Quick-service snack chain Dunkin’ Donuts launched a mobile application Thursday morning for Apple and Android smartphones that will enable customers to pay for transactions and send virtual gift cards to others.

The Dunkin' Donuts Mobile App, which the Canton, Mass.-based company said has been in development for a year, kicked off with a multimedia marketing initiative on Facebook, Twitter, the Apple App Store, Google Play for Android users, and the brand’s website. The launch also was publicized on a digital billboard in New York’s Times Square.

The new app is free to download and contains a number of features. Key among them is the ability to pay instantly at all Dunkin’ Donuts stores across the United States by scanning the smartphone at the point-of-purchase, thereby speeding up transaction times, said John Costello, chief global marketing and innovation officer for parent Dunkin’ Brands Inc.

The app also enables customers to purchase, store or reload mobile Dunkin’ Donuts cards for their smartphone as they would with a plastic card.

In addition, Costello told Nation’s Restaurant News, the app features a “unique mGifting capability” that lets customers purchase and send a mobile gift card to others. Virtual versions of Dunkin' Donuts Cards ranging from $2 to $100 can be sent via text, e-mail and Facebook Connect, accompanied by a personalized message.

“Dunkin’ Donuts is the only QSR that does three-way gifting,” or the ability to send virtual gift cards through three different channels, Costello said. He added that the company expects this feature to help spur gift card sales.

The Dunkin' Donuts Mobile App also contains a GPS-enabled store-locator feature that allows consumers to find the closest Dunkin’ Donuts branch anywhere in the United States. The feature also provides a map and directions, as well as information about store hours, in-store Wi-Fi and drive-thru availability.

In addition, the app allows consumers to link to the Dunkin’ Donuts website nutrition page, where they can gather health-related data about individual menu items.

Prior to the launch the company embarked on an extensive training program for employees, Costello said. Among other things, a security issue was addressed by training employees to let customers scan their smartphone themselves so it would never would leave their hand. Longer cords also were installed at the drive-thru windows, allowing employees to pass the scanner to customers in their cars.

Costello said it was too early to determine how many consumers had downloaded the app, but he noted that it ranked as the fifth most popular app in the Apple App Store today.

With the rollout of its mobile app, Dunkin' Donuts joins chains such as coffeehouse operator Starbucks, which has offered its own app since 2011 but recently started accepting payments through Square, a mobile payment startup.

Costello said he anticipates that Dunkin’ Brands’ sister concept, Baskin-Robbins, will launch its own mobile application in the future.

Dunkin' Brands has 7,015 Dunkin' Donuts units and 2,457 Baskin-Robbins locations.

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

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.

Customers love the drive-thru for the time it saves and the convenience it creates. As a result, drive-thru patronage in the quick-service segment of the foodservice industry usually accounts for 50 percent or more of same-store sales.

But while drive-thru speed is important, order accuracy is even more important. That's because we’re not in the business of serving the wrong food fast.

This video excerpt (at left) from the DVD 60 Second Lessons in Leadership shares the five basic ways to ensure accurate delivery of food and beverage through the drive-thru window. Have your drive-thru team members watch this short video before every shift. The more they learn, the better they'll perform, and the fewer customer service complaints you’ll have.

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

In this weekly Commodities Watch column, John T. Barone, president and commodities analyst for Market Vision Inc., offers a snapshot of the state of commodities for restaurants.

With a large Brazilian crop in the ground this year, coffee futures — which started the year at $2.29 — averaged just $1.57 for the month of June. Then, heavy rain in July knocked berries off trees, threatened quality, and drove prices back to $1.89. But dryer weather in August has been ideal for harvest, and prices have fallen to $1.60. So how low can coffee go?

The Brazilian government had encouraged farmers to hold back sales this past spring in order to help support prices ahead of harvest. So the Brazilians are sitting on large supplies. Additionally, the Euro crisis has weakened demand for higher quality Arabica beans.

Coffee futures should test June lows in the $1.50 range in August and September. But look for potentially negative reports on Brazilian crop quality, and U.S. roaster buying in October and November, to put a floor under prices by fall and eventually send them higher again.

Contact John T. Barone at jbarone@mktvsn.com.
 

Smashburger has named Brett Willis as its new senior vice president of franchise sales, the Denver, Colo.-based company said on Monday.

In his new role, Willis will lead franchise recruitment initiatives for the company, focusing on developing and executing strategies for nontraditional, domestic and international unit growth of the better-burger restaurant chain.

Most recently, Willis led franchise development for Johnny Rockets, focusing on nontraditional locations. He also led franchise development for Arby’s Restaurant Group. Before that, Willis worked as a franchise sales manager and financial analyst for Sonic Drive-In.

“Brett is a well respected member of the restaurant industry, and his significant franchise sales experience with high growth concepts makes him a very positive, strategic addition to our senior team,” Dave Prokupek, chairman and chief executive of Smashburger, said in a statement. “His experience specifically on nontraditional unit growth is particularly relevant as we continue to look for new ways to bring Smashburger’s fresh, premium burgers and menu variety to airports and other nontraditional locations such as food courts, college campuses and casinos."

Starting out in his new position, Willis will concentrate on domestic expansion in key markets like Chicago, Miami, Washington, D.C. and Boston, as well as continued expansion internationally in Canada.

Smashburger currently has 167 restaurants in 27 markets in the United States, as well as one in Calgary and one in Kuwait.

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

This article is part of NRN's first International Top 25 special report, a ranking of the 25 largest restaurant chains and companies, by worldwide sales, with headquarters outside of the U.S. and Canada. NRN partnered with business intelligence specialist Euromonitor International for this report, which is available in full only to Nation’s Restaurant News magazine subscribers in the August 20 issue. Subscribe here.

NRN presents a breakdown of the top foodservice chains, ranked by 2011 regional systemwide sales, in each of six regions of the world: Asia–Pacific, Australia–New Zealand, Latin America, Middle East–Africa, Western Europe and U.S.–Canada.

Asia–Pacific: 7-Eleven
Owned by Tokyo-based parent company Seven & i Holdings Co. Ltd., convenience store chain 7-Eleven leads the way in the Asia-Pacific region with $13.6 billion in 2011 regional systemwide sales.

Australia–New Zealand: Red Rooster
With $442.5 million in 2011 systemwide sales, quick-service chicken chain Red Rooster comes out on top in the Australia-New Zealand region. The chain is owned by Balcatta, Australia–based Quick Service Restaurant Holdings Pty. Ltd.

Latin America: Habib’s
Habib's, a quick-service chain that serves Middle Eastern food, had the top 2011 systemwide sales in the Latin America region, with $769.1 million. Parent company Al Saraiva Empreendimentos Imobiliarios e Participacoes Ltda. is headquartered in Sao Paulo, Brazil.

Middle East–Africa: Nando’s
Quick-service chicken chain Nando’s is the leader in the Middle East–Africa region with $324.1 million in 2011 regional systemwide sales. The chain is owned by Nando’s Group Holdings Ltd., based in Johannesburg, South Africa.

Western Europe: JD Wetherspoon
In Western Europe, bar/pub chain JD Wetherspoon rose above the pack with $1.8 billion in 2011 regional systemwide sales. Parent company JD Wetherspoon PLC is based in Watford, England.

U.S.–Canada: McDonald's
With $51.8 billion in international systemwide sales, or sales generated outside the United States, quick-service burger chain McDonald’s stands out among chains in the U.S. and Canada. McDonald’s Corp., the chain's parent company, is headquartered in Oak Brook, Ill.

RELATED: International Top 25 methodology

This article is part of NRN's first International Top 25 special report, a ranking of the 25 largest restaurant chains and companies, by worldwide sales, with headquarters outside of the U.S. and Canada. NRN partnered with business intelligence specialist Euromonitor International for this report, which is available in full only to Nation’s Restaurant News magazine subscribers in the August 20 issue. Subscribe here.

U.S.-based restaurant companies’ plans for Eastern European countries, particularly Russia, have made headlines in recent months, with McDonald’s and Burger King, among other chains, recently signing or expanding large franchising deals in the one-time capital of the Soviet Union.

“Russia is the leading opportunity within the emerging-market large countries, with the caveat that it is one of the toughest places in the world to do business,” according to Richard Snead, who is now the chief executive of Gatti’s Pizza but as the former chief executive of T.G.I. Friday’s helped Russian operator Rosinter Restaurants become the fifth largest Friday’s franchisee in the world.

Rosinter earlier this year said it would become the first franchisee of McDonald’s in Russia, where the Oak Brook, Ill.-based chain already has about 300 company-operated locations.

David C. Novak, executive chairman and chief executive of KFC, Pizza Hut and Taco Bell parent Yum! Brands Inc., in July told stock analysts that he and other members of the executive team would tour Russia this month. The announcement came during a call about second quarter results, when, according to a transcript from investor website SeekingAlpha.com, Novak noted that the Louisville, Ky.-based company was “especially pleased with our sales performance” in that country, where quarterly system sales growth of 44 percent, including 32-percent same-store sales growth, “give us even more confidence we can build a strong, profitable business in Russia.”

To shed some light on the Eastern European market, Nation’s Restaurant News this week spoke about the region with Michael Schaefer, head of global consumer foodservice research for London-based business-intelligence gatherer and disseminator Euromonitor International.

What are some off the major economic or structural issues in Eastern Europe right now that make it a good or bad expansion market for U.S.-based foodservice chains?

The major near-term issue would be the ongoing crisis in the Eurozone, which continues to have a major impact on those markets with significant exposure, like the Czech Republic or Hungary, both of which continue to see sluggish economic growth. For countries with larger internal markets and less dependence on trade with the Eurozone, the outlook is more positive. In the case of Poland and Russia, for instance, Gross Domestic Product is expected to average 3 percent to 4 percent annual growth in real terms over the next five years, which should keep incomes and foodservice demand growing.

A more long-term issue for the region is demographics. While Russia’s problems of an aging population and relatively low life expectancies (particularly for men) are well documented, to an extent this is an issue for the entire region. Despite lower average incomes, markets like Russia, the Czech Republic and Poland all have demographic profiles similar to markets like Germany or France, and are all expected to see the average age of their populations climb over the next ten years. While this doesn’t preclude continued foodservice demand growth, it certainly will affect strategy, with the heavily youth-focused advertising one sees in Asian or Latin American markets unlikely to prove as central in Eastern Europe.

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What Eastern European countries or markets are most attractive to U.S.-based chains looking to expand in that region, and why?

Poland and Russia both stand out in terms of size and growth potential. Together they account for almost half of total foodservice spending in the region, yet overall per-capita spending remains quite low. The independent restaurant sector is still relatively underdeveloped in both markets, so there is great opportunity for chained operators to expand the market and drive the further development of eating-out culture, particularly in Russia, where outside of Moscow and St. Petersburg the foodservice market remains quite underdeveloped.

Some U.S.-based chains, including McDonald’s, use nonconventional formats, such as limited-menu kiosks, in markets where the standard of living is rising but may not yet be at a point where large percentages of the population can afford regular meals in a conventional restaurants, such as some areas of India. Will that sort of strategy yield benefits in Eastern Europe?

I would say thus far the opposite has been true, with fast-food and even pizza-delivery chains successfully repositioning their concepts with a more upscale, eat-in focused approach. There is still very strong demand for unique eat-in experiences, particularly in markets like Russia, and I think that’s going to see the strongest growth going forward. There’s still a real lack of modern, local, independent casual-dining [concepts], even in cities like Moscow — though that is changing — and that will continue to create opportunities for a wide variety of concepts, from Italian to sushi to bar and grill. While there is also room for a lower-priced offer, particularly as we see expansion to smaller cities and localities where incomes might be lower, I would say an effective in-store experience will remain the strongest driver of sales as a local eating-out culture continues to evolve in many of these markets.

Do these fancier restaurants or adjusted service formats yield higher sales in Eastern Europe and other foreign markets, compared with U.S. locations? Or are they just the table stakes required to even compete in some other countries?

I would say particularly in Russia there is a great deal of interest in new forms of casual dining, because that’s where the biggest gap in the market exists. I wouldn’t necessarily say a fast-food or a pizza chain needs to always dramatically revamp their operations to capture that, but rather simply needs to be aware of the kinds of informal sit-down occasions they will be competing for. Even fast food is going to be less about on-the-go convenience than about experience, socializing, etc.

From what you’ve seen, in Eastern Europe, are American chains having greater success with the company-store or franchise development model?

I think it’s long been possible to succeed in Eastern Europe with a franchised model, with [multi-concept franchisee] AmRest in Poland probably the key example of that. But I would also say there has been a significant acceleration in franchising activity across the region over the last five years, above all in Russia, where the success of franchised concepts has encouraged still more new entrants. While obviously a primarily company-owned strategy can work, as it can anywhere, I’d say there is now much more of a critical mass of capable partners in the region than was the case, say, five years ago. Particularly in Russia, where nearly all of the new entrants in the last one or two years have done so with a franchised model, and many of them are thriving. Rather than one [business model] being superior to the other, I’d say the level of interest in franchising in Eastern Europe is as high as it has ever been, and is likely to remain the preferred model for American chains there going forward.

Contact Alan J. Liddle at alan.liddle@penton.com.
Follow him on Twitter: @AJ_NRN

Minneapolis-based Caribou Coffee has begun an on-site growth strategy in one of its core markets by partnering with Jewel-Osco, one of the largest grocery store chains in the Chicago area.

Caribou opened its first on-site coffeehouse last week at a Jewel location in Barrington, Ill., and plans to open two more units in suburban Hoffman Estates and Countryside this year. Officials said Caribou is set to open another five units in Jewel stores during 2013.

“With the introduction of Caribou’s partnership with Jewel-Osco, our goal is to provide Chicagoans convenient access to Caribou’s best-in-class, premium coffee products, paired with a comfortable, warm and welcoming coffeehouse setting,” chief executive Mike Tattersfield said in a statement. “This is a significant partnership for Caribou, as it allows us to expand our distribution in one of our key markets and accelerate Caribou’s growth among diverse business units in partnership with Chicago’s market-leading grocery chain.”

The 585-unit coffeehouse chain is strengthening its ties to supermarkets after sharply falling sales in its consumer packaged goods division offset same-store sales growth in Caribou’s most recent second quarter, leading the company to lower its earnings guidance for 2012. While same-store sales at its coffeehouses rose 2.8 percent for the July 1-ended quarter, sales of consumer packaged goods fell 8 percent, due primarily to plummeting sales of single-serving K-Cups for Keurig home-brewing machines.

In comments to securities analysts during the chain’s second-quarter earnings call, Caribou officials said the decline in K-Cup sales resulted from the chain’s supplier, Green Mountain Coffee Roasters, losing its distribution agreement with major club retailers like Costco and Sam’s Club. Green Mountain also recently raised prices of K-cups, executives said.

However, sales of Caribou’s bagged coffee in grocery stores and to other foodservice accounts are expected to remain in line with long-term targets, they said. Caribou now expects net sales to be flat for fiscal 2012 compared with a year earlier.

To promote the new on-site coffeehouses in Jewel locations, Caribou will run a “text to win” sweepstakes in which guests can win free Caribou beverages for the rest of the year by texting a code designated for new units to a special number.

In addition to opening units in Jewel stores, last month the chain opened a coffeehouse location within Jungle Jim’s International Market in Cincinnati’s Eastgate Complex shopping center.

Caribou operates or franchises locations in 21 states, the District of Columbia and nine international markets.

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

This article is part of NRN's first International Top 25 special report, a ranking of the 25 largest restaurant chains and companies, by worldwide sales, with headquarters outside of the U.S. and Canada. NRN partnered with business intelligence specialist Euromonitor International for this report, which is available in full only to Nation’s Restaurant News magazine subscribers in the August 20 issue. Subscribe here.

NRN research shows that the Top 25 U.S. and Canadian retail foodservice companies, when measured by the worldwide systemwide sales of all of their proprietary concepts, as a whole had latest completed fiscal year sales of $264.94 billion, or some four times the $65.94 billion in total sales generated by their international rivals.

Here, see how Oak Brook, Ill.-based McDonald’s Corp., the industry-leading quick-service brand, compares to other brands across the globe. And on the next page, find out how the top 10 U.S. and Canadian companies stack up against the top 10 restaurant companies from the rest of the world in terms of worldwide systemwide foodservice sales.

Next: Top 10 companies in North America and the world

Top 10 companies ranked by worldwide systemwide foodservice sales

From all brands, by latest completed fiscal year (U.S./Canada) or 2011 calendar year (Non-U.S./Canada). Dollars in billions U.S. Not all chains are listed.

Consumers visited restaurants less often during the second quarter, but they don’t appear to be trading down from casual dining to limited-service concepts, according to a consumer survey by research firm Dectiva.

In its quarterly Restaurant Industry Tracking Survey, which asks 2,500 consumers where they spend their dining dollars across the chain restaurant landscape, Dectiva found that the number of respondents who said they dined out a few times a month or more declined across all segments for April, May and June. The survey was conducted in early July.

For the limited-service segment, it was the third consecutive quarter of decline, with 64.8 percent of consumers saying they visited such restaurants at least a few times per month during the quarter, down from 72.5 percent for the same period last year.

In casual dining, 45.4 percent of respondents reported frequent visits, down from 51.2 percent a year ago. Sixteen percent of respondents said they visited fine-dining restaurants at least a few times per month, down from 17.8 percent a year ago.

Despite the decline in restaurant visit frequency, consumers said they spent a greater percentage of their overall restaurant spend at casual-dining restaurants during the quarter, a trend that began in late 2011. This trend indicates that consumers were not trading down to limited service, said Dan Meichenbaum, Dectiva’s director of research.

For the quarter, consumers said 41.5 percent of their total restaurant spending was at casual-dining restaurants, compared with 39.8 percent at limited-service locations and 18.5 percent at fine-dining concepts.

Year over year, the casual-dining segment increased its market share, which grew from 38.5 percent a year ago to 41.5 percent this year.

The amount of the consumer dining dollar devoted to limited-service restaurants, however, has shrunk, declining from 41.4 percent in last year’s second quarter to 39.8 percent this year. Fine dining also saw a decline, from 20.3 percent a year ago to 18.5 percent this year.

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

Fazoli’s is following up its recent run of same-store sales success with a limited test of beer and wine sales and a wider test of new sales layers set to debut at the end of the year.

At a restaurant near the University of Kentucky in Fazoli’s headquarters city of Lexington, the chain has begun testing the sale of beer and wine. Consumer research at that unit determined that alcohol sales were the most requested change sought, chief executive Carl Howard said.

A franchisee in Michigan also has asked the quick-service Italian chain if he could experiment with alcohol sales, but the brand will do its market testing at the corporate location in Lexington first, then try it at two nearby restaurants that skew more toward the core family demographic than to college students, he said.

“The caution with us is we are a very family-oriented concept,” Howard said. “We do well on Sunday, which is our second-busiest day of the week, and have a large after-church crowd. We skew really high with young families with children, so we want to make sure we provide an environment that’s not counterintuitive for those groups.”

Though he doesn’t expect beer and wine to be major sales drivers if they prove popular with guests, Howard did say that beer and wine would fit Fazoli’s trajectory of moving the brand toward a “premium QSR” positioning.

“We don’t believe it’s going to be a huge game changer,” Howard said, “but I also don’t believe it would be like adding veal to the menu or something — this isn’t a big reach for us. … It’s a brand extension, but we’re doing it with caution. We’re optimistic we could expand it, and I believe that with everything we’ve done [to evolve the brand], it’s a logical next step.”

The investments in an alcohol platform have not been too onerous, he added. A liquor license in Lexington costs $500, insurance costs rose about $600, and the restaurant invested in some additional staff training and a $600 ice chest to drop into the recess of the front counter.

“We’re fortunate that most of our markets are really simple,” Howard said. “We’re not in Philadelphia, where a liquor license costs half a million dollars. It’s a pretty quick return on investment.”

A preview of ‘Menu 3.0’

Fazoli’s also is testing other new menu initiatives, internally called “Menu 3.0,” that the company hopes to roll out to all corporate stores by November and to the franchise system by early next year. Howard credited the last menu revamp, the “Expand Your Taste” menu introduced in October 2011, with sustaining the chain’s sales momentum.

In July, the brand’s franchisees set a record with their 25th consecutive month of same-store sales increases, and corporate stores tied their record with a 24th straight month of same-store sales growth. With a few days left in Fazoli’s fiscal month of August, same-store sales are up 4.3 percent at corporate restaurants and up 4.7 percent at franchised locations, Howard said.

“I feel really good about September and October, too, but then we’re going up against some big [same-store sales] numbers [from a year earlier],” he said.

A refreshed and relaunched catering offering will anchor the new menu, Howard said, and Fazoli’s also hopes to start a line of consumer packaged goods in November, with a goal of reaching 3,000 grocery stores by January 2013.

A “Toppers” option for the in-store menu would aim to improve the “Expand Your Taste” build-your-own pasta offering by giving customers some set combinations of proteins and flavors that they could add to pastas and sauces they choose. When Fazoli’s tested this option in April, 25 percent of customers who ordered personalized pasta opted to top it, at a $1.49 add-on cost.

“The last time, when we unbundled everything, it went well but our guests didn’t always know how to pick the right protein,” Howard said. “So we’re coaching our cashiers to pair these toppers with the pastas. We’re creating some good protein and vegetable blends to add to our pasta lineup that would allow us to keep our pricing flat but pick up our per-person spend and profit.”

Boca Raton, Fla.-based private-equity firm Sun Capital Partners acquired 250-unit Fazoli’s in 2006.

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

Millennials, the country’s heaviest restaurant users, are cutting back restaurant spending, according to consumer research firm NPD.

Although NPD estimates that Millennials made more than 12 billion visits to restaurants in 2011 and spent $73 billion during those visits, the firm also reports that the number of visits by that demographic has been falling since the start of the Great Recession in 2008. That makes it even harder to win over this young crowd that not only has strong opinions, but also likes to share them through social media.

Millennials represent “the biggest gap between cultures in our history,” said Craig LaRosa, a principal in the Newton, Mass.-based consulting firm Continuum, which designs and develops products, services and business models.

Also known as Generation Y, Millennials make up the country’s largest demographic group at about 76 million people — even outnumbering Baby Boomers, according to the U.S. Census Bureau, which defines them as people born between 1977 and 1995.

In order to understand this age group better, LaRosa and his colleagues have been doing ethnographic research with Millennials, spending time in their homes, talking with them and eating with them. Below are some tips on how restaurants can cater to Millennials' social needs and habits, based on information LaRosa shared from this research.

Tip 1: Encourage sharing and interaction.
For Millennials, food is secondary to interactions with people. So they like smaller portions that allow them to share multiple dishes instead of ordering traditional plates just for themselves. They also are not interested in the standard service in which the food for each course is brought out all at once. Instead, they like plates to be delivered as soon as they’re ready.

Tip 2: Remember that less is more.
Millennials are not only fond of small portion sizes, but they also like fewer ingredients.

“When they shop, the less ingredients, the better,” LaRosa said, adding that members of Generation Y like “clean” labels that list ingredients that they can identify.

Tip 3: Put food and preparation on display.
Just as Millennials like transparency on their labels, or knowing the origin of the cattle they’re eating, they like open kitchens for the same reason: They like to know where their food is coming from.

LaRosa said some members of Gen Y have even bought cows, named them, had them slaughtered and then shared the beef.

Tip 4: Make dishes familiar but not boring.
“Family foods done interesting,” like the Korean taco, are a gastronomic goal of Generation Y, LaRosa said. “Exotic flavor is being brought to very traditional foods,” he noted, adding that Thai, Vietnamese and Indonesian flavors appeal to Millennials.

Tip 5: Offer food that's good for you, but not “healthy.”
Millennials see “healthy” food as bland, but they like wholesome food, including slightly exotic green vegetables, such as kale, and simple proteins, including rabbit.

Studies by the United Nation’s Food and Agricultural Organization have noted that rabbit is nutritious and has a very low environmental impact compared to many other animal proteins. “We’re going to see rabbit more and more,” LaRosa predicted, noting that it’s showing up in grocery stores and butcher shops.

Tip 6: Create dishes that travel well.
Often on the go, Millennials like easily transportable food, such as tacos.

Deli sandwiches are likely to see a revival, LaRosa said, because the whole cuts of meat are seen as wholesome and fit into Generation Y’s “very nomadic, fast-paced life.” He added that deli meat companies are coming out with lines of more boldly flavored cuts, paired with chipotle cheese and similar enhancements.

Tip 7: Run beverage specials.
Mixed drinks are growing in popularity with Generation Y, LaRosa said, as is wine in casks. “The need to have a specific varietal or label is less important,” he said. “They’re looking for a wine that tastes good and won’t break the bank.”

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

Continued same-store sales increases at its Double Eagle Steakhouse and Sullivan’s brands helped the newly public Del Frisco’s Restaurant Group post a three-fold increase in profit in the second quarter.

In its first earnings report since going public in late July, the Southlake, Texas-based steak house operator on Tuesday reported net income in the June 12-ended second quarter of $3.6 million, or 20 cents per share, compared with $1 million, or 6 cents per share, in the prior-year quarter. Revenues increased 17.9 percent to $51.3 million, from $43.5 million in the second quarter of 2011.

Same-store restaurant sales increased 4 percent, including 7.3 percent at Del Frisco's and 0.3 percent at Sullivan’s, compared with a blended same-store sales increase of 12.3 percent in the second quarter of last year.

Mark S. Mednansky, DFRG’s chief executive, said on a conference call with analysts that the company’s three brands “target a much broader customer base than that of fine dining,” adding that DFRG has seven markets where it operates multiple concepts. He said the company plans to open three to five restaurants annually, with the newer Del Frisco’s Grille concept “serving as the primary driver” of unit growth.

The company this year has opened Del Frisco’s Grilles in the District of Columbia and Phoenix, Ariz. Another is planned in Atlanta, and a Double Eagle Steak House is scheduled to open in Chicago. “Each of the Grilles continues to perform at or above our expectations,” said Thomas J. Pennison Jr., DFRG’s chief financial officer.

Pennison added that the recent initial public offering of 5.8 million shares at $13 each produced proceeds of $70.1 million, with $61 million going to repay lenders and $3 million to former private-equity parent Lone Star Fund.

Del Frisco’s Restaurant Group is also looking toward putting more marketing efforts toward the corporate entertaining business.

“We’re also committed to amping up our private-dining sales,” Mednansky said, “which currently represent only about 14 percent of our total sales.” The company has hired a full-time corporate salesperson to spearhead that business, he said, which produces higher check averages and higher margins compared to typical dining-room business.

Private dining shows greater returns in the second and third years that restaurant units are open, he added.

For the full fiscal 2012, Del Frisco’s expects a 3-percent to 4-percent increase in same-store sales.

Pennison said the Del Frisco’s Double Eagle has the most exposure to beef price increases. “Right now, we’ve already modeled into our outlook to deal with lower double-digit increases in our commodities,” he said, adding that the company was able to deal with 2010-2011 beef price increases with mix and pricing.

As of June 12, DFRG owned and operated 32 restaurants in 18 states, including nine Del Frisco's Double Eagle locations, 20 Sullivan's restaurants, and three Del Frisco's Grilles. The company closed a Sullivan’s unit in the Dallas market on June 30 and sold the property, DFRG said in a statement.

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

After building its system to eight suburban Illinois locations in five years, Meatheads Burgers & Fries is coming home to its Chicago headquarters, but don’t expect the concept to change for the big city.

The restaurant is scheduled to open in September in the Roscoe Village neighborhood, which exudes a residential feel similar to the markets where family-friendly Meatheads already does business, said cofounder and chief executive Tom Jednorowicz. As with its other locations, he added, Meatheads is placing its new unit in a shopping center next to a high-end grocery store and a large high school, Lane Tech College Prep, allowing it to execute its same strategy built upon operations, local-store marketing and a larger dinner business than “better-burger” peers.

Jednorowicz said another restaurant in suburban Frankfort, Ill., would open this year, as would two units for sure next year. Systemwide sales are projected to exceed $14 million for 2012. His near-term goal is to grow Meatheads to about 25 units within the next three years.

Jednorowicz spoke with Nation’s Restaurant News about his plans to expand Meatheads methodically by maintaining the concept’s appeal to families.

Would Meatheads have to change its look or menu to go into an urban location?

We feel like there are certain things we do well, and we don’t want to reinvent ourselves. Whenever you’re developing a concept like this, it’s really about hedging risk. You’re minimizing risk by going places where you’re comfortable with underlying variables. It’s very different than Potbelly [Sandwich Works], where I was [chief development officer] before, which was a very urban-out concept: Penetrate the urban core, build brand awareness, then go to the suburbs where that pays dividends.

We’ve worked hard on our marketing programs through local schools around the restaurants, which is how we build our brand awareness and build an identity in these suburban markets. … You’re going to see the same thing in the city. I guarantee you you’ll see the Lane Tech football schedule up in the Roscoe Village location. It’ll be interesting to see how that works in an urban environment, because in Chicago people don’t necessarily live around the high schools where their kids go to school.

So you don’t view the brand as a suburban or urban concept?

We view Meatheads as a family concept. Whether the location is urban or suburban, we’re really looking to first and foremost appeal to that Mom, Dad, school-age kids unit. That’s why we’re doing something here in Roscoe Village instead of The Loop. If you look at The Loop, your business there is five dayparts. We’re open seven days a week for lunch and dinner. We almost solve for [dinner business] first, and then we figure out the lunch business from there.

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We’re trying to provide the highest service level possible without people feeling like they have to tip. Most people in that fast-casual category are really quick service with better food. We’re trying to executive fine-dining culinary principles in an almost-casual-dining way. Lunch is convenience-driven, but dinner is much more dependent on environmental factors in the restaurant.

Is your approach to profitability geared more toward raising an average check or increasing traffic?

It’s not average check, which is $8.50 right now. But for commodity inflation, I don’t want to go any higher than that. We tell our cashiers not to upsell, because all of a sudden you take that $8.50 up to $12, which is great that day, but when you’ve taken a once-a-week customer and become a special-occasion place for them, that doesn’t do you any good. We’re looking for traffic increases more than anything.

One thing we do to appeal to more customers and get them in here more frequently is to give them more food choices and variety. Look at what you have and figure out new creative ways to put it together. We’re doing that right now with shareables, since families are our core business. One major item we’re thinking about adding is chicken fingers, which absolutely appeal to our core audience, but the hard thing is they have to be fresh, natural and made-to-order. I believe that would be a paradigm-shifting addition, and it will help customers perceive us as more than a burger place.

The business model as you describe it could work anywhere, so how do you keep Meatheads from growing too fast?

Where the wheels fall off in a lot of concepts is exactly what you’re saying, and unfortunately, my fingerprints are on some of those murder weapons out there. I’ve been with some of those concepts opening four restaurants a week. But we are so focused on our performance in our restaurants on a day-to-day basis. Are we executing our principles to our standards on a consistent basis? If the answer is no, then we immediately take some of the resources away from what you do to grow. … We grow because growth is energy, but not because we have to. We try to govern it by quality real estate. If every restaurant you do is a profitable, productive restaurant, there isn’t anything else to worry about.

We can be an “early-stage” company for a while. I believe culturally we can maintain the mentality of early-stage for a while, but who knows what the future holds? We’re taking care of business, and letting the rest take care of itself.

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

The newest Restaurant Social Media Index Top 100 ranking shows smaller brands continuing to hold their ground in social media.

Red Mango stayed in its No. 3 ranking from the first quarter directly behind larger brands Starbucks and Wendy’s. The top 5 restaurant brands from 2012’s first quarter — Starbucks, Wendy’s Red Mango McDonald’s and Chick-fil-A — held on to their positions in the second quarter, while some chains, like Subway, jumped into the top ten.
 
Meet the new top 100-ranked restaurant brands, based on activity in the June-ended second quarter of 2012.
 
Learn more on the RSMI homepage, including a breakdown of what's behind the numbers, the index methodology and a video presenting the latest insights in social media brand building. Check out the previous quarter's Top 100.

Company Name	RSMI Score	Company Name	RSMI Score
1. Starbucks	245.17   —	51. Wolfgang Puck	149.57
2. Wendy's	212.77   —	52. Carl's Jr.	149.39
3. Red Mango	208.89   —	53. Jason's Deli	149.06
4. McDonald's	198.42   —	54. Alamo Drafthouse	148.97
5. Chick-fil-A	191.91   —	55. Yard House	148.25
6. Panera Bread	190.62  1	56. Pizza Fusion	148.03
7. Chipotle Mexican Grill	188.96  1	57. Chop't Creative Salad Company	147.76
8. Taco Bell	184.11  9	58. Chili's Grill & Bar	147.67
9. Subway	179.58  18	59. Pei Wei Asian Diner	147.63
10. Firehouse Subs	179.00   5	60. Romano's Macaroni Grill	147.58
11. Buffalo Wild Wings	177.88   3	61. Baskin Robbins	147.37
12. Jimmy John's	176.86	62. LYFE Kitchen	146.68
13. Bonefish Grill	174.59	63. Jamba Juice	146.08
14. Dunkin' Donuts	174.31	64. Zoë's Kitchen	145.91
15. The Cheesecake Factory	168.66	65. Wingstop	145.28
16. Hard Rock Cafe	168.54	66. Famous Dave's BBQ	144.97
17. Arby's	167.52  7	67. Anthony's Coal Fired Pizza	144.91
18. Pizza Hut	167.24	68. McAlister's Deli	144.79
19. Peet's Coffee & Tea	166.16  10	69. Cinnabon	144.71
20. Which Wich	165.15	70. Cold Stone Creamery	144.07
21. Red Robin Gourmet Burgers	165.03	71. Tokyo Joe's	143.49
22. Texas Roadhouse	164.76	72. Ruby Tuesday	143.17
23. Whataburger	164.38	73. Boloco	142.94
24. Shake Shack	163.87	74. Pizzology Craft Pizzeria	142.86
25. Olive Garden	163.76	75. Go Roma	142.69
26. KFC	161.72	76. T.G.I. Friday's	142.42
27. The Coffee Bean & Tea Leaf	161.48	77. Pacific Catch	142.24
28. Domino's Pizza	159.95	78. La Madeleine Country French Café	142.20
29. AJ Bombers	159.72	79. Morton's The Steakhouse	142.18
30. Sweetgreen	159.72	80. Raising Cane's Chicken Fingers	141.51
31. In-N-Out Burger	159.67	81. Red Lobster	141.49
32. Boudin Sourdough Bakery & Cafe	159.56	82. Le Pain Quotidien	141.39
33. Noodles & Company	159.25	83. Mellow Mushroom	141.29
34. Tasti D-Lite	158.62	84. Tender Greens	141.15
35. Applebee's	157.81	85. Orange Leaf Frozen Yogurt	141.14
36. Outback Steakhouse	157.51	86. The Counter	141.08
37. Corner Bakery Cafe	155.42	87. Jack in the Box	141.02
38. Burger King	155.03	88. Denny's	140.97
39. Smashburger	154.81	89. BD's Mongolian Grill	140.97
40. Buca di Beppo	154.78	90. Moe's Southwest Grill	140.80
41. P.F. Chang's China Bistro	154.74	91. Taco Cabana	140.41
42. Hooters	154.69	92. Popeyes Louisiana Kitchen	140.29
43. Five Guys Burgers and Fries	154.57	93. Original Joe's	140.15
44. Wow Bao	154.51	94. Boston Market	139.75
45. Veggie Grill	154.06	95. Krispy Kreme	139.57
46. Maggiano's Little Italy	153.39	96. Auntie Anne's	139.25
47. Pinkberry	152.61	97. Little Caesars Pizza	139.18
48. Papa John's Pizza	152.52	98. California Tortilla	139.16
49. Freshii	152.49	99. Quiznos	138.91
50. Sonic, America's Drive-In	151.96	100. Jersey Mike's Subs	138.86

Legend: Restaurant brands that were ranked in the top 10 of both the fourth and third quarter RSMI results are shown with former rankings and arrows highlighting an increase or decrease of rank.

Source: All data provided by DigitalCoCo

Autumn traditionally is a time of heartier appetites, more robust drinks and an appreciation of root vegetables and rich meat dishes. We’ll see more of that this fall as restaurateurs seek to balance consumers’ desire for new and exciting dishes with their simultaneous need for foods that are comforting and familiar.

In the coming season, chefs will be showing off their skills as preservation artists as well as their rapport with local farmers. They’ll also be playing to Millennials’ collective sweet tooth and getting creative with different cuts of meat.

Here's a look at those four food and beverage trends, as well as one unusual fad and a prediction for a new amenity that could begin showing up at cocktail bars.

Fall trend No. 1: Local sourcing taken to a new level

Many restaurants may already buy fruits and vegetables from local farms or grow herbs on your roof. Maybe they even have their own herd of cattle. But that's just not enough to get anyone’s attention anymore.

This summer, Boston-based chef and restaurateur Todd English announced he had his own oyster farm — something NRN predicted at the end of last year.

And now, The Brown Palace Hotel & Spa in downtown Denver isn’t just managing a colony of bees on its roof; it has found a variety of ways to integrate the honey into its operations. The operation has commissioned a craft beer, BP Rooftop Honey Saison, in collaboration with Wynkoop Brewing Company, located just a mile away on the other side of Downtown Denver.

The Brown Palace Hotel & Spa has also made a barrel-aged honey-infused bourbon in collaboration with Breckenridge Distillery, located about 80 miles away in Breckenridge, Colo. The bourbon made its debut in July and is being used in various cocktails at the hotel, as is the honey itself.

The honey also is being served at the Brown Palace’s afternoon high tea, both to sweeten beverages and as an ingredient in honey buttermilk scones. It also is used in the spa’s honey-lavender soap and lip balm, and in an array of spa treatments.

Restaurants and hotels are proud of their local sourcing efforts and connections to their community, and this fall, they will find more new and creative ways to prove it.

Fall trend No. 2: Preservation in many forms

Use of local, seasonal ingredients is a way of life for many chefs. But sometimes there’s just too much of a single product at the height of its season to use all at once. So chefs are extending the life of local produce while also displaying their skills in the kitchen by preserving what they don’t use right away.

We’ve seen a lot of pickling lately, of everything from cucumbers to eggs, not to mention the trendiest of pickles this year: kimchi. But we’ll see other forms of preservation this fall, too.

Justin Burdett, chef of Ruka’s Table in Highlands, N.C., plans to store the season’s Muscadine grapes in sweetened whiskey. He scores, blanches and peels the grapes and then packs them in whiskey diluted with simple syrup. He serves them with house-made lardo and cheese plates. “It’s a great little accompaniment to keep around,” he said.

John Critchley, chef of Urbana in Washington, D.C., plans to make escabeche out of razor clams, which are harvested during the low tides of spring and fall. He said he’ll poach them and then store them in a vinegar-based liquid.

Brian Malarkey, executive chef of Enlightened Hospitality Group, which operates Herringbone, Searsucker, Gabardine, Gingham and Burlap restaurants in San Diego, said, “I’m really into dried fruits for this fall.” He plans to rehydrate cherries, cranberries, apricots and plums with red wine, brandy or other liquor.

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Fall trend No. 3: Sweet, spiked dessert drinks

Beverage directors and wine merchants alike have noticed young adults’ current penchant for sweet wines — not just slightly off-dry Amarones, but very sweet wines. Moscato dessert wine, for example, is now so popular that Old Chicago has added it to its wine list.

Some restaurants are taking this trend even further by adding alcohol to desserts. The Counter, a 32-unit better burger chain, has started offering wine milkshakes, for example. The most popular of the three flavors, the Pinot Noir, is made with cherries, chocolate, vanilla ice cream and Pinot Noir wine. The Sweet Peach is sweet white wine mixed with peach nectar and vanilla ice cream, and the Mimosa is sparkling white wine, orange juice and vanilla ice cream. The shakes are reportedly a big hit.

So are the beer floats at the Park Hyatt in Beaver Creek, Colo. Varieties include raspberry-Champagne sorbet with some New Belgium 1554 Black Ale poured over it; black cherry-Nutella swirl ice cream with Samuel Adams American Kriek; and New Belgium Lips of Faith-Tart Lychee beer paired with lemon-thyme sorbet and vanilla bean ice cream.

There’s no reason to expect an end to this trend as restaurateurs find new ways to indulge their customers’ sweet tooth and their penchant for strong drink.

Fall trend No. 4: Creative cuts of meat

Americans tend not to be very experimental when it comes to the protein they eat, and getting them to go beyond hamburger, beef and pork loin, and chicken breast can be a challenge. But restaurateurs are giving it a try this fall.

Paul Sussman, chef-owner of Back Deck in Boston, said he’s planning to play with turkey tenders. Anatomically the same as chicken tenders, on a turkey this cut weighs about a pound and thus is suitable to serve two people. “I haven’t used it a lot in the past, but it will grill quickly, and you can brine it so it will stay nice and juicy,” he said.

This fall, 301-unit fast-casual chain Noodles & Company for the first time is using a braised pork shoulder. “We’re using a whole-muscle shoulder that’s marinated, seared and slow cooked, that we hand-pull into shreds in-store,” said Tess Stamper, the chain’s executive chef and director of culinary.

The chain will feature the meat in a pulled pork sandwich on ciabatta and will also mix it with macaroni and cheese that's drizzled with barbecue sauce and topped with crispy onions.

Sylvia Casares, chef-owner of the two-unit Sylvia’s Enchilada Kitchen in Houston, has introduced cabrito, or roast goat, to her menu. It’s sold as an entrée at her more upscale location, but she is adding cabrito tacos to both locations this fall.

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Fall fad: Drinking vinegars

Portland, Ore.-based Thai restaurant Pok Pok has been selling vinegar to drink since 2005, according to its website, which correlates the practice to the consumption of “shrubs” — sour fruit-based drinks sweetened with sugar — as tonics during colonial times. The restaurant adds its own bottled Pok Pok Som (som is “sour” in Thai) to cocktails and also dilutes it with soda water as a popular beverage in both its Portland and New York City locations.

Phat Thai, with locations in Carbondale, Colo., and Denver, is doing that, too, ever since chef Mark Fischer found vinegar bottled as a “health drink” at an Asian market in Denver. “It was interesting, and it went really well with our food,” said Fischer, who has started making his own infused vinegars and mixing them with soda.

Combine that with the 2010 sensation, the Pickleback — a shot of whiskey chased with a shot of pickle juice — and you have a penchant for really sour drinks that isn’t a trend yet, but it’s something to watch in the coming fall season.

Fall prediction: Starter drinks

Handcrafted cocktails can be lovely, but waiting for them is a definite buzz kill. Veteran mixologists and other experts have solved that problem when they go out: They order their fancy cocktail, but precede it with a beer or a shot — something that can be brought to them quickly while they wait for their liquid work of art to be composed.

Mission Chinese, with locations in San Francisco and New York City, has developed a similar tactic to let its customers who are waiting for tables know that they’re appreciated: They get free beer until they’re seated.

Bars that take their cocktails and their customers seriously will soon be doing the same thing: Guests who order a drink that will likely take more than a couple minutes to prepare will be given a little something to whet their whistle. People love free stuff, after all, and if you’re not making a big enough margin from your cocktail program to hand out something gratis then you’re not doing your job.

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

As restaurant franchisees and single-unit operators look to expand, they find out just how much they don’t know about the financing needed to fund growth, which longtime restaurateur Tabbassum Mumtaz and other franchise executives aim to fix with next week’s Dealmakers’ Summit in Chicago.

Mumtaz, chief executive of Dallas-based Apex Restaurant Management, which operates more than 165 locations of KFC, Taco Bell and Long John Silver’s, is one of several organizers of the summit, which takes place Aug. 28-29 at the Hotel Sofitel Chicago Water Tower. The event is meant not only to educate franchisees about finding growth capital and understanding finance deals, but also to connect those operators and franchisors with private-equity firms and other investors.

“Franchisees who are more directly involved in their operations may not be as finance-savvy,” Mumtaz said. “It becomes challenging for them to deal with banks’ attitudes toward smaller companies, onerous covenants and third-party requirements.”

But if mid-level companies and small franchisees can navigate the current lending environment, there are plenty of opportunities for them to improve their stores, build new restaurants or acquire existing locations, Mumtaz said. He spoke with Nation’s Restaurant News about the need for restaurant brands and lenders to come together to help the industry keep growing.

How would you describe the current lending environment for a medium-size restaurant company like yours?

We’re seeing some easing in lending for the bigger companies, but the reality is that banks are still scrutinizing these things so much and are still tight. There are a lot of potential deals out there, but potential buyers are getting frustrated because for the past few years, the consumer confidence just wasn’t there to allow for growth. Plenty of people are trying to sell their restaurants, but buyers and investors have been sitting on their cash. Nobody knew what would happen.

That’s why we wanted to create an environment where folks could help each other and the franchising community. We wanted to create a platform to connect two solid, interested parties knowing that nobody is wasting the other person’s time. The banks are coming to this with a definite interest in investing in these kinds of deals.

What are the most important things growth-minded franchisees need to consider?

They need to understand exactly what they’re buying. When you’re a two- or three-unit franchisee, sometimes if a deal comes in and you just want to get it done, it could be a bad deal if you haven’t done your due diligence. If you’re able to make decent money on the bottom line, that’s the only time you go forward. You also have to be selling yourself to lenders as a potential buyer, not as somebody with ambition but without something in hand. Have a concrete business plan so that there can be solid dialogue — meaning you have to know how a lender would look at a potential deal.

As a Yum! Brands franchisee, you must see plenty of opportunities from franchisors looking to refranchise in the United States.

Definitely. KFC’s refranchising has been completed, but those opportunities will be out there for Pizza Hut, and Taco Bell is looking at another few years of spinoffs. There also are a lot of business owners who are obligated to do a lot of remodels but aren’t able to afford them, and can’t make some other covenants, so banks are helping them develop an exit strategy. We see deals from these brands and all sizes of their franchisees every month.

But do you agree with the widespread move to remodel and reimage restaurants that the major brands like McDonald’s and Wendy’s are advocating?

Yes, because most of the mature brands were suffering the past few years and really struggled with sales. They left their franchisees alone for a little bit to give them some breathing room, but now we’re seeing the economy taking longer to turn around. But I’m optimistic, since all of our brands are seeing positive sales and transactions. Now is the time to reinvest.

If a single-unit operator becomes able to finance her expansion after this summit, what advice would you give her?

The No. 1 thing I learned going from one store to multiple stores is that there is no difference in the fact that you’re going to need good people around you. You need them to support you. When you have one store, you’re focused solely on what’s within those four walls, and when you go to multiple units it’s important to share operations, training and marketing ideas.

We still have that challenge when we develop. But we have all these people on our team now that we have taken from one position in one store to overseeing several units, and I enjoy seeing our people grow.

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

Chris Cosentino’s Twitter handle is @offalchris, matching his penchant for cooking organ meats. But this chef-owner of Incanto in San Francisco, who buys and prepares whole animals, does plenty with vegetables, too, along with anything else that helps him explore the Italian cuisine that is his restaurant’s muse.

“We’re based in the peasant cookery of Italy, and I think that’s a really special way of life,” Cosentino said. “There’s no magic to it; it’s just learning to love it.”

Although Cosentino makes his share of television appearances, including the current season of Bravo TV’s Top Chef Masters and a one-off television special called Time Machine Chefs, he spends a lot of time delving into Italian history to inspire new dishes.

“I’m always trying to push what I’m doing,” he said.

Recently he discussed some new menu items with Nation’s Restaurant News.

What are you working on these days?

Right now I’ve been doing a lot of research into Roman techniques. We’ve made our own garum [an ancient Roman condiment similar to Southeast Asian fish sauce] with anchovies and squids. I found out that the Romans did a lot of other fermenting, as well. So I’m doing a fermented Chioggia chicory. It’s a mixture of garlic, chile and some of our fish sauce, as well as the most beautiful [commercial] fish sauce.

We do a mixture of that and long-cut scallions, and make almost like a kimchi chile paste, and let it ferment for a while at room temperature and then refrigerate it.

So the Romans were not only making fish sauce, but also kimchi?

Yes and no. Unlike kimchi it’s bitter and not crunchy. The flavor notes are extremely different. For example, I use bitters for the sugar starter for it.

What do you plan to do with the chicory?

We’re making a dish that came out from me doing SF Chefs [a charity event]. I served it with thinly shaved braised cold pork belly and mint, scallions and toasted pistachios.

Sounds weird and awesome.

It’s not really weird. Pistachios give it crunch, scallions and mint are refreshing, then you have bitterness from the chicory, and the belly smoothes it all out.

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How do you make garum?

It’s another fermentation process. It’s a salt-to-weight ratio of whatever seafood you use. Classically it’s made with anchovies, and I’ve done it with local anchovies, but squid as well. I have a bottle of six-year-old garum that I made. I only pull it out on occasion because it’s really special.

Does it age like wine?

It clarifies itself as the sediment sinks to the bottom.

How does it fit into modern Italian cuisine?

I use a lot of historical components in food. How many different countries have occupied Italy? Everyone — whether they left a wife behind, whether an Italian woman married a Moor — everyone left something there and the Italians took what was best of it. There’s a lot to be said for that. You find blood oranges and Berber spice. Ginger was a big thing in Florence, and galangal [a cousin of ginger found in Southeast Asia]. A lot of it was used to mask the flavors of rancid meat, but they have important meaning in aspects of Italian cuisine.

But there’s also a philosophy of Italian food that’s really important. They work with what’s in season, they use what’s best, and they work to make a great meal.

Are you using ginger or galangal or other spices from Italian history in your food?

We use “ancient spice,” which is an adaptation from [ancient Roman chef] Apicius. I use it quite often with squab or venison in the fall.

Apicius is supposed to be especially hard to understand.

There’s a thousand different translations, and it’s very unclear, but that’s what Italian food is like — if you think about it. French food is bound by the book of Escoffier. In Italy it’s bound by grandma, and your grandma cooks differently from my grandma. You have different names for the same ingredients, and people are confused by that, but that’s what makes the food very special, and very soulful. I think that’s what’s cool about Italian food, and that’s a really important part of Italian cookery. That, and using what you have.

We dried all the big favas, and I pulled all the skins and served them with only preserved items — preserved tomatoes and preserved white anchovies, and that will be a dish on the menu tonight. I call it peasant gruel, but that’s not what I’ll call it on the menu.

What’s it like being on Top Chef Masters?

Top Chef Masters is very interesting. It brings a lot of interest in what the chef is doing, but for me it’s really about my charity, and what’s exciting for me is what it brought to the Michael J. Fox Foundation [for Parkinson’s disease research]. My uncle died of Parkinson’s. He lived with it for 30 years and he donated his brain for research, so I’m donating the money in his honor. When you donate your brain for research, you want to make sure that research is done. For me, it’s really about that.

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

Yum! Brands Inc. steadily has grown more optimistic for its prospects in its Yum! Restaurants International, or YRI, division, but plans laid out Wednesday at its YRI Investor Day event were even more bullish, according to securities analysts who attended the meeting.

Yum officials reaffirmed their confidence that YRI could produce annual profit growth of at least 10 percent, and they detailed the 14,000-plus-unit division’s plans to double its annual net openings over the next five years as well as shift the bulk of its expansion to emerging markets like Russia and Africa.

Yum’s growth abroad in YRI and its separate China and India divisions comes primarily from KFC and, to a lesser extent, Pizza Hut. Its Taco Bell chain has yet to become an international growth vehicle.

Through the first half of 2012, Louisville, Ky.-based Yum has raised its target for gross new-unit development this year in YRI from 800, first cited in its fourth-quarter earnings call of 2011, to the 900-unit target mentioned in the second-quarter call. According to research notes from Andy Barish of Jefferies & Company and David Tarantino of Robert W. Baird & Co., YRI’s pace of openings and closures is expected to yield about 500 net openings for 2012.

Tarantino wrote that management is allocating more people and money to YRI to increase that rate to 1,000 net openings annually within five years, mostly through accelerated development of underpenetrated markets and with Pizza Hut delivery restaurants.

“The faster pace of expansion seems justified by healthy unit-level returns on capital, with cash payback periods running less than three years — similar to robust China figures — in a range of key growth markets,” Tarantino wrote.

Barish noted that Yum is targeting $1 billion in annual operating profit from YRI by 2015, which would be roughly a 10-percent compound annual growth rate for the nearly $675 million in profit YRI generated in fiscal 2011. He added that about 7 percent of that gain would come from emerging markets, and the remainder would come from YRI’s developed markets, including some company-owned territories that are looking to refranchise large swaths of their systems, such as the United Kingdom.

YRI expects to sell its Pizza Hut dine-in business by the end of 2012, which Barish estimated could improve the United Kingdom’s profit margins by several percentage points.

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“Yum may also take some more company-owned interest in some emerging markets over time as they seek to grow and generate strong returns,” he wrote. “Overall, emerging markets should grow about 15 percent over this timeframe, with developed markets growing about 6 percent.”

In the past few years, Yum has taken a more capital-intensive approach to breaking into its key growth markets for YRI, notably Russia, Africa, France and Germany. Several years ago, Yum entered Russia through a co-branding agreement for KFC with Russia’s native chicken chain Rostik’s. Yum has spent the past several years rebranding those locations to be standalone KFCs, which now produce some of the highest average unit volumes in YRI.

In Africa, Yum in 2010 purchased its largest KFC franchisee in South Africa to turn that market into a training ground for its operators throughout the continent. The company said during its second-quarter earnings call that Yum would be operating in 20 African nations by the end of 2012.

France and Germany have some of the highest average unit volumes in the world for KFC, despite having only a couple hundred stores in those markets and little to no television advertising. Yum executives said during the first-quarter earnings call that the company would have fewer company-owned stores in France and Germany going forward but still would be heavily invested with a “business rental” model, in which Yum holds the leases for new restaurants and charges franchisees a percentage of sales.

According to Tarantino’s research note, YRI officials said the combined operating profit of just Russia, Africa, France and Germany could grow from $99 million in fiscal 2011 to about $260 million by 2015.

Tarantino also noted that management has a bullish outlook on other emerging markets like the so-called CIVETS countries of Columbia, Indonesia, Vietnam, Egypt, Turkey and South Africa, as well as Brazil, the Philippines and Thailand.

In addition to its 14,105 restaurants in YRI, Yum also operates or franchises 15,987 locations in the United States, 5,251 in China, and 479 in India.

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

Executive chef Rick Moonen is dedicated to using sustainable seafood, including catfish, which is farm-raised in the Southeast and is rated as a “best choice,” in terms of safeguarding the environment and preventing depletion of waterways, by the Monterey Bay Aquarium.

For this sandwich, Moonen makes a mild, fish-friendly barbecue sauce by flavoring clam juice with a little caramel and red wine vinegar. He adds the sauce to sautéed onions and garlic flavored with thyme. He then adds some ketchup, hot sauce, Worcestershire sauce and white pepper to that mixture and simmers it for about 20 minutes.

Separately, he sautés diced onion and bell pepper in olive oil until the onion starts to soften. Then he adds paprika, cooks it for a minute and adds salted, diced catfish fillet. He adds the barbecue sauce and simmers it for six to seven minutes, until the sauce thickens.

He puts the mixture on toasted potato buns and serves it with potato chips and pickles for $15.

RELATED:
• Squab with candied pecan and tangerine vinaigrette
• Peach gazpacho

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

Restaurant operators are braced for dry, stiff headwinds in commodity costs as America’s food-producing regions continue to face the most persistent drought in a half century.

Operators from Krispy Kreme to high-end steakhouses are raising flags about the drought’s effect on wheat, corn, soybeans, and other produce, as well as pastureland, beef and poultry, and the effect it will have on the market basket. And little weather relief is in sight.

The U.S. Department of Agriculture’s Aug. 21 update said: “Serious agricultural drought effects persist east of the Rockies, despite cooler weather and recent showers.” For the week ended Aug. 19, the USDA reported that 51 percent of U.S. corn and 37 percent of soybeans were rated in very poor to poor condition.
 
Jeff Powell, president and chief executive of the 15-unit Razzoo’s Cajun Café, said he expects his Addison, Texas-based chain “will be negatively impacted by the drought and other pressures on grain supply.” 

“Corn particularly is a baseline driver of economics in the supply chain,” Powell said. “A shortage of corn caused by drought or other dilution of supply by other uses (ethanol, etc.) obviously negatively impacts the dynamic. Corn is a necessary feed and source of oil, and when in shortage the impact on beef, pork and poultry prices is immediate.”
                               
John T. Barone, president and commodities analyst for Market Vision Inc., wrote earlier this month that higher wheat prices for bread, pizza crust, pasta, flour tortillas and bakery products “are obvious.”

“The ‘sneaky’ price increase will come from the big bump in corn and soymeal prices," Barone said. "That’s because they are the primary feed inputs for poultry, dairy cows, pork — and this year, cattle, because grazing pastures have also been toasted by the drought,”

Popeye’s Chicken & Biscuits recently pointed to the drought and high prices for corn, which is the main feed source for chicken, as the main cause of its higher costs. The company said commodities prices rose 1.5 percent for the second quarter, and company executives expect a 3-percent increase in food costs for the remainder of the year.

A volatile year ahead

Barone also pointed out that beef prices will see a “boomerang” effect. “Cattle ranchers are liquidating, selling off inventory and breeding stock at an accelerated pace,” he said. “This is currently having the effect of inflating available beef supplies and, as a result, beef prices have been moving lower over the past month."
 
During the company's second-quarter earnings call with investors, Wendy’s executives said they did see some relief on beef costs for the balance of the year, as the price of ground beef is dropping with more cattle being sent to slaughter. Next year, however, is shaping up to be more difficult.

"Come spring of 2013, when seasonal beef demand kicks in, there will be hell to pay," said Barone. "The USDA says beef prices will be 4- to 5-percent higher next year.”

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Produce prices are also seeing pressures, said Powell of Cajun-inspired casual-dining chain Razzoo’s. “Drought and other negative environmental conditions compromise the vegetable supply chain,” he explained. “Supply brokers scramble to find global sources of basic staples in both hemispheres. A reliable supply of jalapeños from Mexico may dissipate while a more reliable supply may emerge in Chile. … Our produce costs are volatile.”
 
Even companies dependent on a narrower slice of commodities are concerned. Douglas Muir, Krispy Kreme’s chief financial officer, said in a second-quarter earnings conference call on Aug. 22, that “commodity markets have been volatile lately and the effects of the drought have been significant on many products," noting that Krispy Kreme expects costs to rise modestly.

“I should emphasize, though, that next year is a long way off and much can change in volatile times,” he said. “Except for sugar, we have not purchased a significant portion of next year's need and we are therefore looking to lock in attractive pricing for next year whenever we can.” He added that the company is currently purchasing flour and shortening for the first and second quarters of next year.

Planning price increases

Many restaurant companies are considering modest menu price increases to mitigate rising commodities costs.

Powell said Razzoo’s is expecting its basic food costs to increase by 5 percent to 8 percent over the next year. He said that in response, the Cajun-inspired casual-dining chain anticipates a minor price increase, of 1 to 2.5 percent, over the next 18 months.

Stephen Hare, chief financial officer of Dublin, Ohio-based Wendy’s, said in a conference call with analysts on Aug. 9 that the higher beef costs will be the “largest driver” of commodity spending for the 6,500-unit chain. Hare also said the company would make cuts and “implement selective price increases.”

Similarly, Arne Haak, chief financial officer of Ruth’s Hospitality Group Inc., said in July that the Heathrow, Fla.-based chain of upscale restaurants was looking at menu engineering possibilities and “pricing opportunities.” And casual-dining chain Red Robin of Greenwood Village, Colo., said the commodities outlook was forcing the chain to look at “modest price increases.

Execution is a key part of successful price increases, noted James Morgan, Krispy Kreme’s chairman, president and chief executive. “If we do increase prices [we want to ensure] that we are increasing value to our guest and customers at the same time," he said, "and I think the two are compatible.”

In addition, said Razzoo’s Powell, a “fatal response” for operators would be to compromise quality for a lower cost or to cut portions with the hope that the consumer wouldn’t notice.

“I see this as a healthy and heightened challenge to buy and execute better,” he said, noting that the challenge leads operators to “eliminate waste while maintaining value on the plate while also improving the overall service experience of the guest.”

He added, “Solid operators will react to these challenges and will meet what will be a substantial and increasing customer need. Others will be driven from the market.”

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