Julia Child and Caesar Cardini’s Salad

Ninety years ago, a 15-year-old Julia Child visits Caesar Cardini’s restaurant in Tijuana, Mexico, with her mom and dad, meets the famous restaurateur and eats his namesake salad.

She recalled the experience in her memoir, From Julia’s Kitchen: “One of my early remembrances of restaurant life was going to Tijuana in 1925 or 1926 with my parents, who were wildly excited that they should finally lunch at Caesar’s restaurant. Tijuana, just south of the Mexican border from San Diego, was flourishing then, in the Prohibition era. Word spread about Tijuana and the good life, and about Caesar Cardini’s restaurant, and about Caesar’s salad.”

Ninety years ago Julia Child dropped into Caesar's

Julia Child’s kitchen is preserved in the Smithsonian’s National Museum of American History in Washington, D.C. It’s the part of the “Resetting the American Table” display.

Little did the teenager or anyone else know the enormous impact she would later have on American chefs.

 

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Is Customizable Good for Business?

As restaurant operators are discovering, customizable food is now preferable to cravable food in the fast-casual segment. This won’t be news to anyone in the industry. Many fast-casual restaurant give customers the chance to build their own dishes. So doing plays to the idea of individuality and self-expression, which are widely assumed to be important to millennial diners.

But what has rarely been remarked upon is whether customers can create a dish that’s actually palatable from the plethora of (often exotic-sounding) choices they face. This is to say nothing about whether customers believe they’re getting their money’s worth after biting into their creation.

A pepperoni pizza or a falafel sandwich with tomato and lettuce may be a safe bet, the customer thinks, but he can get that combo anywhere; here, he wants something different but can’t figure out which ingredients provide a satisfying combo. Otherwise, he may feel like he’s wasted $10. And not come back.

Choice: Customers build their own falafel sandwiches at Amsterdam Falafel Shop, a six-unit chain in Washington, D.C.

Choice: Customers build their own falafel sandwiches at Amsterdam Falafel Shop, a six-unit chain in Washington, D.C.

Consider Amsterdam Falafel Shop, a six-unit franchise concept based in Washington, D.C. The image hove shows a portion of the food bar, which includes hummus and baba gahnoush. Customers first choose their pita: Wheat or White. Once it’s filled with freshly fried falafel, they choose toppings.

But how one might ask: Does chickpea salad go with hummus, which is a ground chickpea paste? Will sliced beets combine well with tomatoes and pickles? Or can customers presume everything goes with everything else? Why else would all this stuff be out there?

Or witness the choices at 10-unit &Pizza, also based in Washington, D.C., which offers three types of dough (traditional, Ancient Grains or gluten-free), nine sauces and three cheeses. And then there’s the nine vegetables choices, ten proteins and 15 “finishes” to go. Which of these many tempting items make a pizza that sings the right notes? Granted, customers who don’t want to experiment can opt out and order one of eight signature pies.

At &Pizza a worker builds a custom pizza according to a customer's instructions. This one feature sun-dreid tomato spread, jalapeños and

At &Pizza in Bethesda, Md., a worker builds a custom pizza according to a customer’s instructions. This one features sun-dried tomato spread, jalapeños and feta

Don’t get us wrong, like millions of diners we love the idea of choice. After all, it’s almost a restaurant’s patriotic duty to let the customer have his or her way when it comes to food. And what’s on offer is usually fresh, sometimes local and largely healthful. What’s not to like?

But we have to ask, having sampled both concepts (as well as ShopHouse Southeast Asian Kitchen), whether certain combinations will taste good — and whether counter workers are capable of advising customers not to combine certain ingredients with others. Or is it simply a matter of letting the chips (or chickpeas) fall where they may? And maybe losing business.

 

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SHAK: CMG’s Second Coming?

We read Andy Barish’s first piece of SHAK research with great interest. The veteran  analyst at Jefferies has a sharp mind and is one of our favorite industry observers. The note was entitled “Enlightened Brand but Valuation Keeps Us Tethered” (no doubt a reference to the brand’s vaunted “enlightened hospitality”) and advised HOLD.

Barish, noting that SHAK was already trading at “a significant premium to the other open-ended fast-casual growth companies that are delivering strong SSS and exceeding expectations,” put a price target of $40 on the shares. 

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

Fine-Casual? Shake Shack’s “beeper” system alerts customers their order is ready.

Yet what caught out attention was the analyst’s enthusiasm for the concept itself, dubbing Shake Shack fine-casual, a hybrid term the New York City-based chain uses to describe itself. As Barish explained, founder Danny Meyer is “pioneering ‘fine casual’ by marrying fast casual with fine dining, and [is] poised to capture multiple category tailwinds.”

The tailwinds would eventually result in some 450 units in the U.S., he predicted.

Wait! Who’d mistake a cheeseburger, fries and a shake — the iconic fast-food meal — for fine-dining? And using a buzzer the size of an iPhone to alert customers to their order strikes us as more akin to a TGI Fridays than, say, a Le Bernadin. 

Shake Shack shares more than doubled on their first day of trading. Can another chain match that performance?

Is Shake Shack a lifestyle brand, as some analysts have suggested? If so, it will be a first for a burger joint, In-N-Out Burger notwithstanding.

Barish, who calls Shake Shack a lifestyle brand, appears to believe Meyer’s fine-dining background will produce pre-Recession results: “With a rich culinary and operating heritage informed by Danny Meyer’s Union Square Hospitality Group, mgmt. has put the systems in place to drive 20%+ unit growth, low single digit same-store sales, +30-70bps of operating leverage and ultimately, 20%+ EBITDA growth.”

Maybe he’s right and lightening will strike the fast-casual category twice. After all, Chipotle (CMG) founder Steve Ells trained at the CIA and worked for two years as a fine-dining chef before opening his first unit, in Denver. Yet we remain skeptical that burger lovers will embrace the concept and its lifestyle trappings (read: high price) to the point of using it almost exclusively for their ground-meat sandwiches. There’s simply too much competition.

 

 

Posted in branding, chains, expansion, Fast-casual, initial public offering, quick-service restaurants, Uncategorized | Tagged , , , | Leave a comment

Top 10 Emerging Brands

Chipotle (CMG), Habit Burger (HABT) and Shack Shack (SHAK) made spectacular debuts in the public markets. To be sure, Habit Burger and Shake Shack have yet to prove they’re viable public entities but momentum seems to be with them given what Americans currently like about burger restaurants. Chipotle’s amazing seven-year run as a public company is redoubtable.

Shake Shack shares more than doubled on their first day of trading. Can another chain match that performance?

Shake Shack shares more than doubled on their first day of trading. Will another restaurant chain soon emerge to match that performance?

Yet investors remain hungry for the next smash hit. Which brands today are capable of becoming another Chipotle? Mike Lukianoff, an RTS Partner and Principal of Czar Metrics, a data analysis company, has attempted to figure that out. He told CNBC, which interviewed him about the up-and-comers, “It’s been fascinating to me—how much attention the restaurant space is getting from the investment community.” 

The brands likely to grab investor attention in 2015 are listed below. Click here for Mike’s full-blown analysis):

TOP 10 EMERGING BRANDS 2015

1    Mendocino Farms

2    Cooper’s Hawk

3    Hopdoddy Burger Bar

4    Bruxie

5    Lazy Dog

6    Pizza Rev

7    Project Pie

8    Marlow’s Tavern

9    Twisted Root

10   Ocean Prime

 

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The Chef as Control Freak Fades

The stereotype of a control-freak chef still prevails — at least in the minds of some chefs, like Jonathan Sawyer. The owner of Cleveland’s Green House Tavern, Noodlecat and Trentina told a group of MBA students today that “too many Sawyers are a bad thing.”

As a result, he hires people confident in their skills who also demonstrate a capacity to tell him when he’s wrong. “They share the same vision but are complementary,” he offered.

Chef Jonathon Sawyer of the Greenhouse Tavern (center) with admirers ahead of the panel discussion at the CWRU Weatherhead School of Management.

Cleveland chef Jonathon Sawyer (center) talking to students ahead of a panel discussion on entrepreneurship at CWRU’s Weatherhead School of Management.

Sawyer was joined by entrepreneurial chefs Steve Schimoler of Crop Bistro and Doug Katz of Fire Food & Drink for a panel discussion at the Weatherhead School of Management at Case Western Reserve University, in Cleveland. Shimoler also suggested he knew when to give up control. “One of the challenges is knowing when to pass the baton,” he acknowledged.

It’s crucial for an operator to share his or her vision and responsibilities with key employees, who are motivated to do the heavy lifting. That leaves the entrepreneur to devise say, new streams of revenue — something all three had recently accomplished.

Katz, for instance, opened a diner last year (only to see a portion of it destroyed by an arson fire). He’s also about to launch a new food product (in addition to the pickles he already sells) and he continues his successful catering business. “We go to people’s homes and prepare the same kind of food we do in the restaurant,” he explained, “only we can really personalize that relationship in ways we can’t at the restaurant.”

Last year, Shimoler opened a casual version of Crop — dubbed Crop Kitchen — near the university. He’s also been developing unique flavors for local ice cream manufacturer. “It’s probably not going to make me a lots of money but there is the halo effect of marketing and PR,” he said.

In addition to his three restaurants (one of which features foraged foods), Sawyer has a line of specialty vinegars he currently makes in his restaurant. He said any additional revenues are invested in hiring more skilled employees.  He added that his goal upon returning to Cleveland from New York City was to make the city’s culinary scene the equivalent of Portland, Ore., Nashville or Charleston, S.C. “It amazing to think what has happened here in the last 15 years,” he declared.

 

 

 

 

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The end of dessert

Dessert in Washington, D.C., restaurants has been the subject of two articles and a blog post this month. And not in a good way. Fewer moderately priced restaurants, apparently, are offering them. A local operator explains why in one:

“A cocktail brings in twice as much money as a dessert, and it doesn’t hold up a table at the end of the meal. You have to turn the tables,” Mark Bucher, who owns Washington D.C. restaurant Medium Rare.

The Washingtonian reports that “in the post-crash economy, pastry chefs are no longer seen as essential employees but as pricey appendages” and quotes an owner who says he can’t afford the space a pastry chef needs to ingredients.

Save the table turn: Desserts are fading in moderately priced restaurants, say operators.

Save the table turn: Desserts are fading in moderately priced restaurants, two recent articles claim.

The blogger, an economist, puts a finer point on things: “And the higher urban rents rise, the more tightly space is squeezed and restaurants need open tables, and thus the more restaurant desserts will decline and indeed should decline.”  

The articles acknowledge that desserts aren’t fading in fancy restaurants, where customers generally can afford the $20 charged. But in restaurants with moderate check averages a party lingering over a shared dessert can cost the restaurant money by preventing a table turn.

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Some kinda lovin’

Baby, baby, baby, baby, I beg you please, please, please
I need your love, I need your love, I need your love, I need your love, I need your love
Oh bring it on back, oh bring it on back, bring it on back, oh bring it on back

“You’ve Lost that Lovin’ Feeling”

McDonald’s is struggling. Anyone following the fast-food fortunes of the giant burger chain knows that. Former CEO Don Thompson (McDonald’s first black chief executive and one of only a handful of African-American CEOS among Fortune 500 companies) was sacked last week after only two years on the job, replaced by an Englishman named Richard Easterbrook.

Thompson wasn’t the only one let go. Sixty-three people at Oakbrook, Ill., headquarters got the axe, as well.  No surprise there. Net income tumbled 15 percent in 2014. Most cost-conscious boards wouldn’t be lovin’ that.

House of Love. This month McDonald's is giving away food to random customers who agree to a public display of affection.

House of Lovin’. This month McDonald’s is giving away food to random customers who agree to a public display of affection.

It wasn’t the only news coming from McDonald’s Corp. During the Super Bowl yesterday, the company unveiled an unusual promotion: Paying for a meal with an act of kindness  — like calling a relative and telling them you love them or announcing the best thing about the person standing next to you (presuming you know them). Nation’s Restaurant News reported the details last Friday:

From Feb. 2 to Feb. 14, Valentine’s Day, any customer in any participating restaurant might be randomly selected for the promotion. Each restaurant’s guest service manager, or “Lovin’ Lead,” will give the chosen customer the option of doing something like giving a fist bump to a crew member, calling someone to express their love or offering a compliment, which the company offers as examples.

NRN also quoted a marketing official as saying: “We’re on a journey to change the relationship and conversation, and Pay With Lovin’ is a direct way for us to engage with our customers.”

Now, we’ve nothing against public displays of kindness. In fact, we are currently admiring the enormous kindness of Rally’s employee Evelyn Thomas, who on her way to work this weekend pulled over during a snowstorm to aid a car crash victim. That person (and sole occupant of the car), it turned out, was Toledo mayor Mike Collins, who’d suffered cardiac arrest while behind the wheel. Thomas called 911 and then applied CPR.

But we wonder if inviting strangers (OK, “guests”) to show even a mild form of “lovin’”  isn’t somewhat presumptuous — particularly when McDonald’s is danglin’ free food (up to about $6, we’re told). Awkwardness on both sides of the counter awaits:

McDonald’s employee: “Would you like to pay with lovin’?”

Customer: “Huh”?

Employee: “Your Big Mac and Coke are free if you fist-bump me.”

Customer: “If I what you?”

Employee: “You know, make a fist and touch my fist.”

Customer: “Look, how much do I owe you, dude?”

What’s more, McDonald’s has been long-dinged for slow service, brought about by its large menu, which in turn was brought about by trying to please critics who decried its fat-salt-and-sugar-only menu. Now imagine a scenario where the person ahead of you has to call her mom (who doesn’t answer right away)– and then doesn’t have pay for her food.

 

 

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Where global wages are rising

Restaurants chains with a global presence typically open units abroad in countries where their brands are accepted and they trust local franchisees. But smart companies also look at wages. ECA International, which asked 340 multinational companies report on wage trends in 66 countries, had this to say about Europe in 2015:

“Average salary increases for the region are at a solid 3.3% this year. “While pay rises in the majority of countries in the region sit around this average mark, two countries stand out: Russia and Ukraine. The sanctions imposed on Russia this year and the instability in Ukraine following the revolution in February which ousted President Viktor Yanukovich have put pressure on inflation in both countries. As a result salaries in these countries increased by 7% and 8% respectively in 2014 – higher than anywhere else in the region.

ECA expects European salaries  will grow on average 3.5%; yet once inflation is factored in they will rise by 1.2% in real terms.

Source: ECA International

Read more about wage increases and decreases around the world here.

 

 

Posted in bricks-and-mortar restaurants, franchising, International franchising, restaurants, Uncategorized, wages | Tagged , , , | Leave a comment

Happiness Factor

Most applicants wouldn’t insist that the restaurant job they’re applying for be fun or that they be happy performing it. They might hope it’s fun at some level but probably wouldn’t say so during an interview. Yet if they were applying for work at the chains below, it might not be a bad idea to bring up the idea of happiness. Indeed we discovered each company directly mentions the word “fun” or “happy” on their websites in relation to working there. Not only that, each company uses video to make the claim of having a good time seem real.  Here are excerpts from the sites and links to the videos.

Chipotle: Countless people who came simply looking for a job now find themselves leading dozens, or even thousands of people while enjoying a career that is totally fulfilling, fun, and financially rewarding beyond anything they thought possible. It’s pretty simple: If you work hard, you’ll get noticed and before you know it, you’ll be on a roll.

Video

Lettuce Entertain You: “We recognize that growth and development is a process that never ends, that relationships need constant nurturing, and that improvement is always possible. A sense of humor is very much part of what we do.  If we can’t have fun and make money, there’s something missing.” - Rich Melman, Founder and Chairman

Video

Lemonade: At Lemonade, we work hard and we have a great time doing it. One of the most powerful statements about life at Lemonade is that people here are truly considered family. Many of the new employees join our team because they were told about the culture by a current employee. The way we see it, life is short, so you might as well work happy.

Video

 

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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.”

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