NRA’s Non-Specific Response to the Executive Order

The National Restaurant Association recently offered its take via a press release on President Obama’s controversial Executive Order (formally called Deferred Action for Childhood Arrivals) protecting some undocumented U.S. residents from immediate deportation. 

On the face of it, the order would appear to favor small businesses (like restaurants) that depend on immigrant labor (again, like restaurants). This is because the order allows “parents of U.S. citizens and lawful permanent residents who have been present in the country since January 1, 2010, to request deferred action and employment authorization for three years . . .  provided they pass required background checks.”  (They also have to pay taxes. There’s no promise of citizenship after three years.)

It’s very likely some of the aforementioned parents work in foodservice. Which brings me to the NRA’s brief response to Obama’s order. Bear in mind that while association officials worked closely with the administration to craft menu labeling requirements, the group generally sides with Republicans on business-related issues. Yet the fact that restaurants employ many undocumented people may explain why NRA President and CEO Dawn Sweeney if not exactly soft-pedaling in the November 20 press release merely frets that the order may be detrimental to “common sense immigration reform” without citing specifics: 

“The National Restaurant Association has long advocated for sensible immigration legislation at the federal level.  The nation needs a solution, and the restaurant industry, representing the diversity of our great nation, home to generations of immigrant workers and their families, would like to see progress made on federal legislation.

“We are concerned that the President’s executive action on immigration will negatively impact Congress’ ability to accomplish real and lasting reform. Immigration reform is a highly charged issue that requires deliberate and constructive bipartisan dialogue. We have worked vigorously with both parties to move legislation forward to the benefit of our membership and our workforce. We hope that the debate over process will not derail progress on common sense immigration reform measures in the next Congress.”

Posted in Employees, immigration policy, National Restaurant Association, politics, restaurants | Tagged , , | Leave a comment

“Fresh” Remains the Rage in NYC

That word . . . you know the one that nearly every garden-variety restaurant now incorporates somewhere into its logo, name, menu, t-shirts, uniforms and onto whatever surface is available: It’s “fresh,” in case you somehow haven’t noticed. I spotted it throughout New York City this past weekend. Maybe I’m wrong, but one expects something a bit more sophisticated in this cosmopolitan landscape than an overused epithet that’s a favorite of foodservice operations in Midwestern malls.

Consider the Madison Ave. restaurant below. It’s called Fresh & Co. Note the words subservient to “fresh” that that run along the base of the window (and don’t forget to notice the “Gluten-free” poster in the window itself). They are all currently fashionable and meant to emphasize the menu’s putative healthfulness.

Here's a good example of employing current foodie buzzwords to draw customers into this limited-service restaurant.

Here’s a good example of employing current foodie buzzwords to draw customers into this limited-service restaurant.

I also spotted ‘Essen, another limited-service restaurant, this one shortening the word “delicatessen”  (but also playing on the German/Yiddish verb “to eat”).  Note the food cues in this one (and the available ATM for the cash-strapped).  Also notice the tagline: “Fast Slow Food.” What the hell does that mean?


The all-things-to-all-people restaurant.

“Fast Slow Food”: Is that even possible?

Meanwhile, I dropped into Shake Shack, the veritable NYC-based burger chain that’s expected to IPO before the end of the year. Industry observers believe the 14-year-old company could be worth a billion dollars soon after the offering. It has gained a huge following, not surprisingly, which was made abundantly clear to me as I waited in line with dozens of other people to order a burger and shake at the Times Square outpost. When I finally managed to place an order, I was handed the worn device you see below.

Shake Shack's "beeper" alerts you when your fast-food order is ready.

Shake Shack’s “beeper” alerts you when your fast-food order is ready.

Ten minutes later, my food was up. Apart from the average fries (in the picture below), it was a very tasty meal.

American classic: Cheeseburger, fries and a shake, at Shake Shack.

American classic: Cheeseburger, fries and a shake, at Shake Shack.






Posted in burger chains, chains, Customers, fast food, Fast-casual, fresh, initial public offering, Local sourcing, quick-service restaurants, restaurants | Tagged , , , , , | Leave a comment

Yelp Stars Drive Sales

What’s a review star worth anyway? In terms of restaurant profitability — a lot. Czar Metrics recently conducted the most comprehensive quantitative research to-date studying the impact of customer reviews on restaurant performance. Czar founder and RTS Partner Mike Lukianoff found that one star can mean as much as 12 percent increase in sales for upscale restaurants, particularly in urban locations.

The study, presented at the prestigious Cornell Hospitality Research Summit on October 12-14, was conducted using actual sales volumes for almost 2000 restaurants across more than 40 US markets. You can receive a copy of study by clicking here and filling out the form. 


Posted in Analytics, ideas, Menu, restaurant critics, sales, Yelp | Tagged , , | Leave a comment

Ready to Sell Your Company?

It may be time to sell your company. Buyers with access to capital seem to be everywhere.

So it wasn’t surprising that accounting firm and RTS partner CohnReznick sponsored a webinar that featured two industry experts – Piper Jaffray investment banker Damon Chandik and Catterton Partners Jon Owsley — who explained how investment banks and private equity firms went about acquiring and preparing to acquire restaurant companies. Apart from a mention or two, neither executive offered details of specific deals they’ve recently done. Instead, they kept things general but interesting.

IPO fever: Bojangles Restaurants , the chicken-and-biscuits restaurant chain, is pursuing an IPO that could be worth almost $1 billion.

The men agreed now is a great time to be a seller. Chandik, Owlsey and host Gary Levy (a CohnReznick partner) said they couldn’t recall a better time sell given low interest rates and the amount of dry powder available. And there were always the public markets to consider, where the shares of several restaurant companies have continued to trade at a premium to their IPO price.

Chandik, however, suggested that sellers hire an investment banker instead of trying to accomplish a sale on their own. Operators, he declared, are better served operating their businesses than searching for buyers — something he does on a daily basis.

Still, tough decisions loomed: Does the owner(s) want to sell the business outright? Does he want to partner with a financial sponsor? Once the seller has decided, he then has to develop a model for his business, which would include a 3 to 5 year forecast; he would also have to provide financial audits or risk losing the opportunity to sell.

The founder of Portillo’s Hot Dogs with sales of more than $8 million per location, recently sold the chain to private equity firm Berkshire Partners for a reported $1 billion.

That’s because private equity firms — if the seller decides to partner with one —  want to invest in companies that have tidied up their financial house. Particularly taxes, Owsley emphasized. Moreover, Catterton likes companies that have been “rolled up.” In other words, Owsley prefers that a group of restaurants operate under a corporate umbrella rather than being separately owned by various individuals. You may want to judge if your company is ready for private equity against Owsley’s other other considerations (below).

Private equity






Posted in capital, Executives, expansion, financing, initial public offering, investment bankers, M&A, Private equity | Tagged , | 1 Comment

Can Organics Solve Casual-Dining’s Problems?

This morning veteran restaurant analyst Howard Penney posted to Twitter a solution to casual-dining’s problems. Go organics!

“I posit that if an increasing number of consumers are eating natural/organic products at home, it is only natural that a greater number of people will seek this alternative when looking for food to eat away from home.” 

As evidence, he cited the conference call remarks of Kroger CEO J. Michael Schlotman, who said that the “natural/organic customer is growing in numbers.” It wasn’t clear, however, if Schlotman was referring to his chain or others. Penney, meanwhile, also mentioned Whole Foods and Fresh Market attacted this particular clientele. 

“Going into Whole Foods or Fresh Market is an exciting shopping experience for a foodie. These chains have successfully created fun, high energy environments for consumers.”

Yet it strikes us as odd to suggest that organics and natural foods are answers to segment’s serious sales problems (they’ve tumbled for nine years running). After all, such issues as poorly trained servers, aging restaurants and lack of culinary creativity also need to be addressed in a big way.

Last May, for example, USA Today noted, “While Red Lobster’s troubles have been exacerbated by its mostly seafood menu, its problems reflect larger trends in the casual dining industry. There’s a general lack of innovation and a lack of perceived value.”

What’s more, organics cost more in general, and should chains resort to raising prices to cover them how many customers — who may not give a damn about natural or organic foods — will stop coming?

However, the same article noted that Millennials desire healthier menu options. (As for Baby Boomers, data on their desires isn’t clear though they have upped restaurant visits, according to Food Business News.) So while we remain unconvinced that organics are the sole answer, we do concede they could play a role in putting a few more butts casual-dining’s seats.

Sales of organic foods continue to climb, though at a slower pace.

Sales of organics continue to climb, though today at a slower pace.

Consider, for instance, how easily Olive Garden’s dinner menu could be modified. We bet the asparagus in appetizers and the flour in flatbreads could be switched to organic without significantly driving up costs (Penney did not address food cost or supply-chain issues.) And why not use air-chilled chicken in the 18 dishes that feature the bird? The web menu doesn’t even mention whole wheat pasta, though an employee at an Olive Garden reached by phone said it was available in a linguine dish.

Beef and pork could be sourced from farms that raise animals humanely, i.e., without cooping the animals in tight pens.

We don’t mean to pick on Olive Garden. In fact, we would not be surprised if the aforementioned changes (or a few of them, anyway) take place under the new board of directors at parent Darden Restaurants — one of whom incidentally is RTS Partner Jean Birch. In fact, we strongly suggest that Jean and her new colleagues read Penney’s manifesto.


Posted in Analytics, casual-dining, chicken, Customers, farm to table, Food, organic, restaurants, Turnaround | Tagged , , | Leave a comment

Teens Like Organic Foods

Teens apparently like organic foods, according to a survey by Piper Jaffray. The Minneapolis-based investment bank recently released the results of a teen buying-habits study that showed a “very strong secular trend” toward organic foods.

Good to Go Organics is a busy restaurant in mid-town Manhattan.
Good to Go Organics is a busy restaurant in mid-town Manhattan that features natural, gluten-free chicken nuggets on its menu.

When researchers asked teens, “Do you eat organic food?” this fall, 41 percent said yes. That’s a 200-basis-point year-over-year increase, though 100 basis points below Spring 2013. Teens also acknowledged they were eating more organic foods.

Within those teens who are eating organic, they’re consuming more of it as the delta of those consuming more versus less has
increased for four consecutive surveys.

Restaurant operators who cater to upper-income customers won’t be shocked to discover that, as the researchers also noted, “the spread of those eating more organic food versus those eating less is highest among upper-income teens.”

Posted in Analytics, Food, Menu, organics, restaurants, Sustainability, Vegan, Vegetarian | Tagged , | Leave a comment

New Guard: Three Fast-Casuals

We’re pretty sure you’ve heard enough about ambitious young, fast-casual brands wanting to be “the next Chipotle.” Yet we’re fairly certain you wouldn’t mind learning more about young brands with a chance to multiply. It’s certainly the case with three new-guard concepts. This past weekend RTS Partner David Farkas traveled to Bethesda, Md., to eat at ShopHouse Southeast Asian Kitchen, Cava Mezze Grill and Luke’s Lobster — all of which have multiple outposts in the Washington, D.C., area. Here’s a look at what he discovered.

Big portion: Shophouse's rice noodles with vegetables and green chili sauce.

Big portion: Shophouse’s rice noodles with vegetables and green curry sauce.

ShopHouse Southeast Asian Kitchen: Chipotle, which created ShopHouse, must like the D.C. area, because it has so far opened three units there and is in the process of opening a fourth. It’s not surprising. The District and suburbs are filled with young, educated people who have disposable income and tend to eat wisely. I dropped by for an early lunch and to have a chance to speak with the staff. The two guys on the line patiently explained the offerings — all of them looking very fresh in stainless steel containers — and then proceed to fill my bowl with rice noodles, summer squash, and green curry sauce Three things jumped out at me: the first was an upcharge of a buck for an additional vegetable; the portion size (huge!); and a small, laminated booklet an employee to look up the ingredients in the curry sauce. It was appreciated — indeed, a special touch. When I asked if I could see the booklet, the employee said he’d have to ask the manager, who must have nixed the idea.

The line at Shophouse where food is dished up in classic fast-casual style.

The line at Shophouse where food is dished up in classic fast-casual style.

Cava Mezze Grill: Another “dishup” concept that’s heavy on healthful foods, Cava was launched in 2006 and has so far grown to four units, all in Greater Washington. By noon Saturday, people were streaming in for salad bowls that featured grilled chicken or meatballs. Like ShopHouse (only a few doors away), portions are large and very tasty. I particularly liked the chopped and seasoned chicken.

The menu at Cava Mezze Grill is confusing at first. but offer directions on how to fill a bowl.

The menu at Cava Mezze Grill can seem confusing at first. Yet it offer specific directions for how to fill a bowl.

Cava, which features well-seasoned Middle Eastern food, didn’t have Middle Easterners working the line; everyone was a native Spanish speaker. Did that detract from the concept? I’m not sure. (The ShopHouse crew also spoke accented English, but I couldn’t tell where they were from.)  But many years ago I heard Chipotle founder Steve Ells say that he purposely hired Spanish speakers for his first outpost — people whose English was shaky at best, he added. In any case, customers moved through the line easily and appeared to be having a good time chatting with Cava’s workers.

Behind the lines: Chicken being grilled on a busy Saturday afternoon at Cava.

Behind the lines: Chicken being grilled on a busy Saturday afternoon at Cava.

 Luke’s Lobster: There’s no way to turn succulent lobster into common comfort food. It will always remain a comforting luxury food to most Americans. So why would anyone think $15 lobster rolls (from sustainable fisheries) — along with crab rolls, shrimp rolls, and lobster bisque — have a place in the fast-casual segment, where checks average $7-10 per person? (Sold from food trucks, we get. The roll is more of a treat than a regular lunch item.) But Luke Holden, a Maine native, thinks otherwise and has so far opened 13 stores, two of which are in the D.C. area.

Luke's Lobster roll is filled with claw meat and a minimal amount of mayo.

Luke’s Lobster roll is filled with claw meat and a minimal amount of mayo.

The Bethesda outpost, with minimal seating indoors, is chiefly for people who like eating at the half-dozen picnic tables out front. And there are lots of those people today. In fact, I eat inside because there’s no room to sit at a table. (Just three employees, including the manager, were pumping out the food, to boot!) But $15 a pop? Bear in mind Bethesda is prosperous; indeed, most of the areas surrounding the District, in Maryland and northern Virginia, boast high median household incomes.

Posted in branding, chicken, Fast-casual, restaurants, Uncategorized | Tagged , , , , , | Leave a comment

More tips to improve restaurant service

Picking up where we left off in our last post, here are more tips to improve service in your restaurant. Getting service right is especially important today as restaurant visits have remained flat for most eateries so far this year. Blame the situation on the slow recovery if you like. But by all means make certain your guests enjoy and remember their dining experience.

Otherwise they may get used to eating at home, believing it’s the less expensive option. This advice comes courtesy of RTS Partner Len Ghilani, who has been helping restaurants improve their performance for many years.

•  Use the word “guests” (as in someone who comes to your home) as opposed to “customers” (as in someone who walks into a muffler shop) This mindset makes a difference.

•  Answer the phone before the third ring. Smile first

•  Have an “info” list at the host desk for FAQs, so the host has immediate answers: Do you have any gluten-free items? What are your hours? How do I get there from (blank). Does your food have MSG. What’s the dress code? Average price of wine offerings, average price of dinners, etc.?

•  Check the cleanliness and paper stock of restrooms frequently

•  Have a couple of food items that can be used for what we call “the odd guest out” in the event that one order isn’t ready with the rest.  (Example: If the kitchen has 3 of the 4 orders ready for table 32 and the fourth order is going to take longer than a couple of minutes, instead of holding food in the window (which ties up the expediter’s space and holds up the guests), send the 3 orders with a small salad, small app or cup of soup for the fourth guest with an explanation that his/her plate will be right out.

•  At the start of each meal period, have the servers at-the-ready to assist the host by seating the first table in their section.

•  During busy periods, have a manager or chef “butler-pass” small samples of a signature or specialty item to diners and those on a wait list. This can also be done with a bottle of wine the house wants to promote. Pouring small samples to diners who are drinking wine is a nice touch.  (Most vendors will comp a few bottles for that reason.)

•  Treat the single diner as if he or she was an expected and invited guest.

•  Walk guests to the restroom as opposed to pointing across the room.

•  Have large umbrellas available for those days when rain starts prior to the guests’ departure and walk them to their car! (I do this a lot and it blows people away, especially the elderly and the well-dressed women.)

Posted in casual-dining, ideas, service, Service standards, Uncategorized | Tagged , , , | Leave a comment

Bleak report: Time to reassess your restaurant

A recent bleak report makes us think it’s time for you reassess your restaurant – particularly the FOH if you’re operating a casual, full-service restaurant.

The report comes from the NPD Group and blames lost business on the widening gap in personal income. NPD cites as evidence the fact that fewer Americans than ever identify themselves as middle-class and the falling number of restaurant visits among low-income people. NPD points out QSR traffic was flat through June 2014 compared to same period last year. On the other hand, visits to fine dining restaurants (average check $40) were up three percent. Total restaurant industry traffic was flat for the period, the report notes.

“Like other retail sectors, the restaurant industry is feeling the effects of this cultural and economic phenomenon,” the researchers say. Combined with continued media coverage of a slow recovery and the fact that most Americans choose some form of limited-service when eating out, NPD may be on to something.

Add to that, less than 10 percent of restaurant visits are to fine-dining restaurants. “With low-income visit cutbacks and not enough fine dining traffic to make-up for traffic declines,” NPD ominously warns, “restaurant operators will need to appeal to the middle-class to fill the gap.” But that portion of the pie is apparently shrinking, too.

Garden Fresh client

So we’ve come up with ten ideas to help your restaurant maintain guest counts. We believe they add value (at little cost to your business) to the dining experience:

• Make dining a little more classy by not auctioning food at the table. Number the seats at the table so the waitstaff or runners can silently drop plates in front of diners who ordered them.

• Allow customers to travel from bar to table without having to first settle a bar bill.

• Greet every customer. Waitstaff should be on nodding acquaintance with regulars, gratefully acknowledging their presence with a smile or brief welcome even when the diner isn’t sitting in their station.

• Make every effort to honor all requests regarding food allergies, etc.

• Keep tables bussed and neat. Let guests to sit where they want.

• Edit your menu, making sure ingredients are mentioned but without off-putting language (example: “Our USDA Sirloin is cooked to perfection”).

• Show generosity. If there’s a mistake, deliver a new dish without asking if the customer wants it replaced.

• Instruct servers to state the price of specials. (And make sure the dish is special.)

• Surprise regulars with a free beverage or a dish you’re testing. Ask for their opinion.

• Remind servers not to clear plates before everyone in the party is done eating (unless a guests wants the plate removed).

• Say goodbye and thank guests as they exit the restaurant. If your host isn’t busy, make sure a compliment accompanies the goodbye.

Posted in casual-dining, Employees, fast food, Fast-casual, Fine-dining, service, Service standards, Uncategorized | Tagged , , , | Leave a comment

Manhattan’s Seasonal Treat

I found myself wandering around Manhattan over Labor Day weekend, and figured I might as well visit Magnolia Bakery’s original outpost in the West Village. It’s a small, tidy corner store on Bleecker St. and West 11th, just off Eighth Ave. It was Saturday morning and customers were trickling in to treat themselves to one of many fine pastries.

A small, tidy store filled with amazing pastries and coffee

A small, tidy store filled with amazing pastries and coffee. Don’t miss  Banana Pudding. or Peach Pie.

RTS Partner Chef Andrew Hunter has been encouraging the rest of us to drop by the store, which opened in 1996, or any of the four other outposts in Manhattan, for that matter, whenever we’re there. He recommends Banana Pudding. But Magnolia’s entire menu is inviting.

I chatted with Josh, the store manager for awhile. He told me Magnolia’s owners are expanding the concept via franchising. Which seemed a smart idea given that operation is a high-quality bake shop. Given the right equipments, recipes should be easy enough to duplicate by a trained baker.

I can’t treat myself to pudding in the morning (sorry Andrew). So I texted him, asking what else he suggests. Any of the seasonal fruit pies, he texted back. Peach it was!

Breakfast: Call it pie or a crumble, it's an astonishingly good example of putting fresh, seasonal fruit to good use.

Peachy-keen: Call it pie or a crumble, it’s an astonishingly good example of putting fresh, seasonal fruit to good use.

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