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Healthy Kids Menus

An article on NPR is citing a study that was done by ChildObesity180 on the fast casual restaurant chain Silver Diner changing up their kids menu to offer more healthy options.

The study tracked some 350,000 kids menu orders covering 6 months before and 6 months after they changed the menu. Healthy meant the meal met the standards set by the National Restaurant Association’s Kids Live Well Program. The new menu eliminated soda and fries as the default option and offered salads and strawberries instead. The study found that whether there were healthy or not healthy sides the majority of orders went with the default. The “old” sides are still available to order if the customer desires. Silver Diner raised the price of the kids meals 19 cents which they stated had little to no effect on sales.

Interesting study I suppose with all the healthy options hype going on. The fact that the study found that it basically doesn’t matter what’s on the menu as most go with the default options, doesn’t tell me it had a positive or negative effect on sales. You can’t really say that this is what the customers wanted for that same reason. From the time that this study was conducted in 2012 until now the restaurant industry has seen some tremendous growth so it was probably good timing to try out a new menu. It’s nice that more children are eating healthier when they go out, but sometimes fries and milkshake are needed.

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I have copied the full article below:

Will a kids’ meal sans fries and soda still tempt the youngest diners at restaurants?

Chef Ype Von Hengst certainly thinks so. He’s the co-founder of Silver Diner — a chain of fast-casual restaurants in Virginia and Maryland.

Customers want healthier options for their kids, Hengst says. “We tempt them with the stuff they like, but we make sure it’s also good for them,” he says.

Back in 2012, Silver Diner completely overhauled its children’s menu, offering options like teriyaki salmon and quinoa pancakes alongside diner classics like chicken tenders and grilled cheese. The chain also took fries and sodas off the kids’ menu (though customers can still request those items), and it made healthy side items like salads and strawberries the default options.

“This was a huge hit, I think,” he says. “I think everybody — moms and kids — appreciated this.”

Researchers with ChildObesity180, at Tufts University Friedman School of Nutrition, got wind of the changes Hengst was planning, and they wanted to know if he was onto something. So they tracked what families ordered at all of Silver Diner’s locations during the six months before and after the kids’ menu changed — some 350,000 children’s meals in all. The results were published Tuesday in the journal Obesity.


“What we found was that this new menu was really working for them,” says Stephanie Anzman-Frasca, a research associate and adjunct professor of nutrition at Tufts University, who led the study.

Before the changes, only about 3 percent of meals ordered off the children’s menu qualified as healthy — meaning they met the nutritional standards set by the National Restaurant Association’s Kids Live Well program. After the menu revamp, 46 percent of meals ordered met that standard.

And while 57 percent of customers ordered French fries for their kids off the old menu, only 22 percent still requested fries after they disappeared from the menu. All told, about 40 percent of customers stuck with the default side dishes — regardless of whether the sides were fatty or healthy.

“There’s actually a lot of research done in other contexts that shows that people always tend to choose the default. They don’t like going out of their way to choose something else,” Anzman-Frasca notes. So if strawberries and salads are the automatic choice, most parents and kids are going to be happy with that, she says.

Although the average price of kids’ meals increased by 19 cents after the health-conscious overhaul, most customers didn’t seem to notice the difference, Anzman-Frasca adds. The restaurant’s revenues consistently increased during the study period.

“This shows that restaurants shouldn’t worry about disappointing their customers and losing profits if they change their menus,” Anzman-Frasca says.

It also shows that kids’ palettes are more sophisticated than we’d expect, she says. “We’re starting to see in this study that kids are open to more things than we give them credit for.”

Hengst agrees. “Let me tell you, the kids lost it for our low-sodium teriyaki salmon,” he says. “And meanwhile, moms were like, ‘Wow! I didn’t even know my kid liked salmon.’ ”

Silver Diner’s success comes as no surprise to Margo Wootan, the director of nutrition policy at the Center for Science in the Public Interest, a nonprofit consumer group that advocates for healthier foods.

“If you’re a parent and you’re at a fast-food restaurant, it’s likely that you’re tired, and [the kids have] just finished soccer practice,” she says. “You’re going to order whatever is easiest.”

When restaurants make healthy options visible and easy to order, customers tend to respond well, Wootan notes. “So why not make healthy choices easy and automatic?”

A growing number of food purveyors are coming around to Wootan’s point of view.

Disney Resorts recently changed its children’s menus so that meals automatically come with fruits or vegetables and a healthful beverage. Burger King’s kids’ meals now all come with apples and milk instead of fries and soda by default. And lots of other fast-food chains –- including McDonald’s and Wendy’s –- have made similar swaps and dropped soda from their kids’ menus (though parents can still order them).

“And, you know, the kids don’t notice these changes, because they’re really just in it for the toys,” Wootan says.

Still, a 2012 report by CSPI found that 97 percent of kids’ meals don’t meet basic nutritional standards.

“Healthier kids’ meals is one of the hottest trends in the restaurant industry right now,” Wootan says. “But progress is so very slow.”


A Restaurant Without A Restaurant

There’s a great article in Wired about David Chang’s new venture, Maple. Talk about going crazy with implementing technology in a restaurant. Maple is a fine dining restaurant that you can’t dine in. That’s right they only offer delivery ordered through their mobile app.

They have one kitchen in the financial district of Manhattan with a staff of 22. They have a very limited menu each day for lunch and dinner. Where most restaurants focus on ambiance, Maple focuses on delivery. They have developed and implemented very sophisticated software to manage deliveries and the staff of 32 delivery people.

The software tracks the orders that come in and prioritizes them in real time taking into account the current deliveries. It tracks the delivery drivers routes, speed, traffic etc to time everything perfectly. As you can imagine they need to be able to deliver great food at the right temperature in a timely manner. That’s quite a task to manage and could never be done efficiently without technology.

It’s a pretty amazing story. It will be interesting to see how they make out. They plan to expand to other densely populated areas as they grow. I have copied the full article below:

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WHILE HE WAS in business school, Caleb Merkl got to thinking about opening a restaurant. Everyone told him he was nuts, because restaurants are crazy expensive to run and mostly doomed to fail. Merkl knew they were right, of course. But now, he’s gone and done it anyway. Well, sort of.

Technically, Maple, which launched in downtown Manhattan today, is an app. But in almost every other way, it operates more like a restaurant. It’s got a kitchen staff of 22 who cook up a rotating daily menu of fresh meals, curated by co-founder and chief culinary officer David Chang of Momofuku fame, as well as executive chef Soa Davies, formerly of the Michelin starred restaurant Le Bernardin. On any given day, the team is whipping up dishes like arctic char with dill on a bed of olive relish or green chile enchiladas with locally sourced tortillas and home-made green sauce.


The difference is, you can’t actually go to a Maple restaurant. In fact, they don’t even exist. Instead, the only way to enjoy Maple’s food is to order it through the app. Maple is using technology to eliminate one of the trickiest—and most costly—parts of running a restaurant, which is, well, running a restaurant.

This approach distinguishes Maple from the dozens of startups trying to eke out a space in the food industry without actually having to get their hands dirty making and serving the food. There are restaurant delivery services like Seamless and Delivery.com that simply connect you with existing restaurants, and companies like Blue Apron and Plated that send you all the pre-portioned ingredients you need to cook your own meal at home. There are messenger apps like Postmates that let you order delivery from restaurants that don’t offer it themselves. There’s even Uber’s new food delivery service.
Maple is going after something altogether different. It’s the answer to the question: What would a restaurant be like, if you couldn’t actually go to the restaurant? For Maple’s founders, coming up with that answer means thinking as thoroughly about what makes for a good delivery experience as traditional restaurateurs think about furniture, plating, location, and decor.

“Restaurants aren’t set up to do delivery well. They don’t have the budget or time to think about packaging or putting technology together to route the orders intelligently,” Merkl says. “For us, everything we do is about how to make some part of delivery better.”

Restaurant, Redesigned

It all starts in the kitchen. On any given day, Maple offers just three options for lunch, which costs $12 with tip and delivery included, and three options for dinner, which costs $15 all-in. Limiting variety allows the kitchen staff to focus on quality and speed, says Maple co-founder and chief operating officer, Ashkay Navle. Maple plans to open a kitchen in every neighborhood it serves, which Merkl says minimizes the time it takes to go from Maple’s oven to your door. For now, Maple runs just one kitchen, which exclusively serves Manhattan’s densely populated Financial District, but that will change with time. “It’s about building as much density as we can, which is why our delivery zones are so tight,” Navle says.

But while limiting Maple’s geographic footprint helps, what really makes its model work is the technology that runs it. That’s also what helped Maple raise $22 million from tech investors like Thrive Capital and Greenoaks Capital Management. The team has redesigned virtually every piece of technology that runs a traditional restaurant from scratch. As orders come in through the Maple app, the kitchen staff doesn’t simply cook them on a first come-first served basis, and send them out in that order. Instead, the technology prioritizes the orders based on what other orders are coming in to ensure its delivery team is traveling the most efficient route.

When the delivery team is actually on the road, Maple’s delivery app tracks them all the way, measuring their velocity to determine how much time they spend on the bike, how long it takes them to walk to the person’s door, which streets have the most traffic, and which buildings take longer to deliver to than others. The app processes all of this information and uses it to inform future routes. “The system gets better at making these decisions over time,” Navle says.

It’s this technology that Will Gaybrick, who is both a Maple co-founder and a partner at Thrive Capital, says makes Maple a smart investment. “In general, food service is really not leveraging technology to scale,” he says. “But it’s technology that lets us serve better food, faster, fresher, and at a better price.”

The Complete Package

There’s a sophisticated science to Maple’s method, but of course, there’s an art to it as well. Not satisfied with tossing your meticulously delivered meal at you in a grease stained brown bag, Maple’s founders also went to great lengths to ensure the packaging itself is optimized for delivery. That means they tested nearly every off the shelf package to find the one that can withstand heat and condensation the best and minimize the amount of space the food has to shift around. They also hired one of the Museum of Modern Art’s former assistant creative directors to design their subtle yet sophisticated branding.

“Restaurants have that asset, but it rarely travels with delivery,” Merkl says. “We think it’s especially important to recreate some emotion around food, when we don’t have a physical space.”

What’s more critical to Maple’s success than any of this, though, is the fact that the food is actually incredibly good. With Chang as a co-founder, Maple has access to one of the world’s most celebrated chefs. That’s an asset no amount of technology could replace. According to Merkl, who was introduced to the Momofuku founder through a connection at Thrive Capital, Chang was receptive to the idea of Maple from the start. “He’s already playing at the highest level, and now he’s more interested in where food is going than he is in how much farther he can push fine dining,” Merkl says.

‘Not a Technology Company’

But while there are obvious advantages to forgoing a physical restaurant, including minimizing overhead and making it much easier to scale, there are also substantial obstacles to delivering on the promise of perfect delivery. For starters, Maple’s business model still requires a huge staff, only instead of waiters and waitresses, it’s a delivery team. Right now, the company has 32 delivery people, and that’s just for one neighborhood. Navle expects it will grow with time.

Then there’s the fact that in order for Maple’s technology to be worthwhile, Maple needs densely packed routes. That means that Maple may never be a practical solution outside of big cities, and even in those cities it will need a large volume of orders in any given area to make the delivery-only model economically efficient. That’s why Maple is only going to expand geographically once it has built a substantial user base in the Financial District.

But while Maple may not scale as quickly as the average tech company, Merkl says it will scale much more quickly and efficiently than the average food company. And that, he says, is what Maple is, first and foremost. “I know it’d be super in vogue to say, ‘We’re building a platform that will deliver you anything,’ but we’re actually just trying to build a food company,” he says. “We’re not a technology company or a logistics company or a growth for growth sake’s company. We’re a food company, and we’re by nature going to grow more slowly, because it’s about building trust over time.”


Chipotle removes GMO ingredients

Chipotle announced that they have removed all GMO ingredients from their menu. GMOs are getting a lot of buzz the last handful of years or so, and being in St. Louis where Monsanto is headquartered, I certainly hear my fair share of the GMO arguments.

For Chipotle the move makes sense, they have been talking about it for a few years and it has finally come to fruition. This is part of their brand; healthy, fresh, organic ingredients. They market this heavily and it’s certainly a differentiator in the industry. Is this a big deal? Or is it just expected from Chipotle at this point as we get more and more familiar with the brand?

Will other chains have to follow suit? Does this matter in the grand scheme of the industry? I wonder if most people care about GMOs or not. Obviously, people like Chipotle and are frequenting their locations often as seen in their sales. Is that because their food tastes great and is reasonably priced or is it because of their image and appeal to the more ingredient aware consumer? My guess is it’s a combo of both, but mostly the former. They make a great burrito.

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Check out this video from the Wall Street Journal talking about the announcement today:



Pizza chains thrive on convenience, value, technology

Nation’s Restaurant News posted an article today on the turnaround and success of large pizza chains recently. Publicly traded pizza chains posted a 6.4% same store sales growth in the 4th quarter of last year. Domino’s posted 14.5% sales growth in the first quarter. Marco’s Pizza’s net sales rose 41% last year. So there are some great numbers coming out of the pizza market.

Go back 6-8 years ago and pizza chains were struggling big time with some (Round Table Pizza, Sbarro and Giordano’s) filing for bankruptcy. The article cites the following as the reason for the turnaround:

  • Pizza chains reworked their business models
  • Improved their menus
  • Found the right value message
  • and worked hard to make their restaurants more convenient

The biggest factor according to the article was adopting technology. Apps to allow for ordering and customer engagement has spurred a lot of the growth and signs point to that trend continuing. Some stores are seeing up 60% of their orders coming from online, mostly through mobile apps. By adopting technology to handle labor intensive tasks, operators are now able to cut back on labor, thus being able to keep prices very reasonable to the consumer. Pizza prices haven’t risen at the rate that other food has recently and technology is big part of that stat.

I have copied the full article below for you:

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Despite intense competition from grocery stores and burgeoning fast-casual pizza players, traditional pizza chains have been outperforming the overall restaurant industry in recent quarters.

Publicly traded pizza chains averaged same-store sales growth of more than 6.4 percent in the fourth quarter of last year, and based on the 14.5-percent first-quarter sales growth at Domino’s Pizza Inc. — its best domestic result in at least 16 years — that performance has accelerated so far this year.

Privately held chains have also been performing well. Madison Heights, Mich.-based Hungry Howie’s same-store sales have risen 10 percent so far this year, CEO Steve Jackson said.

Toledo, Ohio-based Marco’s Pizza is on track to add 150 locations this year, and finish with more than 700 units. Net sales last year rose 41 percent.

How are pizza chains seeing such success? By making their business models convenient, enabling them to take advantage of their natural value to court families and groups looking to feed a lot of people for less money.

“It’s a community food,” said Bryon Stephens, Marco’s president and chief operating officer. “Whether it’s family, friends or neighbors, we add to the value equation and have food everybody can share.”

It’s a remarkable comeback from six years ago, when a strong argument could be made that Americans had reached their fill of pizza.

Domino’s sales fell for three straight years (2006-2008), and at one point its stock was trading at less than $2 a share. Pizza Hut’s sales fell 12 percent in the fourth quarter of 2009. And in 2011, Round Table Pizza, Sbarro and Giordano’s all filed for bankruptcy.

The sector was loaded with competitors. Grocery stores were making inroads into the business with a huge selection of higher-quality frozen pizzas, as well as their own offerings. Convenience stores started selling pizza, too. And the U.S. was saturated with pizza restaurants.

Amid intense competition, pizza chains reworked their business models, improved their menus, found the right value message and worked hard to make their restaurants more convenient.

In particular, they’ve leveraged technology to make it remarkably easy to order a pizza without being in danger of being put on hold.

Pizza chains were among the first in the restaurant business to see technology as a way to make their operations more efficient and customer friendly. In recent years, they’ve intensified technological adoption.

Both Domino’s and Papa John’s get at least half of their orders through digital channels. Domino’s has apps that let customers order through a smartwatch or even a television.

The increased popularity of pizza has coincided with the growth of smartphone use. According to eMarketer, the number of smartphone users has nearly tripled between 2010 and 2015.

At Marco’s Pizza, about 17 percent to 20 percent of sales now come through digital channels, but that percentage is rapidly growing. At some newer locations, the rate is as high as 60 percent.

“The pizza category is one of the first to get on board and embrace the whole tech revolution,” Stephens said.

The chain’s Digitale project lets customers order pizzas over the Internet and by smartphone, but it also tracks those orders to customize its relationship to those customers. It also helps find similar customers, Stephens said.

“We understand who they are and what they’re buying from us,” he said. “We get to social, digital marketing that allows us to communicate to them more frequently. Consumers are more fragmented than ever on where they’re getting their media. We’re spending a lot of money against those initiatives.”

Hungry Howie’s put online ordering in place five or six years ago, and its use is increasing 30 percent to 40 percent every year, Jackson said. The 560-unit chain has enjoyed 20 straight quarters of same-store sales growth.

“We say that online ordering is a big part of that,” Jackson said.

He also admits that he is a relatively recent convert.

“When online ordering started to service, personally it took me a little time to get on board,” Jackson said. “You pick up the phone, call and order a pizza. Or I have to find my computer, turn it on and boot it up. Who’s going to do all that?

“The real transition happened over the last five years with the iPhone, apps. Samsung and Android have done a good job to make our phones so important that we can’t live without them.”

The adoption of technology might finally be shifting the advantage to pizza chains. For years, chains ceded a large part of the market to independents, even as other restaurant sectors consolidated. But many executives now say that technology has shifted the advantage to chains.

“Chains’ tech advantages has led to the erosion of independents’ market share,” Stephens said.

The ease of pickup isn’t just limited to technology. Detroit-based Little Caesars shifted its strategy a decade ago to $5 Anytime Pizza, letting customers pick up large pizzas for the price of a Subway Footlong sandwich. And Papa Murphy’s took take-and-bake pizza and made a chain out of it.

The convenience of buying pizza has combined with the sector’s traditionally strong value, particularly for families and groups who see pizza as a more affordable option.

A family needing a quick meal, for instance, can order a pizza or two for not much more than $10 in many cases. And now they do so easily, either by picking it up directly or ordering via smartphone.

That’s a value that has been in place for years. Jackson recalled his days working at Dairy Queen, when ice cream cones cost 10 cents to 35 cents. Today a cone is $2.

“I was delivering pizza in 1972,” he said. “At the time, it was $3 for a pizza. The competition is selling large pizzas for $5 today. If you take the analogy of Dairy Queen or coffee, that pizza should be going for around $50.”

Letting your Why guide your actions

Check out this video on what makes Chipotle’s pork different.

Chipotle stopped serving pork in hundred’s of it’s stores back in January because one of their suppliers wasn’t living up to Chipotle’s animal care standards. I’m assuming that this cost them quite a bit in profitability as pork is a higher contribution margin item than chicken or steak.

I think that Chipotle’s corporate culture and commitment to selling humanely raised animals is a great example of understanding yourself as a company and what your customers value.

So often companies market their corporate responsibility but when the rubber meets the road, and they have an earnings call coming up, they cave and go for profits and alienate their customers and damage their brand. It is refreshing to see Chipotle practicing what they preach.

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Sexy Thermometer Calibration



Shame on you if you clicked on this because you saw the word sexy; you need to get some.  We found this great article on Kitchen Thermometer Calibration from the University of Nebraska-Lincoln.  Here are some of the points that I found most interesting and the full article is at the bottom of the blog post.

  • Use distilled water, the minerals in tap water could significantly affect the freezing & boiling point.
  • Determine the calibration method by what the thermometer is used to primarily temp.
  • You should calibrate thermometers: at least once a month, when dropped, or if  health department regulations call for it.
  • Thermometers must be calibrated within +/- 2 F (1.1 C), discard thermometers that don’t calibrate.
  • Altitude affects boiling points, see chart at bottom of post to determine what your true boiling point is.

Calibration in Ice Water

  1. Add crushed ice and distilled water to a clean container to form a watery slush.
  2. Place thermometer probe into slush for at least one minute taking care to not let the probe contact the container.
  3. If the thermometer does not read between 30° and 34° F adjust to 32° F. Non-adjustable thermometers should be removed from use until they have been professionally serviced.

Calibration in Boiling Water

  1. Bring a clean container of distilled water to a rolling boil.
  2. Place thermometer probe into boiling water for at least one minute taking care not to let the probe contact the container.
  3. If the thermometer does not read between 210° and 214° F adjust to 212° F. Non-adjustable thermometers should be removed from use until they have been professionally serviced.

250X250 Thermometer.001


Thermometer Calibration

HACCP based food safety programs require accurate record keeping to be successful. Temperature is often the parameter of interest when monitoring a critical control point (CCP). To assure that a temperature dependant process is under control a calibrated thermometer must be used to record temperatures. The majority of thermometers can be calibrated following a few basic procedures.

To be considered accurate, a thermometer must be calibrated to measure within +/- 2° F (1.1° C) of the actual temperature. Actual temperature can be determined in a variety of ways including measurement with an NIST (National Institute of Standards and Technology) certified reference thermometer or simply through using an ice water solution or boiling water. Another option is the use of sophisticated, and often high cost, calibration equipment that is increasingly becoming available commercially.

The simplest and cheapest way to calibrate a thermometer is through either the use of ice water or boiling water. Distilled water should always be used as dissolved solutes in tap water can significantly affect both freezing and melting points. Another important consideration is the altitude (Table 1) at which calibration is being performed. At sea level, pure water boils at 212° F but at 10,000 feet above sea level it boils at only 194° F. Barometric pressure also has an effect on boiling point but the effect is much less than that of altitude.

You may visit WorldAtlas.com to determine the altitude of your city.

Thermometers intended for measuring higher temperature items, such as cooked product, should be calibrated in boiling water while those used for taking lower temperatures should be calibrated in ice water. When calibrating in ice water both the water and ice should be composed of distilled water. In either case care should be taken to prevent the thermometer from contacting the container being used as this could result in erroneous temperature readings.

Calibration in Ice Water

    1. Add crushed ice and distilled water to a clean container to form a watery slush.
    2. Place thermometer probe into slush for at least one minute taking care to not let the probe contact the container.
    3. If the thermometer does not read between 30° and 34° F adjust to 32° F. Non-adjustable thermometers should be removed from use until they have been professionally serviced.

Calibration in Boiling Water

    1. Bring a clean container of distilled water to a rolling boil.
    2. Place thermometer probe into boiling water for at least one minute taking care not to let the probe contact the container.
    3. If the thermometer does not read between 210° and 214° F adjust to 212° F. Non-adjustable thermometers should be removed from use until they have been professionally serviced.

Thermometers that are found to be inaccurate (i.e. do not measure within +/- 2°F of the actual temperature) should either be manually adjusted or serviced by a professional. Thermometers that have a history of deviating from actual temperature measurements should be discarded and replaced. To assure accuracy, NIST certified thermometers must be re-certified annually.

Thermometers that cannot be easily calibrated through direct immersion in boiling or ice water can be calibrated by comparing readings with another calibrated thermometer. Thermometers that may be calibrated in this way include smokehouse probes and room temperature thermometers. When doing this it is important that the thermometer used for the comparison has been calibrated recently. All thermometers should be calibrated regularly with those used for monitoring CCP’s being calibrated either daily or weekly, depending on the volume of your operations. Any thermometer that has been subjected to abuse, such as being dropped on the floor, should be immediately recalibrated to assure accuracy. Hard to calibrate thermometers could be compared directly with NIST reference thermometers but this may be undesirable as many of these reference thermometers are glass and mercury and could present chemical and physical hazards in food production areas.

Table 1 – Relationship of Altitude to Boiling Point of Pure Water

Feet Above Sea Level

Boiling Point

Feet Above Sea Level

Boiling Point


212° F


203° F


211° F


203° F


210° F


201° F


209° F


199° F


208° F


197° F


207° F


194° F


206° F


190° F


205° F


187° F


204° F





McDonald’s works on turnaround

McDonald’s has been a huge topic in the industry this year with their dismal financial performance, commitments to changing their food supply and raising the minimum wage at the corporate owned stores. Nation’s Restaurant News posted an article online following McDonald’s earnings call. Here are some of the highlights from the article:

  • New CEO Easterbrook was quoted as saying “We can’t afford to carry legacy attitudes or legacy thinking” in regards to the changes that will be announced in a special meeting on May 4th.
  • This did not come up in the meeting, but McDonald’s has filed for a trademark for the term “McDelivery”
  • They did discuss developing a mobile app to help them connect more with their customers vs the current transactional relationship that they currently have with them
  • “This is going to be a growth-led turnaround.”
  • Simplification of it’s operations was a big topic, not just menu cuts

It will be interesting to see what comes out of the special meeting in early May. It’s a big ship to turn around, but I think they can pull it off. They have the money to do it, but it’ll depend heavily on whether or not they can turn customers in their favor. They have a tough stigma of junk food to shake which will be difficult.

What are your thoughts? Do you think this is the beginning of the end of an industry legend? Or can they pull it off and stay on top? Let’s face it even though they are struggling now they are still a giant in the industry.

I have posted the full article below:

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McDonald’s Corp. executives avoided discussing details of the company’s turnaround plan during an earnings call Wednesday, following a difficult quarter in which net income fell 33 percent and global same-store sales declined 2.3 percent.

McDonald’s CEO Steve Easterbrook hinted that the company’s changes, to be revealed at a special meeting on May 4, could be significant. He indicated that the company must avoid “legacy thinking” as it plots a turnaround.

“We can’t afford to carry legacy attitudes or legacy thinking,” Easterbrook said during the call, his first as McDonald’s CEO. He was named to the top job in January, and took over on March 1 for Don Thompson, who retired.

A potential change that executives did not discuss was delivery. Last week, McDonald’s filed a trademark for the term “McDelivery.” The patent was first reported by CNBC.

Delivery has been a growing part of quick-service restaurants’ arsenal. Burger King has tried delivery in some markets. And Taco Bell plans to test delivery this year.

Beyond McDonald’s trademark application, there are no other indications that it is working on a delivery program. Trademarks are often filed before concrete plans are revealed. The company has not yet responded to a request for comment.

Executives did suggest that McDonald’s is developing a smartphone app that should be ready in the second half of the year. Easterbrook indicated that the app would focus on improving customer experience, but later iterations of the app could focus on customer engagement.

“We do see it as a business driver as we look out ahead,” Easterbrook said. He added that an app would help the company “personalize” its relationship with customers and “shift from a transactional to a more purposeful relationship with customers.”

Easterbrook added that this “personalization” could extend to the menu, which could be done through the company’s customization test, Create Your Taste, which will be expanded to a couple markets in the U.S. this year, he said.

Executives said the company closed 350 restaurants in the first quarter in the U.S., Japan and China, in addition to 350 previously planned closures, but also said that few additional closures will come.

The company will reveal more details in May, and investors seem to be expecting big news. McDonald’s stock jumped more than 3 percent by mid-afternoon trading Wednesday.

Investors have been pushing McDonald’s to take more drastic financial steps to improve shareholder value in the short term, particularly selling units to franchisees and spinning off real estate. McDonald’s controls its franchisees’ real estate. Investors want the company to spin off that real estate out of a belief that the company’s stock doesn’t get credit for those assets.

But Mark Kalinowski, analyst with Janney Capital Markets, suggested there are a few easy levers for McDonald’s to pull for a short-term gain.

“Folks hoping for a near-term rise in the stock may be hanging their hat on hopes that McDonald’s can spark some pizzazz in investors that day,” Kalinowski wrote. “With meaningful capex cuts having been announced a few months ago and no non-core brands to sell off, doing so successfully will be a more difficult challenge than the similar challenge McDonald’s faced when it had a relatively new CEO meet with investors in New York City back in spring 2003.”

Easterbrook noted that the turnaround would be mostly about finding ways to lift sales and keep them there.

“We want to sell more hamburgers to more customers more often,” he said. “This is going to be a growth-led turnaround.”

Still, Easterbrook strongly hinted that the company is thinking differently this time, which isn’t easy for a brand that’s been around for 60 years, and which has been enormously successful for most of that time.

“We have been phenomenally successful for 60 years, and there are so many good reasons for that,” Easterbrook said. “Much of that I’d never, ever wish to change. That’s very precious to us. But there is a certain conservatism and incrementalism that builds into that. As a company that has not necessarily been a bad thing, but when you need to make a step change, our organization doesn’t naturally go there. It has to be led there.”

“We’re challenging some conventional thinking on a number of fronts,” he added.

Easterbrook said the company could work on innovation, both through new products and limited-time offers, and still simplify its operations. Simplification doesn’t just mean menu cuts, he said, though he called the cuts announced in January an “initial phase.”

“It’s not just simplification,” Easterbrook said. “It’s what else can we take off the workload of the teams and management in the restaurants. There are other things we can take out of the restaurants to simplify the job of management and crew.”

Easterbrook offered some views on how McDonald’s got into its current state, with 18 months of sales weakness and problems at many of its key markets around the world, notably its two biggest, the U.S. and Japan.

He suggested that the company should have worked on potential future growth pipelines during its successful run from 2003 through 2010.

“We had four or five growth initiatives working together from 2003 through 2010,” he said. “There were a number of different growth platforms that worked and worked around the world. That included delivering great quality coffee, which lifted the breakfast business, extended hours and the reimaging program, to name three. But perhaps what we didn’t see is the need to create that future pipeline of growth platforms.

“Sometimes the consumer will guide you there, but sometimes you have to take things into your own hands.”

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New guidelines require calorie count for food and drinks

An article from WIVB 4 in Buffalo highlights the upcoming federal requirements to post calorie counts on drink and food menus. The federal requirements only target restaurants and bars with more than 20 locations.

The restaurant/bar owners quoted in the article don’t feel that it will affect their business negatively. They feel that most people realize that they will be consuming more calories when they go out to eat and look at it as more of a treat. I think there can be a negative affect in that average check per person will go down and that deserts will be the first to get ignored more often than they already do now. Depending on the type of restaurant that can significantly hurt profitability.

The hope from the government is that this will help with the obesity problem in the US. I don’t see it having much of an impact. There’s a lot more education that needs to go into eating healthy than just looking at calorie counts. Plus all this info is usually available now online and people that care about it look it up prior to going out to eat. But most of us just go out to eat and order what we want then deal with the consequences.

What are your thoughts? Do you see this having a negative affect on your business? Do you think it will make a positive impact on obesity in the US?

I have posted the full article below:

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UFFALO, N.Y. (WIVB) — New federal guidelines will soon require many restaurants nationwide to post calorie counts for food and drinks on their menus. The menu labeling rule is part of the Affordable Care Act.

The FDA wants to make you more aware of the calories that you are not only eating, but drinking.

At Gramma Mora’s- a Mexican restaurant on Hertel Avenue, the message is: “It’s fun to go out to eat- and it’s even more fun to have a margarita with your meal,” says Owner, Liz Giovino.

Come December, many restaurants nationwide will be required to post calorie counts on their drink lists. It’s something some restaurant go-ers say they plan to ignore.

Irinia Arias from Buffalo says, “I think they put it there for a reason, but i don’t think anybody is really going to pay attention to it.”

The regulations will apply to all chain restaurants and bars with at least 20 locations. But Giovino doesn’t believe it will impact Buffalo’s restaurant industry.

“There are going to be people who are watching calories, but when most people go out to eat they are going to realize there are going to be calories they are going to have. You just have to be smart to decide what choices you’re going to have,” she said.

Health experts say these new requirements will help combat the country’s obesity epidemic by showing just how many calories lurk in your favorite food and drinks.

Owner Charlie Giovino says the impact should be minor, since people who eat out already know they’re indulging.

“If people are going to go out to dinner and they are going to come to our restaurant, I don’t know if they’re really going to be interested in that,” he says.

New York City began requiring chain restaurants to post calorie counts on menus in 2006, and now the rest of the country will soon follow suit.

Whether menu labeling has any effect on health is still an open question; some studies have shown it has no impact. But a 2008 study at Starbucks showed a drop in average calories purchased after calorie content was posted.


Spending at Restaurants Tops Grocery Stores for First Time

For the first time since the commerce department started tracking this stat in 1992 consumers have been spending more in restaurants than they have in grocery stores. This happened in March of this year. Again more promising news for the restaurant industry. Dailyfinance.com sites that “experts” believe it’s a combination of the sign of consumer confidence and a sign of the times.

According to the article today’s busy lifestyle is a driving factor and “takeout, drive-throughs and other quick and easy meals are driving growth for the industry”. Here are a few other interesting points in the article:

  • Millennials are going out more often and restaurants are catering to their likes and dislikes
  • Millennials represent 23 percent of total restaurant spending
  • NPD Group says that baby boomers also would rather eat out and that the industry is missing the boat on them as they aren’t spending as much effort on their wants
  • The cost of restaurant meals are rising faster than in home meals

I have copied the full article below:

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What’s for dinner tonight? You’re more likely to find the answer on a restaurant menu than you are on your grocery shopping list.

New government figures show American consumers spent more at restaurants and bars in March than they did at grocery stores — the first time that’s happened since the Commerce Department began tracking in 1992.

Experts say it’s a sign of confidence in the economy — and a sign of the times. Consumers are looking for convenience, which means a lot of the industry’s growth is coming from areas other than the traditional sit-down meals. Hudson Riehle, senior vice president of research at the National Restaurant Association, says takeout, drive-throughs and other quick and easy meals are driving growth for the industry. He says “consumer usage of restaurants has become an important element of their lifestyle.”

Younger millennials, those 18 to 28 years old, are going out more often, and restaurants are increasingly catering to their likes and dislikes. According to the market research firm NPD Group, millennials represent 23 percent of total restaurant spending. However, that’s still below their spending level in 2007, just before the Great Recession began.

At the same time, baby boomers have the means and the time to enjoy eating meals that someone else prepares for them. And NPD says many restaurant operators aren’t paying enough attention to this group.

Empty Nesters Enjoy Eating Out

Carol Macknin says she and husband Alan are eating out more. ” Most of it is spur of the moment. We don’t have the kids to worry about any more. As a result, we don’t spend as much.” The couple, with four grown children, recently moved from the suburbs into downtown Philadelphia. She says both factors give them the feeling of having “a new-found freedom.”

Whoever is doing the ordering, young or old, restaurants are becoming an increasingly important sector of the economy. The National Restaurant Association says industry-wide sales this year are projected to total a record high $709 billion, up nearly 4 percent from 2014. There are 1 million restaurants nationwide, accounting for 14 million jobs, representing about 10 percent of the U.S. workforce. And even though the big chains get most of the media attention, about 7 in 10 restaurants are single-unit operations, according to the association.

The cost of restaurant meals (averaging $6.96 last year) are rising faster than the cost of in-home meals ($2.24), the NPD Group says. NPD also notes that even though we are spending more of our food budget on restaurants, four out of five meals come from food bought for the home.

There is one important asterisk about the trend, as Bloomberg notes. The government figures on grocery stores don’t count stores such as Walmart (WMT), Target (TGT) and Costco (COST). Instead, they are considered “general merchandise retailers,” even though they account for an ever-increasing proportion of food sales.

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Are consumers rejecting giant restaurant chains?

McDonald’s has been in the news a lot lately between their slugging financials and the most recently announced pay increase. This article from Nation’s Restaurant News examines the possible reasons for the sluggish performance of 4 of the top 5 restaurant chains; McDonald’s, Subway, Wendy’s, and Burger King.

Burger King is the only one of the four that saw an increase in system sales growth, but it was very small at 1.6%. Subway saw decent unit growth adding 900 units, McD’s saw a .5% growth in units, while the other 2 lost units.

The article notes that large pizza chains are performing very well. With Domino’s and Papa John’s leading the pack.

Personally, I feel there are a few reasons for the changes (some mentioned in the article as well)

  • Consumers seems to be latching on to the “healthy” option these days. Subway, in recent years, was touting this marketing message, but there are lots of other options now that are speaking the same language.
  • The food and marketing message of the tops chains are going stale. They’ve been marketing and serving the same stuff forever and I think consumers are seeking out something different. Chipotle is crushing and it’s very different from the top chains.
  • The large chains are relying solely on marketing, and they have enough money to do so, but they also need to start investing in technology in order to stay relevant. Technology to interact with their consumers, but also technology that helps them run better operations. In large organizations it can be very hard to make a decision that will be a drastic change. They are big ships to turn and it takes time.
  • The newer concepts are embracing technology and are adapting to the “new” consumer. It appears to be working.

Would love to hear some other opinions so please comment. I have copied the full article below:

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This isn’t a good time to be a really big restaurant chain.

Three of the top five restaurant chains in the U.S., McDonald’s Corp., Subway and The Wendy’s Company, saw declines in system sales last year. A fourth, Burger King Corporation, had modest system sales growth at 1.6 percent, a year after its sales declined.

What’s more, most of these chains aren’t really adding units. Both Wendy’s and Burger King unit counts declined in 2014. McDonald’s unit count grew by 0.5 percent in 2014, according to SEC filings.

The weakness at the biggest restaurant chains in the country puts a damper on any talk of an industry comeback, at least for now. If the restaurant industry really was in growth mode, its biggest players would be showing more improvement, or at least some improvement.

“When brands like McDonald’s and Wendy’s and Subway and Burger King, four of the top five restaurant chains, continue to struggle, it’s hard to be optimistic about the growth rate for the industry,” said Darren Tristano, executive vice president at the restaurant consulting firm Technomic.

But is it also possible that consumers are rejecting the biggest chains in favor of smaller, more nimble competitors that are more able to respond to constantly changing consumer demands? Perhaps, though the explanation isn’t quite so simple.

For one thing, plenty of big chains in certain sectors are performing well. The pizza sector, in particular, appears to be shifting toward larger brands as Domino’s Pizza Inc. and Papa John’s International have seen flourishing sales in recent years — driven by technology that independents can’t quite match.

Chipotle Mexican Grill added $900 million in sales last year and is now a $4 billion restaurant chain that is probably a year away from breaking into the 10 largest restaurant concepts in the U.S.

And Starbucks Corp., despite its seeming ubiquity that has turned it into the third largest restaurant chain in the U.S., continues to add sales in a coffee market it dominates.

That said, coffee and pizza are commodities and those chains have done a good job of making life easier for their consumers through technology. Chipotle is almost an anomaly: A big chain that is able to enjoy double-digit growth in both same-store sales and unit count thanks to a business model that enables variety without complication and a marketing strategy that goes right at the heart of what many consumers want these days.

And it’s difficult to look at the weakness at McDonald’s and Subway, the largest restaurant chains in terms of system sales and unit count, respectively, and not come away with the conclusion that some customers are looking for alternatives.

Subway’s sales declined an estimated 3.3 percent, according to Technomic — even though the sandwich chain continues to grow, having added about 900 locations last year.

Subway might be the most dominant restaurant chain in its market — it has about 61 percent market share of the largest sandwich chains, according to Nation’s Restaurant News data. But the company’s competitors are growing fast, including Jimmy John’s and Firehouse Subs, which have been consistently among the fastest growing restaurant chains in recent years. They might be finally making a dent in Subway’s market share.

McDonald’s system sales declined 1.1 percent in the U.S. last year, according to SEC data, but its issues are more complex. Burger King might have taken some business from McDonald’s last year, but the Oak Brook, Ill., chain could well be losing market share to a host of other competitors — including, say, pizza chains that are appealing to McDonald’s core family demographic or convenience stores, which have aggressively courted the convenience customer.

In both cases, their size might be hurting them, making it more difficult to add menu items or make changes because there are just so many locations and franchisees.

Smaller chains can do things faster. They are generally newer, so they tend to appeal more to younger consumers that tend to reject their parents’ restaurants. And they have more specialized menus. They also can take advantage of social media and Internet advertising to offset the big guys’ marketing dominance.

“We’ve been seeing that for years,” Tristano said. “It isn’t just the attitude toward larger brands. It’s the ability of a smaller brand or independent to be more nimble, to utilize trends faster. While all these bigger chains are struggling to keep up and catch up, the smaller chains are able to add items consumers are looking for.”