Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse and Wine Bar brands, and has an additional 195 restaurants under franchise or joint venture agreements. The company also owns a minority interest in the Roy’s Hawaiian Fusion brand.
The People Report Workforce Index, which measures market pressures on restaurant employment, rose in the second quarter of 2012 to its highest level since 2007, an indication that operators will continue to face challenges regarding recruitment and retention.
The Workforce Index, based on surveys of restaurant human resources departments and recruiters, stood at 69, about six points higher than in the previous quarter. It was the Workforce Index’s highest reading since the first quarter of 2007, before the recession began.
The Workforce Index measures from a baseline value of 50, with any results over that level indicating increased pressures on the five components: employment levels, recruiting difficulty, vacancies, employment expectations and turnover.
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“If you look at employment pressures being reported to us,” said Joni Doolin, founder of the Dallas-based People Report, “they are the highest since first quarter 2007. It is very clear that the market is starting to move, particularly when you look at the bellwether of QSR.”
Doolin said the Workforce Index number for the quick-service segment in the second quarter, which rose to 75.2 from 66.6 in the first quarter, was “the canary in the coal mine” and a harbinger of a tougher job market ahead for other categories.
“Those employees in QSR, typically if they are well trained and well qualified, will then as they get more experience and get a little older have the opportunity to move into casual-dining jobs, where they can potentially make more money,” Doolin said. Turnover in QSR traditionally has been higher than in any other segments, she noted.
Workforce Index readings higher than 60 indicate especially stiff pressures, and by segment the second quarter readings compared to first quarter were:
• Quick Service: 75.2, up from 66.6
• Fast Casual/Family Dining: 69.6, up from 61.3
• Casual Dining: 67.1, up from 61.5
• Upscale Casual/Fine Dining: 68.2, up from 66.0
Doolin said that if the Workforce Index numbers continue to be positive employers will begin to see an impact on restaurant hiring by the middle of summer.
“I would be strategically accessing my current staffing levels, and I would be accelerating anything in my arsenal relative to retaining employees and to understanding what their plans are for the next couple of quarters," Doolin recommended to restaurant operators. "And I would be increasing my awareness about the job market and becoming more aggressive about adding staff where I could. I wouldn’t wait until I had a problem.”
The People Report index found that each industry segment also recorded an overall index value of 67 or higher in the second quarter.
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“Of particular note, the Employment Expectations component recorded its highest reading (82.7) in the history of the Index,” the report said.
The report noted that the U.S. economy has added 635,000 new jobs during the first three months of 2012, an increase of 59,000 jobs over the same period in 2011.
“Fueled by solid but unspectacular monthly job gains, unemployment dipped to 8.2 percent in March — its lowest rate in over three years,” the report said. “Job growth in the foodservice industry for the first three months of 2012 totaled 103,00, an increase of 24,000 jobs over the first quarter of 2011, and slightly better than the 101,000 jobs added in Q4 of 2011.”
The Employment Levels component once again increased four points to 68.9 during the quarter, as companies in the industry continued to add to their payrolls.
Looking ahead, the Workforce Index’s Employment Expectations registered a value of 82.7, indicating strong job growth is expected in the industry in the next quarter. Seventy percent of companies plan to add staff at the hourly level in the quarter. At the management level, 59 percent of companies plan to add staff.
Rising Roll Gourmet used to be all about lunch. But with catering now accounting for a third of systemwide sales, the fast-casual chain is expanding its breakfast and dinner options, as well as changing its criteria for site selection.
“All of our catering has been typically right off of our restaurant menu,” said David Smith, chief operating officer of the chain's Atlanta-based parent company, Rising Roll Franchising Concepts LLC. But now, the company is experimenting in its corporate-owned location in Atlanta with items specifically intended for catering.
“We’re trying to gain more revenue by extending our dayparts and extending into a whole new business that we’ve never been in, and that’s hot catering,” Smith said. “Even more than hot sandwiches, we’re going into testing of hot entrées and hot side dishes,” he added. “We’re hoping to get our catering customers to order one more time a week and build our revenue that way.”
For example, a limited-time offering on the restaurant menu this spring is a grilled asparagus wrap. For that item, asparagus and roasted red peppers are topped with an ancho chipotle sauce and rolled in a sun-dried tomato and basil wrap. It’s available through the end of May for a suggested price of $6.95.
“We want to make more use of that grilled asparagus,” Smith said. So the company has experimented with topping it and the peppers with Parmesan cheese and a blended Italian dressing, baking it and offering it on their dinner catering menu as a “grilled asparagus steak.”
Another new catering option is macaroni and cheese with turkey and guacamole, available in eight-, 12- and 16-ounce cups for $3.29, $4.29 and $5.29, respectively, on the catering menu of the corporate store.
“We plan to roll it out to the franchise system by the end of May,” he said.
Smith said he is also working on three projects on university campuses, a demographic departure from the company’s base of lunchtime office workers. “These [locations] would be opened until 2 in the morning, and most [Rising Roll Gourmets] close at 2 in the afternoon,” he noted.
To accommodate the new hours and demographic, the company is working on late-night, college-student-friendly food, such as a three-cheese mac and cheese with grilled chicken, ancho chipotle sauce and chopped roasted red peppers.
Smith said the chicken in that item is the same as in the whole-muscle breast used for lunchtime salads, sandwiches and panini. For the catering menu he’s experimenting with flavoring it with pesto, rolling it in breadcrumbs and baking it.
Smith said the expansion beyond lunch is also extending to breakfast. Although some Rising Roll Gourmet locations have been offering breakfast for as long as four years — and since 2008 criteria for site selection for new locations has included being a good venue for the morning daypart — he said the company is conducting a test with a national retail coffee brand and might bring it in systemwide.
So far, the addition of that brand, which he wouldn’t name, has resulted in higher coffee sales at the test location, “and it will also build our reputation for breakfast,” he said.
The chain’s adaptations since the economy soured were intended to give it a leg up when it’s time to expand again, Smith added. “We want to be poised for some real growth when the lending environment warrants it,” he said.
There are currently 14 Rising Roll Gourmet locations open in Georgia, Texas and Colorado. The company is currently developing eight retail and express locations, and is planning for an additional 15 traditional retail restaurants and 29 nontraditional locations to open by the end of 2015.
In its first significant move under new ownership, Quiznos this week launched a new “Better Than Ever” menu and branding campaign to help revitalize the sandwich chain’s positioning.
The goal of the rebranding is to differentiate the sandwich chain with better ingredients and unique flavors, according to the company.
“We’re going after high-quality ingredients, more meat in our sandwiches and unique Quiznos’ recipes, which was really what the company was founded on: things you can’t get anywhere else,” said Greg MacDonald, Quiznos’ chief executive, in an interview with Nation’s Restaurant News. “You can’t get them at Subway and you can’t get them at some of these casual dining chains.”
Ingredient improvements include a switch to all-natural chicken, Angus beef and upgraded turkey. Breads now include a garlic focaccia.
Signature favorites remain on the menu, but Quiznos has added more than 25 new items, many of which are less than 500 calories. A centerpiece of the new promotion, for example, is a new Chicken Milano sandwich on rosemary Parmesan bread, with mozzarella, a three-cheese Italian blend, seasonal lettuces, tomatoes, and smoky sundried tomato and basil pestos.
Gone are the Sammie, Bullet and Torpedo sandwich lines. The new menu includes more wraps, salads and new grilled panini flatbread offerings, as well as a new line of Sub Sliders, smaller renditions of the traditional subs on a sweet brioche bun.
With the new menu, guests can now also create their own sandwiches, choosing certain proteins, cheese and dressing – something Quiznos didn’t offer before, MacDonald said.
The menu rollout to the chain’s 2,700 restaurants in the U.S. and Canada was accompanied by a refresh of all locations, including a deep cleaning, new furniture and repainting. In addition, employees will get new chef’s jacket uniforms this week, designed to reflect the chain's new culinary emphasis.
MacDonald said the company has supported the effort with about $40 million, largely for advertising, but also to help franchisees with remodeling and new uniforms.
The cash comes from new owners, Avenue Capital Group, a New York-based hedge fund that spared the Denver-based chain from near bankruptcy with a debt-for-equity swap earlier this year.
The restructuring deal, which closed in January, eliminated about one-third, or $300 million, of the company’s estimated $870 million outstanding debt. Avenue Capital also injected about $150 million in new capital, taking a majority stake in Quiznos.
MacDonald said the brand relaunch has been in the works for about 18 months, and the new board is fully behind it.
With the new menu, prices have increased almost 2 percent, he added. The increase was based on advice from a “price elasticity” firm hired to evaluate pricing over the past five years and regionally.
“Yes, pricing is going up 2 percent, but we strongly believe value is being improved because we’re also increasing the amount of food in our sandwiches and upped the quality of ingredients,” MacDonald said. “The difference between (price) and what the quality and the recipes are, through our research, drove very strong value scores for us.”
The new menu is being supported by a new advertising campaign with the tagline “Qrave Quiznos,” which marks a “significant increase” in the chain’s media spend, MacDonald said.
Television commercials focus on the craveability of Quiznos items. In one, a sleepwalker dreaming of the Chicken Milano sandwich repeatedly bangs up against the glass door of a restaurant, for example.
Watch a commercial from the new campaign; story continues below
The relaunch also included a focus on customer service. Most restaurants were closed for up to half of a day to retrain staff on the new menu and improving the customer experience, MacDonald said.
Additional online and in-store training has also been made available to further support franchisees. And the chain now has additional field managers at a ratio of about 1-to-30 locations. Previously the ratio was about 1-to-45, he said.
Keith Rentschler, president of the Quiznos Franchisee Association, or QZFA, and a franchise operator in St. Louis, Mo., described the brand enhancement as “all positive.” He said the association applauds and thanks the new ownership “for making the financial commitment to attempt to put Quiznos’ name back on the map."
However, Rentschler added, the rebrand does not impact the chain’s fundamental business model, which franchisees have described as “broken.” Profitability remains “elusive,” he said.
“The system must step back completely from what they have been doing for years and find a way to truly and honestly recognize the franchise owner as their number one asset, and do everything in their power to grow sales, reduce expenses and make the franchise profit-and-loss statement their absolute only priority,” said Rentschler. “Until this commitment is made on all fronts, the health of the brand will continue to suffer.”
Kevin Tackett, one of the chain’s largest franchisees with eight units in Florida, said it was too early to gauge customer response to the new menu and advertising. But he said he is “cautiously optimistic.”
Quiznos has roughly 2,200 locations in the U.S. and 650 internationally. MacDonald said the company will push international growth this year and plans to open about 100 locations overseas, with Brazil and India as key markets.
MacDonald said he was also pleased with domestic development, though he did not specify opening goals in the U.S. “It’s a great time to grow right now domestically,” he said. “Unemployment has actually helped us because there’s a demand from people who want to buy a franchise and we have one of the lowest turnkey costs in the industry right now.”
MacDonald said the chain’s “next-generation” design, which new stores have this year, is slightly more upscale, but turnkey opening costs are around $175,000. “That, against our competition, is a strong selling point for us,” he said.
Sonic of Phoenix—MHR, the Phoenix-based arm of Sonic Drive-In franchisee Mason Harrison Ratliff Enterprises LLC, recently tested an offer through daily deal company Groupon that was aimed at driving traffic to the quick-service operator’s online ordering system.
While the franchisee did not release detailed test results, supervising partner RD Martin spoke with Nation’s Restaurant News and said the test was an overall success. As with all Groupon deals, the Sonic franchisee split some of the revenue generated by the sale of vouchers, but the details of the split have not been made public.
Martin said the test was used as a "great way to help encourage folks to get past those first-time jitters" sometimes associated with ordering online, especially for quick-service operators. Restaurant online ordering platforms have traditionally had the most success with pizza chains and other delivery-based brands.
Since last year, however, the Sonic franchisee has offered its guests the option to order meals online through SonicOnTheGo.com and its mobile version, SonicOnTheGo.mobi. In late February, the group offered a test Groupon offer, allowing users to purchase a $10 online voucher for $5 and a $15 voucher for $7 that could be redeemed by placing an online order with one of the participating Sonic locations.
Martin breaks down the process in this Q&A with NRN.
What happened to average checks during the test, and how did it impact operations?
In general, OLO Online Ordering [the franchisee’s online ordering vendor] check averages run about 100 percent to 150 percent larger than on-lot orders — without the typical speed-of-service demands associated with quick-service restaurants or the need to turn tables, or push a drive-thru.
Can you afford to acquire customers at a 50-percent or greater discount level?
The hardest part of getting customers to use online ordering is getting them to do it that first time [and] navigate a website instead of a dining room, or [drive-in] stalls in our case. It’s challenging to get customers to order in a non-traditional way. Once the initial account is set up, the convenience of using it that second time is really appreciated.
Consequently, we see the large discount as a great way to help encourage folks to get past those first-time jitters and give it a go. It is a numbers game: How many people can I communicate to that we offer online ordering, and how many people can I encourage to try online ordering so I can get them past that [process] the first time?
Additionally, using Groupon to promote [online ordering], we did receive a large portion of the discounted dollars back [through revenue sharing with Groupon].
Were there other considerations behind this Groupon online ordering test or the use of online ordering by your business, in general?
Something else businesses should consider: While the [online ordering] business is building, additional sales are not offset by proportional costs. Yes, we have the food and paper cost, but the online orders come into the restaurant in a very controlled way.
Unlike traditional on-lot promotions, we found it took no additional labor, no additional repair and maintenance, and no additional costs for equipment or other costs associated with on-lot sales. The only cost we incurred was the food and paper cost.
This last point cannot be emphasized enough when discussing the value of [online ordering] and is why we continuously run a $5 off your first online order of $10 or more [promotion]. The check average on the $5-off orders is in excess of $12 after the discount.
Does Sonic want to pursue online users, given the response to SonicOnTheGo.com, to date?
I cannot speak for Sonic Industries [operator-franchisor of the Sonic Drive-In chain and a division of Sonic Corp.] We hope one day Sonic Industries would consider a bigger initiative than the 30 Sonic of Phoenix—MHR stores in Phoenix.
I'm trying to talk the other two Sonic groups in Phoenix into trying this [online ordering]; that way we can get a [mobile] app. Instead of needing to go to SonicOnTheGo.mobi on your mobile device, you'll be able to get an app and access it that way. It would be more consumer-friendly.
There are 80 stores in all in this market, but I only have 30 of them.
Focusing on your world then, how does your group view online ordering as a business strategy?
We definitely see this as the wave of the future and will continue to ride it. Besides convenience for our customers, it offers a great way to market your business. You can personalize discounts, promotions and fundraisers with [online ordering], and this we have just begun to utilize. In addition to co-branding with OLO Online Ordering and Groupon, we have tied in our Facebook page. 'Like' us on Facebook and get a discount code for a free burger and tots when you order online.
When you think of Sonic, you think about people pulling into at-restaurant stalls and ordering or using the drive-thru. How do you handle people who order ahead and come by to pick up their food?
They typically pull into a stall and say, 'Hey I placed an online order,' and we bring it out. It really is just that simple.
Some operators and analysts are concerned that online ordering for quick-service operations has the potential to create problems, in that customers may order and then take longer than they expect to pick up their food and then complain about cold product or demand a fix. Have you found that to be a problem?
Since we can prepare an order quickly, we often wait until the pickup time to prepare it. If it is a bigger order, we start to prepare five minutes before pickup time.
The big issue is side orders because people expect them to be hot, and they do hold for a shorter time than a burger that is prepared and wrapped in a foil bag or wrap. We can usually accommodate the convenience/speed/quality if we wait until the customer arrives to make the side orders. In [quick service] we are usually pretty quick in general, so waiting as long as we can to prepare an online order is not too much of an issue, and it does not stress out our system or setup.
I will admit we sometimes make an order over, so it is hot, if a customer arrives past their pickup time.
Restaurants favored uncomplicated methods for cooking seafood in 2011, according to data compiled by research firm Datassential on the fastest growing seafood-preparation terms.
The term tartare saw the most growth on menus in 2011, with usage increasing by 25.6 percent. Braised, pan-seared and pan-roasted followed closely behind.
Since Datassential simply tracks the occurrences of words on menus in a particular category without context, it's possible that even the most simple-seeming preparation method could be paired with complex flavors or sauces. A look at the firm's list of fastest growing menu terms for sauces and flavors hints at restaurants allowing simply prepared seafood to be the canvas for more innovative flavors, since words such as truffle, aioli and jalapeno top the list.
A popular example of that technique is the black cod with miso dish that Nobu Restaurants is known for. For that dish, black cod is simply roasted with a complex, miso-based sauce that creates a caramelized crust over the fish.
NRN’s senior food writer, Bret Thorn, wrote in the April 30 issue of Nation’s Restaurant News about the simplicity chefs are employing in their preparation of salmon due to an increased consumer interest in the origin of food. He also wrote that chefs are looking toward more straightforward preparations that highlight seasonality of the ingredients and flavors being used to prepare their salmon dishes.
The top placement of tartare for fastest-growing preparation term on menus in 2011 is interesting in light of this, considering that most seafood tartare dishes are made with fresh salmon or tuna that is diced and dressed minimally. It also shows an increased willingness of consumers to consume raw seafood.
At the NRA Show this past weekend, restaurant trend watcher Nancy Kruse also highlighted the importance of menu descriptors such as “real” and “authentic,” and mentioned McDonald’s efforts in Europe to highlight their sustainability efforts as a key example of appealing to consumers who are interested in the origins of their food.
