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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Restaurant Quiz: Current events

Say you suddenly find yourself having to make small-talk to a potential client and his team gathered in a conference room ahead of your presentation. Because you’re an expert, they also expect you to chat about current events and trends in general. Can you? Take this short quiz to find out. As usual, a right answer takes you to the source; a wrong one  . . .  well, you’ll know it when you see it.

 1.  Burger King this week announced its intention to merge with which large chain?

a.  Dunkin Donuts

b.  Firehouse Subs

c.  Tim Horton’s

d.  Red Lobster


2. Which chain isn’t among those currently rumored to be preparing for an IPO?

a.  Shake Shack

b.  Cafe Rio

c. Habit Burger

d. Piada 


3. True or False: Seeing an “A” in the window of a restaurant makes 76 percent of New Yorkers feel more confident about the safety of eating at that restaurant. 



Which fast-casual restaurant lays claim to this soup?

4. The menu of which fast-casual chain features the following signature items: Chicken and Orzo Soup, Hummus, Greek Salad, Chicken Kabobs and Chicken and Slaw Pita.

a. Zoe’s Kitchen

b. Baja Fresh

c. Piada

d. Pei Wei


5. Le Diplomate in Washington, D.C., currently offers a dish that has such a high food cost its manger claims, “We’re almost paying people to eat the dish.” Which one is it?

a. Ravioli with White Truffles

b. Lobster Bisque

c.  Porterhouse steak

d. Dover Sole 


Posted in chains, Customers, expansion, Fast-casual, Fine-dining, Food, M&A, Menu, quick-service, restaurants, signature dish, Trends | Tagged , , , | Leave a comment

Is tipping still necessary?

Last spring, an article in the Los Angeles Times about tipping in restaurants caught our attention. It turns out it was only the first of several we have since read on the (now) touchy subject of FOH gratuities. Nonetheless, we bet the vast majority of full-service restaurants in this country are not aware of these rumblings.  The habit of leaving money (typically 20 percent of the bill) for table service is so ingrained that to suggest otherwise sounds completely off-the-wall.

Do tips provide an incentive for FOH staff to work harder? Or are tips merely the expected way for servers to reach minimum wage levels in tip-credit states?

Yet a no-tip policy is part of the business model at Brand 158 in Los Angeles, the paper reported.

Owner and first-time restaurateur Gabriel Frem wanted to discourage competition between his employees and create a steady working environment, where everyone could act as more of a team.

“We think that if we stabilize the lives of our employees, they can then focus on the customer,” said Frem. “If people came to work and didn’t know what they were going to make for the week, that tension would eventually translate to the customer.”

The article unfortunately doesn’t tell us how much the owner is paying his FOH staff. Nor does it reveal how many servers (if any) quit when he announced the policy. Still, it’s an interesting way to operate largely because the wage subsidy that customers provided is now gone. Do you raise menu prices to make up the difference? (Frem claims he did not.) And then last Friday we spotted another tipping story about a first-time Canadian operator, which begins:

Less than three months into life as one of Canada’s first no-tipping restaurants, the Smoke ’n Water restaurant in Parksville has returned to the mainstream — tipping is back on the menu.

Owner David Jones said the restaurant has decided to scrap its no-tipping policy in favour of a traditional restaurant model as a result of customer demand.

Apparently, customers insisted on leaving tips and Jones felt he had to oblige them. Jones, meanwhile had raised prices to cover his higher labor costs. Now back to the status quo, servers will make less per hour.

Jones estimates servers will now be making about $20 an hour in tips plus the standard front-of-house minimum hourly wage, while cooks will remain fairly close to their existing wages and there will be tip-sharing between the two sides of the restaurant.

Jones still intends to offset medical and dental costs for his 36 staff.

“He admitted he was sad to walk away from what he believed was a first step in changing how food service is done in Canada,” reported Business Vancouver. 

But these two examples — at least insofar as they’re explained –are somewhat uncomplicated. Neither story addresses issues like tip-sharing, tip credit, minimum wage differences within a state, or service charges in lieu of tips. Or whether receiving tips makes your staff work harder than the otherwise would of everyone received the same wage.

Read this argument, which appeared a year ago in Slate, for abolishing tips to grasp how complicated it is to decided whether to keep the practice alive in your restaurant or shuck it all together.

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Firehouse Subs: Making a difference

At 11:30 a.m. on a recent Sunday morning, in a Firehouse Subs’ unit a few miles east of Indianapolis, business is already brisk. Customers fill about a third of the seats and the line at the cash register is growing longer.

There’s no question the sandwiches here are tasty and the service friendly and fast. It’s yet another indication the Jackson, Fla.-based chain deserved to be ranked first in customer loyalty among sandwich chains and “was the favorite in friendly service and accommodating children, and took second place in quality food and atmosphere,” according to a recent study by Market Force.

But we think Firehouse Subs’ unusual decor also contributes to performance and has helped the 770-unit chain expand quickly through franchising. Here’s what we spotted on a recent visit that demonstrates Firehouse isn’t a run-of-the-mill sandwich joint.

The concept was co-founded by two brothers who had been fireman. Here's the evidence.

The concept was co-founded by two brothers who had been firemen. Here’s the evidence, which hangs near the entrance to the restaurant. Note the brick wall.

Hot sauces are nothing new, yet discovering so many bottles in a QSR still startles.

Hot sauces are nothing new in restaurants, yet discovering so many bottles in a QSR still startles — and sets the concept apart from rivals.

Should never be an afterthought. In fact, they should when possible (like these) emphasize the brand message.

Tables should never be an afterthought. In fact, they should when possible (like these) emphasize the brand message. 

Posted in bricks-and-mortar restaurants, chains, design, Employees, fast food, franchising, franchisor, Growth company, quick-service restaurants | Tagged , , , , | Leave a comment

The “joint employer” hot mess

joint, noun \ˈjint\: a point where two bones meet in the body: a place where two things or parts are joined : a particular place

This week the National Labor Relations Board — the industry’s bete noir — ruled that McDonald’s USA can be held responsible for labors abuses committed by franchisees. The NLRB dubbed the chain a “joint employer respondent.” It’s obviously bad news for McDonald’s; it’s also unusual.

Are franchisors like McDonald's "joined" to franchisees?  government appears to think so.

Are franchisors like McDonald’s responsible for labor abuses on the part of their franchisees? The government appears to think so, this week naming the burger chain a “joint employer” in 43 complaints.

Officials at the giant burger chain reacted quickly, calling the decision a “radical departure” and vowing to fight the labor board. They weren’t the only ones in a lather. The International Franchise Association described the ruling as a “seismic change” and accused the agency of bowing to union pressure, namely, from the SEIU. What’s more, IFA declared:

This legal opinion would upend years of federal and state legal precedent and threaten the sanctity of hundreds of thousands of contracts between franchisees and franchisors, a bedrock principle of the rule of law.

Here’s the the thing, though. Those contracts are restrictive. Anyone reading them might easily get the impression that franchisees are bound closely to franchisors — and not merely financially but behaviorally, too. Franchisors mandate menus, uniforms, advertising, FF&E, operating procedures, and signage, which they describe in detail in Franchise Agreements and Franchise Disclosure Documents. There’s not much room for negotiation.

That must be the way the NLRB is seeing it. The agency therefore concludes McDonald’s is joined at some crucial level to its franchisees (“owner-operators,” in McDonald’s-speak), whom they effectively monitor and control via contracts. The final sentence in the press release notes:

In the 43 cases where complaint has been authorized, McDonald’s franchisees and/or McDonald’s, USA, LLC will be named as a respondent if parties are unable to reach settlement.

It should interesting and instructive to watch how this potentially hot mess works out.


Posted in burger chains, Employees, fast food, Government regulations, labor, lawsuit, minimum wage, unions | Tagged , , , , , , | Leave a comment

Helpful? Or another way to skin the franchise cat?

Scrolling through an Franchise Disclosure Document for a fast-casual style chain recently, I came upon an usual paragraph. Most FDDs, after all, are pure boilerplate, with each section either rife with restrictions or rampant with requirements. But this paragraph suggested, if not generosity, at least a helping hand.

I wondered if the franchisor was actually looking out for franchisees. So I showed the aforementioned portion of the document to RTS’s  franchise experts, Andy Simpson and Frank Steed. Neither were impressed with the offer, agreeing it was probably not helpful.

But, hey, we’ll let you make up your own mind. Let us know what you think:

“We have engaged a consultant as an approved supplier of lease negotiation and consulting services for our new and existing franchisees. If you desire, in your sole discretion, to engage the consultant to perform negotiating and/or consulting services relating to a new lease or a lease renewal, you will be required to sign an agreement with the consultant and pay the consultant a flat fee of no more than $2,500. We may derive revenue from your landlord in the form of a “tenant placement fee” as a result of your retaining the consultant. The tenant placement fee we may receive for each transaction will be no lower than 2.5% of the total cost of the rent during the applicable lease term. ”


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Quality Rules (but you knew that)

If you’re an executive at a major fast-food chain, we bet you’ve already flipped through the August Consumer Reports. How could you not? The title of the magazine’s cover story — “America’s Best & Worst Fast-Food” — is a grabber. So is the number of people surveyed — 96,208. You don’t come across that kind of free research everyday.

Taste Champ: CR's survey rated the The Habit Burger as the tastiest among QSR burger chains.

Taste Champ: CR’s survey ranked the The Habit Burger the tastiest among QSR burger chains and second (behind In-N-Out Burger) in overall burger chain ratings. Oh, did we mention it’s a regional chain?

We’ll spare you the details. You can get an overview here and by watching the video below. What we want to point out is that today quality rules the roost. And the test of quality now is chiefly how the food tastes (and to a lesser extent, its provenance).

In fact, your restaurants proximity to growling stomachs is no longer a sure traffic-building bet. Real estate still plays a major role in the business of running restaurants, of course; it’s that now no matter where you are you could be toast.

The article notes, for example, that while 64 percent of survey respondents say location is a “major factor” when choosing a restaurant, the figure is 11 points lower than the 75 percent posted last year. Food quality, moreover, is critical to 50 percent of the survey participants. That’s up from 40 percent in CR‘s previous fast-food survey.

And the country’s most “convenient” chains – McDonald’s, Taco Bell and KFC — all ranked last in their respective categories.

This survey’s results won’t be news to the industry. The large QSR chains have been surveying their customers and those of competitors for decades, monitoring eating trends among many things. But because tastes don’t change over night and because they can outshout tiny rivals, fast-food giants needn’t be nimble. As a result, current fads and trends don’t penetrate their boardrooms or test-kitchens quickly. Apparently to their detriment.


Posted in burger chains, chicken, fast food, quick-service restaurants, restaurants, Trends | Tagged , , , , , | Leave a comment

$15 an hour? Relax, don’t worry

Does $31,200 a year sound like a lot of money — to anyone?

OK, maybe to a teenager living at home. But let’s say the teen has to work full-time to earn it. The sum becomes less enticing, no doubt.

Yet that’s how much a person earns working full-time for $15 an hour — before taxes and benefits are subtracted, of course. And once you’re making $15 an hour any government subsidies you were receiving  – say, food stamps — may disappear, increasing your cost of living.

Thus, earning $31,200 a year isn’t likely to be anyone’s idea of entering a comfortable, middle-class existence. Or really anything close to it.

How much will dessert cost once you're paying $15 an hour to staff?

How much will dessert cost once you’re paying $15 an hour to staff?

So why do restaurant operators often appear so opposed to raising the minimum wage to $15 an hour?

“We are a very different type of industry – hospitality is the backbone of the city and a very labor-intensive endeavor,” [Gwyneth] Borden said. “For businesses with tight margins and low prices, it’s going to be hard.”

Borden, executive director of the Golden Gate Restaurant Association, also told the San Francisco Chronicle that restaurants wanted workers who receive tips to be exempted from the minimum wage hike. Employer health-care costs should also be considered as part of any hourly wage, she added.

She was reacting to a compromise announced yesterday at City Hall that, the Chronicle reported, “would increase the city’s current hourly base pay, $10.74, to $12.25 next May 1, then to $13 in July 2016 and $1 each subsequent year until it reaches $15 in 2018. That would bring the annual pay for a full-time minimum-wage worker to $31,000.”

The city already has the highest minimum wage at $10.74-an-hour in the country.  The new wage plan will be put to voters in the next election.

San Francisco, by the way, is among several wealthy U.S. cities that are proposing raising the minimum wage. Mayors in both Chicago and New York City have said they’re in favor of an increase in hourly earnings.

Seattle’s city council last week unanimously voted to boost the minimum wage to $15 an hour by January 1, 2017. But that time frame only includes businesses that employ 500-plus workers, effectively excluding nearly every business in the city.

Restaurants and other small business employing fewer than 500 have until at least January 1, 2021, though hourly rates modestly increase every year.

With long time frames like these restaurant owners should not react negatively to pro-labor groups pushing higher hourly wages. Make one’s objections known, to be sure, but understand in the long run you’ll likely have years before having to pony up $31,200 annually to a burger flipper. Showing compassion will likely win you more points. Even if you do have to raise prices.


Posted in Employees, employment, hourly workers, minimum wage, restaurants, unemployment, wages | Tagged , , , , | Leave a comment

Quiz: Celebrity chefs and a wage hike

Welcome to Quiz-Time! Once again, we’re testing the degree to which you’ve been paying attention to events in the restaurant industry. The biggest this week, of course, was Seattle’s minimum wage hike. But there were others. So let’s get right to it. As always, a right answer takes you to the story itself. This week a wrong one earns an earful of Babs.

1. Which celebrity chef is devoting considerable effort to foodservice in Haiti?

a. Mario Batali

b. Jose Andres

c. Dan Barber

d. Rachel Ray



2. Seattle’s minimum-wage hike, to $15 an hour, is a three-part affair? What’s will be the minimum hourly rate in phase one, beginning on April 1, 2015, for national restaurant chains?

a. $10 an hour

b. $10.50 an hour

c. $11 an hour

d. $11.50 an hour


3. Tom Sacco, the franchisor of Ponderosa and Bonanza, recently rolled out a fast-casual eatery in Lindale, Texas. What category is it in?

a. pizza

b. steakhouse

c. Italian

d. sandwich


4. Speaking of celebrity chefs an early one is making — or trying to — another name for himself via Mexico. Who is it?

a. Dean Fearing

b. Norman Van Aken

c. Jeremiah Tower

d. Jacques Pepin



Posted in burger chains, celebrity chefs, Fast-casual, Food, franchisor, minimum wage, quick-service, restaurants, wages | Tagged , , , , | Leave a comment

Wrapz Redux (in Cleveland)

Wraps are history, right? What Texas Monthly dubbed “America’s hottest craze” in a 1997 article was dropped into the culinary dustbin by the mid-aughts after customers realized they were actually eating a dolled-up burrito. And sometimes a not very good one. In the end the model just didn’t resonate, though brands with national ambitions opened impressive looking stores, as the story notes:

“They’re cute. At many, the colors are jazzy, the lines have a nineties retro look, with sharp angles and undulating curves, and the decor is free-form and whimsical: Customers at Freebirds in College Station create aluminum-foil figurines and add them to a special display shelf; at Habanero’s Grill in San Antonio, a cartoon cow sails over the moon in a floor-to-ceiling mural. Beyond setting a chipper mood, these decorative touches elevate the stereotypical fast-food environment to what the restaurant industry calls “fast casual,” a setting where people will pay $4.50 to $6 for a wrap and another $2.50 for a smoothie and walk out happy.”

Did you catch that “fast-casual” reference? So early! Anyway, the word “wraps” — or in the photo below, “wrapz,” live on at least in name. I spotted this eatery in University Circle, near the Case Western Reserve University campus. It was closed at the time. Too bad, because its Yelp reviewers give the tiny restaurant generally high marks. “This place is a solid. Much better then the nearby Chipotle but with a different flavor. It’s fast and the quality of the food is very good,” declares Ryan S.

Wraps reappear in an outdoor mall in Cleveland .

Wraps reappear at an outdoor mall in Cleveland, near a university.

I’ve yet to sample anything, but so far what I like most about this 1,400 square-foot one-off is the addition of “Pita Bar” to the name, suggesting the food here is largely Middle Eastern — and not merely post-trendy combinations of lemon-grass aioli, ancho chili-rice and miso-glazed salmon. That’s smart and catchy.

By the way, Texas Monthly guessed wrong, predicting the wraps craze of the late ’90s would last. “Unlike inane fads such as cigars and martinis, wraps satisfy a need,” the article asserts. Today they do so only when that need is filled (pun intended) with the familiar, not the odd. (As for martinis, yeah, the magazine missed that one, too.)


Posted in Fast-casual, Food, New concept, restaurants, small business | Tagged , , , | Leave a comment