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Collette’s Notorious BBQ Pie with Vidalia onion petals

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This seasonal pizza, prime when Vidalia onions are ripe and thoughts start turning to barbecue, features onion “petals” — wedges of sweet onions coated in flour, then batter, and then deep-fried.

Chef-owner Spike Mendolsohn puts those onion petals on top of a pizza that’s spread with barbecue sauce spiked with pureed chipotle peppers instead of classic tomato sauce. It’s sprinkled with cheddar cheese and pulled pork, and then baked. The onions go on top afterwards.

The pizza is $4 per slice, $20 for a medium pie and $22 for a large pie.

Contact Bret Thorn at bret.thorn@penton.com.
Follow him on Twitter: @foodwriterdiary


Factors beyond food attract Millennial diners

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Restaurants have a huge opportunity to market to Millennials, generally encompassing all consumers aged 18 to 34 years old, but they must be prepared to appeal to younger diners with more than just food, according to new research from industry consultant Technomic.

The Chicago-based firm found that while Millennials are frequent restaurant guests, their loyalty to foodservice brands stems from not only their love of the food, but also from their perceptions of a restaurant’s social responsibility and community involvement.

“Millennials visit restaurants more frequently than any other generation,” said Darren Tristano, executive vice president of Technomic. “Restaurant operators are making consistent efforts to track the purchasing habits of Millennials and appeal to their unique need states. Success with today’s Millennial consumer will depend on making an emotional connection and setting expectations.”

Two Technomic studies, the “Understanding the Foodservice Attitudes and Behaviors of Millennials” and the longer-running “Consumer Restaurant Brand Metrics” program, revealed several insights into Millennials’ dining-out preferences and listed by segment the chains that benefited.

RELATEDTargeting your demographic: Millennials

The three brand metrics Millennials value the most were social responsibility, food quality and community involvement.

Technomic defined social responsibility as a brand's effort to act in a way that is good for the environment or for employees. The Millennial diners surveyed for the two studies identified In-N-Out Burger as the best brand at this metric in quick service. McAlister’s Deli was recognized as such for fast casual, while Cracker Barrel Old Country Store and Logan’s Roadhouse took the honors for family dining and casual dining, respectively.

On ratings for food quality, Millennials evaluated restaurant chains on more than menu items’ taste and visual appeal, Technomic found. Survey respondents said they also considered whether ingredients were from local, sustainable or organic sources. Descriptors like “grass-fed” or “free-range” also boosted restaurants’ perceptions among Millennials.

In the quick-service category, Jimmy John’s received the highest marks for food quality among Millennials surveyed. McAlister’s and Cracker Barrel once again received top marks for fast casual and family dining, respectively.

In casual dining, Red Lobster had the most favorable perception among Millennials for food quality, a point that the chain has touted for months in its “Sea Food Differently” marketing campaign. The commercials feature real Red Lobster employees and suppliers discussing the freshness and authenticity of the brand’s seafood.

Watch a “Sea Food Differently” commercial; story continues below

A third key metric for Millennials, supporting local communities, encompasses philanthropic efforts like making charitable contributions and supporting civic organizations, Technomic said. Chick-fil-A earned the No. 1 spot for quick service in that metric, based on Millennial consumers’ feedback. Corner Bakery Café led fast-casual restaurants on this value, while Bob Evans and Bonefish Grill earned top marks for family dining and casual dining, respectively.

Technomic’s Consumer Restaurant Brand Metrics program tracked 50 attributes in order to determine the preferences of Millennial and other diners. The data are collected on an ongoing basis, and the study’s sample represented more than 40,000 annual visits.

Contact Mark Brandau at mark.brandau@penton.com.
Follow him on Twitter: @Mark_from_NRN
 

Mother's Day specials boast more than brunch

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Mother’s Day is traditionally one of the highest-volume days of the year for restaurants specializing in upscale brunch, but foodservice brands across all segments see the holiday as a sizeable opportunity to boost traffic and are deploying promotions beyond brunch to attract mothers and families.

New research from online-reservation specialist OpenTable Inc. suggests that while brunch is still the most popular meal on Mother’s Day, marketing opportunities for restaurants exist beyond the mid-morning meal. Although 58 percent of people surveyed said brunch was part of their plans, 39 percent said the family planned to take Mom out to a special dinner — and roughly one-quarter of them said they may eat out more than once on Mother’s Day.

The survey results indicated another good sign for restaurants of all types: Twenty percent of respondents said they plan on spending more money this year for Mother’s Day. Three quarters of them said they plan to spend about the same amount as last year.

Among the restaurants taking advantage of Mother's Day marketing opportunities beyond brunch is First Watch, a Bradenton, Fla.-based chain of 90 breakfast-and-lunch restaurants. For the sixth consecutive year, the chain will offer mothers a complimentary box of Russell Stover chocolates for dining in on Mother’s Day. Similarly, Nashville, Tenn.-based Shoney’s is giving away its Hot Fudge Cake to all mothers with the purchase of an entrée at its more than 200 restaurants in 17 states.

Fellow family-dining chain Denny’s is incorporating an interactive element for its offer of a free Skillet Cookie a la Mode. Guests can send their mother’s a free Mother’s Day e-card from the Denny’s website in exchange for a coupon for the dessert, redeemable on Mother’s Day. Spartanburg, S.C.-based Denny’s operates or franchises 1,685 restaurants.

Fazoli’s, the chain of more than 200 fast-casual Italian restaurants, also ran a digital promotion for Mother’s Day. The Lexington, Ky.-based brand was scheduled to name its “Mother of the Year” Friday, after several weeks of soliciting nominations on its Facebook page. The winner would receive free family meals at Fazoli’s for one year.

“Our moms take care of us 365 days a year, year after year,” chief marketing officer Cathy Hull said in a statement. “That’s why we wanted to continue the tradition of honoring Mom with a prize that will allow her to sit down and enjoy a quality meal with her family each month for a year.”

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Red Mango, the 170-unit frozen-yogurt chain based in Dallas, is running a “Share the Love” promotion from Mother’s Day through graduation season and Father’s Day, in which the purchase of every $25 gift card earns the buyer a $5 gift card. Those purchases also enter people into a sweepstake for free frozen yogurt for a year.

“Our brand motto is ‘Treat yourself well,’ and we believe treating our moms on their special day to all-natural frozen yogurt is a memorable way to show them we care,” founder and chief concept officer Dan Kim said in a statement. “Buying them a $25 Red Mango gift card will certainly make them feel loved, but the free $5 Share the Love Card you’ll get with that purchase will make you smile as well.”

Another frozen-yogurt chain, Yogurt Mountain, is offering mothers the first 10 ounces of frozen yogurt purchased on Mother’s Day for free. The Birmingham, Ala.-based brand has 42 stores in 15 states.

Casual-dining brands also are celebrating mothers this Sunday with giveaways and gift card promotions.

RELATEDSpring is prime for gift card sales

Atlanta-based Hooters, for example, is offering a complimentary order of 10 boneless wings to all mothers dining in its more than 400 restaurants. Maryville, Tenn.-based Ruby Tuesday, meanwhile, is giving away a free “Simply Fresh” cookbook to mothers in its more than 800 restaurants.

Upscale-casual steakhouses Ruth’s Chris Steak House and Fleming’s Prime Steakhouse & Wine Bar are not only rolling out special brunch menus for Mom, they're also offering $25 gift cards to encourage a repeat visit after her special day.

Orlando, Fla.-based Ruth’s Chris is promoting its Maine lobster and specialty cocktails for the occasion, and in addition to a $25 gift card, the brand also will hand out a long-stem rose to each mother dining in at its 150 restaurants on Sunday.

Fleming’s special $34.95 prix-fixe brunch menu includes the Blood Orange Fizz cocktail, as well as Filet Mignon Benedict and New Orleans Style French Toast. The $25 dining card is redeemable from May 14 through June 15. Newport Beach, Calif.-based Fleming’s has 64 locations nationwide.

Contact Mark Brandau at mark.brandau@penton.com.
Follow him on Twitter: @Mark_from_NRN
 

A look at Emeril Lagasse's carryout concept

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Emeril Lagasse, who expanded his restaurant holdings earlier this year to Charlotte, N.C., with the opening of his new e2 Emeril’s casual-dining eatery, recently created a carryout-only extension of that brand with an adjoining e2 GO.

While executives said Emeril’s Homebase, Lagasse's New Orleans-based company, has no immediate plans to expand e2 Emeril’s, the notable television chef has leapt into the carryout business with e2 GO. Lagasse has 12 other restaurant concepts in Florida, Louisiana, Nevada and Pennsylvania.

Marti Dalton, marketing director for Emeril’s Homebase, said e2 opened in late January and e2 GO opened in late March. “We’re really happy with how business is going,” Dalton said. “It’s a new market. It’s in the business district and arts district, so it’s a very urban area.”

Unlike other properties, the e2 Emeril’s offers a variety of crudo. “The design is different too,” Dalton said. “The counter-seating is lower than in our other restaurants. There is also a centerpiece where fish are displayed.”

The e2 GO was planned all along, Dalton added. “The front of the restaurant is located on the Lavine Avenue of the Arts, and the back is on a breezeway, which is next to the Duke Energy Center,” she explained. “So it was in the plans to have the quick-serve restaurant.”

The e2 GO part of the restaurant serves weekdays from 11 a.m. to 3 p.m., and it plans to soon offer online and phone ordering. Guests can create salads from greens and produce, proteins such as roasted chicken, roast beef, turkey or poached shrimp, and a selection of housemade dressings and garnishes. Drinks include local beers, wine, iced teas and bottled beverages such as kombucha and sparkling sodas.

At e2 Go, carryout prices range from $5 for Hilda’s Egg Salad sandwich to $9 for a variety items, including a curried shrimp salad sandwich with currants, almonds and green chiles to a sliced chimichurri steak with arugula and oven-dried tomatoes on a tortilla. With a hint to roots in New Orleans, e2 Go also offers gumbo with rice for $6.

In the main dining area, which is open for lunch and dinner, mid-day entrees range from $10 for Fried Ashley Farms Chicken Thigh with buckwheat waffle and sorghum molasses to $14.50 for North Carolina white shrimp and grits with pancetta, tomato, corn and hon-shimeji mushrooms. Dinner entrees range from $20 for farro risotto with seasonal roasted vegetables to $38 for a Painted Hills rib-eye steak with a salad of arugula, fennel, oven-dried tomato and housemade Worcestershire sauce.

In addition to e2 emeril’s and e2 GO, Lagasse’s Emeril’s Homebase also operates: three restaurants in New Orleans (Emeril’s, NOLA and Emeril’s Delmonico); four in Las Vegas (Emeril’s New Orleans Fish House, Delmonico Steakhouse, Table 10 and Lagasse’s Stadium); two in Orlando (Emeril’s Orlando and Emeril’s Tchoup Chop); and three in Bethlehem, Pa. (Emeril’s Chop House, Burgers And More by Emeril and Emeril’s Italian Table).

Contact Ron Ruggless at ronald.ruggless@penton.com.
Follow him on Twitter: @RonRuggless

Dunkin' Donuts: No rush for West Coast expansion

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A distribution center for Dunkin’ Donuts is scheduled to open in Phoenix this fall, paving the way for the brand’s cautious return to the West Coast.

The hopes of Dunkin’-loving, East Coast-born Californians were raised this week after a Dunkin’ Donuts outlet opened on the Southern California Marine base Camp Pendleton. It was the first to open in the state since 2002, when the chain pulled its final location out of Sacramento.

One report called Camp Pendleton opening the equivalent of California’s beloved In-N-Out Burgers opening a unit in New York. Dunkin’ officials, however, said the Camp Pendleton location is part of the chain’s strategy of opening on military bases, and it doesn’t necessarily mark a flood of new units to come to the Golden State.

Dunkin’ Donuts has 26 outlets on military bases worldwide, including 19 in the U.S., and the company is actively looking to develop more, said Michelle King, a company spokeswoman.

“We recognize there is a lot of demand for Dunkin’ Donuts in California, as evidenced by the fact that California is the No. 1 state for sales of our bagged grocery coffee,” said King. However, she added, “Camp Pendleton is a unique nontraditional location, and it will be some time before we consider expanding in California beyond the military base.”

The Canton, Mass.-based chain has been growing aggressively in recent months, using what King described as a disciplined “hub-and-spoke” approach. “When we enter California, we want to do it right,” she said, “and we want to make sure the infrastructure is established to satisfy the needs of our guests.”

This week, the National DCP LLC, or NDCP, Dunkin’ Donuts’ franchisee-owned distribution and purchasing cooperative, announced it had signed a lease for a distribution center in Phoenix — the first to be located West of the Mississippi River.

The distribution center will supply food, paper, and equipment to about 80 restaurants in Arizona, Texas, Nevada and New Mexico, King said.

“It has the ability to service more Dunkin’ Donuts restaurants as the network grows,” she said. “At this point, the center is sufficient for our needs (and) supports our Westward expansion.”

King noted that the NDCP plans to have a network of distribution centers that can “flex to meet our franchisees’ needs.”

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Dunkin’ Donuts had about 15 units in California in the late 1990s. The chain attempted to open in Sacramento in 2002, but all the locations ended up closing because “the time wasn’t right for the brand, and the infrastructure didn’t exist to grow and expand in the state,” King said.

California is also a hotbed for archrival Starbucks Corp., as well as donut competitor Krispy Kreme.

Dunkin’, however, has almost 7,000 U.S. locations — mostly in the East — and the company has said it plans to more than double its number over the next two decades.

Last year, Dunkin’ saw the opening of 243 units, and 260 to 280 net domestic locations are planned for 2012.

International growth is also a big push for the brand. This week, Dunkin’ opened its first units in India and Guatemala, for example.

In New Delhi, India, two restaurants opened, the first of 500 planned over the next 15 years by franchisee Jubilant FoodWorks Ltd. — the largest international store development commitment in the chain’s history.

Market research firm Technomic Inc. said coffee consumption in India doubled between 2001 and 2010, but it remains only about 5 percent of U.S. consumption levels on a per capita basis, indicating a solid growth opportunity.

Starbucks also is scheduled to open its first location in India later this year.

In Guatemala, the first of four locations planned there opened this week. The unit marks an expansion of Dunkin’s existing relationship with franchisee Grupo Intur, which operates 42 Dunkin’ locations in Honduras.

RELATED:

Dunkin' 1Q boosted by new menu items
Dunkin’ Donuts inks three franchise deals in Texas

Contact Lisa Jennings at lisa.jennings@penton.com.
Follow her on Twitter: @livetodineout

Restaurant comps wane in April, but operators remain optimistic

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Restaurant industry same-store sales were up in April but dipped slightly compared to the prior month due to a decline in guest traffic and a mid-month drop-off, according to the latest NRN-MillerPulse survey.

MillerPulse, an operator survey exclusive to Nation’s Restaurant News, included respondents from 63 restaurant operators in May regarding April sales, profit trends, performance and outlooks. Respondents included operators from all regions of the country that represent the quick-service, casual-dining, fine-dining and fast-casual segments. Those surveyed in May represented restaurants that booked about 16 percent of industry sales.

Industry same-store sales were up 3.2 percent in April, down a full percentage point from March’s 4.2-percent increase, the survey found. Quick-service restaurants, which include both fast-food and fast-casual brands, saw a solid sales increase of 4.6 percent for the month, but the number was slightly disappointing compared to the 6.0-percent increase the segment saw in March.

However, full-service restaurants, which include both fine-dining and casual-dining brands, had a more difficult month. Same-store sales increased 1.6 percent for the segment in April, compared to the 2.1-percent increase in March, the survey found.

EARLIER: Restaurant comps remain steady in March, operators expect strong April

The less-than-spectacular performance in April following an optimistic outlook going into the month and a strong start during its first half has left both operators and analysts perplexed.

“There is nothing you can point to that says the economy changed in a week, and the weather effect we have seen the last several months is gone,” said Larry Miller, restaurant securities analyst at RBC Capital Markets and creator of the monthly MillerPulse surveys. “I think it more has to do with a calendar shift of the dates of Easter and spring break.”

The survey found that while guest traffic was up 0.9 percent overall in April, that figure was down from the 2.3-percent gain in March and both quick-service and full-service restaurants struggled with slower traffic. Quick-service traffic was up 2.1 percent for the month, compared to a more than 4.0-percent increase in March. Full-service restaurants saw a 0.6-percent decline in traffic, compared to nearly flat numbers the month prior.

However, the disappointing sales and traffic numbers haven’t dampened operators optimism, with a net 34 percent of operators surveyed saying that they expect sales to be better in May versus April, a high for the survey in 2012. That number was calculated by the 43 percent of operators who feel that things will be better in May versus the 9 percent that believe they will get worse.

“That’s what’s most interesting about this month’s results,” Miller said. “It’s the drop we saw and the optimism of operators, which might be difficult to swallow.”

Full-service operators continued the trend from last month as being the most optimistic, with a net 39 percent of them expecting better sales in May, compared to a net 30 percent of quick-service operators who felt the same way.

And while Miller might not be as staunchly positive in his outlook as some of the operators surveyed, he isn’t panicking either.

“When you step back and look at the 2-year trend, we are still in an uptrend, but just not as strong,” he said. “Things are still on track, but when we see a drop-off like we did in the second half of April, doubt starts to creep in.”

Register for MillerPulse at www.nrn.com/industry-insight.

Contact Charlie Duerr at charles.duerr@penton.com.

Setting the record straight on tip income

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A new bill introduced by Sen. Tom Harkin, D-Iowa, would raise the cash wage by 220 percent for employees who earn tip income. State to state, the proposed measures have been even more severe. In Illinois, for instance, state Sen. Kimberly Lightford introduced a bill to eliminate the tip credit altogether.


Rarely has servers’ compensation been such a significant part of the political conversation about wages. Now that it is, it’s our responsibility to educate legislators about how much tipped employees actually earn and why the tip credit is important to the full-service restaurant industry. Unless their misperceptions are corrected, the consequences for restaurants — and the people they employ — will be dire.


In contrast to Europe, where service charges and salaries are the industry norm, servers in the United States receive a base wage that’s supplemented by tip income based on the service they provide. Part and parcel of tipping is treating tips as what they are: income earned on the job. That’s the way the U.S. Internal Revenue Service sees it. 


Yet this new round of wage bills is supported by rhetoric that pretends restaurant employees survive on subminimum wages occasionally supplemented by “gifts” customers leave them.


The reality is that tipped employees don’t just survive on tip income — typically, they thrive. In my experience it’s not uncommon for even part-time table servers to pull in upwards of $40,000 a year. And when an employee’s tips don’t measure up to expectations — a rare occurrence — employers compensate for it as the law requires. 


The compensation structure adopted by current law is a reflection of the actual business conditions that define the full-service restaurant business. Whether state legislators find it ideologically acceptable or not, it’s a fact that one-third of every food dollar goes to pay the cost of labor. After paying the bills, owners and operators face a profit margin of just 3 percent.


Despite these stark facts, more than 20 states have shrunk the portion of tips that restaurants can count as income. Seven have eliminated it entirely. That’s placed big burdens squarely on the backs of restaurants — and those burdens trickle down to employees when they can’t be offset through higher prices. 


The state of Washington, for instance, has been turned upside down by its prohibition of the credit for tips. Many restaurants there have stopped hiring busboys and started assigning larger sections to fewer servers. Employees get fewer opportunities to provide customer service, which means customers get fewer opportunities to reward it.


Legislators like Sens. Harkin and Lightford should do their homework on these unintended consequences. Trinity University and Miami University economists have already shown that for each 10-percent increase in the mandated wage rate for tipped employees, work hours have dropped by more than 5 percent.


If passed, this new generation of proposals will force restaurants to implement one of a few undesirable alternatives. Some will do away with tips altogether and move to a European service-charge model, where the potential for a $20-an-hour tipped position will vanish. Others will continue the march toward more customer self-service instead of raising prices, creating an industry with less opportunity for servers. 


When it comes to wages and tip credits, current law isn’t broken, and legislators like Sens. Harkin and Lightford shouldn’t try to fix it. If they persist, they’ll merely worsen the conditions that have already been imposed on a handful of states. Less employment, less service and lower compensation — is that any politician’s idea of progress? 

Dick Rivera is chairman and chief executive of Rubicon Enterprises LLC, a Sarasota, Fla.-based restaurant management and investment company, and past chairman of the National Restaurant Association. He received a Golden Chain Award in 1989 when he was president and chief executive of T.G.I. Friday’s. He has also held other top leadership positions at Real Mex Restaurants Inc. and Darden Restaurants Inc.

PREVIOUSLY: Sound decision making is vital to success

Communal tables promote shared experience

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More restaurant concepts are pushing aside the two-tops and setting a communal table into their dining room floor plans.


Once found in only a handful of independent restaurants, shared eating spaces are popping up in both hip urban bistros and suburban chains, creating more welcoming environments that operators say help to build community, loyalty and sales — as long as they fit a concept’s image and don’t disrupt traffic flow or other diners.


“Communal tables deliver a more inviting, welcoming restaurant experience for two reasons,” said Judy Kadylak, marketing director for Burlington, Vt.-based Bruegger’s Enterprises Inc. “First, they send a clear message to guests that large groups are welcome, which helps to build loyalty and drive sales. 
Second, they send the message that this is a welcoming place where neighbors can catch up or strangers can become friends.” 


Bruegger’s has been adding communal tables in new construction and remodeled units since April 2010, said Kadylak, noting that the tables underscore Bruegger’s brand message that it is a neighborhood bakery.


Other chains also are bringing groups to the table, including Mooyah Burgers & Fries, which introduced communal tables at a new unit in Tyler, Texas, in February, and True Food Kitchen in Scottsdale, Ariz., which offers one or two such tables at its four upscale health-oriented casual-dining units.


Sitting down to the idea


Panera Bread installed its first communal tables about 10 years ago, said Scott Davis, chief concept officer for the St. Louis-based bakery-cafe chain.


“The idea came out of a trip we made to Paris in January 2001 with a small group of design folks,” he said. “We were working on the next generation of the prototype, which is what we now know as Panera. We wanted to get our heads around bread and bakery in a different culture from America.


“We spent the week walking through all the great bakeries and shops in Paris, and we kept bumping into these communal tables,” Davis said. “Our designers immediately fell in love with the idea, but I was a little skeptical. I come out of operations, and I said to myself, ‘I’m not sure Americans want to be sitting with someone else at their table during lunch.’”


But patrons have embraced the tables — if not quite on the European level, Davis said. Panera debuted the communal table element in the fall of 2002 at a prototype in Aurora, Ill., and it’s now in more than 1,300 of the chain’s 1,500 units.


Most people use the communal tables as gathering places for groups, Davis said, pointing to their use by those in scrapbooking clubs and those holding business or community meetings. For example, at the Panera in Davis’ hometown of Cicero, N.Y., one group meets every Friday.


“It’s a great place for an extended group to do work or just get together and chat,” he said. “It has taken on its own life, maybe a little bit different from the European experience but certainly a core element of Panera.”


Alexis Barnett, marketing director for Dallas-based Mooyah, said that larger groups can pose a challenge when they pull smaller tables together, sometimes blocking walkways and disrupting other diners.


“Communal tables offer a specific place for these groups to sit every time,” Barnett explained. “The opportunities within the community are numerous — think about sports teams, school groups, book clubs and Boy Scout troops, just to name a few. Mooyah is perfect for group occasions and dining out with friends and family. We also feel like we are breaking through with marketing messages like ‘Let’s Meat at Mooyah!’”


The first communal tables debuted this year, and Barnett said Mooyah plans to continue including them in future units.


“Mooyah’s brand positioning supports being anchored in local ownership, the use of local ingredients, local support, down-to-earth values and truly being an active difference maker in the community,” she said. “We strive to be an icon in the neighborhood — the place to gather with friends or family, share a great meal and maybe celebrate a moment like a team win. Communal tables send the right message to our guests that we are a place to hang out and enjoy a great burger.”


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Chris Tripoli of A’la Carte Foodservice Consulting Group in Houston said he is seeing more communal tables. 


“I refer to them as the ‘today’s chef table,’” he said, adding that they are less formal and more fun. But he warned that communal tables need to fit into the casualness of the overall concept, which is why bakery-cafes are particularly suited for the larger tables.


Since April 2010, Bruegger’s has “remodeled nearly 75 bakeries around the country and installed the communal tables in every bakery that had the available space,” Kadylak said. “We will continue to add the tables when bakeries are being refreshed, if the space allows.”


Consumer reaction has been positive, Kadylak added. 


“Overall, our guests appreciate the community table — especially those patrons that like a little extra space, enjoy gathering with their neighbors or enjoy meeting new neighbors,” she said. 


“Some guests prefer sitting alone or with their companions, so the community table is sometimes used by only one or two guests, which can be a little problematic when the bakery is very busy,” she noted. “Additionally, we do have some bakeries where the space just doesn’t allow for the tables.”


Given his 10 years’ experience working with communal tables, Davis of Panera suggested several questions a concept should consider before installing them:


Does it work with the seating configuration? “You have to consider how it fits into the space,” Davis said. “The good news for us was that it was designed as part of the ground-up construction. If you are retrofitting one into a space, you have to consider how the traffic flow around it works. Because it is so big, it can easily disrupt your dining room if you’re not careful.”


Will it affect other diners? Larger tables create bigger noise, Davis said. “You’ve got six, eight or 10 people together all talking, that can create its own set of noise that could be disruptive to people on the periphery,” he said. “It could be a big negative to the people in booths next to it if there’s a lot of commotion going on. You have to be thoughtful about how the space is set up and positioned.”


What’s the proper height of the table? For Panera, it’s regular table height. “At one time we had higher-topped tables, at stool height, that could fit six people, but we tended to find the shorter, more standard table height works better,” Davis said. “It feels more comfortable than bar-height seating.”


How is the area lighted? “We put specific lighting in for that table,” Davis said. “I’ve seen retrofit tables where lighting wasn’t a match for it.” Experts warn against accidently leaving the big table in a black hole of light.


Will it fit into the store’s demographic patterns? “Our larger footprint, which can handle a large lunch volume, can afford a larger space dedicated to a larger table,” Davis said. “If it became 50 percent of our dining room, it wouldn’t work so well.” Panera units typically have 4,200 square feet and 120 seats, with communal tables usually seating eight to 10, Davis said.


Communal tables have expanded Panera’s customer market, Davis said.


“It’s been satisfying seeing how new groups of folks find ways to use Panera because of the tables being there, from people holding meetings to families meeting there,” Davis said. “They may view Panera differently than they have seen it in the past. That’s been great for us — giving customers new ways to use Panera in their lives.”


Davis admitted that the larger tables have overcome his earlier skepticism.


“For me, it was a great way to discover a new way to do something different,” he said. “Sometimes your first reaction is not the right reaction. We took a step out on the plank and made it work.”


Contact Ron Ruggless at ronald.ruggless@penton.com.
Follow him on Twitter: @RonRuggless.


Editor's Letter: Coming together

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Just days after a lively discussion among our editorial team on the pros and cons of communal tables, I found my party of four seated at one in a New York outpost of Le Pain Quotidien.

Since I was in the Greta Garbo camp — “I want to be alone” — the incident was ironic and unexpectedly delightful. I did not leave with newfound friends, but I did get to see a variety of prepared dishes, eavesdrop on a little French and enjoy more room than I would have had at a four-top. All told, the experience was more festive and agreeable than I would have imagined.

Looking to build such feelings of bonhomie and community into their operations, a growing number of chains are taking a cue from indie peers who have long embraced the trend and incorporating communal tables into their dining rooms. We explore the sales-building merits of large-party seating and pose some questions to consider before sitting down to the idea.

We also look into the creation of The American Pizza Community, a newly formed coalition of big-name pizza companies representing 20,000 locations. The group, born out of frustration with the yet-to-be-promulgated federal menu-labeling guidelines, intends to push its agenda in meetings with Washington lawmakers in late June. As included in the sweeping health care reform act of 2010, companies with 20 or more units will be required to disclose nutrition information on menus and menu boards.

“A Big Mac is a Big Mac is a Big Mac wherever you go,” said Jeff Rinke, vice president of marketing at Hungry Howie’s, a TAPC member with 550 units based in Madison Heights, Mich. “But pizza is totally customizable with every order. So how do you label an item [that hasn’t been built yet] accurately on a menu board?”

While TAPC’s formation points to the diverse factions comprising the foodservice industry, members insist they feel no dissatisfaction with other foodservice trade groups, such as the National Restaurant Association or National Council of Chain Restaurants.

In fact, operators large and small gathered together in Chicago earlier this month for the NRA Restaurant, Hotel-Motel Show. The annual event was a success by many measures: Attendance was higher than projected, available exhibit space sold out, and optimism was in the air at meetings and events throughout the Windy City. Look for a recap of the four days of whirlwind activity in this issue’s Special Report. [Editor's note: NRN's full coverage of the NRA Show can be found here.]

With the NRA Show now behind us, operators are gearing up for summer. In Food & Beverage we examine the wide array of cold drinks cooling off customers and heating up sales nationwide. From the proprietary lemonade at three-unit Havana Central in New York to strawberry water at Jasper’s Corner Tap & Kitchen in San Francisco, these nonalcoholic quaffs are energizing business.

If alcoholic beverages are more in line with your concept, The NPD Group has refreshing news: The opportunity to increase alcohol sales in full-service restaurants is huge. In a recent survey NPD found that 35 percent of diners who frequent places serving alcohol order a drink — and that figure has held steady for three years.

“Full-service operators have been focusing on the food because that’s how [consumers] decide where to eat; beverages have been lost,” said Warren Solochek, NPD vice president of client development. “If operators focus simply on food, they’re forgetting a very important part of their menu.”

So don’t forget to turn to the Consumer Trends feature in the Marketing section to pick up some ideas that operators are employing to augment alcoholic-beverage sales.

It’s just one more way that restaurants can enhance the dining experience and welcome customers to their tables.

Contact Robin Lee Allen at robinlee.allen@penton.com.
Follow her on Twitter: @RobinLeeAllen.

PREVIOUSLY: Editor's Letter: Breaking new ground

Corn futures prices shrink on crop forecast

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The May issue of the U.S. Department of Agriculture’s World Agricultural Supply and Demand Estimates, or WASDE, is always interesting as it provides the USDA’s first forecast for the next year. 


In this month’s report, the USDA hit the corn crop with a triple whammy by increasing 2011-2012 old-crop end stocks from 801 million to 851 million bushels; increasing the 2012-2013 production forecast to 14.79 billion bushels, up 19.7 percent from last year; and projecting 2012-2013 farm-level corn prices to average just $4.60 per bushel, down 24.6 percent from $6.10 in 2011-2012. Corn futures have responded by dropping from a pre-report high of $6.66 per bushel May 9 to below $6 by mid-month. The new-crop December 2012 corn contract was trading near $5.


China remains the 800-pound gorilla in the corn market. Corn prices rallied in late April following a USDA announcement of export orders for 1.56 million tons of U.S. corn to “unknown destinations.” With old-crop corn supplies historically tight, the spring/summer weather will be a huge swing factor for corn prices until the new crop arrives this fall. 


Also in May’s WASDE, the USDA projected cattle prices higher both this year and in 2013, hog prices are forecast to decline in both years, and broiler prices look to be lower in 2013 based on projections for lower feed prices. See compiled USDA WASDE data at www.mktvsn.com/resources/forecast-report/.


Beef — April’s USDA cattle report showed feedlot inventories at 11.5 million head, down from 11.7 million last month but still 2 percent above a year ago. New placements in March were 6 percent below last year. Similar or stronger declines are expected for April. The anticipated gap in feeder supplies, precipitated by last year’s herd-liquidating drought in Texas, appears to be upon us. A tighter supply situation could be exacerbated by heifer retention for herd rebuilding. But smaller cattle numbers will be somewhat offset by larger slaughter weights, which are up 2.7 percent from a year ago, and by weaker consumer demand. Expect the “big three” grilling holidays — Memorial Day, May 28; Father’s Day, June 17; and the Fourth of July — to put a seasonal charge in beef demand at the retail level. 


Coffee — Futures prices have remained surprisingly tame in the $1.70s. A weaker Brazilian currency and reports of ample supplies available for shipment in producing countries are weighing on prices. Even so, with the onset of the Brazilian winter, the typical freeze/frost speculators may put a little spike in prices over the next few weeks. Arabica supplies historically are tight and will remain so until Brazil begins harvesting a potentially record-large 2012-2013 crop. The effects of tight supplies may be partially mitigated by weaker summer consumption in North America and Europe.


Dairy — Butter markets hit a 2-year low of $1.30 per pound May 9, down from $1.52 in late March. The May USDA Dairy Products report showed March butter output up 6.4 percent from a year ago. Also, in the May 1 Oceania-based GlobalDairyTrade auction, anhydrous milkfat dropped 13.6 percent from the mid-April report to close at $1.29 per pound. That equates to $1.04 on an adjusted 80-percent butterfat equivalent. Translation: U.S. butter exports are uncompetitive in world markets this spring, and prices look to be weak through summer. 


March cheese production was up 17.7 percent from last year, indicating a shift from butter to cheese output post-Easter. Class III milk futures bottomed at $15.09 per hundredweight May 9 and point to block cheese prices in the $1.60s for the second half of 2012. Block cheese was at $1.50 per pound in mid-May, 13 cents lower than a year ago. Barrel at $1.45 was 19 cents per pound below this time last year. While strong first-half milk output is projected to fade in the second half of 2012, a big corn crop this year could help reduce the feed-price ratio and improve producer economics.


Pork — The USDA’s quarterly Hogs and Pigs report showed total inventory at 64.87 million head, up 1.9 percent from a year ago and higher than expected. The December-February pig crop was 2.9 percent higher than a year ago. Pigs per litter were 1.7 percent above last year. Producers say they do not plan to increase farrowings in the next two quarters, but with the sow herd 0.6 percent higher than last year, some increases likely are forthcoming. 


Pork output is forecast to climb 2.1 percent in 2012. Supplies of pork in cold storage are 6.7 percent above a year ago, with pork-belly supplies up 25.9 percent and trimmings 34.0 percent higher. Excess supplies are meeting very weak demand, as retail pork prices have remained elevated despite the drop in wholesale prices. Pork bellies, in the mid- to upper-80-cents-per-pound range, are well below February’s high of $1.30. Summer highs now look to fall around $1.10.


Poultry — Producers continue to sustain reductions in output, despite returning to profitability in recent months. The nation’s broiler-type hatching flock on April 1 was down 6.4 percent from a year ago. Eggs being set into incubators are now down 5.2 percent, and broiler-meat production is down 5.3 percent year-to-date. March broiler output was 8.1 percent below a year ago. Cold-storage supplies are at a five-year low. 


It’s been record-high prices for dark meat — wings and leg quarters — that have saved the bottom lines of poultry producers. Meanwhile, breast-meat prices remain moderately priced in the $1.40s, and seasonal highs should only reach about $1.60 in June. Wing prices are absurdly high for this time of year, in the mid-$1.70s, more than double year-ago levels. The hopes of summer lows around $1.30 are now looking more like $1.50. As long as bird slaughter numbers remain depressed, wings will continue to be in tight supply. 


John T. Barone is president of Market Vision Inc. in Fairfield, N.J., and can be reached for comment at jbarone@mktvsn.com.

PREVIOUSLY: Beef prices take hit from public concerns

A new voice for the pizza segment

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Worried that compliance with federal menu-labeling regulations will create problems for the nation’s chain pizza operators, members of a newly formed coalition of pizza companies representing 20,000 locations are traveling to Washington, D.C., to present their concerns directly to legislators.


Gathered under the banner of The American Pizza Community, or TAPC, executives from such usually competitive brands as Domino’s Pizza, Papa John’s Pizza, Little Caesar Enterprises, the International Pizza Hut Franchise Holders Association, Hungry Howie’s and Godfather’s Pizza are banding together to meet with federal lawmakers June 19-20. They will address challenges they expect to face from the yet-to-be enacted menu-labeling provision — which was passed in 2010 as part of President Barack Obama’s sweeping health care reform package.


While most pizza chains previously relied on the National Restaurant Association and the National Council of Chain Restaurants to voice their concerns to legislators, TAPC members said more could be done to effect changes favorable to their specific conditions and operations. 


The coalition’s decision to take its individual message to Capitol Hill reflects the wide diversity and sometimes divergent needs inherent within the foodservice industry, which also has given rise to such specialized associations as the International Franchise Association and the now-defunct Council of Independent Restaurants of America.


Nevertheless, TAPC members insist the formation of the new association was not born out of any dissatisfaction with the Washington-based NRA or NCCR. It was created to deliver a more personalized pizza-
centric message to lawmakers.


Caroline Oyler, vice president and senior counsel at Papa John’s, said the world’s third-largest pizza chain is an NCCR member and that “we do get value from that. But NCCR represents a cross-section of all chain restaurants and isn’t always able to address issues specific to this one segment.


“We found [pizza chains] were aligned on some of these issues, and we believe that speaking as a group will help,” she added.


Lynn Liddle, executive vice president of communications, investor relations and legislative affairs at Domino’s, agreed.


“Most of us are active members of both groups, and we have had successes in working with them,” Liddle said, citing advances in reduced credit card fees. “We see ourselves as unique, however, and in need of addressing issues specific to pizza.”


NRA and NCCR spokesmen said neither organization views TAPC’s formation negatively or as a sign that their groups aren’t meeting pizza-company member needs. NCCR executive director Rob Green said his association’s obligation to bring a wide range of restaurant chains together to discuss all appropriate issues automatically broadens the scope of its focus.


“What we’ve tried to do is get everyone around the table to discuss what their challenges are, specific to menu labeling,” Green said. “But if there’s some disgruntlement about what we’re doing for the pizza industry, no one’s coming out and saying it on the record.”


NRA executive vice president of policy and government affairs Scott DeFife, agreed, saying the industry’s largest association always works to balance the attention given to each segment’s particular concerns.


“Many members of our board are from the pizza segment, and they talk to us all the time about the needs of their companies and stores,” DeFife said. “So while we are attuned to issues that are somewhat unique to pizza, … we do focus most on the threads that tie the entire industry together as a common business enterprise.”


TAPC members point out they have specific problems when it comes to menu labeling.


“When there are 34 million ways to top a pizza just at Domino’s, it’s easy to understand how the one-size-fits-all situation currently proposed doesn’t work for pizza,” said Liddle, who also serves as chair of TAPC. “We want to go to Washington to offer up alternatives that would work for pizza.”


The industry is still waiting for the U.S. Food and Drug Administration to promulgate the final menu-labeling regulations.


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Meanwhile, TAPC’s members are in the process of defining the goals of the new organization.


Liddle described the nascent TAPC as “young and just beginning,” and added, “It even took a while for us to jump through all the legal hoops to be able to meet as a group.”


Still, Oyler said, TAPC wants to grow its membership rolls even while there is no firm plan for a formal trade association.


For the time being, TAPC’s interests are chain focused since federal menu labeling applies only to restaurant companies with 20 or more units — a stipulation TAPC calls unfair since it exempts at least half the pizza segment’s 70,000 operations. Liddle also said the majority of their brands’ franchisees own three or fewer stores and that the potential costs associated with compliance to menu-labeling regulations would be burdensome to those small enterprises.


“Even though they’re part of a large chain, the majority are still mom-and-pop businesses,” she said, adding that legislators don’t appear to understand that. “That’s part of what we’re hoping to explain by going to the Hill and knocking on some doors.”


What pizza is not, TAPC members say, is quick-service food that customers consume exactly as described on a menu board. Lack of customization allows most restaurants to present a relatively uniform description of all products on the menu, said Jeff Rinke, vice president of marketing at Hungry Howie’s, a 550-unit chain based in Madison Heights, Mich.


“A Big Mac is a Big Mac is a Big Mac wherever you go,” Rinke said. “But pizza is totally customizable with every order. So how do you label an item [that hasn’t been built yet] accurately on a menu board?”


National legislators’ first rendering of menu-labeling requirements, dubbed the LEAN Act — Labeling Education and Nutrition — was widely accepted by pizza operators as flexible enough to work within their operations. However, changes were later made to the act, which became known as the Menu Education and Labeling, or MEAL, Act. Among other things, it specified all nutritional information must be posted on store menus. 


That change, Rinke added, remains the sticking point for pizza operators, who say the huge number of specifics cannot fit on a menu board. 


“And why would we have that on a menu board anyway, when more than half of our customers order online or use the phone?” he said. “So at the very least, we want to get some clear, concise and understandable rules.”


This is not the first time restaurant chains have voiced dissatisfaction with the MEAL Act. In 2009 20 foodservice brands — including several major pizza chains — sent a letter to members of Congress urging them to broaden the scope of the legislation. Signatories contended it was a mistake to limit the measure’s application to only large chains, which would exempt more than 75 percent of U.S. restaurants. They said it should cover more supermarkets and convenience stores, as well.


But while menu labeling was the chief stimulus for the creation of the new pizza coalition, Liddle said its members have other concerns, as well — for example, fluctuating commodity pricing and labor regulations that routinely erode margins. In addition, state-specific wage regulations for tipped delivery drivers and occasional driver unionization efforts create their own headaches. 


TAPC members also hope they can help legislators understand how the current farm bill’s 
ethanol-friendly aspects boost protein prices and hurt restaurants’ bottom lines.


“We want to see things change in a way that will benefit the group and lessen that volatility,” Liddle said.

PREVIOUSLY: What the FDA menu-labeling regs really mean

Maple flavors sweeten US menus

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There’s a long list of foods we Americans like to claim as our own. Mom’s apple pie is the prime example, along with other favorites, such as hamburgers or macaroni and cheese. But the truth is that most of our comfort-food classics originated elsewhere, usually in European kitchens. One notable exception, however, is maple syrup and its sweet companions, maple sugar and maple honey. They have roots that go deep into the colonial experience, as settlers learned from Native Americans how to tap the maple tree and extract its sap for a variety of uses. The resulting 
maple-inflected products have stood the test of time. While the flavor never goes out of fashion, there are periods like the present when chefs refocus on maple, celebrating its versatility and ratcheting up its use on menus. 



Maple in the morning. The popularity of maple syrup as a topping for pancakes and waffles — and its easy affinity for sausage, ham and bacon — have made it a breakfast staple, of course. Operators have been building on maple’s breakfast appeal with modern morning menu items. Einstein Bros Bagels’ limited-time-only Maple & Brown Sugar Oatmeal Bagel included rolled oats and raisins, a combination that’s both tasty and nutritious. Meat Cheese Bread in Portland, Ore., delivers a dramatic wake-up call with The Maple, in which maple-currant bread pudding is the carrier for sausage, spicy Cheddar cheese and fennel shavings. In the opposite corner of the country, OhNo Café in Portland, Maine, provides an equally innovative eye opener with its breakfast bagel sandwich that combines maple-glazed prosciutto with Vermont Cheddar and a dash of hot sauce. And at aptly named Syrup in Denver, where infused syrups are a signature, diners can start the day right with The Foster, featuring bananas sautéed in handcrafted maple-vanilla syrup.


Maple in the evening. Maple makes a smooth transition to dinner at Red Lobster, where it appears on the Wood-Fire Grill Menu. The Maple-Glazed Salmon and Shrimp is finished with a maple-cherry glaze, and the seafood-averse can enjoy the same flavor treatment on wood-grilled chicken breast. At George Martin’s Strip Steak, an independent restaurant in Great River, N.Y., Berkshire pork chops are maple-brined and served with roasted pears and a fresh cider reduction. Maple is also used in some creative cross-daypart offerings, like the Sugar-Dusted Maple Potato Doughnuts at Chicago’s West Town Tavern, a dessert item that taps into growing interest in artisanal doughnuts and is served with a whiskey-custard dipping sauce. Insiders at ChurchKey in Washington, D.C., order the house-made brioche doughnut. It’s glazed in savory maple-chicken jus, stuffed with chicken and bacon, and available by special request on Sundays from noon until night. 


Super in snacks. Snacks have become a major area of growth, and maple plays a role there, too. Last year, Denny’s made waves with a bacon-centric promotional menu that featured a Maple Bacon Sundae consisting of vanilla ice cream crowned with maple-flavored syrup and a sprinkling of diced hickory-smoked bacon. Eight-unit Magnolia Bakery uses a maple-and-cream-cheese combination as icing on its Pumpkin Cupcakes and the filling in its Whoopie Cookies. Maple even promotes school spirit and creates buzz at Brigham Young University, where multiple maple bars are reshaped to form an 18-inch Cougar Tail, the signature snack of the BYU Cougars
football team. BYU Dining Services reports selling a hefty 5,000 per game.


Delicious in drinks. Maple has become a bit of a breakout player in specialty cocktails around the country, too. At PDT in New York, the house Old Fashioned is newfangled with bacon-
infused bourbon and maple syrup. Bacon also infused vodka in the Baconcello Martini at Osteria Via Stato in Chicago, where it was mixed with artisanal maple syrup and topped with lime. And at Alembic in San Francisco, a promotional drink combined bourbon with maple-syrup gastrique, smoked apple-cider foam and fresh thyme.


Looking ahead, we’ll see more unexpected flavor combinations featuring maple, an ingredient that plays well with others. Condiments like maple mayonnaise, aïoli and mustard are appearing on menus around the country, and they represent the contemporary and creative evolution of a bona fide American classic.

Nancy Kruse, president of the Kruse Company, is a menu trends analyst based in Atlanta. E-mail her at nancykruse@aol.com.

PREVIOUSLY: The Kruse Report: Shell game

Smart brands know how to ‘fail fast’

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In the past few weeks I went from never having heard the business term “fail fast” to hearing it everywhere.

It came up when I interviewed former McDonald’s executive Ed Rensi at his startup chain Tom & Eddie’s and when I listened to Kathy Benning of Buffalo Wild Wings address the Marketing Executives Study Group.

Even if the term strikes me as new, the concept of businesses quickly correcting course when plans go awry has been around forever. So why am I hearing more about it now? My hopeful guess is that restaurant brands are taking risks again, going after market share instead of riding out an economic recovery that remains tepid for a lot of people.

Take a look at the quick-service segment to see what I mean.

It may be too early to tell if Burger King can sustain the momentum evident in its 4.2-percent gain in North American same-store sales in the first quarter. But the chain is staying aggressive, launching an overhauled menu in April with 13 new items, including offerings like snack wraps, fruit smoothies and frappés that have built sales for McDonald’s. A menu relaunch of this magnitude and an accompanying — and expensive — ad campaign that includes celebrity endorsers like Jay Leno and David Beckham is a significant risk for a company that had lost its way the past few years.

Wendy’s, the chain that had passed Burger King to claim the title of second-largest burger brand by U.S. sales last year, has remained even more nimble.

After admitting that its first-quarter sales were “disappointing” due in part to the trade-down effect resulting from its marketing strategies, Wendy’s said it no longer would advertise The “W” cheeseburger.

Wendy’s introduced The “W” at $2.99 last November to have a mid-priced hamburger between its My 99-cent Everyday Value Menu burger and Dave’s Hot ‘N Juicy cheeseburger at $3.69. But rather than encouraging value-conscious diners to trade up, The “W” backfired and stole transactions from Dave’s Hot ‘N Juicy. The negative sales mix combined with food-cost inflation cut into store margins and produced same-store sales growth of less than 1 percent.

During Wendy’s May 8 earnings call, chief executive Emil Brolick conceded that The “W” “was not the right positioning” and disclosed that the chain no longer would advertise the sandwich, now being sold for $3.19.

The marketing mistake cost Wendy’s in the short term, but the even bigger misjudgment would have been to wait and hope for trends to turn around. Acting prudently and quickly could prove to be pivotal in Wendy’s own journey back to robust sales growth, ultimately showing that failing doesn’t make one a failure, but indecision and inaction do.

Contact Mark Brandau at mark.brandau@penton.com.
Follow him on Twitter: @Mark_from_NRN.

PREVIOUSLY: Advertising with 
integrity at Chipotle

Diners drink up

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As consumers gradually emerge from a lingering recessionary spending mind-set and step up their dining-out frequency, many also are loosening up when it comes to ordering drinks — specifically, wine, beer and cocktails.

The sale of alcoholic beverages has largely kept pace with traffic trends, while consumer orders of all other beverages combined have declined over the last five years, according to a new report from market research firm The NPD Group.

And while full-service operators have been concentrating on winning over cost-conscious diners with revamped food menus, they now might want to consider turning their attention to merchandising beer, wine and cocktails, NPD officials suggested.

“Full-service operators have been focusing on the food because that’s how [consumers] decide where to eat; beverages have been lost,” said Warren Solochek, NPD vice president of client development. “If operators focus simply on food, they’re forgetting a very important part of their menu.”

According to NPD’s latest Beverage Alcohol Report, which examines what motivates consumers’ alcoholic-beverage choices at restaurants, 35 percent of diners who visit a full-service operation that serves alcohol will order a drink. With that number holding relatively steady for three years now, the opportunity to increase servings of alcoholic beverages in fine- and casual-dining operations is huge.

In fact, beverage alcohol has performed best at full-service restaurants, NPD found. Visits to these operations declined by 2 percent between 2010 and 2011, but the number of beverage-alcohol servings at those places decreased by only 1 percent for the year ended November 2011 compared with the same period a year earlier, NPD reported.

Despite those losses — which are due largely to weak traffic — some alcoholic-beverage products and categories are growing increasingly popular with full-service restaurant customers.

Beer is consumers’ beverage of choice at full-service places ranging from sports bars to casual-dining restaurants, NPD found. Whether bottled or draft poured, beer is served at 15 percent of all meal and snack occasions at fine- and casual-dining outlets. In the last three years, servings of beer have fluctuated because the younger adults who have historically purchased the beverage more often have been hit hard by the recession and high unemployment. Microbrews — small-batch beers largely produced by regional breweries — have helped maintain beer’s popularity, though.

“The good thing for beer has been a fairly big increase in purchases of microbrews,” Solochek said. “Younger people are looking for new and different kinds of things. [That’s] the appeal of microbrews.”

Whether classics made with consumers’ favorite brands or new creations custom-crafted by a mixologist, cocktails also continue to be popular. Cocktails are served at 10 percent of all meal and snack occasions at fine- and casual-dining outlets. Bourbon and whiskey are among the most popular spirits. Cocktail servings have remained flat the last three years, keeping pace with full-service traffic.

Wine has gained more menu importance of late, thanks to older adults who have taken to ordering beverage alcohol more frequently when they visit fine-dining restaurants. Ordering incidence of wine now exceeds 2007 pre-recession levels.

While food is primarily what lures diners to a particular restaurant, having the right beverages can seal the deal, NPD found.

“The trends show us it’s still important to have something unique on your [alcoholic-beverage] menu,” Solochek said. “People like choice.”

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The promise of higher sales and more-frequent visits has prompted operators in a variety of service segments to more closely examine and differentiate their existing hard beverage offerings.

The food at Union Square Cafe in New York has long been driven by fresh, local and seasonal ingredients, although that approach did not extend to its cocktail menu. In an effort to mirror the kitchen and boost slipping beverage sales, the cafe last year launched a seasonal cocktail-of-the-day program.

“Whether cocktail, soda, beer or wine, we should give the same thought and attention to where it comes from,” said Sam Lipp, managing partner of Union Square Hospitality Group, parent of Union Square Cafe. “We had not given the same attention to our spirits.”

Each day, a new farm-to-table cocktail is featured on the cafe menu, which is printed twice daily. Among the recent concoctions featured were the Pea Shooter, a blend of lemon vodka, chamomile grappa, and English pea and mint purée, and the Rhubarb Rossini, with rhubarb rum, Pampero, Lillet, lemon, cherry brandy, bitters and a splash of Prosecco. Since launching the beverage program last year, Lipp said the restaurant’s liquor sales have risen 15 percent, and beverage sales overall are up 17 percent.

Original-recipe craft cocktails have been a major theme at Mr. Rain’s Fun House, a seasonally focused American bistro in Baltimore. However, when the restaurant opened in 2009, craft cocktails were a relatively new concept, and many cash-conscious diners were reluctant to drop $11 on an unfamiliar drink. To inspire orders, Mr. Rain’s added cocktail flights — three mini craft cocktails for $25 — in 2010. The flights took off and helped to increase cocktail sales between 25 and 35 percent in the last year.

“It really helped to solidify our menu in the city, helped boost sales,” said beverage director Perez Klebahn.

Building on that success, Klebahn is creating bottled cocktails — carbonated versions of existing house-made drinks that are served in a bottle — for the summer. He’s also working on other innovations, including barrel-aged cocktails and breakfast-cereal-infused cream-based cocktails.

At Sizzler, guests usually have steak on their minds, not wine or beer. But the 168-unit steakhouse chain is hoping to change that with a new pairing program.

“Sizzler offers beer and wine, but it’s really never been a focus,” said Katie Cameron, senior director of marketing services for Sizzler USA. “As we revamped the brand, it seemed to make sense to pair our LTOs with beer and wine.”

The new program pairs wines with several of the chain’s limited-time offerings. For example, Salmon Creek Merlot is married to Steak & Shrimp Scampi, and Salmon Creek Chardonnay is suggested as an accompaniment to Steak & California Grilled Malibu Chicken. Rolled out in late April, the program is in test at 110 stores.

The chain, which recently underwent a brand overhaul, also added a beer panel to its new menu and may roll out a beer pairing to go with a summer barbecue LTO.

At least one restaurateur has built an entire concept around consumers’ increasing thirst for microbrews. Idaho’s Brewforia Beer Market is a retail-casual-dining-restaurant hybrid that offers more than 800 different beers from around the world, with a strong focus on American craft beers.

Brewforia, which its owner has dubbed “the Starbucks of beer,” has one unit open in a Boise suburb and a larger second unit under construction nearby. A franchise program is set to launch in the fall.

“The appeal of craft beer for people is being able to try something new,” owner Rick Boyd said. “The other big part of the appeal is the locavore movement. People feel a tremendous amount of pride in buying products made by people in their own town.”

Nation’s Restaurant News has an exclusive agreement to obtain the NPD Group data and research findings that appear on the Consumer Trends page.

Studying social media

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Operators sharing social media strategies at the 2012 National Restaurant Association Restaurant, Hotel-Motel Show in Chicago quickly dispelled the notion that succeeding in these new marketing platforms is easy or free.


However, while social media takes an investment in money to execute sophisticated campaigns and in time to learn and monitor new networks, a few intuitive tactics could improve restaurants’ performance, brand executives said. 


Three tips emerged from educational sessions on social media at this year’s show.


Start by recognizing others


For restaurant owners who don’t know where to start in social media, experts on the “Engage & Integrate: Social Media Tactics For Restaurants” panel suggested that they begin by giving attention and recognition to others in order to receive Facebook “likes” and Twitter followers in return.


Matt Bodnar, a partner of Birmingham, Ala.-based Fresh Hospitality, a multiconcept franchisor, said brands that only ever self-promote get ignored, so the ideal starting point is to promote others in the community via social media.


“If you promote other people who are in your niche or in your area on social media without asking for anything in return … you start forming relationships where people eventually start sharing your story,” Bodnar said. “The way that you build those relationships with people is you give to them first.”


He cited as an example a restaurateur forming a Twitter account and searching for people in the same city with similar interests in food and restaurants. Responding to or retweeting those users’ tweets would get the restaurateur on the radar of potential customers, Bodnar said. The same tactic could be used on local organizations, especially local philanthropic groups and charities, he added.


Panelist Chase Gilbert, an owner-operator of Fresh Hospitality’s Taziki’s Mediterranean Cafe concept in Nashville, Tenn., credited Bodnar’s approach in part with driving traffic and sales beyond initial expectations at his months-old location.


Some of the people in Nashville with whom he started interacting to promote the local restaurant scene included competitors.


“It just makes people realize that what you’re putting out there for them to see on Twitter [or on other platforms] is real,” Gilbert said.


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Encourage sharing


Experts participating in another NRA Show panel discussion, “Close the Gap: Connecting Social Media with Traditional Marketing Touchpoints,” agreed that customer-restaurant interaction on social networks would result from brands listening to fans, not broadcasting to them endlessly.


But restaurants also must monitor their profiles for guest complaints or questions so that they can respond quickly, said David Stidham, vice president of marketing for Prairie du Sac, Wis.-based Culver’s.


“Every time there is a grievance or a conflict or something that somebody has posted online about a bad experience, we are actually creating a deeper, stronger relationship with them by responding right away,” Stidham said. “They really do appreciate the fact that we reach out to them and aren’t a mindless company that puts a Facebook page up.”


Resolving conflicts publicly on Culver’s Facebook wall encourages just as many guests to respond with their own accounts of positive experiences, he added.


Stidham and co-presenters Dave Florin and Dana Arnold of the chain’s marketing and advertising agency, Hiebing, noted that the more comments, “likes” and shares Culver’s receives on its Facebook page, the better its EdgeRank score, which Facebook uses to measure brands’ influence and determine where they are displayed in customers’ news feeds. 


“Digital content is really the only medium out there that the more it’s consumed, the bigger it gets,” Stidham said. 


Culver’s most recent promotion was shared widely, not only for its offer of a free North Atlantic Cod Filet Sandwich during Lent, but also because of its entertainment value, Stidham said. The Catch of the Day contest was an online game that let users virtually fish in the sea to hook a free sandwich.


Importantly, the contest was “fan-gated,” he said, meaning that a user had to “like” Culver’s Facebook page in order to play.


“It’s one thing to offer a free item, but it’s another to do it in an engaging, entertaining way,” Stidham said. “I would rather have 300,000 active, engaged fans than 3 million people that are there for a freebie.”


Make it easy, rewarding


However, Culver’s does use vouchers for free value baskets to reward fans for actions like commenting on a photo or sharing one of their own on the brand’s Facebook page.


“If I have 1,000 people a day posting a picture of themselves having a great time at Culver’s, I’ll give 1,000 value baskets away every day,” Stidham said. “We want people to see that behavior, see that it’s rewarded and continue to grow that activity.”


Often, the fewer steps a brand requires from customers in order to redeem an offer, the more engagement they get with social media promotions, as Culver’s saw last year when it introduced its Mini Mixer dessert. Fans needed to only enter the brand’s Big Secret sweepstakes on Facebook to get a voucher for the product, which was released once Culver’s reached its goal of 10,000 entries — in just a few hours.


“It was as easy as possible for guests to engage with the promotion,” said Arnold, Hiebing’s director of public relations and social media. “Are you likely to do these five things just to be entered into something? Probably not.”


Another Facebook promotion, Culver’s Hometown Hall of Fame, focused not on a product but on recognizing “hometown heroes” who embody the small-town values inherent to the chain’s history and “Welcome to Delicious” positioning. Fans could nominate people from their towns to be recognized, and people voted to elect a grand-prize winner, “increasing the virility of the campaign,” Arnold said.


Total entries were down from the Big Secret promotion, but Hometown Hall of Fame still was shared far and wide, she noted.


“People are sharing a story of something they really care about,” she said, “and they are far more likely to share that with their network of friends.” 


Contact Mark Brandau at mark.brandau@penton.com.
Follow him on Twitter: @Mark_from_NRN.


Having Words With: Bob Barry

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Bob Barry joined The Greene Turtle Sports Bar & Grille as chief operating officer in 2007 as part of an investor group that purchased the then-11-unit casual-dining chain from its founders. In January, Barry was named president and chief executive of the Edgewater, Md.-based chain.

Mirroring the fable “The Tortoise and the Hare,” The Greene Turtle has proven that steadfast progress can trump speedy growth. The concept, inspired by a bar in the Green Turtle area of the Bahamas, debuted in 1976 in Ocean City, Md., and has spread across the Mid-Atlantic. Today, an emphasis on quality fare has food contributing 70 percent of sales in new units. The Greene Turtle has 13 company-owned locations and 19 franchised units in Delaware, Maryland, Virginia and around Washington, D.C., and is about to make a splash on New York’s Long Island.

HOMETOWN: Laurel, Md.
EDUCATION: B.A., Florida International University
EXPERIENCE: chief executive, BMCKJ LLC, a food manufacturing company; CEO, Bakery Resources Group — Ms. Desserts; chief operating officer, The Great Cookie Ltd.; director of marketing, Grace Culinary Systems, a division of W.R. Grace & Co.
PERSONAL: married, three children
HOBBIES: bow hunting, fishing, watching his kids play sports

What changes are underway at The Greene Turtle?

I hired a vice president of finance and administration a few months ago and just hired a vice president of marketing, so we’re definitely going through infrastructure changes and moving people around to support the growth that we are experiencing.

It’s a time when we have a lot of growth going on. We’re about to open our fourth unit this year. We are working with a large [Burger King] franchise group out of Long Island, and they will open their first store outside of Queens.

How is The Greene Turtle different from other casual-dining chains?

We are very flexible. We range in size from 5,500 square feet up to 12,000, and everything in between. Our typical wheelhouse is right around 7,000 square feet. We are not cookie cutter, and we’re not afraid of conversions as long as we can fit the elements and design into the shape. But we’re not afraid to go into several different shapes to make it work.

We have a mug club. We sell mugs for lifetime membership. Each store has about 1,000 mugs hanging on the wall. Members get discounted beverages, mug club parties, a lot of e-mail communications. There are people who will have mugs in every Greene Turtle.

TVs now are common [in restaurants], but we have TVs at every seat.

We also have a large amount of apparel sales and a freestanding apparel store at the beach in Ocean City. A few years ago, Greene Turtle was the most recognizable icon in the state of Maryland.

How has The Greene Turtle evolved?

We’ve developed over the last five years a strong emphasis on the food and the freshness of the food. We’re still a sports bar and restaurant, but with an emphasis on food and service. We have handmade crab cakes, freshly made chicken tenders; we’re really stepping it up a notch or two.

We want [our] fan base to come in and watch their sports team and to be a destination for the family to dine at. Our numbers show that in terms of the mix as far as food and beverage, food is increasing. It has increased by 15 percent in the last 20 months.

What did you learn from the Great Recession?

What it made us focus on was putting an emphasis on being great, not good. Average-to-good won’t make it anymore. You need great food, great service, great execution. …What we’re focusing on right now is really trying to get our managers focused on hiring the best. We’re encouraging the staff to create a fun atmosphere each and every time to give a great experience to the guest and trying every day to execute 100 percent.

What are the biggest challenges going forward?

The biggest challenge is industrywide — getting through these tough economic times that we’re having and getting the consumer to increase their spending habits. Right now, guest counts are down over the last five years, so the biggest challenge is getting through these tough economic times. We’ve managed to do that so far. And then, really finding “A” locations. Every restaurant company is looking for the “A” locations; no one is interested in “B”s or “C”s. You need to know the locations you pick are going to be a winner. … Finally, we’re still all caught in the value discounting now. Do we ever get away from that as an industry?

Contact Robin Lee Allen at robinlee.allen@penton.com.
Follow her on Twitter: @RobinLeeAllen.

PREVIOUSLY: Having Words With: Seth Woods

Thomas H. Lee Partners to buy Fogo de Chão in deal valued at $400M

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Private equity firm Thomas H. Lee Partners LP said Tuesday it has agreed to buy the 25-unit Fogo de Chão chain from GP Investments Ltd.

GP Investments, based in Sao Paulo, Brazil, valued the deal for the full-service Brazilian-style churascarria chain at about $400 million. The companies said they expect to close the deal in the third quarter.

Boston-based Thomas H. Lee Partners, or THL, was part of a group that bought Dunkin’ Brands Inc. and took it public in 2011.

Jeff T. Swenson, managing director of THL, said in a statement that the private equity firm had “tremendous respect for Fogo's innovative dining experience and unparalleled commitment to customer service and quality.”

Larry Johnson, chief executive of Fogo de Chão, which is headquartered in Dallas, added, “With three new restaurants opened in the past 12 months, Fogo has charted a compelling growth path.”

J.P. Morgan and Jefferies Finance LLC are providing financing for the transaction. Jefferies & Co. Inc. acted as financial advisor to THL, and Weil, Gotshal & Manges LLP acted as its legal advisor. J.P. Morgan acted as financial advisor and Davis Polk & Wardwell LLP acted as legal advisor for Fogo de Chao.

GP Investments, which is publically traded, acquired full ownership of Fogo de Chão last August. GP Investments, through its private equity fund GP Capital Partners III LP and other investors, had held a 35 percent stake in Fogo de Chão since 2006. With the purchase of the remaining 65 percent, GP Investments valued the equity in Fogo de Chão at $95 million.

RELATED: Fogo de Chão founder Jair Coser talks growth

Fogo de Chão was founded in 1979 in Southern Brazil and opened its first U.S. unit in 1997. The company has U.S. locations in: Atlanta; Austin, Texas; Baltimore, Md.; Beverly Hills, Calif.; Chicago; Dallas; Denver; Houston; Indianapolis, Ind.; Kansas City, Mo.; Miami; Minneapolis, Minn.; Philadelphia; San Antonio; Scottsdale, Ariz.; Washington, D.C.; Las Vegas; and Orlando, Fla.

Contact Ron Ruggless at ronald.ruggless@penton.com.
Follow him on Twitter: @RonRuggless

3 restaurant LTOs that went bad

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Too much of a good thing can be bad, especially for restaurants trying to walk that fine line between driving traffic with lower prices and maintaining a profitable average check.

Recently, a handful of restaurant chains — Wendy’s, Red Robin Gourmet Burgers and McDonald’s among them — are re-examining seemingly successful menu and marketing efforts after promotions aimed at driving incremental traffic caused customers to simply trade down. 

While successful price-point promotions usually depend upon some sacrificing of an average check to spur incremental guest counts, the balancing act can be a tough one to execute.

Take a look at what executives said they learned from these chains' recent missteps.

First: Wendy's W cheeseburger

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Wendy’s: W cheeseburger backfires

Wendy’s chief executive, Emil Brolick, conceded during the chain’s first-quarter earnings call that disappointing same-store sales growth of 0.8 percent at corporate restaurants and 0.7 percent at franchised locations resulted from an incorrect positioning of the W cheeseburger.

 Meant to encourage customers to trade up from a 99-cent sandwich to the $2.99 W, the new menu item backfired and instead stole transactions from Dave’s Hot ‘N Juicy Cheeseburger, which carries a $3.69 suggested price for a single. The average check for a transaction involving the W was $1.19 less than the average check for a sale involving a Dave’s Hot ‘N Juicy, Brolick said at the recent Morgan Stanley Retail and Restaurant Conference.

“Quite honestly, the thought process about this was not what it needed to be,” Brolick said. “The individual using a 99-cent value menu — not just ours, but across [the quick-service segment] — has a tendency to be younger, male and lower-income.

“Moving up from a 99-cent item to $2.99 is a dramatic step up in price for them,” Brolick said. “If you raise the price on a 99-cent item, often those people will migrate to another 99-cent item on the menu, because price is very important to them.”

The best way to deliver value, Brolick asserted, is to “give people a clearly superior product and charge them a competitive price.”

The W will become an optional menu item later this year, Brolick said, and Wendy’s expects the majority of franchise markets to discontinue the product when the brand transitions to advertising another limited-time offer.

READ MORE: Wendy's cuts forecast after 'disappointing' 1Q results

Next: Red Robin's Big Melt Bacon Burger

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Red Robin: Big Melt Bacon Burger doesn't drive new traffic

Red Robin Gourmet Burgers attributed its weak same-store sales growth of 0.5 percent — comprising an average-check gain of 4.1 percent and a guest count decline of 3.6 percent — to the strategy around its Big Melt Bacon Burger limited-time offer.

Steve Carley, chief executive at Red Robin, said the advertising for the Big Melt Bacon Burger “struggled to break through the clutter” and did not produce the incremental traffic the chain sought with the aggressive $6.99 price point.

“The Big Melt Bacon Burger mixed really well in our restaurants, and a lot of our guests were satisfied,” the chain’s chief marketing officer, Denny Marie Post, added. “It was a marketing issue that we didn’t drive [customers] in. … What we ended up with was trade-down from the existing guest.”

Carley said that customers did add more appetizers and sides to their orders in the first quarter but added, “We absolutely need to sell more burgers and entrees.” The chain’s newest burger, the Tavern Double, also has debuted at $6.99, but the menu item includes the option to trade up to one of three Tavern styles for $1, which is intended to protect the average check, he said.

New commercials have already begun airing for the Tavern Double.

Watch the triplets commercial; story continues below

“It allows us to have a $6.99 starting price point every day,” Post said of the Tavern Double offer. “Guests can choose to trade up from there, via the three styles, or perhaps they discover another signature burger.”

READ MORE: Red Robin retools marketing

Last: McDonald's Loose Change menu
Previous: Wendy's W cheeseburger

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McDonald’s: Loose Change menu erodes average check in Australia

Securities analysts recently visited the McDonald’s Corp. Innovation Center, where the company shares best practices from around the world. There, McDonald's executives told a cautionary tale about value menus from its Australian market, a major profit contributor to the company’s Asia-Pacific, Middle East and Africa, or APMEA, division.

According to research notes from Jeffrey Bernstein of Barclays Capital and David Tarantino of R.W. Baird, Australia’s “Loose Change” value menu drove large gains in guest counts but caused more erosion to the average check than anticipated.

McDonald’s officials told analysts that while the result is a short-term trade of average check for traffic gains, the improvements in guest counts would positively benefit the Australian market over the long term.

“This phenomenon could continue, but the traffic gains are seen as positive for longer-term business trends,” commented Tarantino after meeting with McDonald’s executives, including chief financial officer Pete Bensen, at the Innovation Center.

McDonald’s same-store sales in APMEA grew 1.1 percent in April, which the company attributed mainly to results in Japan offsetting strong performance in other countries.

Same-store sales in the United States grew 3.3 percent for the month, which McDonald’s said resulted not only from seasonal beverages but value pricing. The company’s major value move came toward the end of March when it introduced the Extra Value Menu, a collection of the existing menu items with prices falling between the Dollar Menu and Extra Value Meals.

McDonald’s promoted the 20-piece Chicken McNuggets heavily on television, as well as spring and summer beverages like Frozen Strawberry Lemonade and the Cherry Berry Chiller. 

Watch a commercial for the Cherry Berry Chiller; story continues below

READ MORE:

Analysts: McDonald's to battle pitfalls with innovation
McDonald’s: Special offers drove April same-store sales growth

PreviousRed Robin's Big Melt Bacon Burger

Contact Mark Brandau at mark.brandau@penton.com.
Follow him on Twitter: @Mark_from_NRN

Chef Tre Ghoshal: More than molecular

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Tre Ghoshal might have immersion circulators, dehydrators and anti-griddles in the kitchen at his restaurant Adara in Montclair, N.J., but he’s not all about the bells and whistles of molecular gastronomy. The 30-year-old chef and entrepreneur also is well grounded in culinary fundamentals: He’s one of the country’s 65 certified master chefs, a designation given by the American Culinary Federation after passing what is by all accounts a grueling eight-day test of culinary skill and knowledge.

The son of immigrants from the Indian state of West Bengal, Ghoshal named his restaurant, which he opened last October, for a Sanskrit word for “love.”

“It’s an expression of me, really,” Ghoshal says of the restaurant. “Every single dish has a story behind it.”

Ghoshal’s own story didn’t start with a love for food. Although he’d been working in kitchens since he was a teenager, he developed a genuine appreciation of food while he was studying history and political science at Humboldt State University in the northern California town of Arcata, a two-hour drive from Napa Valley. While studying there he worked at the Rib Room at the Eureka Inn in the nearby town of Eureka under Mark Campbell, a protégé of legendary chef Thomas Keller.

“That really kind of set off the direction of my food,” Ghoshal said.

He went on to culinary school at the Art Institute of New York and then ended up working at Nouveau Sushi in Montclair, N.J., where he got in-depth experience with Japanese cuisine. He also has been chef at Rotunda at Neiman Marcus in Paramus, N.J., and at The Savoy Grill in Newark, N.J.

Those experiences plus the Indian food he grew up on inspire the food at Adara, and so do the avant-garde chefs from whom he draws inspiration.

Ghoshal discussed his food and his plans for the future with Nation’s Restaurant News.

Your publicists have described your food as “molecular cuisine.” How do you describe it?

The focus is on balance and flavor profile with a comfort level to it. It’s earthy and has a natural feel.

This restaurant’s a vision I’ve been developing after the past 16 years in the business.

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• Shaun Doty discusses new chicken concept
• David Chang on popular kimchi dish

But you’re only 30 years old.

I started as a dishwasher and went through the whole gamut.

But you went to culinary school anyway?

I thought I needed the red tape to advance my career. In my particular path the degree proved to be insignificant, but I’d recommend it for 98 percent of people who want to be chefs.

Why?

Everybody wants everything so quickly these days, and I think you need to grow some hair on your chest, so to speak. There’s some respect to be given to theoretical development as a chef.

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Walk me through some of your dishes.

We have confit duck leg that’s crisped up and tossed with Asian barbecue sauce. It’s served with duck breast that’s cooked sous vide, pan seared and sliced thin, and a maki [sushi roll] of mango-papaya salad in rice wine vinaigrette. Black and white sesame seeds are sprinkled along the leg and the breast.

Under the duck is a coconut curry bisque with kaffir lime, a lemon grass sorbet and melon balls suspended in rose water. It’s served with crushed peanuts.

That dish has classic French technique, modern western technique, Japanese aspects of presentation and South Asian flavors. Tell me about another dish.

The Pork with Five Flavors is a pork belly that’s hickory smoked, then brined, then cooked sous vide for 48 hours. Then it’s pan seared and served with a root beer barbecue sauce.

It comes with mustard seeds braised in a sweet liquid with ginger, chile and garlic, a hot mustard ice cream and aerated rye brioche. Mustard with fish is a common marriage in Bengali cuisine.

When you say hot mustard ice cream, do you mean spicy mustard?

No, the ice cream itself is hot.

Do you use methylcellulose to get the “ice cream” to gel?

Yes.

What are your plans for the future?

Adara for me is not at all the be all, end all. I’m not a rich guy. I have chef-type money and opened a restaurant as nice as I could on the limited funds I have so someone who has a lot more money than I do can be moved by the experience.

I have a two-and-a-half-year lease. I’m working on putting together and investment group to open in New York.

But I’m living a dream right now. All I’ve wanted to do is to do things my way.

Contact Bret Thorn at bret.thorn@penton.com.
Follow him on Twitter: @foodwriterdiary

Applebee's sells 33 locations to franchisee

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Applebee’s has nearly reached its goal of becoming an almost-all-franchised brand with the signing Tuesday of an asset purchase agreement to sell 33 company-owned locations, primarily in Missouri and Indiana.

Applebee’s parent company, DineEquity Inc., said it has signed an agreement with American Franchise Capital LLC, based in Greenwich, Conn., whose managing partner William Georgas is a longtime Applebee’s franchisee.

Georgas was previously the co-managing owner of The Georgas Group, a franchise company that operated 47 Applebee’s locations. This is the first Applebee’s acquisition for the American Franchise Capital, however, which Georgas formed with Trevor Ganshaw with the goal of acquiring franchises in the U.S. and Canada.

The transaction, which is expected to close in the third quarter this year, is expected to result in net proceeds after taxes of about $26 million and will reduce DineEquity’s sale-leaseback-related financing obligations by about $22 million.

DineEquity expects to pay about $5 million related to the settlement of net working capital liabilities and deal costs, the company said. The sale is also expected to save about $1.3 million in annualized general and administrative expenses.

“We are pleased to announce the sale of 33 Applebee’s company-operated restaurants, reflecting yet another significant step in our strategy to transition to a 99-percent franchised restaurant system,” said Julia Stewart, DineEquity’s chair and chief executive, in a statement. “American Franchise Capital is a great franchise partner with deep operating experience.”

RELATED:
• DineEquity to sell Applebee's restaurants
Applebee's executives step down
• Applebee's joins Kids LiveWell

Since acquiring the chain in November 2007, DineEquity has sold 342 company-owned Applebee’s locations to franchisees. The company has long argued that a franchise business model is less capital intensive and less vulnerable to cash flow volatility.

Once the deal with American Franchise Capital is complete, along with another pending sale of 39 restaurants in Virginia announced earlier this year, the chain will be 97-percent franchised.

Glendale, Calif.-based DineEquity operates and franchises 2,018 Applebee’s restaurants, as well as the 1,551-unit IHOP brand.

Contact Lisa Jennings at lisa.jennings@penton.com.
Follow her on Twitter: @livetodineout

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