Domino’s Pizza, Inc. chief executive Patrick Doyle Tuesday called the company’s second quarter the “perfect example” of how Domino’s long-term business model could produce growth in earnings, same-store sales and store counts, though he acknowledged that the company has much it still needs to accomplish in the United States and abroad.

“To me, the one disappointment in the quarter is that we’ve got to be positive on order counts domestically over time,” Doyle said during the company’s earnings call with securities analysts.

Despite transactions falling an unspecified amount, however, Domino’s improved its operating margin 1.7 percent to 30.5 percent on the way to an 11.3-percent increase in net income for the June 17-ended quarter.

For the period, net income rose to $28.1 million, or 47 cents per share, compared with $25.2 million, or 40 cents per share, a year earlier.

Revenue fell 2.3 percent for the quarter to $376.1 million, compared with $384.9 million a year earlier. Domino’s attributed the decrease mostly to lower supply chain revenues, the sale of several company-owned stores to franchisees over the past 12 months, and negative effects of foreign currency translation.

In the United States, same-store sales rose 1.7 percent, reflecting gains of 1.9 percent at franchised stores and 0.3 percent at company-owned locations. International same-store sales increased 5.7 percent.

Focusing on transactions before growth in U.S.

Much like its domestic results in the first quarter of 2012, Domino’s increased its same-store sales in line with its long-term guidance between 1 percent and 3 percent in the United States. Again like the first quarter, same-store sales were positive and margins and average check improved, though transaction counts were down.

Domino’s mostly marketed its Artisan Pizzas in the second quarter after focusing on advertising side items like Parmesan Bread Bites in the first quarter. Doyle reiterated that Domino’s officials are not satisfied whenever transactions decrease, so the chain will make marketing changes in the back half of the year, though he would not elaborate. The brand began the third quarter by marketing its sandwiches.

“The pizza category looks to be up a little bit, but the U.S. consumer is still pretty darn conservative,” Doyle said. “Until we get certainty resolved around the economy or taxes, I think they’ll stay conservative.”

Another key metric Domino’s is tracking in the United States is net unit growth, which was positive in the second quarter with three net openings. The result comprised eight new stores and, more importantly, only five closures, which was the fewest for Domino’s in quite some time, Doyle said.

“We want to get back to some modest positive net growth domestically, but it’s still going to take some time,” he said. “Financing is now much better for our larger franchisees, but for one- and two-store folks who want to open another location it’s still relatively tough out there.”

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Domino’s will focus domestic-growth efforts on improving unit-level economics and increasing franchisee profitability, Doyle said, adding that franchisees’ per-unit profitability was running $5,000 ahead of last year’s results through the first six months of 2012.

The brand has no plans to deploy its cash into development incentives for franchisees, he added.

International system remains robust

Though Doyle described the macro global economy as “tepid,” especially for Europe, he nonetheless was pleased with the international division’s 5.7-percent increase in same-store sales — which lapped a 7.4-percent gain from a year earlier. The sales success was “very broad-based,” he added, reflecting the fact that Domino’s is spread out over a diverse group of markets and does not rely disproportionately on any handful of countries.

“As you see a weakening global economy, particularly in Europe, we’ve looked at it very closely, and [the volatility] just hasn’t been there,” Doyle said. “We’ve seen weakness in Greece, but we have only 35 stores there. We’ve seen weakness in Spain, but only a little. Really, after that, the rest of Europe is strong for us, and Asia is strong.”

In the second quarter, the chain opened a net 111 restaurants in its international division, bringing its trailing-12-months total to 481 net openings. Domino’s will be devoting more attention to emerging markets like Brazil and China in the coming years, which do not have the sales of other developed markets like Mexico and Australia but hold a lot of promise for the brand.

“Brazil is relatively small for us, but it’s growing nicely,” Doyle said. “We’re getting good results and have a strong partner down there. It doesn’t crack our top 10 yet, but given the size and scale of the market, we’re pleased with where we are. … China is kind of like Brazil, in that it’s a big market, so it’s an area that’s going to get a lot of focus over the years.”

Given that the pizza category is growing in most international markets and that Domino’s has been able to take market share in many countries, Doyle said, the company has no plans to start competing with other Western restaurant chains that have announced plans to discount aggressively, as McDonald’s has done in India, for instance.

Domino’s reached the 5,000-unit milestone for its international system during the second quarter.

Ann Arbor, Mich.-based Domino’s operates 387 restaurants and franchises another 4,514 units in the United States, and it franchises 5,023 locations in more than 70 international markets.

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

As U.S. consumers slowly increased their restaurant visits and spending in the spring of 2012, the restaurant industry notched its first increase in total unit count for chains and independents in nearly two years, according to a new report from The NPD Group.

The Port Washington, N.Y.-based market research firm found in its “Spring 2012 ReCount” report that total restaurant units increased by 2,872 in the 12 months ended March 31, 2012, to 592,960 locations. That increase comprised gains of 1,888 locations for chain restaurants and 984 openings for independents.

For the spring 2010 and spring 2011 “ReCount” reports, independent restaurants had lost 1,172 units and 1,331 units, respectively. During those two years, chain restaurants had benefited from independents’ struggles, growing by 2,114 locations in 2010 and 1,350 locations in 2011.

The quick-service segment was the biggest beneficiary to the restaurant industry’s renewed unit growth, accounting for 2,275 of the 2,872 new locations opened in the trailing 12 months.

“With improvement in restaurant visits and spending, restaurant operators, especially in the quick-service segment, are more willing to invest in new locations,” Greg Starzynski, director of product management for NPD Foodservice, said in a statement. “However, I expect them to take a more cautious approach to expansion than we saw earlier in the past decade. This is particularly true of the full-service segment, since expansion costs are significantly higher and traffic and spending gains have not been as strong in this segment.”

In a separate study, NPD’s CREST service had found that customer visits to U.S. restaurants had increased 1 percent for the 12 months ended May 31, 2012. During that period, consumer spending at restaurants had risen 2 percent.

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

Buffalo Wild Wings officials told securities analysts Wednesday they were “very pleased” with financial results for the second quarter despite excessive commodity inflation for chicken wings that shrunk restaurant-level margins 3.4 percent in the quarter, a headwind that the chain will fight the rest of the year through menu price increases and new marketing initiatives.

During the June 24-ended second quarter the company began to feel the brunt of commodity inflation as higher chicken wing prices drove a 31.6-percent cost of goods, compared with 27.2 percent in the year-earlier quarter. Traditional wings cost $1.90 per pound in the quarter, compared with $1.02 per pound a year earlier.

Chief financial officer Mary Twinem said 4.1 percent of that 4.4-percent increase in food cost was due to wing prices, and more than half a percentage point of that resulted from the fact that the wings are larger. Because the chain buys these wings by the pound but sells them individually, larger wings will make food inflation that much harder to mitigate.

As a result, Buffalo Wild Wings’ restaurant-level margins in the quarter fell to 17.5 percent of sales compared with 20.9 percent of sales in the year-earlier second quarter. However, the company's net income still rose 9.3 percent to $11.7 million, or 62 cents per share, compared with $10.7 million, or 58 cents per share, a year earlier.

In addition, revenue increased 29.7 percent to $238.7 million, benefiting from same-store sales gains of 5.3 percent at company-owned restaurants and 5.5 percent at franchised locations, as well as the performance of new units and 17 franchised restaurants that Buffalo Wild Wings purchased during the past 12 months.

Room for continued pricing increases

Buffalo Wild Wings officials said the brand had the flexibility to implement menu price increases this year to bring its food cost closer to its traditional range of between 29 percent and 30 percent.

The chain’s new-menu rollout in July contained a price increase of about 1 percent, which combined with earlier increases from January produced prices about 3 percent higher than a year earlier, Twinem said. The brand likely would take another 1-percent price hike in September when a menu extension rolls out.

Chief executive Sally Smith added that almost all company markets raised the price of the chain’s Wing Tuesday promotion from 45 cents per wing to 50 cents this year.

“We have not seen any resistance to that price increase at all,” she said, “which gives us some confidence that, should wings remain high, there’s a possibility for Wing Tuesdays [to] take another price increase.”

A longer-term strategy for managing through high wing prices would be tested this year, Smith said, in which the menu descriptions for orders of wings would convert from the specific number of wings — six, 12, 18 and 24, generally — to some new grouping like “single,” “double” or “triple.”

“So if yield becomes an issue, you can modify the quantity going into that ‘single,’ ‘double’ or ‘triple’ order,” she explained. “Although the wings are larger, they also provide additional proteins to the guest. So having five wings versus six wings, you may actually be getting more value, if you were to call it that.”

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She said in a follow-up interview with Nation’s Restaurant News that Buffalo Wild Wings’ first location in Calgary, Alberta, would open soon with this “non-numerical” menu description, and several franchisees and some corporate markets will begin testing it immediately. The goal is to have all testing complete by the time Buffalo Wild Wings prints its next new systemwide menu in January 2013, she said.

Sports schedule to prove favorable

Commodity pressure caused Buffalo Wild Wings to temper its full-year outlook for earnings growth, from a 20-percent target to a range between 15 percent and 20 percent. However, brand officials said the chain’s prospects for the top line would remain robust.

“We’re very confident in our ability to drive sales into our restaurants,” Twinem said. “We’re just not sure that commodities are going to work in our favor.”

Smith concurred, citing branding and sales-driving initiatives like the chain’s title sponsorship of the Buffalo Wild Wings Bowl, to take place during college football’s championship season in late December. The brand also will take advantage of the Summer Olympics by rolling out three new varieties of flatbread sandwiches for sharing.

During football season, the National Football League will air more Thursday night games, which officials said would benefit Buffalo Wild Wings’ traffic. The chain will bulk up its marketing spending through a 50-percent increase in the number of Fantasy Football Draft Party promotions offered at its restaurants, as well as several new radio and TV spots, and a Facebook promotion offering tickets to the Buffalo Wild Wings Bowl as a prize.

“We’ve set strategies in motion to evolve our brand and ensure we remain compelling for our guests well into the future,” Smith said. “We believe that with our dedicated focus on our guest experience and our concentrated efforts on operational excellence and profitability, we will continue to expand the Buffalo Wild Wings brand across the globe.”

To that end, Buffalo Wild Wings also announced its first international-development deals outside North America, including one 22-unit agreement for Saudi Arabia and the United Arab Emirates, with options for four additional Middle East countries, over the next six years. Another pact for four locations in Puerto Rico by 2016, the first of which is scheduled to open next year, also was announced.

Minneapolis-based Buffalo Wild Wings operates or franchises 837 restaurants in the United States and Canada.

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

The Plamondon Companies, parent of Roy Rogers Restaurants, has named Melanie Dyer the quick-service chain’s director of marketing.

Dyer, who spent the past 11 years as KFC’s national marketing manager, said she is enjoying working for a “nimble” concept like Roy Rogers, which has 20 company-owned and 29 franchised restaurants.

She said she plans to play to the concept’s strengths of quality, variety and a “customer-forward” attitude.

The chain specializes in USDA Choice roast beef sandwiches, as well as never-frozen, all-natural fried chicken and hamburgers that guests can customize at the restaurants’ “Fixin’s Bar.”

In August the chain plans to roll out what Dyer calls “the two-fist, no filler fajita.” The Chicken Fajita Wrap is made with oven-roasted chicken and seasoned with pico de gallo, Cheddar cheese and sour cream, and is priced at $4.29.

“What I love about it competitively is that it’s filler-free and is a substantial hot eat, not a snack, which I think sets us apart in the marketplace where wraps are concerned. It also tastes amazing,” Dyer said.

Named after the once-renowned cowboy singer and actor, Roy Rogers Restaurants was founded in the 1960s by Marriott International and grew to 648 units, mostly in the Northeast. It was purchased by Hardee’s in 1990, and many locations were converted to that concept or sold to other chains.

Franchisees Pete and Jim Plamondon, whose father, Jim Plamondon, Sr., helped found Roy Rogers as a Marriott executive, bought the brand in 2002, when the chain was more than 600 units smaller than at its peak.

“The fact that this system could be kind of cut off at the knees and still survive is a testament to the brand itself,” Dyer said.

“There’s lot of heritage with who Roy Rogers was, but not a lot of recognition,” she added. “I think that gives us a chance to redefine what Roy’s is now. Even though we do have that deep heritage — we don’t want to lose Roy Rogers as the person who embodied what this brand is — I do want to take it from a Hollywood feel to a backyard feel.”

Since the chain is now much smaller than it was, Roy Rogers has a community-owned feel and reputation that its markets support, she noted.

“In the data that I’ve seen that shows how the customers feel when they come into the store, it doesn’t feel like a chain [to them],” she said. “It feels very local and community-based, and that’s what we strive to keep as we grow.”

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

DineEquity Inc. said Wednesday it has agreed to sell 65 Applebee’s restaurants in Michigan, a move that when finalized, will complete the company’s five-year strategy of turning the casual-dining chain into an almost fully franchised brand.

Since acquiring Applebee’s Neighborhood Grill & Bar in 2007, Glendale, Calif.-based DineEquity has sold or entered into agreements to sell all of its 510 domestic company-operated restaurants, except for 23 test market locations the company intends to keep.

Three refranchising deals are still pending, the company said. But once those are finalized in the third or early fourth quarter, Applebee’s will be 99-percent franchise operated. To date, the company has sold 342 domestic locations to franchisees since the brand was acquired.

Julia Stewart, chair and chief executive of DineEquity Inc., which also owns the mostly franchised IHOP family-dining chain, has long argued that the franchise business model is less capital-intensive and experiences less volatility in cash flow performance compared with company-operated restaurants.

“We are excited to reach this very important milestone in our history and realize our strategic goal of transitioning the Applebee’s business model away from company-owned and operated restaurants and toward the pure-play franchisor model we pioneered at IHOP,” Stewart said in a statement.

The deal with franchise operator TSFR Apple Venture LLC for the 65 Michigan restaurants is expected to net about $61 million after taxes and will reduce DineEquity’s sale-leaseback financing obligations by about $38 million.

DineEquity said it expects to pay about $9 million related to the settlement of net working capital liabilities and deal costs. The sale is also expected to result in about $2.6 million in annualized general and administrative savings.

TSFR Apple Venture is part of a family of Michigan-based restaurant companies founded by the Schostak family, lead by Mark Schostak, executive chairman. When the deal closes, the family will own, operate or have an investment in more than 160 restaurants across the quick-service, family-dining and casual-dining segments.

In May, DineEquity revealed two asset purchase agreements: One with Potomac Family Dining Group LLC for the sale of 39 Applebee’s units in Virginia; and a second with American Franchise Capital LLC for 33 restaurants, mostly in Missouri and Indiana.

DineEquity operates or franchises more than 3,500 restaurants in 18 countries between the two brands.

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

Panera Bread Co. plans to continue its increased advertising and expansion of its drive-thru units, executives said Wednesday in discussing positive second-quarter income and sales trends.

The company is in the midst of its first national cable-television media purchase and is supplementing with traditional marketing efforts, Ron Shaich, chairman and co-CEO, told analysts on a conference call. “We classify the national cable buy as a test that we expect will help us determine the best mix of media as we go forward,” he said.

William Moreton, president and co-chief executive of Panera, said the marketing message was altered in the current promotion, the “Summer Celebration,” which started about five weeks earlier than usual. Panera breaks its promotional year into five such “celebration” segments.

The shift, Moreton said, helped Panera’s second-quarter same-store sales. “We adjusted our internal calendar to better match the desires of our customers,” he said. “We believe this timing shift drove approximately 100 basis points of the comp increase in the quarter.”

Another program that had a positive impact for Panera in the second quarter, according to executives, was its "meal upgrade program," which has been in effect for several quarters. By offering guests a 99-cent bakery item with the purchase of a beverage, Moreton said, the program drove about 50 basis points of positive mixed growth in the quarter.

In addition, Shaich said that supply chain enhancements have helped Panera get items such as fresh avocados into almost all its bakery-cafes, which has increased sales of its Signature Salad by 22 percent in the second quarter.

Blended same-store sales for franchised and company-owned stores were up 5.9 percent in the quarter, the company said. Moreton added that as of Tuesday, third-quarter same-store sales continued to trend upward, with company units’ same-store sales up 5.9 percent over last year.

Looking ahead

Panera has increased its marketing this fiscal year, increasing the percentage of sales on direct media expenses to 1.5 percent in 2012 from 1.3 percent last year. “Although this is a relatively minor increase as a percent of sales," said Shaich, "this increased level of spending gives us approximately 26 percent more immediate dollars this year to improve our share voice."

He noted that Panera switched its lead creative agency to Chicago-based Cramer-Krasselt, and the company expects to roll out a new campaign next year.

Executives said that beyond focusing on marketing efforts, Panera will continue to increase drive-thru expansion. The company is planning for 40 percent of the new units this year to include drive-thrus, which are aimed at convenience as well as the increasing catering business.

“Drive-thrus remain a tool that we’re using to increase customer convenience for those people that are tied to a car at certain meal occasions,” Moreton said. “Development of drive-thrus continues on pace to end the year with 200 units systemwide.”

In addition, Panera will roll out later this year a new “conversational ordering system,” Shaich said, which is a “less-structured process” designed to improve order accuracy and guest interactions.

Executives said they will also look at opportunities for more Panera urban cafes such as the ones opened in Boston, New York and Toronto.

“I should note that with our urban bakery cafes, our average weekly sales are higher than our suburban units, but so are the rents and the capital costs,” said Moreton. “So our expectation is that once we’re at steady state, the urban bakery cafes will have a very similar return on investment as our suburban cafes do."

The St. Louis-based company on Tuesday reported that income rose 24 percent in the quarter ended June 26, to $44.1 million, or $1.50 a share, from $35.7 million, or $1.18 a share, in the year-earlier period. Revenue was up about 18 percent, to $530.6 million, in the quarter.

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

Eric Justice, former vice president of culinary operations for the casual-dining chain P.F. Chang’s China Bistro and its sister fast-casual chain Pei Wei Asian Diner, has joined consulting company Culinary Concepts Group as vice president of culinary services.

CCG said Justice would work with founding partners Ethan Royce and Shawn Davidson “to create and launch innovative new food concepts for leading national brands,” including Panera Bread, Dunkin’ Donuts and Pei Wei.

Justice also has worked with T.G.I. Friday’s parent Carlson Restaurants World Wide, Houston-based Pappas Restaurant Group, and Rare Hospitality, which was parent to the Longhorn Steakhouse and Capital Grille chains before it was bought by Darden Restaurants.

Nicholas Batey is the new executive chef of the Whiteface Lodge in Lake Placid, N.Y. Most recently executive chef of the Hilton Garden Inn and Homewood Suites in Rockville, Md., Batey is now serving dishes such as tuna tartare with cucumber, ginger, coriander, sesame, lime, chives and gaufrette potatoes, and figs stuffed with Boursin cheese and wrapped in prosciutto.

Jennifer Backman has been named executive chef at the Weekapaug Inn, in Weekapaug, R.I., which is slated to reopen in October. Previously executive sous chef at the Ocean House in Watch Hill, R.I., this native of Washington State studied culinary arts at Johnson & Wales in Providence, R.I., and is well acquainted with local fare, which she is using in dishes such as roasted tautog — a local fish — with Jonah crab salad, asparagus, fennel and smoked tomato vinaigrette.

Chad Greer is executive chef at Henry’s at the Farm in Milton, N.Y., and his wife Tammy Ogletree is pastry chef. The two were the former chef-owner and pastry chef-owner of Beso in nearby New Paltz, N.Y. Greer said he prepares food with strong, distinctive flavor and textures. That includes chilled spring pea soup and crab with local peas, Dungeness crab salad and pea shoots; crispy baby calamari with roasted chipotle ragout, cilantro and lime; and fettuccine with prawns, local corn and tomato cream sauce.

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Peter Smith is executive chef at Bean & Bottle at the Lodge at Sonoma Renaissance Resort and Spa in Sonoma, Calif. Most recently the executive chef of the JW Marriott Hill Country Resort & Spa in San Antonio, Texas, Smith is originally from the Australian state of Queensland, but got his culinary degree in Sydney, Australia, at Windermere Culinary College.

Gerald Infantino is now executive chef of the Baltimore Convention Center, which is operated by Centerplate. He’s working on creating new standard and specialized menus for the venue. Since May 2009 he had been hub executive chef for Centerplate, with responsibility for culinary oversight at seven venues in that area, including the Indiana State Museum, NCAA headquarters and the Klipsch Music Center VIP Club.

John Cox is executive chef of Sierra Mar at the Post Ranch Inn in Big Sur, Calif. A native of northern New Mexico, but a graduate of the New England Culinary Institute in Montpelier, Vt., Cox most recently was in Carmel, Calif., as executive chef of Casanova and La Bicyclette.

Steve Cruz, who has spent the past five years working in catering and as a private chef, is now executive chef at The Orchard House in New York City, where he is making items such as lamb sliders with tomato jam, avocado, basil and scallion mayonnaise, and mac and cheese pancakes with Vermont maple syrup.

Tony Flier is the new executive chef of The Golden Bear Restaurant Group, Based in San Francisco, which operates MoMo’s, Pedro’s Cantina and Pete’s Tavern. Previously a culinary consultant for Pucci Foods in Haward, Calif., Flier, a native of San Mateo, Calif., started working in restaurants at age 15, doing stages in Europe before returning to the San Francisco Bay area, where he helped open landmarks such as Nola, Kingfish and Fish market.

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

DineEquity Inc. on Tuesday announced that Jean Birch, president of the IHOP chain, will step down effective Aug. 27, and the company will cut about 100 jobs as it moves to a more efficient franchising model.

The company said it expects to generate about $10 million to $12 million in annualized savings as it shifts to a more efficient shared services platform between its IHOP and Applebee's brands, which will include a headcount reduction.

Julia Stewart, DineEquity’s chair and chief executive, will assume day-to-day leadership of IHOP an provide strategic direction until a replacement for Birch is found, the company said.

“I want to thank Jean for her dedication and leadership,” said Stewart in a statement. “She has made lasting contributions to the brand and has identified ways to expand our breakfast platform. I wish Jean all the best on her future endeavors.”

The news came as the Glendale, Calif.-based operator and franchisor of the IHOP and Applebee’s brands reported net income available to common stockholders for the second quarter of $15.9 million, or 88 cents per share, compared with a loss of $284,000, or a loss of 2 cents per share, for the same quarter last year.

Revenues for the quarter declined 14 percent to $229.4 million, in part because the company has almost completed its strategic plan to turn Applebee’s into a 99-percent franchised chain. Three transactions for the sale of 137 Applebee’s locations in Virginia, Missouri, Indiana and Michigan are pending, but the company expects they will close in the third or fourth quarters.

IHOP has been struggling over the past few quarters with sinking sales, a trend that continued into the second quarter. The brand's domestic same-store sales for the second quarter were down 1.4 percent, reflecting a decline in traffic that was offset by a higher average guest check, the company said.

However, same-store sales at domestic Applebee’s locations systemwide increased 0.7 percent, which the company said reflected a higher guest check average that was partially offset by a drop in traffic.

Birch’s departure follows other executive changes earlier this year. Patrick Lenow, IHOP’s fomer executive director of communications, left the company in March. Jim Peros, former senior vice president of operations at IHOP, retired in March.

On the Applebee’s side, Shannon Johnson, the former vice president of culinary and menu strategy, left the company to join McDonald’s USA as director of culinary innovation in May.

DineEquity franchises and operates 3,500 restaurants under the IHOP and Applebee’s brands in 18 countries.

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

Traffic, sales and margins were all positive for Texas Roadhouse Inc. in the second quarter, but executives told securities analysts during the brand’s earnings call that they want to keep things simple and continue to invest for more challenging times to come.

For the June 26-ended quarter, Texas Roadhouse’s net income jumped 26 percent to $20.3 million, or 28 cents per share, compared with $16 million, or 22 cents per share, a year earlier. Revenue rose 15 percent to $320.3 million, compared with $279.6 million a year earlier, reflecting same-store sales gains of 4.5 percent at company-owned restaurants and 4.8 percent at franchised locations, an increase in store weeks of 9.8 percent and an improvement in restaurant-level margins by nearly 1 percent.

Texas Roadhouse’s 4.5-percent increase in company-owned same-store sales comprised a 0.5-percent increase in traffic and a 4-percent lift in average check. The average price increase in the latter figure was 4.1 percent compared with a year earlier, and a slightly negative mix shift brought the average check down by 0.1 percent.

“One quarter does not have us rethink anything we’re doing,” president Scott Colosi said during the earnings call. “Some quarters your traffic’s up 2 percent, some flat or down 3 percent. But if we execute on our mission statement to provide legendary food and legendary service, we think we’ll get new people in the door and keep them coming back. We’re not going to mess around with the formula or deviate from it.”

Reinvesting for the long term

Texas Roadhouse officials plan to keep up investments in restaurant facilities and guest-facing operations programs like its “leader at the door” strategy to maintain conservative, consistent growth in the face of relatively flat traffic and increasing commodity pressure, they said.

Major overhauls, like opening for weekday lunch, are not being considered in the current slow-growth environment for casual dining, they said. Rather, Texas Roadhouse would continue to tweak a few parts of the menu, upgrade stores and look for a few more international openings.

Colosi said capital expenditures for maintenance would increase in the near term to meet the brand's goal of improving the restaurants’ looks and functionality. Managing partners would be encouraged to update everything from aging kitchen and computer equipment to landscaping and pavement for the parking lots.

“There’s not some larger-scale remodeling program coming, but that’s the idea,” he said. “We don’t want our guests to perceive us as tired or stale, so we budget this into all our agreements. We expect to spend the money, and we voice the need to our operators to spend the money.”

Price Cooper, chief financial officer, said the chain’s “bump-out” remodeling efforts to add between 25 and 35 seats have produced a mid-to-high-single-digit sales lift to those restaurants. The brand has completed 90 such remodels in the past three years and could hit as many as 35 this calendar year, he said.

“From a financial perspective,” Cooper said, “it’s a no-brainer as far as the return.”

The chain is on pace to open its projected 25 restaurants this year and is estimating at least as many new units next year.

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Playing with prices, not portions

Expecting no relief from this year’s 7-percent increase in its commodity basket, Texas Roadhouse will attempt to control food inflation in 2013 with a moderate price increase and by continuing its savings efforts that leveraged the chain’s labor and occupancy costs down slightly in the second quarter.

The brand is testing a 2-percent menu price increase, which broadly covers most of its menu categories, in 16 restaurants, founder and chief executive Kent Taylor noted.

“Historically, around that 2-percent level is what we’ve been comfortable with as a management team and with our operators taking,” Colosi said. “There have been exceptions in the past, like going higher when [we have to contend with] minimum-wage increases. We believe we’re still competitive in the marketplace with that 2-percent level.”

Company officials have very little visibility on how much commodity inflation to expect in 2013, but they will attempt to mitigate higher food costs by leveraging what they can on everything but their center-of-the-plate items, Colosi said.

“We’re protective of what we’ve got on the plate and challenge ourselves to increase that quality,” he said. “We’ll look at other lines on the P&L and the other things we buy a lot of that don’t affect the food. We want to put pressure on our competition and still give our managers the great value they need to provide to our guests.”

Fewer transactions for alcohol remain a headwind for Texas Roadhouse, as the trend has nagged the brand for about five years, Cooper said. But the chain is still realizing the benefit of last year’s rollout of its bone-in rib eye, as well as the effect of its 23-ounce porterhouse, which the brand introduced in February. As a result, menu mix pressure improved from a 0.3-percent negative effect in the first quarter to only a 0.1-percent effect in the second quarter.

The company is forecasting traffic for the second half of 2012 to rise only between zero and 1 percent, Cooper said. Texas Roadhouse slightly raised its 2012 guidance for earnings per share to between 98 cents and $1 per share, but narrowed its range for same-store sales to between 4 percent and 4.5 percent, from earlier estimates between 4 percent and 5 percent.

Same-store sales are expected to slow in the second half of the year as the chain rolls off menu price increases from 2011 and contend with a slightly higher effective tax rate.

Louisville, Ky.-based Texas Roadhouse operates 306 company-owned units and franchises another 72 locations in 47 states and the United Arab Emirates. The company also owns and operates three Aspen Creek restaurants.

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

While same-store sales and customer traffic levels were positive for the month of June, restaurant operators nevertheless have scaled back their expectations for the future, according to the National Restaurant Association’s Restaurant Performance Index.

The NRA’s RPI, a monthly composite that monitors the health of and outlook for the foodservice industry, held steady at 101.4 in June, unchanged from May. However, June marked the eighth consecutive month the RPI has registered above 100, signifying expansion in the index of key industry indicators.

“The latest Restaurant Performance Index reflects improvements in each of the four current situation indicators in June,” said Hudson Riehle, the NRA’s senior vice president of the Research and Knowledge Group. “Restaurant operators reported positive same-store sales and customer traffic, while their capital spending activity advanced for the second consecutive month.”

However, Riehle added, “Although the overall current operating environment remains positive, operators have definitely tempered their expectations for the future. Each of the four expectations indicators softened in June, including restaurant operators’ least positive economic outlook in eight months. Still, market conditions are substantially better than two and three years ago.”

The NRA’s Restaurant Performance Index comprises two components — the Current Situation Index, which measures current trends in same-store sales, traffic, labor and capital expenditures; and the Expectations Index, which measures operators’ six-month outlook for same-store sales, employees, capital expenditures and business conditions.

Read the full report.

The Current Situation Index rose to 101.5 in June, a 0.7 percent increase over May and the strongest level in three months, the NRA said. It marks the eighth consecutive month the Current Situation Index has remained above 100.

Sixty-one percent of restaurant operators surveyed said same-store sales rose between June 2011 and June 2012, the same as in May. In comparison, 24 percent of operators said same-store sales fell in June, a decrease from the 28 percent who said they declined in May.

The Expectations Index, on the other hand, slipped to 101.3 in June, a 0.7 percent decrease from May and the third consecutive month the index has fallen. And while June was the 10th consecutive month the Expectations component remained above the 100 mark, it also represented the weakest level in seven months, the NRA said.

Fifty percent of restaurateurs said they expect to enjoy more positive sales in six month compared with the same period in the previous year. That is up slightly from the 48 percent who reported similarly last month. By the same token, 13 percent of operators anticipate that their sales volume will be lower in six months than it was in the year-ago period, the highest proportion in eight months.

In general, operators say they are not particularly optimistic about the direction of the overall economy. Twenty-eight percent of restaurateurs expect that economic conditions will improve in six months, a decrease from the 36 percent who felt similarly in May. In comparison, 21 percent said they expect economic conditions will deteriorate in the next six months, up from 19 percent last month.

The RPI is based on responses to the NRA’s monthly tracking survey.

Contact Paul Frumkin at paul.frumkin@penton.com.
 

IHOP’s menu will be streamlined and engineered for value over the next 18 to 24 months as parent company DineEquity Inc. strives to turn around lackluster sales for the family dining brand.

In a call to analysts following the release of mixed results for the June 30-ended second quarter on Tuesday and the announcement that IHOP president Jean Birch would be stepping down, Julia Stewart, DineEquity’s chair and chief executive, said declining consumer confidence and economic headwinds have taken a toll on both the IHOP and Applebee’s brands.

Applebee’s, however, reported positive domestic systemwide same-store sales of 0.7 percent for the quarter, while IHOP’s domestic same-store sales declined 1.4 percent and have been negative for six consecutive quarters.

Stewart said the fundamental problem is IHOP’s menu, which, she said, has too many items, is too difficult to execute and must do more to offer guests better value.

“Guests are saying in general that it has gotten too expensive at IHOP,” said Stewart.

As the company searches for a replacement for Birch, Stewart said she will be very involved in the menu revamp over the next several months. While expressing confidence in the 1,557-unit IHOP’s management team, she said, “My involvement will only make it faster and better.”

For the first half of the year, IHOP’s domestic same-store sales were down 0.9 percent, mostly as a result of declining traffic that was partially offset by a higher guest check average, the company said.

Earlier this year, IHOP launched a new advertising campaign that aimed to embrace the brand’s heritage of breakfast. . With the tagline, “IHOP: Everything you love about breakfast,” the campaign focused on menu innovation and classic items the brand is known for, such as pancakes, omelets and stuffed French toast.

Internal research has shown that the campaign is effective in catching guests’ interest, however it hasn’t been enough to turn interest into visits because the menu still needs work, Stewart said.

Working in “pieces and parts” over the next 18 to 24 months, Stewart said the chain will streamline the menu, removing items that are underperforming or too difficult to execute. In the works are more "cravable" menu additions and items that will send a clearer message of value, said Stewart.

“We believe this strategy will culminate ultimately in driving sales,” she said. “We’ve done it before at IHOP. We’ll do it again.”

Over the past four years, the company has also revitalized the 2,018-unit Applebee’s brand, which was acquired in 2007. About 90 percent of Applebee’s menu has changed or been enhanced, and about 42 percent of the chain’s domestic locations have been remodeled with a new look.

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Stewart said the “two for $20” campaign at Applebee’s continues to be well received by guests, especially when new menu items are introduced.

For the first half of the year, Applebee’s domestic same-store sales were up 1 percent, largely because of a higher guest check average that offset declines in traffic. However, Stewart said, “There’s no question that economic headwinds have hurt us, especially at Applebee’s. It has been a lumpy and bumpy time.”

Promotions and events will continue to focus on building sales at lunch, dinner and late night for Applebee’s, she added.

Earlier this year, Applebee’s also debuted a new marketing campaign with the tagline “See you tomorrow,” highlighting new summer flavors and everyday value. Stewart said the campaign is being well received, but the impact will take time.

Applebee’s is also close to reaching its goal of becoming a 99-percent franchised brand, once three pending refranchising deals close later this year. That shift away from company-owned units, however, has also allowed for efficiencies between the two brands that will result in the loss of about 100 jobs, the company said.

Stewart said about half of the job cuts are tied to the pending refranchising deal that includes the sale of 65 Applebee’s in Michigan. The other half includes redundant positions between the two brands. The consolidation is expected to result in annualized savings of $10 million to $12 million.

Stewart said the drought in the Midwest this summer could also have an impact on commodity costs. Earlier this year, the company estimated food costs would increase between 4 percent to 5 percent for fiscal 2012, and that franchisees had room to take price increases — though continuing efforts to consolidate purchasing and distribution between the two brands is also expected to offset inflation.

“Franchisees shouldn’t have to price right now, unless something happens with the drought that I can’t predict,” Stewart said.

For the first six months, DineEquity’s net income available to common stockholders increased nearly 65 percent to $45.8 million. Revenues were down 16 percent to $474.9 million, largely because of refranchising efforts.

The company also reduced debt by about $88.3 million in the first half of the year with cash proceeds.

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

Kona Grill Inc. plans to expand its happy hour and menu initiatives, which contributed to strong profit in the second quarter, and has a restaurant remodel program on the horizon, executives said Monday.

Scottsdale, Ariz.-based Kona Grill on Monday reported that profit in its second quarter, which ended June 30, rose 126 percent to $1.8 million, or 20 cents a share, compared with $800,000, or 8 cents a share, in the prior-year period. Restaurant sales increased 2 percent to $25 million.

Berke Bakay, president and chief executive of Kona Grill, said during a conference call with analysts that the company's 2.3-percent same-store sales increase in the second quarter represents Kona Grill’s seventh consecutive quarter of positive same-store sales and the 10th consecutive quarter of positive traffic — "which we believe demonstrates the strength and momentum of our brand in multiple markets.”

Bakay said Kona Grill will continue to offer new products in its bar and sushi menus, which he said produced more than 54 percent of the chain’s sales. The company also introduced the lower-calorie “Trim” menu promotion in May and the spicier “Flare” menu earlier in July.

Bakay added that on Tuesday the company was rolling out a summer menu with such items as a chicken caprese sandwich, a soft-shell crab po’ boy and banana cream pie “while removing select lower-volume items to keep our menu fresh.”

Christi Hing, Kona’s chief financial officer, said the chain would take 1.1-percent price increase on this new menu. Currently, tickets are in the $24 to $25 range, she said.

The American grill and sushi chain also rolled out a new wine list in June with “more competitive” pricing, Bakay said, to follow on the introduction of the “Wine Down Wednesday” promotion started in April in a test program at eight restaurants, which featured bottles at half price.

“We are seeing significant increases in the average number of bottles sold in these restaurants compared to last year,” noted Bakay. Hing added that Kona’s alcohol mix remains consistent at about 30 percent to 31 percent of sales.

Kona Grill in September will begin remodeling a unit in Chandler, Ariz., that will offer a new design model for renovations of other units in 2013. Bakay forecasted renovation costs, including new materials, furniture and fixtures, in the range of $500,000 for each store. “We have several stores that maybe were opened six, seven, eight years ago that would significantly benefit from a remodel,” he said.

As for performance by region, Hing said Kona sees strength in Texas. However, its home market of Arizona has been “lagging,” she said, adding: “We've been weak in Arizona for quite some time and I think that trend still continues.” Those stores are falling behind average unit volumes of other stores, of which she said about 40 percent do around $4.5 million.

Kona Grill owns and operates 23 restaurants in 16 states.

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

Burger King Worldwide Inc. reported Wednesday a nearly 60-percent increase in second-quarter profit, saying turnaround efforts including menu and marketing moves in the U.S. and Canada are taking hold.

The second-quarter report marks Miami-based Burger King’s first as a newly public company, following its listing earlier this month on the New York Stock Exchange. Private-equity owner 3G Capital Partners Ltd. continues to hold a 71-percent stake in the burger brand, following its market debut, which was accomplished through a reverse merger with a public investment vehicle, Justice Holdings.

For the quarter ended June 30, Burger King reported net income of $48.2 million, or 14 cents per share, compared with $30.2 million, or 9 cents per share, in the same quarter a year earlier.

Global revenue fell 9 percent to $540.8 million, in part because the company is selling units to franchisees in an ongoing move to become a 100-percent franchised business — a goal the company said it may reach within 12 months.

Systemwide same-store sales for the 12,604-unit chain rose 4.4 percent, as a result of positive trends in both traffic and average check, Burger King reported.

Same-store sales rose 4.4 percent in the U.S. and Canada, marking the region’s second consecutive quarter of positive results. Company officials expressed confidence that ongoing menu and marketing efforts at Burger King will eventually close the gap behind arch rival McDonald’s.

In the U.S., a broad menu revamp in the spring, and the more recently launched barbecue-themed summer menu, has helped expand Burger King’s audience to include more women and seniors, said Steven Wiborg, BK’s executive vice president and president of North America.

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Wiborg said guests have responded particularly well to new beverages, like smoothies and frappes, as well as the chain’s chicken platform and sweet potato fries.

Though sales slowed slightly in July, Wiborg said he had high hopes for menu offerings in the pipeline this year, which he said would expand on existing platforms and include more themed limited-time offers.

The turnaround in the U.S. and Canada will continue to focus on four pillars that include menu changes, as well as marketing, remodeling and improved operations, said Bernardo Hees, Burger King’s chief executive.

“There is no silver bullet,” he said. “It’s not just about marketing or a new product. The four pillars must work together.”

Wiborg said the company’s heavier advertising efforts in the second quarter supporting the new menu launches have been effective, particularly in social media. After the summer menu debuted, he said social media mentions grew by 12.7 percent.

In the U.S. and Canada, about 40 percent of 7,469 units have been remodeled, and those units are seeing a 12 percent to 15 percent lift in average sales, said Wiborg.

Aggressive international growth also continued in the second quarter with two new joint ventures in Russia and China.

In Russia, the master franchise partner has committed to opening several hundred restaurants over the next few years, the company said. About 1,000 units are planned in China over the next five to seven years, making it the chain’s largest multi-unit development deal to date.

Both are modeled after a successful joint venture in Brazil, which has grown Burger King’s presence there from about 60 locations to 140, with 200 expected to open before year’s end.

The chain showed its strongest same-store sales growth in Latin America and the Caribbean, where a 10.5-percent increase was driven by restaurants in Brazil and Mexico. Same-store sales in Europe, the Middle East and Africa rose 3.3 percent; and in the Asia Pacific region rose 2.1 percent, the company reported.

During the quarter, Burger King refranchised 386 company-owned restaurants domestically, including the 278 sold to Carrols Restaurant Group, the chain’s largest franchisee. Another 78 units were refranchised in international regions.

At the end of the quarter, the chain’s 12,604 restaurants included 11,786 franchise locations, and Hees said he expected the refranchising effort to be completed within 6 to 12 months.

Hees noted that Burger King has seen more merger and acquisition activity in the past 12 months than it has in the past decade.

“It shows there’s a lot of interest in the business,” he said.

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

Responding to the small-indulgence trend and the profitability of catering, Cold Stone Creamery has launched a line of miniature frozen treats suitable for offsite gatherings that will be available for franchisees in the 1,086-unit domestic system starting October 3.

On the same day, the Scottsdale, Ariz.-based Kahala Corp. subsidiary will also introduce a seasonal frozen yogurt flavor, salted caramel, made with an unusual French vanilla yogurt base that contains eggs. That flavor will be available for a limited-time through January 8.

Ray Karam, Cold Stone Creamery’s senior tastemaster, said the miniature treats had been tested off and on at corporate headquarters and don’t require that any additional ingredients be purchased, with the exception of lollipop sticks for the Cake Pops and some packaging.

The new items are:

• Oreo canapés — Oreo cookies topped with a miniature scoop of ice cream, dipped in either ganache or frosting and garnished with sprinkles or candy.

• Cone-olis — Inspired by a suggestion from a franchisee who suggested piping soft ice cream into cannoli shells, these are made from miniature waffle cones filled with cheesecake ice cream, dipped in miniature chocolate chips, garnished with a stripe of non-dairy “bettercream,” and topped with a maraschino cherry.

• Cake Bites — made from large sheet cakes spread with ice cream and topped with an optional layer of caramel or fudge, cut in one-inch-by-three-inch rectangles, dipped in ganache and garnished with a choice of candy.

• Mini Cones — choice of ice cream in miniature waffle cones and dipped in a chocolate shell.

• Cake Pops — already available in certain locations, house-made yellow, red velvet or devil’s food cake is mixed with frosting, rolled into balls, dipped in a chocolate shell and garnished with sprinkles or other candy.

The new catering program is a permanent addition to Cold Stone Creamery’s options. Prices for the items are set by the franchisees, but Kahala’s suggested retail price is $1.49 each.

The seasonal salted caramel flavor is hard-packed yogurt made from a French vanilla base, which, unlike most frozen yogurt, contains eggs for added richness, and a little salt.

A ribbon of the chain’s proprietary caramel, spiked with sea salt, is then rippled through the product.

Cold Stone Creamery reintroduced frozen yogurt to its system last year and currently has 30-40 different flavors, Karam said.

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

Thousands of Chick-fil-A fans turned out Wednesday for the unofficial “Appreciation Day” at most of the Atlanta-based fast-food chain’s 1,600 units.

The observance was originally proposed by former Arkansas Gov. Mike Huckabee, who signed up more than 500,000 attendees through a posting on his Facebook page after Dan Cathy, the chain’s president and chief operator officer, came under criticism for comments in July about same-sex marriage.

Steve Robinson, executive vice president for marketing, issued a statement Wednesday that emphasized the Chick-fil-A Appreciation Day was not created by the company.

“We appreciate all of our customers and are glad to serve them at any time,” Robinson said. “Our goal is simple: to provide great food, genuine hospitality and to have a positive influence on all who come into contact with Chick-fil-A.”

A midday visit to a Dallas Chick-fil-A unit found a half dozen people waiting outside the restaurant and more than 25 cars snaked around the store and well into the thoroughfare waiting to place orders in the drive-thru.

Marguerite Buccino, who was leaving the restaurant with two of her children and a stack of meals to go, said for her, patronizing the restaurant was a matter of liberty and free speech. If you say something other people don’t like, are they going to put you out of business?” she asked.

Supporters of same-sex marriage plan a “Kiss Mor Chicks” kiss-in Friday at Chick-fil-A restaurants.

MORE: Scenes from Chick-fil-A Appreciation Day

As of March, Chick-fil-A had restaurants in 39 states and the District of Columbia. It planned to open 77 stand-alone restaurants and 15 licensee locations in 2012.

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

This video post is part of Sullivision on NRN.com, a resource center for restaurants looking for service, leadership and sales-building techniques from industry expert and NRN columnist Jim Sullivan.

Recent industry research shows that shaving two seconds from every drive-through customer’s wait time can generate an additional $12,000 in monthly sales, simply because of improved to efficiency and subsequent volume.

In this video breakdown, I share the six key essentials necessary to accelerate drive-through delivery and throughput, from a two-handed delivery to making sure everything is being measured. The tips are based on my work with more than 50 well-known quick-service restaurant brands. I encourage you to show this video to any restaurant drive-through team right before a busy shift and make “just-in-time” training a reality for your crew.

Jim Sullivan is chief executive and founder of Sullivision.com, which designs leadership, service and sales-building products, programs and services for the Top 200 restaurant and retail brands worldwide. Clients include McDonald’s, American Express and Walt Disney Company. More information on Sullivision and its products and services can be found at Sullivision.com.

Follow Jim Sullivan on Twitter, Pinterest and LinkedIn: @Sullivision

The parent of Jamba Juice reported Wednesday a 17-percent increase in second-quarter profit, saying the promotion of more healthful smoothie and menu options has boosted sales.

For the quarter ended July 3, Emeryville, Calif.-based Jamba Inc. reported net income of $4.6 million, or 5 cents per share, compared with $3.9 million, or 5 cents per share, in the same quarter a year ago.

Second-quarter revenue rose 12 percent to $66 million, which included an additional week compared with last year.

Systemwide same-store sales increased 5.7 percent, which included a 5.1-percent increase among company-owned locations and a 6.4-percent increase among franchised units. The Jamba Juice chain totals 783 locations.

Jamba said this second quarter was the seventh consecutive quarter of same-store sales increases for the chain, which is in the second phase of a turnaround effort that began about three years ago. The turaround plan has included the addition of new food offerings — from steel-cut oatmeal to frozen yogurt — as well as cutting costs, refranchising efforts, and building a consumer packaged goods platform of Jamba Juice-branded products in grocery and other retail stores.

This year, Jamba has focused on turning the smoothie concept into a healthy, active lifestyle brand. The chain, for example, has introduced a reduced-calorie Make It Light option for classic smoothies; introduced new All Fruit and Fruit and Veggie smoothies; expanded the Fruit Refresher line made with coconut water; and added more fresh blended juices.

Encouraged by the positive results, Jamba in May raised its outlook for the year, saying same-store sales will increase between 4 percent and 6 percent. Earlier estimates had full-year same-store sales rising between 3 percent and 4 percent.

“Jamba experienced another strong quarter with gains in comparable store sales, store traffic, average price and adjusted operating margin,” James White, Jamba chair, president and chief executive, said. “We are accelerating our growth as a healthy, active lifestyle brand through product and menu innovation, retail growth in the U.S. and internationally, and expansion of our consumer products platform.”

Earlier this year, Jamba also began growing a small self-serve format called JambaGO, designed for K-12 schools and other non-traditional locations.

Last month at the School Nutrition Association conference, the chain debuted a new smoothie developed in partnership with the National Dairy Council that includes fruit and fat-free milk for JambaGO locations. The smoothie meets new federal requirements for school nutrition and will be available in schools in September in two flavors: berry and peach.

In a call with analysts, White said the company ended the second quarter with about 130 JambaGO locations. He predicted that between 400 and 500 units will open before the end of the fiscal year, reaching 1,500 locations by the end of 2013.

For the quarter, the company generated about $300,000 in revenue from CPG products, and White said Jamba is on track to reach its goal of $3 million for the year.

During the quarter, Jamba completed the acquisition of the intellectual property rights to a line of energy drinks developed with Nestle, which White said will be re-launched to further grow the CPG business.

Also under development are new premium Talbott Tea beverages, he said. The company acquired the premium tea brand earlier this year.

Meanwhile, traditional Jamba Juice locations are also growing.

During the quarter, seven domestic franchise units opened, including four non-traditional locations, as well as six international units. Four Jamba locations closed during the quarter.

White said 30 international locations have opened in the past 18 months with 20 outlets in South Korea, seven in Canada and three in the Philippines.

For the year, the company expects that a total of 40 to 50 locations will open in the U.S. and another 15 locations internationally.

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

T.G.I. Friday’s has unveiled a new kitchen and bar design in a unit that re-opened this week in Nashville, Tenn.

The Opry Mills Friday’s location, which was destroyed by flooding two years ago, debuted this week with an open kitchen that is about 25 percent smaller than a typical Friday’s unit and a redesigned bar.

“After the flooding, we were totally committed to coming back to Opry Mills, but this time with a restaurant that would knock people’s socks off,” said Ricky Richardson, chief operating officer T.G.I. Friday’s, which is owned by Carrollton, Texas-based Carlson Restaurants.

“We’ve completely redesigned the kitchen so guests can see how we cook their favorite dishes,” Richardson said in a statement, “and the bar is now the centerpiece of the restaurant.”

The bar also includes community tables, located across from the bar, which the company said, “encourage friends to gather and talk, watch a game or wait for a table.”

The kitchen and bar redesigns were shepherded by Dean Small, co-founder and managing partner of Synergy Restaurant Consultants of Laguna Niguel, Calif., who said the result offers a blueprint for future domestic Friday’s units and renovations.

“We wanted to give them a kitchen design that would launch them into the future and differentiate them from the competition,” Small said. “And also we wanted to bring in the new technologies and cooking platforms to the table that would help them to maximize through-put and reduce the kitchen footprint.”

The design, Small added, included a migration strategy “that will allow them to convert older locations into the new technologies and support menu growth.” Friday’s also sought to reduce energy use as well, he said.

The redesign of the new unit takes about 25 percent of square footage out of the kitchen, where the consulting team:

- Installed a plancha. “The plancha allows us to cook burgers not only faster but it cooks at a much higher temperature, something like 600 degrees,” Small said, “so we get a great seer on the beef and we don’t lose the juices in the meat.”

- Added a pizza oven. “It’s a gas-fired pizza oven that we’re doing flatbreads out of and a dozen other items,” he said.

- Installed a combi oven, “which allows us to do multiple things like steam and cook pasta and rice, but it allows us the flexibility of cooking things over night and slow roasting,” Small said.

- Added a high-speed Panini machine.

- Replaced gas ranges with induction cooktops. “That helped our green energy efficiency standards,” Small said.

- Offered a wood-enhanced broiler, which burns a proprietary blend of wood “to perfume and flavor the items.”

The new equipment will also allow for new menu items, he said.

The bar has been redesigned for a “robust, interactive experience,” Small said, and includes quieter blenders and machines to produce three different kinds of ice.

T.G.I. Friday’s has more than 900 restaurants in 60 nations.

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

Looking to differentiate the Hooters concept at a time when other “breastaurant” chains are expanding, the new leadership team at the Atlanta-based chain launched a brand refresh this week that seeks to upgrade its service, menu and marketing.

Called “Hooters 2.0,” the brand augmentation kicked off with a new ad campaign sporting a new tagline, “Feed the Dream,” and positioning Hooters as a place to celebrate any day or occasion.

Hooters will remodel between 20 and 25 restaurants per year of its more than 430 restaurants over the next few years, and any new builds will take the form of a more contemporary prototype, officials said.

“People want any reason to engage or re-engage with the brand,” said chief executive Terry Marks, who came aboard with his executive team in late 2011. “It’s highly thought of, and our unaided awareness is among the best. But the food had not kept pace over time. We had real opportunities with the food and the Hooters Girls’ hospitality.”

Service initiatives take flight

Hooters’ changes to its service and hospitality systems started at the corporate level, “where we went all the way back to sharpening our interviewing and hiring processes, as well as how we handle orientations with the Hooters Girls,” Marks said.

The chain will move toward a team service model, where servers think less about handling only their tables in designated sections, and more about pitching in everywhere on the floor where they could attend to a guest.

“It’s not very difficult to train, but change is change,” Marks said. “Now the idea is to take care of every table and every guest. The guest doesn’t understand why they’re not getting any attention when a server is right there and could help out.

“Once we started training this way, our guest satisfaction metrics started to jump,” he said. “It’s the perfect example of something that wasn’t a hard fix, but it was a philosophical fix.”

Chief operating officer Sam Rothschild said improving the service of Hooters Girls would defend the kind of unique guest experience Hooters can claim against competitors, even concepts who recruit similar servers, like Twin Peaks and The Tilted Kilt. The brand also had to upgrade its audio-visual packages to keep pace with consumers’ expectations of a sports game-day destination.

But Marks stressed that the news Hooters would be more than a sports bar.

“We’re more than a sports bar, but we should be able to compete head to head with anybody on the game-day occasion,” he said.

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Menu gets a makeover

Rothschild said another key to getting repeat traffic would be menu innovation.

For its menu revamp, Hooters looked everywhere for opportunities to upgrade ingredients and found a crucial one in its salad lineup. The chain took its salad offerings from a base of head and romaine lettuce to a new spring mix, and developed 30 salads in total.

“We launched the new salad lineup to increase trips, and that applies both to our core user and a light user who we’d like to make a medium user,” Marks said. “Even that core user needs to mix it up for lunch and dinner and have something lighter once in a while. By broadening the menu and introducing items that are better for you, we can get both new people and lapsed guests who might have outgrown our core items.”

Hooters wants to continue to own chicken wings as a menu category, Marks added. The menu now has 20 new wing sauces, many of which were ideas that generated in Hooters’ international restaurants.

“Some of the food and hospitality programs that were tested earliest just got implemented, but we’re always testing more new items,” Rothschild said. “You continue to build on successes, and the longer-term branding things will be working constantly.”

Rothschild said another big food opportunity in Hooters 2.0 would be sharable items, which ideally would play well with the chain’s target Millennial demographic, “who are adventure seekers and like to share.”

“We’re looking hard at the appetizer category,” Rothschild said. “Wings are sharable as well. We’ll look at different platters and combos to round out the menu.”

New wise guys for spokesmen

Hooters Girls will give up the spotlight in new commercials to two puppet owls, one an angel owl and the other a devil owl, who sit on potential guests’ shoulders and act out their inner monologue arguing for and against a trip to Hooters.

Marks said the characters could make their humorous spots on a long, ongoing basis.

“Those characters could play a role in all sorts of aspects of the brand,” he said. “They could advertise anything from what to order, to the role of the Hooters Girls, to whether it’s OK to come into Hooters. It takes the tension the brand has had over the years and has some fun with it.”

Later in this year’s football season, commercials will star football commentator John Gruden, a Super Bowl winning head coach and former Hooters employee.

Hooters’ leaders hope to put a lot of marketing dollars behind the owl characters by requiring franchisees’ marketing fund contributions to skew toward more national broadcast buys than local-store marketing, Marks said.

“That will be a slow build over time,” he said. “We’re not asking our operators for more money, but we’re recalibrating the spending so that we have more firepower behind the new advertising campaign.”

The reconfigured national marketing fund also will devote the resources to getting DirecTV’s package showing every Major League Baseball broadcast in every Hooters in the United States, he added.

“The evolution of the menu and the brand will stop when consumers stop changing, which is never,” Marks said. “This isn’t an event that will come to some end point; it’s a constant evolution.”

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

Experimentation with more unique flavors and the use of healthful, sustainably sourced ingredients are trending among American diners today, according to menu research firm Datassential.

The firm used its database of menu items from more than 4,800 restaurant chains and independent establishments to find the four major food trends happening now, half way through 2012.

“Safe flavor choices don't hold as much weight as they once did,” Datassential said in its report. “Instead, operators are subbing them out for an adoption of sophisticated and unique ingredients, fun experimentation with bold, less-familiar flavors within ethnic cuisines, and a focus on health and whole foods.”

The four most prevalent trends from Datassential newest report:

No. 1: Specialty ingredients

Datassential said customers want “more bang for their bucks in these tough economic times,” and chefs have responded by including high-quality, unique ingredients into dishes. The choice of proteins in 2012 really exemplified this trend, Datassential noted.

Pork belly is showing up on 39 percent more menus than a year ago, steak tartare is on 32 percent more menus and wild salmon is being mentioned 25 percent more often.

This trend has spread to the quick-service level, too, with Arby’s continuing to promote the premium medium-rare prime rib that it introduced in early 2011, and McDonald’s expanding is line of Angus burgers with the current test of a “Clubhouse Angus Burger” in San Diego.

Specialty breads are also on the rise. Casual-dining burger specialist Red Robin rolled out pretzel bread for a burger during Oktoberfest last year. It also regularly offers jalapeño cornmeal buns, ciabatta, marbled rye, baguettes, sourdough and Texas toast.

Fast-casual chain Au Bon Pain combined high-end protein with specialty bread in June with its lobster salad BLT. Available as a limited time offering for the summer, the sandwich is served on an eggless brioche, which the bakery café’s customers preferred over brioche that contains eggs.

Next: New ethnic flavors

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No. 2: New ethnic flavors

“‘Ethnic’ doesn't just mean teriyaki chicken for Japanese or pad thai for Thai — instead, operators are moving past such traditional flavors and experimenting with new ingredients and dishes, drawing inspiration from Asian, Latin and Mediterranean cuisines primarily,” Datassential reported.

That includes Thai sweet chile sauce, now so widespread that McDonald’s has such a sauce, tested during the 2010 Vancouver Winter Olympics, available nationwide today.

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Red Robin also serves Thai chile sauce with its lightly breaded mushroom appetizer, and it also has a Sriracha dry seasoning on its spicy new burger, The Cry Baby.

The Vietnamese bánh mì sandwich is also on a virtual roll, available at many independent restaurants as well as at 18-unit flex-casual chain Mama Fu’s. Based in Austin, Texas, the chain won an Nation’s Restaurant News MenuMasters award earlier this year for its sandwich.

Chipotle subsidiary Shophouse also opened last year with a bánh mì offering, and Wendy’s is currently testing a chicken flatbread version of the sandwich.

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• Southeast meets West 
• Bánh mì boom
• Kimchi gains popularity in the U.S

From Latin America, the herb vinaigrette chimichurri is appearing on dishes ranging from Rubio’s new salmon taco, to Applebee’s Fiesta Chicken Chopped Salad.

From the Mediterranean, the Greek yogurt sauce tzatziki is showing up on menus ranging from The Cheesecake Factory, where it appears on its Santorini Farro Salad, to T.G.I. Friday’s which last year offered “Tapa-tizer Skewers, including one with lemon-garlic sauce and Tzatziki, available with black Angus sirloin or chicken.”

Next: Healthful offerings
Previous: Specialty ingredients

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No. 3: Healthful offerings

Healthful offerings are getting more emphasis on menus — but in ways that help consumers feel like they’re not depriving themselves, according to Datassential.

Terms like “all-natural” and “locally sourced” are spreading faster than “low-fat,” and a variety of whole grains are making their presence felt.

Quinoa, for example, appears in the Southwest Scramble at the new Starbucks subsidiary Evolution Fresh. Quinoa’s also served on Seasons 52’s menu, in its Summer Vegetarian Tasting, although it’s called “grains of life,” instead.

Freshii also offers quinoa bowls as part its offerings. And Red Mango has said it’s using only all-natural ingredients in its new “frozen coffee chillers.”

RELATED: Back in style

Next: New vegetables
Previous: New ethnic flavors

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No. 4: New vegetables

As part of the better-for-you trend, restaurants are branching out with vegetables they hadn’t used before, Datassential found, noting that kale, Brussels sprouts and celery root in particular are trending.

Kale in particular is popping. Quite apart from a kale Caesar trend that swept independent restaurants last summer, it’s appearing in salads at chains such as Burger Lounge.

Mustard greens, another trendy vegetable, was the centerpiece of the vegetarian dumplings at Rickshaw Dumpling Bar, which has two brick-and-mortar locations and four food trucks in New York City, and roasted beets are featured at six-unit True Food Kitchen in dishes such as roasted beet and mozzarella agrodolce with pistachio, arugula and extra virgin olive oil.

Previous: Healthful offerings

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