Nearly 250 foodservice executives met in Phoenix this week for the Women’s Foodservice Forum Executive Summit, an annual event focused on developing the leadership ranks of the industry it serves.

In partnership with Northwestern University’s Kellogg School of Management, the Executive Summit offered opportunities for learning, sharing and the building of critical leadership attributes needed to lead effective teams and build sustainable organizations.

“It was wonderful to connect with industry peers and friends at this year’s Executive Summit," said Lorna Donatone, Sodexo chief operating officer and education market president, and WFF chair. “The content was outstanding, we’ll all be returning to our organizations with stronger leadership skills and insights that will help us go further.”

This year’s program included keynote presentations from Dev Patnaik, chief executive of Jump Associates, and author of “Wired to Care: How companies prosper when they create widespread empathy,” and Dov Seidman, founder, chairman and chief executive of LRN, and author of “HOW: Why How we do anything means everything.”

Faculty from the Kellogg School of Management tackled topics from building influence to entrepreneurship in a corporate setting and the importance of innovation. The Executive Summit was held at the Arizona Biltmore Hotel & Spa and wrapped up Wednesday.

“Advancing more women leaders is something we must tackle as an industry,” WFF president and chief executive Fritzi Woods said. “It was great to have so many leading foodservice companies, big and small, here to participate in the programming and demonstrate their commitment.”

Contact Sarah E. Lockyer at sarah.lockyer@penton.com.
Follow her on Twitter: @slockyerNRN
 

This is the best-selling cocktail at all eight locations of this steak-and-seafood house, according to Ryan Valentine, director of beverage for the chain’s parent company, Cameron Mitchell Restaurants.

“When someone sees one, they order one,” he said. “It’s a great tasting cocktail. It’s very balanced, it’s made with really great ingredients, and it’s not overly sweet, so when people enjoy it they have a second one. It’s also a visual experience.”

To make the drink, citrus vodka, crème de cassis and house-made sour mix are shaken with ice and strained into a cocktail glass in which a thumbnail-sized piece of dry ice has been placed. Strawberries and blueberries that have been soaked in a mixture of sugar and orange liqueur are then floated on top, along with an ounce of brut Champagne.

“You get these deep currant flavors from the crème de cassis, and the sparkling wine ties it all together,” Valentine said.

The drink is around $14, although it varies a bit by market.

Ocean Prime has locations in Atlanta, Dallas, Denver, Detroit, Indianapolis, Orlando, Phoenix and Tampa. The Berries & Bubbles also is available at Mitchell’s Ocean Club in the company’s hometown of Columbus, Ohio.

RELATED:

• Sopa de puerco
• The Yumbii Philly
• More Cool Plates

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

Editor's note: The following column is from Healthy Dining, a company that has been at the forefront of restaurant nutrition since 1990. This series provides restaurant operators with information on industry-related nutrition topics. The views expressed here do not necessarily reflect those of Nation's Restaurant News.

Health experts speaking at The Culinary Institute of America (CIA) 2012 Healthy Flavors, Healthy Kids National Leadership Summit provided compelling evidence backing the urgency of the nation's fight to reverse the childhood obesity epidemic.

"Health is a flavor issue, and that is what this conference is all about," emphasized Amy Myrdal Miller, MS, RD, Director of Programs and Culinary Nutrition at the CIA. "As a nation, we will never make an impact on health and nutrition unless flavor is the driving force. Healthful food must be crave-able and delicious."

Fruits and vegetables: An opportunity for restaurants

Elizabeth Pivonka, PhD, RD, President and CEO of Produce for Better Health (PBH), led first the ‘5 A Day for Better Health’ campaign more than 20 years ago and now heads up the ‘Fruits & Veggies — More Matters’ campaign. These programs represent the largest public-private fruit and vegetable nutrition education initiative, and they were developed to target primarily moms, the gatekeepers to family’s meals.

Pivonka presented research PBH conducted with moms in Gen X (i.e., born between 1965 and 1979) and Gen Y (i.e., born between 1980 and 1990).

“We know that both Gen X and Gen Y moms believe it is their role to increase their families’ consumption of fruits and vegetables. Gen X moms, especially, continue to be highly motivated to increase their own and their family’s consumption of fruits and vegetables,” explained Pivonka. “This creates a great opportunity for restaurants to please moms and their children by offering more fruits and vegetables that kids like.” (See chart: Moms report kids' top 10 favorite fruits and vegetables.')

The research, outlined in the State of the Plate: 2010 Study on America’s Consumption of Fruits and Vegetables Report, reveals that the No. 1 reason moms want to increase their intake of fruits and vegetables is to "stay healthy." Other top reasons include "like the taste," "to feel well," "to prevent weight gain," "to lose weight," "to get energy" and "to prevent disease."

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The PBH research also shows that kids younger than 12 years old have increased their intake of fruit by almost 10 percent since 2004. However, vegetable intake has remained relatively unchanged, and only 2 percent of children meet both fruit and vegetable targets.

The mothers studied also indicated that restaurants can be both a catalyst and a barrier to increasing their family’s fruit and vegetable consumption. “Although moms report that it is easier to get their family to eat fruit at restaurants and quick-service establishments (as compared to prior years), moms still report limited fruit and vegetable choices in restaurants as one of the main barriers to increasing their family’s fruit and vegetable consumption," explained Pivonka. "So, again a great opportunity for the restaurant industry.”

LAUSD a testing ground for healthful dishes

David Binkle serves up more than 120 million meals for kids each year. His position as the Interim Director of Food Services for the Los Angeles Unified School District (LAUSD), the second largest district in the nation, has provided a testing ground for finding ways to please kids with healthful ingredients.

One of the biggest and most important changes Binkle and his LAUSD foodservice team made was to transform the procurement process. “Instead of asking, ‘What can you give us for the cheapest price?’ we now tell our suppliers what we want, including the quality standards the products must meet," Binkle explained. "And our suppliers are stepping up to the challenge. We have moved from highly processed foods to more natural and whole foods."

The district spent a good part of 2008 and 2009 on revamping its menus and recipes. "We removed or reduced a lot of the customary processed meals, like nachos, corn dogs, pizza, macaroni and cheese and fried foods," Binkle noted. "We added lean protein meals, such as chicken breast sandwiches made with 100% whole grain buns and chicken wings." Those new items, he said, have so far been popular.

"We are always exploring new ways to please our kids with healthful ingredients," Binkle said, adding that he is always looking at the restaurant industry for inspiration. “In fact, I just tried the Southwest Grilled Chicken Salad at Jack in the Box and it was fantastic. Moist, flavorful, really good!"

Contact Anita Jones-Mueller, M.P.H., at anita@healthydiningfinder.com.
 

Increased catering sales, an enhanced coffee program and an expanded reduced-calorie menu helped drive a fifth consecutive quarter of same-store sales increases for the Einstein Noah Restaurant Group during the second quarter, the company said Thursday.

The Lakewood, Colo.-based parent to the Einstein Bros. Bagels, Noah’s New York Bagels and Manhattan Bagel brands said there was no update on plans to explore strategic alternatives, which could include a possible merger or sale. The company announced its review earlier this year.

The company said its ongoing strategy of expanding through franchising and licensing, cutting costs and reducing debt have helped fuel bottom-line improvement.

For the quarter ended July 2, Einstein Noah net income fell about 4 percent to $3 million, or 17 cents per share, compared with $3.1 million, or 18 cents per share, in the same quarter a year ago.

This year’s quarter, however, included about $400,000, or 2 cents per share, in expenses related to the strategic review process, and last year’s quarter included a gain of $900,000, or 3 cents per share, from the sale of two restaurants and the receipt of insurance proceeds after a fire damaged one company-owned location.

Second-quarter revenue rose 2.2 percent to $106 million. Same-store sales rose 1.3 percent systemwide, driven by a 3.9-percent increase in average check from menu mix, pricing and a jump in catering sales that was partially offset by fewer transactions. At company-owned locations, same-store sales increased 1.2 percent.

Jeff O’Neill, Einstein Noah’s president and chief executive, said efforts to build catering sales are taking hold. Catering grew by 17 percent during the quarter.

He also touted the success of the company’s recently enhanced coffee platform and the addition of specialty beverages, like low-fat smoothies.

Earlier this year, Einstein Noah expanded its Smart Choices menu of reduced-calorie options that center on the chain’s Bagel Thins, a thinner, lighter version of traditional bagels. The company hopes to build on momentum with new “everyday value” options being tested in Dallas and Denver, as well as a limited-time bundling offer called “Pick Two,” which combines a half sandwich with soup or salad.

Meanwhile, the company has improved margins by cutting costs, including the closure of commissaries. The company has a goal of cutting $3 million in costs this year. The company is continuing plans to accelerate growth through franchising and licensing, focusing on existing top-tier markets where brand awareness is already strong, O’Neill said.

Einstein Noah ended the second quarter with 783 locations among its three brands, including 448 company-owned, 95 franchised and 240 licensed units. For the year, the company expects to open between 60 and 80 locations, including eight to 12 company-owned units, 12 to 14 franchised and 40 to 54 licensed restaurants.

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

The People Report Workforce Index, which measures expected market pressures on restaurant employment, dipped for the third quarter of 2012 from highs in the second quarter that hadn’t been seen since 2007.

The readings still indicated restaurant operators would continue to face challenges surrounding recruitment and retention in the second half of the year.

The Workforce Index, based on surveys of restaurant human resources departments and recruiters, measures from a baseline value of 50, with any results over that level indicating increased pressures on five components: employment levels, recruiting difficulty, vacancies, employment expectations and turnover. Results are based on expectations for the quarter currently underway.

The third-quarter Workforce Index stood at 65, about four points lower than in the previous quarter. The second quarter saw the Workforce Index’s highest reading since the first quarter of 2007, before the recession began.

Overall: All industry Segments

Michael Harms, senior business analyst for the Dallas-based People Report and Black Box Intelligence, which produce the quarterly reports, said in an interview Thursday that operators reported “a little trepidation” after seeing employment pressures pick up over the past year.

“The first part of the year, the economy seemed to be picking up steam and everybody had high expectations,” Harms said. “I think those expectations may be curbing a little bit as a little uncertainty has crept back into the marketplace. … I think we’re seeing a lot of that wariness as we move into the second half of the year on both the unemployment side and staffing as well.”

Overall workforce index Q3 2012

The Labor Department on Friday reported that the U.S. economy generated 163,000 jobs in July, above the 100,000 that economists had forecast. The jobless rate, however, inched up to 8.3 percent from 8.2 percent in the prior month as more workers sought employment.

Harms said restaurant operators still saw pressures in hiring levels and recruiting difficulties in the third quarter. “They are at some of the highest levels we’ve tracked in recent years,” he said. “But, at the same time, we’re seeing mixed signals. We’re seeing unemployment level off or tick up. … There are so many conflicting indicators going into the second half.”

Workforce Index readings higher than 60 indicate especially stiff pressures. All four segments showed third-quarter index readings lower than in the second quarter:

• Quick Service: 66.8, down from 75.2
• Fast Casual/Family Dining: 63.5, down from 69.6
• Casual Dining: 64.7, down from 67.1
• Upscale Casual/Fine Dining: 64.3, down from 68.2

The People Report third-quarter index added that sister company Black Box Intelligence found “comparable sales figures for the restaurant industry have been improving, albeit slowly, all of which is translating to increasing workforce demands and additional staffing.”

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

Despite posting increased sales and profits in the second quarter, many of the restaurant industry’s largest companies did not sound optimistic that strong trends would continue and were cautious on the economic and consumer environments for the second half of the year.

 Restaurants’ gains in sales and profits in the second quarter were all hard-won, executives said, as consumer confidence continues to waver in markets across the globe, spurring brands to take menu price increases, accelerate promotional activity and intensify their efforts to take market share from equally active competitors. Yet, certain restaurant stocks were hard hit as investors read into comments made about the remainder of the year and the unsteady state of spending, sentiment and job growth. Even restaurant chains performing well tempered comments for Wall Street.

Nation’s Restaurant News looked at five companies — BJ’s Restaurants Inc., Chipotle Mexican Grill Inc., McDonald’s Corp., Papa John’s International Inc. and Starbucks Corp. — to report the straight talk from second-quarter earnings conference calls with analysts and investors. Papa John’s stands alone in its confidence.

BJ’s Restaurant & Brewhouse

Officials said BJ’s enjoyed another quarter of gains in market share, earnings and sales because of continued unit growth and sales-driving menu strategies. Second-quarter net income rose 10 percent, while revenue increased 18 percent. The chain’s 4.4-percent gain in same-store sales included 3.2-percent hikes to menu prices and a 0.8-percent uptick in traffic.

 BJ’s announced that it will expand its test of its first television marketing campaign.

In a call with analysts, Jerry Deitchle, chief executive for BJ’s Restaurant & Brewhouse, said:

“It is not going to be easy; it is a struggle. Even for the larger consumer companies out there — and we see all the earnings releases and sales commentary of other restaurant companies that are much larger and stronger than we are, and some of the softening trends they’re seeing — it’s a toughening environment. If we could ever get a little bit of tailwind here, it would have a remarkable effect on our business — but we’re all fighting the headwinds now.”

Next

Chipotle Mexican Grill

Same-store sales growth slowed sequentially from April to June for Chipotle, yet the company still managed an 8-percent same-store sales increase for the quarter. Many on Wall Street thought that was a sales miss, as the fast-casual burrito chain typical record double-digit same-store sales results.

 Total revenue rose 21 percent and Chipotle’s net income rose 61 percent to $81.7 million. Officials said they expect mid-single-digit same-store sales growth for the rest of 2012. The company’s stock fell more than 20 percent in morning trading on July 20, when it released its earnings results.

In a call with analysts, Jack Hartung, Chipotle's chief financial officer, said:

“We're seeing a slowdown. I mean — there's no other way around it. We were humming along nicely in the first quarter. We were humming along nicely in April. And then we saw a slowdown. … We think it's related to just general consumer spending. We're not seeing anything that's specific to markets. It seems like it's pretty broad based. It's not a significant slowdown, but it is a slowdown….

"I can tell you that the one thing that's interesting, [although] it doesn't explain the slowdown. A significant percentage of our increase is takeout. And so we do have more people coming in and leaving. And I don't know what that means. It does mean that we are selling a few less drinks….

"I'll tell you what we're not going to do: We're not going to do things that traditional QSR might do. So we're not going to do discounting or rush out and come up with the next new menu item.”

McDonald’s

Slowing economies in Europe, Japan and China were a drag on McDonald’s earnings, which foreign-currency translation battered to a 4-percent decrease to $1.35 billion for the quarter. Same-store sales rose 3.6 percent in the United States, 3.8 percent in Europe and 0.9 percent in the Asia-Pacific, Middle East and Africa division.

Across the world, McDonald’s plans to intensify its marketing spending and value proposition to coax consumers into incremental visits, officials said. McDonald’s also saw its stock slide following its earnings report.

In a call with analysts, Don Thompson, chief executive of McDonald's, said:

“At points [previously], we’ve seen one or two markets of our top 10 — maybe three or four — that might be experiencing these consumer confidence issues. This is one of the first times when we’ve seen more of a global piece, so it’s a little bit more than a European cold. What it all means for us is that the

things that we’ve employed historically — we’ve got to make sure that we’re in the best position again to drive additional traffic in the restaurant and be able to trade those customers up….

"We’re seeing a hike in competitive activity across the informal-eating-out marketplace, which is interesting because it’s not just in QSR. We’re seeing it across all of the marketplace from fast casual to convenience stores a

nd grocery stores. Having said that, for us at McDonald’s, what matters most is to remain focused on what’s within our realm of control.”

Next

Papa John’s Pizza

After what chief executive John Schnatter called an “outstanding” second quarter, Papa John’s raised its full-year, earnings-per-share guidance to between $2.45 and $2.55, from a previous range of $2.40 to $2.50 per share. The company also raised its expectations for same-store sales growth in both its domestic and international systems.

Second-quarter net income increased 22 percent, while revenue rose 8.5 percent, reflecting same-store sales growth of 5.7 percent in North America and 6.1 percent in Papa John’s international system. Officials did not credit any new initiatives with driving results, but rather the brands consistent deployment of the “Papa John’s Way,” built around in-store execution and quality-focused marketing.

In a call with analysts, Andrew Varga, chief marketing officer for Papa John's Pizza, said:

“We’ve really seen broadly in QSR over the past, let’s say, four to five periods, some pretty good strength across all categories. In one sense, the reports we’re seeing give us some encouragement, at least in our specific and broader category of QSR from the same-store sales perspective, that things look good.

"We feel very good that we’re in a unique position to take some share from larger quick-service chains and from the largest piece of the pizza category, which is the independents. We’re not doing anything differently than what we’ve told you over the last few years. We just keep running our quality positioning and quality story and keep doing it every day.”

Starbucks Coffee

The coffeehouse giant lowered its earnings forecast for its fiscal fourth quarter after the July 1-ended third quarter produced results below its expectations. Net income rose 19 percent for Starbucks while revenue grew 13 percent, reflecting a 6-percent global same-store sales increase, including a 7-percent gain in the United States. However, sales began slipping in mid-June and continued their swoon into July.

Like Chipotle, Starbucks endured a steep drop in its share price after reporting disappointing earnings, as the stock fell more than 10 percent.

In a call with analysts, Howard Schultz, Starbucks' chief executive, said:

“We had 7-percent U.S. comp growth and 6-percent global comp growth for the [second] quarter. We would take that any quarter over the 41-year history of the company, and it’s a stunning accomplishment, given the backdrop of economic issues.

"We saw a moderate change in June, but the numbers that Starbucks now has are so big that a moderate change in transactions and comps can have a swift and acute change to the economics of the current quarter. …

"So this is not a Starbucks issue; this is a macro problem. It’s not an excuse — we have to correct code on it — but we’ve got a fracture in consumer confidence, and one of the things that you already know about, but we’re confident that we will be able to navigate through it."

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

In what pundits, analysts and investors alike are reading as a warning sign for the restaurant industry, McDonald’s monthly global same-store sales results were not positive for the first time in years.

One of the largest quick-service restaurant companies in the world, and one that had weathered the recession better than most, reported Wednesday that global same-store sales were flat in July, meaning no change from the same month last year. Same-store sales fell 0.1 percent in the United States, 0.6 percent in Europe and 1.5 percent in McDonald’s Asia-Pacific, Middle East and Africa region.

Since 2003, U.S. monthly same-store sales for McDonald’s had only seen negative territory once in 2008, twice in 2009 and once in 2010. Europe has posted a monthly same-store sale decline only twice since 2006.

“We view July as an overall reflection of a weak global macro environment,” John Ivankoe, a restaurant securities analyst at J.P .Morgan, said in a research note, adding that there are “clear [same-store sales] headwinds in the U.S. with a ‘lackluster’ consumer environment.”

For McDonald’s in particular, Ivankoe said the chain should also expect “stiffer competition than at any time in recent history from resurgent Burger King and Taco Bell … and possibly improving Wendy’s.”

In April, Oak Brook, Ill.-based McDonald’s reported second-quarter results that included the revelation of slower sales trends, which McDonald’s said was the result of a “slowing global economy [and] persistent economic headwinds.”

Still, at that time, the company expected positive results in July, as did Wall Street. McDonald’s miss led to a 1.7-percent stock decline on Wednesday, to a close of $87.53. The stock is hovering near its lower annual range, as it has traded between $83.61 and $102.22 during the past 52 weeks.

McDonald’s said its U.S. promotions, which included the new lower-calorie menu and Olympic branding efforts, “did not offset the effects of the sluggish economy.” Overseas, the company said Germany and Japan were the weakest pockets.

“Our leadership team has the experience to effectively manage through the challenging environment and build sales and market share,” McDonald’s chief executive Don Thompson said in a statement.

McDonald’s market share has some analysts talking, as competitors have been setting their sights on the quick-service leader for some time and are now gaining some traction.

Larry Miller, securities analyst at RBC Capital markets said U.S. sales slowed at McDonald’s at the same time competitors were focused on value and new menu items. Burger King has been promoting its BBQ menu this summer following a broad menu makeover this spring, and Taco Bell has gained traction with its Doritos Locos tacos. Wendy’s continues to explore new menu moves after posting a 3-percent increase in second-quarter same-store sales.

“The result was the competitive set took some share from McDonald’s,” Miller said.

Contact Sarah Lockyer at sarah.lockyer@penton.com.
Follow her on Twitter: @slockyerNRN

Jack in the Box reported a 38-percent drop in earnings for the third quarter on Wednesday, and the company said it is looking at workforce reductions, restructuring functions and opportunities for outsourcing.

For the quarter ended July 8, the San Diego-based company reported net income of $11.6 million, or 26 cents per share, compared with $18.7 million, or 38 cents per share, in the year-earlier period. Gains from refranchising contributed about 5 cents per share for the quarter compared with a benefit of about 13 cents in the prior year quarter.

This fiscal year, the parent to the namesake quick-service chain and the fast-casual Qdoba Mexican Grill brand has been conducting a comprehensive review of its organization structure, including workforce reductions, the company said.

The quarter’s results included a restructuring charge of $11.3 million, or about 16 cents per share, related primarily to costs resulting from employees electing to participate in a voluntary early retirement program. More restructuring charges are expected during the fourth quarter, the company said.

During the quarter, Jack in the Box also entered into an agreement to outsource its distribution business, a move that is expected to be completed by the end of the first quarter of fiscal 2013.

Revenues for the quarter declined about 3 percent to $501.8 million.

For the Jack in the Box brand, same-store sales increased 2.8 percent systemwide, with an increase of 3.4 percent at company-owned locations and 2.6 percent at franchised units. Qdoba’s same-store sales rose 2.1 percent systemwide, with an increase of 3.3 percent for company-owned units and 0.9 percent for franchised units.

Linda Lang, Jack in the Box Inc.’s chair and chief executive, said same-store sales increases at company locations were driven by traffic growth and climbing average checks.

“Four weeks into the fourth quarter, our same-store sales are tracking above our third quarter results,” she said in a statement. “We believe the same-store sales increases we’ve experienced over the last seven quarters reflect the investments we have made to drive sustainable growth by enhancing the entire guest experience at the Jack in the Box brand.”

At the end of the quarter, the company operated 2,247 Jack in the Box locations, and another 1,661 were franchised. The company owns 614 Qdoba restaurants, and another 310 are franchised.

For the year, the company slightly upgraded projections for Jack in the Box, saying same-store sales will increase 4 percent to 4.5 percent. However, Qdoba’s system projections were downgraded slightly to between 2.5 percent and 3 percent. Earlier, the company had said same-store sales would grow between 3.5 percent and 4.5 percent for both brands.

Earnings per share will range between $1.48 and $1.58, excluding restructuring charges, the company estimated.

By the end of the year, the company is expecting to sell about 100 Jack in the Box locations to franchisees in an ongoing refranchising effort, which is expected to generate proceeds of about $45 million.

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

This is part of NRN’s 2012 Consumer Picks special report, produced in partnership with WD Partners. The study rates top restaurant chains based on customer preferences. Visit Consumer Picks on NRN.com for more information. For the full report, including detailed rankings on the more than 100 chains, see the Aug. 6 issue of Nation’s Restaurant News.

In the 2011 Consumer Picks survey, Papa Murphy’s Take ‘N’ Bake Pizza took the top spot, and In-N-Out Burger took second place. But ice cream specialist Marble Slab, one of six new brands in this year’s LSR category, pushed last year’s high rankers to second and third place, respectively.

The attributes consumers consider most important among limited-service brands are Food Quality, a brand’s Reputation and Cleanliness.

1. Marble Slab Creamery

This popular frozen-treat chain recently opened its first location in Saudi Arabia and merged with MaggieMoo's Ice Cream and Treatery under the Marble Slab Creamery moniker. The chain makes its Consumer Picks debut with the highest score in the limited-service category.

• Number of units: 250 (source: Technomic Top 500)
• U.S. systemwide sales: $66.5 million (source: Technomic Top 500)
• Survey strengths: Cleanliness, Menu Variety, Atmosphere, Craveability
• Last year’s rank: N/A

Next: Papa Murphy's Take 'N Bake Pizza

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2. Papa Murphy's Take 'N Bake Pizza

In the last year, Papa Murhpy's named Ken Calwell as its new president and chief executive and celebrated its 30th anniversary. The pizza chain also launched a new ad campaign called "Take 'N Bake Revolution", which focused on customization.

• Number of units: 1,283
• U.S. systemwide sales: $696 million
• Survey strengths: Value, Likely to Recommend, Return Intent
• Last year’s rank: 1

Next: In-N-Out Burger
Previous: Marble Slab Creamery

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3. In-N-Out Burger

For the second year, In-N-Out Burger won top ratings in seven out of the 10 survey attributes, scoring much higher than its peers in the hamburger category on Food Quality, Craveability and Reputation.

• Number of units: 266
• U.S. systemwide sales: $596 million
• Survey strengths: Service, Reputation, Craveability
• Last year’s rank: 2

Next: Ben & Jerry's
Previous: Papa Murphy's Take 'N Bake Pizza

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4. Ben & Jerry's

Ben & Jerry's, the veteran Burlington, Vt.-based ice cream chain, tapped into the growing trend of Greek yogurt by rolling out a new line of frozen yogurts. In April, the chain introduced four new Greek frozen yogurt flavors, including Strawberry Shortcake, Raspberry Fudge Chunk, Banana Peanut Butter, and Blueberry Vanilla Graham.

• Number of units: 298 (source: Technomic Top 500)
• U.S. systemwide sales: $103 million (source: Technomic Top 500)
• Survey strengths: Reputation, Food Quality
• Last year’s rank: 3

Next: Chick-fil-A
Previous: In-N-Out Burger

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5. Chick-fil-A

The popular chicken sandwich chain, recently surrounded by controversy, has had a busy year. Chick-fil-A named four new executive vice presidents and set a goal to reach $10 billion in systemwide sales before 2020. The Atlanta-based chain also plans to open 92 restaurants in 2012.

• Number of units: 1,592
• U.S. systemwide sales: $3.9 billion
• Survey strengths: Food Quality, Cleanliness, Service
• Last year’s rank: 7

Editor's note: Company sales and unit data was derived from the 2012 Nation Restaurant News Top 200 report, except where noted.

Previous: Ben & Jerry's
 

This is part of NRN’s 2012 Consumer Picks special report, produced in partnership with WD Partners. The study rates top restaurant chains based on customer preferences. Visit Consumer Picks on NRN.com for more information. For the full report, including detailed rankings on the more than 100 chains, see the Aug. 6 issue of Nation’s Restaurant News.

Cracker Barrel Old Country Store continued to rock its way to the top of the family-dining pack in the 2012 Consumer Picks survey.

The attributes consumers consider the most important among brands in this segment are Food Quality, Cleanliness and Service.

1. Cracker Barrel Old Country Store

During the last year, activist investor Sardar Biglari has been involved in a heated battle with Cracker Barrel's board of directors over ther direction of the brand. Biglari eventually purchased a substantial amount in the company's stock, bringing his stake in Cracker Barrel up to 16.3 percent. This year also saw the passing of Dan “Danny” W. Evins, 76, founder and chairman emeritus of Cracker Barrel Old Country Store Inc.

• Number of units: 603
• U.S. systemwide sales: $1.93 billion
• Survey strengths: Likely to Recommend, Reputation, Menu Variety
• Last year’s rank: 1

Next: Marie Callender's

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2. Marie Callender's

At the end of 2011, parent company Perkins & Marie Callender's Inc. emerged from Chapter 11 bankruptcy with its debt load reduced by more than $200 million. The company also recently announced that Jeffrey Warne, former president and chief executive of O'Charley's, would be its new CEO.

• Number of units: 80
• U.S. systemwide sales: Not available
• Survey strengths: Food Quality
• Last year’s rank: 3

Next: Bob Evans Restaurants
Previous: Cracker Barrel Old Country Store

Continued from page 2

3. Bob Evans Restaurants

In the past year, Bob Evans has committed itself to an initiative to reimage its restaurants to look more contemporary, as well as target value in a series of new menu moves. The brand recently started offering $6 Farmhouse Deals and a $9.99 3-Course Steak Dinner, as well as other value-focused promotions.

• Number of units: 565
• U.S. systemwide sales: $1.34 billion
• Survey strengths: Menu Variety, Food Quality
• Last year’s rank: 2

Next: The Original Pancake House
Previous: Marie Callender's

Continued from page 3

4. The Original Pancake House

The Original Pancake House, based in Portland, Ore., continues to gain favor with consumers for the fresh-made batters and sauces used for its signature pancakes and omelets.

• Number of units: 116
• U.S. systemwide sales: $160
• Survey strengths: Food Quality, Cleanliness
• Last year’s rank: N/A

Next: IHOP
Previous: Bob Evans Restaurants

Continued from page 4

5. IHOP

The subsidiary of Glendale, Calif.-based DineEquity has had a busy year. The family-dining chain launched a new marketing campaign with the goal to "take back and own" breakfast, and also rolled out a retail line of its maple syrups. Most recently, the chain's president Jean Birch said she would be stepping down, and DineEquity announced that they would begin a menu overhaul at the brand.

• Number of units: 1,514
• U.S. systemwide sales: $2.6 billion
• Survey strengths: Menu Variety, Food Quality
• Last year’s rank: 5

Editor's note: Company sales and unit data was derived from the 2012 Nation Restaurant News Top 200 report, except where noted.

Previous: The Original Pancake House

This is part of NRN’s 2012 Consumer Picks special report, produced in partnership with WD Partners. The study rates top restaurant chains based on customer preferences. Visit Consumer Picks on NRN.com for more information. For the full report, including detailed rankings on the more than 100 chains, see the Aug. 6 issue of Nation’s Restaurant News.

It may not shock casual-dining operators that customers choose to visit them for their food quality, cleanliness and menu variety, but they may be surprised to learn that having a reputation for value doesn’t cinch their status as a consumer favorite either. Consider The Cheesecake Factory, which emerged as the most preferred casual-dining brand in the Varied-Menu subcategory despite tying for the lowest rating for Value. Although the chain fell short on Value, it nearly swept the rest of the survey’s attribute ratings.

1. The Cheesecake Factory

In the past year, Calabasas Hills, Calif.-based The Cheesecake Factory has revamped its menu to include new low-calorie, more healthful menu items. The chain also announced its first venture in the international market with a franchise deal in the Middle East.

• Number of units: 156
• U.S. systemwide sales: $1.5 billion
• Survey strengths: Food Quality, Reputation, Cleanliness
• Last year’s rank: 4

Next: P. F. Chang's

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2. P.F. Chang's

P.F. Chang's China Bistro had a busy year, selling to private equity firm Centerbridge Partners for $1.1 billion and debuting Pei Wei Asian Market, a fast-casual spin-off of Pei Wei Asian Diner. The Scottsdale, Ariz.-based company's CEO Richard L. Federico was also named the 2012 Norman Award winner for leadership.

• Number of units: 206
• U.S. systemwide sales: $930.4 million
• Survey strengths: Service
• Last year’s rank: 3

Next: Bonefish Grill
Previous: The Cheesecake Factory

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3. Bonefish Grill

This year, John Cooper, president of Tampa-based Bonefish Grill, was named one of Nation's Restaurant News' Golden Chain honorees. The chain, known for its market-fresh seafood, also demonstrated its ability to effectively use social media to engage and retain customers, signficantly increasing its Restaurant Social Media Index score in the first quarter.

• Number of units: 158
• U.S. systemwide sales: $459 million
• Survey strengths: Food Quality, Cleanliness, Reputation
• Last year’s rank: 2

Next: Olive Garden
Previous: P.F. Chang's

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4. Olive Garden

Olive Garden has made an effort to shift its focus to value amid struggles with sales. The subsidiary of Orlando, Fla.-based Darden Restaurants Inc. has introduced promotions like "Create Your Own" lunch and the "two for $25" deal in order to meet an "elevated need for affordability" going into 2013, said Drew Madsen, Darden's president and chief operating officer.

• Number of units: 784
• U.S. systemwide sales: $3.6 million
• Survey strengths: Reputation, Menu Variety, Value
• Last year’s rank: 8

Next: Carrabba's Italian Grill
Previous: Bonefish Grill

Continued from page 4

5. Carrabba's Italian Grill

The Tampa, Fla.-based chain continues to feature seasonal, hand-prepared Italian food, with most dishes made from scratch in its restaurants. Most recently, Johnny Carrabba, cofounder of the chain, opened a fast-casual concept in Houston called Mia's Table.

• Number of units: 232
• U.S. systemwide sales: $686 million
• Survey strengths: Food Quality, Service
• Last year’s rank: 5

Editor's note: Company sales and unit data was derived from the 2012 Nation Restaurant News Top 200 report, except where noted.

Previous: Olive Garden

This is part of NRN’s 2012 Consumer Picks special report, produced in partnership with WD Partners. The study rates top restaurant chains based on customer preferences. Visit Consumer Picks on NRN.com for more information. For the full report, including detailed rankings on the more than 100 chains, see the Aug. 6 issue of Nation’s Restaurant News.

Restaurants have always been about the food, but the quality of that food has never been more important, according to the folks who matter most — your customers.

In the 2012 Consumer Picks survey, Food Quality rose to the top as the most important attribute across all three industry segments — Limited Service, Casual and Family — as determined by the 5,346 responses reflected in the survey. In the case of Limited Service and Family, Food Quality ousted Cleanliness, the attribute that had risen to the top for those segments in last year’s survey.

That’s just one of the notable findings to surface in this year’s study — one that Nation’s Restaurant News and WD Partners have strived to make bigger, better and more insightful than our inaugural survey last year.

To that end, this year’s report includes 13 new restaurant chains, bumping the number of represented brands to 152; a new attribute, Craveability; and instructions on how to compare what consumers said about a brand in 2012 with what they said in 2011 — in other words, how to gauge their changing perceptions against a benchmark.

The 2012 survey results are based on 130,000 restaurant visits made in the six months since Dec. 15, 2012. Consumers, who were queried online, were asked to rate brands based on 10 attributes: Atmosphere, Cleanliness, Craveability, Food Quality, Likely to Recommend, Likely to Return, Menu Variety, Reputation, Service and Value. The methodology on the next page has more information about how responses were calculated and presented.

Along with Food Quality, Cleanliness and Service also ranked high in terms of importance to diners. Value only came in at No. 3 for Limited Service and placed as No. 4 for Family and Casual, underscoring again a finding from last year that Value is relatively unimportant compared to other attributes. Indeed, of the top Overall Scorers in each segment — newcomer Marble Slab Creamery in Limited Service, The Cheesecake Factory in Casual and Cracker Barrel Old Country Store in Family — none won the top score for Value, although they all clearly emerged as customer favorites.

Not surprisingly, the more customers pay, the more they expect restaurant brands to execute on all attributes. This is reflected in the average importance rating score, which rises from 57.4 percent for Limited Service to 63.8 percent for Family and 69.6 percent for Casual.

Given higher expectations for more expensive brands, this year we broke Fine Dining out as its own category to further refine the survey process and establish a set of metrics that more fully reflects the similarities and differences among the brands evaluated here.

In last year’s Consumer Picks report, the two Fine-Dining chains — Ruth’s Chris Steak House, based in Heathrow, Fla., and McCormick & Schmick’s in Houston — were incorporated into the Casual-Dining category. But because both are high-ticket brands, the results were somewhat distorted and, consequently, the pair tended to outperform other chains in the category in the eyes of the consumers.

Clearly, when customers shell out more than $30 for an entrée, they form different expectations about the dining experience, particularly where Food Quality, Atmosphere, Service and Craveability are concerned.

The decision to evaluate fine-dining chains apart from casual-dining brands is intended to address this issue more fairly and present more of an “apples to apples” comparison as the category expands in the future.

The survey’s new attribute, Craveability, proved to have a big influence in the Limited-Service segment, where Food Quality and Craveability tended to go hand in hand for those brands ranked highest within their subsegments. Among those rewarded for both by consumers were Panera Bread, Krispy Kreme Doughnuts, In-N-Out Burger, Pei Wei Asian Diner, Souplantation/Sweet Tomatoes, Chick-fil-A and Chipotle Mexican Grill.

In the Casual segment, Menu Variety had the same impact. The brands that scored highest within their subsegments also had the highest score for Menu Variety, suggesting that consumers appreciate options even when they seek out a specialized cuisine such as Italian, Mexican, steak or seafood. Among those subsegment top scorers were Olive Garden, Bonefish Grill, Texas Roadhouse and The Cheesecake Factory.

For the full report, including detailed rankings on the more than 100 chains, see the Aug. 6 issue of Nation’s Restaurant News.

Paul Frumkin contributed to this article.

This is part of NRN’s 2012 Consumer Picks special report, produced in partnership with WD Partners. The study rates top restaurant chains based on customer preferences. Visit Consumer Picks on NRN.com for more information. For the full report, including detailed rankings on the more than 100 chains, see the Aug. 6 issue of Nation’s Restaurant News.

This issue marks the second year of Consumer Picks, an industry-wide survey reflecting how customers rate select restaurant chains. Because of the success of last year’s survey, we were encouraged to make this year’s review bigger and better.

The 2012 survey has attribute ratings on 152 chains, up from 139 chains in 2011. This year we also added an extra attribute, Craveability, to measure if a chain has menu items people crave.

In addition, this year we created a separate category for Fine Dining. While this segment only includes two chains represented in the survey, it will be easier to read and review the Casual-Dining segment without having to mentally “subtract” the Fine-Dining brands. Of course, we hope to grow the number of brands included in that segment in the 2013 Consumer Picks.

This year we are also including importance ratings for Limited Service, Family Dining and Casual. It is interesting to note that the importance attributes increase as check averages increase between each of these segments. Consumers are clear that if they are paying more, they will expect more across the attribute spectrum.

These changes aside, much of the survey is consistent in format to the 2011 report in order to facilitate year-to-year comparisons. These assessments will undoubtedly be a common use of the data. As such, I would like to offer a few suggestions and warnings.

First, a warning: If you look at just the difference in a brand’s scores from 2011 to 2012, you run the risk of drawing incorrect conclusions. To look only at one year over the other for any one brand does not take into account the time difference between the research or the economic and social factors that took place during the year, impacting consumers’ responses.

A better way to make the comparison is to take one brand’s score against the average score for an identical group of competitors, comparing the relative difference between the subject brand and its group of rivals. Directly comparing how the subject brand is doing against a competitive set allows for more insightful evaluations.

In the example provided below, we use Red Robin Gourmet Burgers as the subject brand. To make the comparison, five competitors were chosen. I would recommend using a minimum of five competitors as the basis for comparison, although you can use more.

Comparison example

Looking at Red Robin’s Overall Score in isolation shows almost no change — 66.5 percent in 2011 versus 66.6 percent in 2012. But when you look at these scores against the competitive set, where the average score dropped from 63.9 percent to 61.4 percent, a much more noticeable improvement in Red Robin’s relative position becomes apparent.

This same pattern can be seen in the Food Quality attribute. In the Service attribute it may appear that Red Robin had a lower performance in 2012, yet in comparison to the competitive set, the casual-dining brand actually improved by a slight degree.

If you would like to make a similar comparison of your brand, WD Partners has created a blank Excel file that you can download. It is available at: www.wdpartners.com/lombardi/downloads.php.

Finally, when reviewing this survey data, please keep any one brand’s set of attribute ratings in perspective with the brand’s positioning and historic offer. For example, In-N-Out Burger scores somewhat lower for Menu Variety, but a limited menu is part of that brand’s positioning strategy and needs to be taken into account.

Likewise, when looking at the Atmosphere attribute ratings for Papa Murphy’s Take ‘N’ Bake Pizza, it is good to keep in mind this is a takeout-only brand where there is very little time spent inside the store, making the Atmosphere attribute less critical.

As with any other data, the more the user understands the correct interpretation of the results, the more value the data provides.

This is part of NRN’s 2012 Consumer Picks special report, produced in partnership with WD Partners. The study rates top restaurant chains based on customer preferences. Visit Consumer Picks on NRN.com for more information. For the full report, including detailed rankings on the more than 100 chains, see the Aug. 6 issue of Nation’s Restaurant News.

In addition to presenting chain preferences across the thousands of consumers who participated in this year’s Consumer Picks, Nation’s Restaurant News and WD Partners also have segmented consumers based on demographic groups and income levels to find their top restaurant chain preference. Looking at women, men, Millenials and consumers with income above and below $25,000, find which restaurants strike which cords with customers.

Limited Service snapshot

Who likes what?
Favorite limited-service chain among each group

Women: Marble Slab Creamery

Men: Potbelly Sandwich Works

Millenials: In-N-Out Burger

Gen X: Marble Slab Creamery

Boomers: Marble Slab Creamery

Matures: Papa Murphy's Take 'N' Bake Pizza

Income level:

<$25K: Souplantation/Sweet Tomatoes

$25K-$49,999K: Marble Slab Creamery

$50K-$74,999K: In-N-Out Burger

$75K-$100K: Papa Murphy's Take 'N' Bake Pizza

>$100K: Bruster's Real Ice Cream

Casual Dining snapshot

Who likes what?
Favorite casual-dining chain among each group

Women: The Cheesecake Factory

Men: P.F. Chang's China Bistro

Millenials: Bonefish Grill

Gen X: P.F. Chang's China Bistro

Boomers: BJ's Restaurant & Brewhouse

Matures: The Cheesecake Factory

Income level:

<$25K: The Cheesecake Factory

$25K-$49,999K: The Cheesecake Factory

$50K-$74K,999K: BJ's Restaurant & Brewhouse

$75K-$100K: Bucca di Beppo

>$100K: Mellow Mushroom Pizza Bakers

Editor's Note: Millennials born 1982-2000. Only Millennials 17 or older qualified to take the survey; Gen X born 1965-1981; Boomers born 1946-1964; Matures born 1945 or earlier.

ALSO: Check out NRN's special report, "Targeting Your Demographic," to see how demographics matter when deciding the best strategies for your business. 

As the sustainable food movement continues to grow, it’s spreading from the farm to the sea. And though it takes some effort to become educated about what to serve and what to avoid, many chefs and operators are finding that serving sustainable seafood can actually be less expensive, more flavorful and allow for more creativity in the kitchen.

According to the National Restaurant Association’s What’s Hot in 2012 chef survey, sustainable seafood is a top trend among chefs. And sustainability initiatives, such as the well-known Monterey Bay Aquarium Seafood Watch program, report an increase in the number of chefs and operators following their guidelines.

“Chefs themselves are starting to see the writing on the wall,” said Sheila Bowman, Seafood Watch manager of culinary and strategic initiatives. “It’s not just a nicety; chefs are seeing they won’t be able to get this fish 10 years from now.”

All the seafood Chef Jeffrey Jake serves at Silverado Resort and Spa in Napa, Calif., comes from sustainable, local sources. Since 2001, Jake has been involved with Monterey Bay Aquarium to understand and encourage seafood sustainability.

Though some chefs might find this limiting, Jake says there are plenty of good options on the Seafood Watch list to choose from. For example, his menu currently features Monterey Bay abalone (or sea snails), with sweet Nantes carrot puree, fava beans, sea lettuce and truffle vinaigrette.

“The challenge is small compared to the efforts and costs to the fisherman,” said Jake. “I guess the biggest challenge is to get the public not to always eat from the top of the food chain. Try sardines; eat more shellfish.”

To keep the menu sustainable at Ripple in Washington, D.C., Chef Logan Cox serves all manners of lesser-known and oft-shunned species, including blue fish, wahoo, anchovies and sardines. “These fishes are generally tastier,” said Cox. “They are much more unique, special. We try to focus on that. It requires us to be that much more creative.”

Cox is currently serving local-caught, pan seared, crispy blue fish with creamed corn congee, pickled crab and blueberry capers. Not only is blue fish a bestseller, but Cox says it’s also significantly less expensive than its overfished counterparts.

Aaron Noveshen, owner of Pacific Catch, which has four locations in California, gets around higher costs of more popular fish, such as salmon, by offering sustainable varieties in season, as well as buying them in larger quantities. He also features lesser-known fish that are harder to differentiate from overfished varieties, such as albacore tuna in place of yellow fin tuna.

“It’s no silver bullet,” said Noveshen. “A lot comes down to seasonality.” He also notes the importance of developing a good relationship with seafood suppliers who understand what sustainability means to your brand.

Celebrity chef Sam Choy has been serving sustainable seafood in his restaurants for two decades, and now he’s doing the same with Pineapple Express, his new Los Angeles-based food truck. For example, Choy only uses sustainable salmon for his poke, wraps and salads. Though it can sometimes cost more, Choy says it’s worth it.

“Customers are happier; the planet stays healthier,” said Choy. “I can tell you I have never lost a customer because we used sustainable fish, but we have certainly gained many.”

A leader in the sustainability movement, Bon Appetit Management Company rolled out Seafood Watch’s guidelines nationwide back in 2002. The company, which continues the effort in its 400 locations in 32 U.S. states, doesn’t see cost as a barrier.

“Contrary to popular belief, serving sustainable seafood can be less expensive,” said Helene York, director of purchasing strategy for Bon Appetit. “Some environmentally responsible species can be more expensive, which is why menu planners should look at their fish program as a whole. If planned properly, there shouldn’t be an increase.”

Bon Appetit’s parent company, Compass Group USA, began partnering with Seafood Watch a few years later. Today, 80 percent of the seafood the company serves at nationwide is sustainable.

“Bon Appetit really led the way,” said Marc Zammit, vice president of sustainability for Compass USA.

“It was really about the preservation of flavor as well as the preservation of the earth.”

Timing might not be Francesco Palmieri’s strong suit. He opened his first restaurant, The Orange Squirrel, in his hometown of Bloomfield, N.J., in November 2008, when the economy was in shambles.

Positive reviews and loyal customers kept him going, though, and the restaurant has sustained itself with signature items such as whole roasted bronzini and lobster Cobb salad.

Before opening The Orange Squirrel — a name Palmieri won’t explain because he likes to keep his customers guessing — the chef spent most of his career cooking nearby in New York, most recently as a sous chef at Jeffrey Zakarian’s former restaurant, Town, at the Chambers Hotel.

A graduate of the Culinary Institute of America, Palmieri started his career cooking at Windows on the World at the World Trade Center and then helped his colleagues from there open an employee-owned restaurant, Colors. He also worked as a sous chef, and later acting executive chef, at Pino Luongo’s former landmark Italian restaurant, Coco Pazzo.

Palmieri discusses some of The Orange Squirrel’s popular seafood dishes.

What kind of seafood do your customers like?

You can’t go wrong with tuna, salmon, bass, red snapper, cod, halibut. When it comes to shellfish, lobsters, scallops, clams, things that are common on the East Coast is what they go for — anything that’s recognizable.

If we try to do something more island-y, like wahoo, that’s a little more difficult for them to approach. Some people who enjoy seafood will go for it, but most people like what they know.

But you have a few somewhat unusual fish on the menu, like bronzini.

That’s been on the menu since we opened, and we sell quite a few of that. It’s basically an American-style sea bass, and it’s been brought to the forefront by a lot of restaurants in the area. If we just tell them it’s a sea bass, that’s something they can relate to. And it’s easily sourced, originally from Italy, but more and more of it comes from the tip of Africa.

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How do you prepare it?

We clean it and stuff it with rosemary, thyme and lemon. Then it’s quick-seared on the grill and then put in a cast-iron skillet with white wine, olive oil, crushed garlic, thyme, salt and white pepper. Then we put it in the wood oven. When it’s done we dress it with lemon sea salt, fennel pollen and orange powder. In the spring and summer we top it with Cerignola olive vinaigrette, and in the fall and winter it gets a blood orange beurre blanc.

You also use white marinated anchovies rather than the salted, preserved kind, in your Caesar salad. How do customers respond to that?

Anchovies can be a hard sell. It has a stigma of being salty and stinky. But I think when they know you’re doing something a little bit different, they’re willing to take the chance. Ours are harvested from Italy or Spain, and they’re much meatier and plumper, and their flesh is much sweeter.

Tell me about your lobster Cobb salad.

That’s another plate we’ve had since day one. It’s a nice way to have a salad with some protein, especially the royal protein of lobster.

We use the organic greens from my garden when they’re in season, some roasted corn and pancetta lardons. That’s all tossed with a Champagne and mustard vinaigrette, topped with an avocado mousse, some deviled quail eggs, lemon sea salt, and lobster meat that I poach for only about three-and-a-half or four minutes.

Why only four minutes for the lobster?

If you cook it more than that, it gives it a different texture. It’s a little more firm and rubbery, and I like to have people experience a flavor that’s almost ocean-like.

We cook it in a court-bouillon with thyme, bay leaves, peppercorns, coriander, ginger, shallots, scallions and salt. We simmer that and then drop the lobster in.

Then to stop the cooking, we don’t drop it in ice water, because that dilutes the flavor. Instead we drop it into cold court-bouillon, with ice cubes also made of court-bouillon.

Have you had trouble sourcing any of your seafood lately?

There are so many fish that are hard to source. Even halibut will sometimes go on a critical list. But those fish that are hard to source shouldn’t be on the menu. It’s not good for the fish and it’s too expensive for the consumer.

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

The Wendy’s Company's turnaround efforts appeared to be taking hold in the second quarter, and the company plans to accelerate remodeling efforts next year as “new look” units show a sales lift of up to 25 percent, the company said Thursday.

For the second quarter ended July 1, Wendy's reported a loss of $5.5 million, or a loss of 1 cent per share, compared with income of $11.3 million, or 3 cents per share, last year, primarily as a result of a $25.2 million pretax charge from the early extinguishment of debt.

However, consolidated revenues rose 3.8 percent to $645.9 million for the quarter, and both company-operated units in North America and franchise locations, respectively, generated a same-store sales increase of 3.2 percent, representing the fifth consecutive quarter of comparable sales increases.

The same-store sales climb was even better than the 3-percent increase projected at an analyst conference earlier this year. The increase also contributed to climbing margins at company-operated locations of 14.1 percent for the quarter, compared with 13.9 percent last year, though that increase was offset somewhat by higher labor costs as the chain invests in improving customers service with the new “My Wendy’s” initiative, training employees to be friendlier, greet all guests, show pride and other attributes.

The service improvements are part of Wendy’s ongoing “A Cut Above” brand positioning strategy, which has included menu innovation, cost cutting, daypart expansion and restaurant growth.

A cornerstone of the effort, however, has been Wendy’s reimaging campaign, which began last year.

Emil Brolick, Wendy’s chief executive, said 10 new-prototype restaurants opened in 2011 have shown a sustained average sales lift of 25 percent, and the company is shifting into overdrive, with plans to open 50 remodeled restaurants this year, along with another 17 new builds featuring the more contemporary design.

In 2013, that number will grow. The company is planning to remodel 100 locations and open another 20 with the new look. Another 100 franchised locations are scheduled for remodeling.

By 2015, Brolick expects about half, or 750, of the chain’s company-operated restaurants to have the new design.

The re-imaging comes in three options, or tiers, with the 25-percent lift seen among units with the Tier I redesign, the most comprehensive. Tier II tends to generate a 15-percent lift, and Tier III a 5-percent sales increase.

Brolick said promotions for late night launched around Memorial Day have helped increase sales during that daypart by about 7 percent.

Breakfast, however, remains a challenge. The company began testing a breakfast program in 2006 that has seen several iterations. Brolick said the daypart is still not showing the desired economic results, and work will continue.

“We want our share of [the breakfast] business, but it has to be a profitable share,” he said.

Wendy’s is also continuing efforts to build its market share among Hispanic consumers, which Brolick sees as an opportunity.

The chain’s marketing efforts in general are resonating with guests, Brolick said, including commercials featuring Wendy Thomas, founder Dave Thomas’s daughter, as well as a redheaded actress known as “Red.”

In July, the chain launched a new mobile app that helps guests plan a meal under a certain number of calories. Brolick said the app already has 26,000 users.

Higher commodity costs also remain a challenge, the company said. Some relief on beef costs is expected for the balance of the year, as the price of ground beef is dropping with more cattle being sent to slaughter because of the drought in the Midwest and lowered demand because of the “pink slime” controversy earlier this year. But beef prices are expected to rise next year because of herd liquidation, which could have a long-term impact.

Dublin, Ohio-based Wendy’s operated or franchised 6,547 locations at the end of the second quarter, including 1,425 company-owned locations. During the quarter, the company closed 19 underperforming restaurants and franchisees closed 28.

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

Editor's note: This exclusive series to Nation’s Restaurant News provides C-level insights into the sales and traffic data from clients subscribing to Black Box Intelligence, a financial performance benchmarking company. The views expressed here do not necessarily reflect those of Nation’s Restaurant News.

Our predictions of a soft month were unfortunately correct. July started out strong but faltered later on.

The just-released Restaurant Industry Snapshot for July reports that industry same-store sales rose 8 percent and traffic fell 1 percent, compared with a same-store sales increase of 1.4 percent and a traffic decrease of .8 percent in June.

We based our predictions on the Restaurant Willingness to Spend Index from our partners Consumer Edge Research, which declined from an 88 in May to 81 in June. [The baseline is set at 100.] Expectations dropped for both the $100,000-plus consumer and the under $50,000 consumer, by 11 and 9 points respectively. That decline, coupled with the Olympics in the last three days of the month, fueled our concerns.

However, it was particularly encouraging to see such a strong start to the month. Our members reported positive same-store sales in food and in alcoholic beverages. When sales did soften, it occurred predictably in the dine-in area, as to-go sales and catering were both very strong.

Digging into regional results, it was intriguing to me to look at various data points that might explain the differences between sales the best and worst regions. The Midwest is being hammered with record hot weather — along with all parts of the country besides the Northwest — but is still on top with a sales increase of 1.8 percent. At the same time, sales in the West declined .7 percent.

However, none of that matters nearly as much as when you correlate the regional unemployment numbers to performance. When you dig into Bureau of Labor Statics as we do, you find that in the Midwest, very few designated market areas are experiencing unemployment above the 8.4 percent national average.

Conversely, when you look at the West region, very few DMA’s are below that level. In fact, Los Angeles and other southern California markets are still at 10.3 percent and higher — almost 2 percent higher than the rest of the country.

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So what does this mean for performance of our industry?

We believe that the consumer is essentially in a constant state of flux, as indicated by the spike in the just-published July Consumer Edge Research Restaurant Willingness to Spend Index, which jumped six points to 87.

We continue to track the predictability of the index against the change in direction — positive or negative — for the next month's sales. The index has been correct record 24 out of 27 times, including in July.

So why did it go down so much last month and up so much this month?

Our assumption is that with the speed of technology today, consumers spend with their mood as influenced by what is happening on the short-term digital highway. The U.S. is having a great Olympics, so you are hearing stories about our gifted, hardworking athletes and not as much about the election or other negative economic data.

Still, you can't feel good or spend to eat in restaurants if you don't have income, so the lingering unemployment rate is dragging us down. I think this is beginning to lead our research group to look deeper at the results on a market-by-market basis.

In the month of July, we reported data on 146 designated market areas, with 64 percent positive and 37 percent negative. In every one of those markets you have the macro impact of metrics like unemployment, but you also have competitors that outperform the rest.

That leads me to the most powerful thought that seems so obvious but is seldom discussed: If our industry is truly in a market-share battle, as we believe we are, where is it won? It is won in individual markets where great operators leverage their brands’ consumer equity to outperform the competition.

Yes — marketing, pricing and product are all important, but only if someone owns the result in their market. Whether you are a chain or an independent, you have to win in your market — which brings me to a comment I frequently make:

Not all boats are lifted or fall by the tide; some just out-sail the rest.

The Restaurant Industry Snapshot is a compilation of real sales and traffic results from 117 DMAs from 73 distinct restaurant brands and approximately 12,000 restaurants that are clients of Black Box Intelligence. Currently, data is comprised of casual dining (44%), upscale/fine-dining (32%) and fast-casual/family-dining (24%). Black Box Intelligence is a sister company to People Report, which tracks 1 million restaurant employees on workforce analytics. The Restaurant Industry Snapshot also includes the “Restaurant Industry Willingness to Spend Index” from Consumer Edge Research, which is a monthly household survey of more than 2,500 consumers. Consumer Edge Research is a marketing partner with Black Box Intelligence and People Report.

Wallace B. Doolin
Doolin is chairman of Thomas Doolin and Associates LLC, the holding company of People Report, the leader in human capital business intelligence for the restaurant industry and Black Box Intelligence. He is the founder of Black Box Intelligence, a state of the art business intelligence product for the restaurant industry. Additionally, Doolin serves as executive chairman of ESP Systems LLC, a hospitality and healthcare technology company. Other current responsibilities include public company board of director service for Caribou Coffee and Famous Dave’s. Previously, Doolin served as CEO of Carlson Restaurants Worldwide and TGI Friday’s.
 

Terri Funk Graham, Jack in the Box Inc.’s senior vice president and chief marketing officer, is stepping down after 22 years with the quick-service chain, company officials said Thursday.

In a call to analysts following the release of third-quarter results, Linda Lang, Jack in the Box’s chair and chief executive, thanked Graham for her “countless contributions,” including oversight of the chain’s advertising campaigns and product development, “which have contributed to our high level of brand awareness, as well as an impressive record of sales growth,” Lang said.

Company officials said the chain is not looking for a replacement to fill the CMO role, but marketing responsibilities will be handled by internal talent.

Graham has “put together a very strong team, (an) experienced team, and she’ll be assisting us during the transition,” Lang added.

Under Graham, Jack in the Box has focused marketing efforts on the iconic and edgy character “Jack,” with his oversized ping-pong-ball head and pointy yellow hat, perched at a jaunty angle.

San Diego-based Jack in the Box reported a 38-percent decline in net income for its third quarter on Wednesday, but same-store sales are climbing for both the Jack in the Box and Qdoba Mexican Grill brands based on growing traffic and larger average checks.

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

CKE Restaurants Inc., parent to the Hardee’s and Carl’s Jr. quick-service restaurant chains, said late Thursday that it will not proceed with a planned initial public offering that was scheduled for today.

In a short statement issued on the eve of the company’s planned return to public markets, CKE officials said it has determined not to proceed with the IPO due to “market conditions.”

Earlier this year, Carpinteria, Calif.-based CKE hoped to raise as much as $230 million with a return to the New York Stock Exchange. The offering of 13.3 million shares of common stock was initially priced between $14 and $16 per share.

The week started optimistically, with much for restaurant-friendly investors to chew on.

Bloomin’ Brands Inc., parent to the Outback Steakhouse chain, held an IPO on Wednesday. Though the amount of stock issued and the price was slashed the day before the market debut, the stock price has climbed through the week to $13.49 late Thursday from the opening of $11.60.

Still, the week also brought discouraging news from McDonald’s, which saw same-store sales slip in July at each of the chain’s divisions, including the United States.

While some hold McDonald’s’ slip as an example of worsening trends within the quick-service segment, others point to improving sales at Burger King, Wendy’s and Taco Bell as a counter argument, saying the quick-service giant may be losing market share to competing brands.

CKE, which was taken private by Apollo Management in a $700 million deal in 2010, has also shown improving trends this year.

The company swung to a profit in its May-ended first quarter, reporting net income of $9.5 million, compared with a loss of $2.6 million a year earlier. Revenue for the latest quarter rose 3 percent to $412 million, and blended same-store sales for company-owned locations increased 2.6 percent.

CKE was planning to use income from the IPO to reduce its net debt of $654 million to a projected $590 million.

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