Food for Thought - July 15, 2003

By The Editors -- Restaurants & Institutions, 7/15/2003

DRIVING OFF WITH CHEVYS

Boosting its position as a leader in the Mexican segment, Dallas-based Consolidated Restaurant Operations Inc. (CRO) announced a deal with Chevys Inc. to acquire the Chevys Fresh Mex and Fuzio Universal Pasta concepts for an undisclosed price. Chevys’ headquarters will remain in Emeryville, Calif., and continue to be led by President and CEO Ron Maccarone. No menu or staffing changes are expected. Also likely to be included in the final agreement is the 29-unit Rio Bravo Cantina chain, says Bill Watson, CRO vice president of marketing, although at press time that part of the transaction had not been finalized.

“We certainly see a number of opportunities. The geographies of the Chevys portfolio and the CRO portfolio are almost entirely complementary,” Watson says, noting the potential for operating synergies and purchasing leverage. “It will make us a far more formidable player in the Mexican segment than the two companies operating separately.”

CRO’s lineup consists of eight concepts— including El Chico Café, Cantina Laredo and The Spaghetti Warehouse—with a total of 137 full-service and 37 franchise locations in 18 states and Canada. CRO plans to continue adding new stores, Watson says.

Separately, The Galardi Group, the Newport Beach, Calif.-based parent of the Wienerschnitzel chain, announced it has acquired Utica, Mich.-based Tastee-Freez. Terms were not disclosed. Tastee-Freez frozen treats have been available at 56 of the more than 350 Wienerschnitzel units since 1999 under a co-branding agreement.

TASTES FOR SOMETHING NEW

The addition of McGriddles (r.) is McDonald’s first major new-product introduction in some time (Premium Salads are really upgrades of the McSalad Shaker line). Will the griddle-cake breakfast sandwiches catch on? Menu innovation is a hit-or-miss proposition, as the Oak Brook, Ill.-based chain has learned since it unveiled its New Tastes Menu—a portfolio of food items local markets could feature as limited-time offerings—in January 2001. Some made it, some failed and some never got a menu tryout.

KRISPY KREME DOUGHNUTS EXPANDS

Krispy Kreme has opened its first store outside North America. The unit in a suburb of Sydney, Australia, is the first of 30 the chain plans over five years in Australia and New Zealand.

MENU FOCUS

Breakfast at the top chains focuses on dishes that convey quality, seasonality and robust flavors—the same trends that shape other dayparts.

BOB EVANS
Chicken Cordon Bleu Skillet: open-faced omelet with grilled chicken, smoked ham, home fries, Jack cheese, hollandaise sauce and diced green onions

CARROWS
Belgian waffle with pecan pieces baked inside, served with maple butter

THE CHEESCAKE FACTORY
Omelet filled with fontina cheese and topped with asparagus, portobello mushrooms, artichokes and tomatoes

CORNER BAKERY CAFE
Breakfast panini: grilled country bread filled with scrambled eggs, smoked bacon and Cheddar cheese

CRACKER BARREL OLD COUNTRY STORE
Seasonal wild Maine blueberry pancakes with blueberry syrup

DENNY’S
Fabulous French Toast (above) made with egg bread, sprinkled with confectioners’ sugar and served with bacon and sausage

MIMI’S CAFE
5 Alarm Santa Fe Omelet with diced jalapeños, cilantro, tomatoes, onions, tortilla bits, Jack cheese and spicy chipotle-chile sauce

PERKINS RESTAURANT & BAKERY
Cinnamon-roll French toast: two rolls sliced, dipped in egg batter and grilled

RUBY’S DINER
Fresh seasonal strawberry compote on waffles, pancakes or French toast

DQ'S CHILD'S PLAY

When Dairy Queen wanted to sharpen its reach into the youth market, the chain went to the source, asking children ages 8 to 12 what they want. The concept’s research discovered that kids prefer treats in shades of blue or ones that change color. Young customers like sour flavors and icy, slushy items of all sorts. Thick, blended soft-serve desserts with colorful add-ins are popular picks. Other flavors kids crave include cotton candy, pink lemonade and strawberry-kiwi.

“We saw an erosion in the child’s meal market. Toys and game promotions weren’t working. The franchisees were apathetic,’’ says Patty Halvorson, director of national and local promotions for the Minneapolis-based chain, which picked Atlanta, Minneapolis and Seattle as test markets for focus groups and home interviews. Input from youthful consumers was so informative that Dairy Queen formally created The DQ Crew, three advisory panels of 30 children each in the three cities. The kids attend two to three tasting sessions annually and receive $30 per session to evaluate 10 to 11 treats; participation lasts one year. To maintain communication, children get password access to the Crew’s link on Dairy Queen’s Web site.

EINSTEIN TAKES WING

In-flight dining continues its comeback thanks to a recent licensing agreement between Eatontown, N.J.-based Einstein Bros. Bagels and Kriftel, Germany-based LSG Sky Chefs, which will supply food for selected flights on United Airlines, US Airways and other carriers it serves. Meals will be sold, at prices ranging from $7 to $10.

The three-year contract to provide airline meals is a first for Einstein’s, according to Greg Powell, vice president of franchise and business development. “It’s a branding vehicle and will expand customer awareness of our lunch program,’’ he explains.

LSG Sky Chefs also is partnering with several other restaurant concepts that operate airport locations, including D’Amico & Sons, a Minneapolis-based restaurant chain, and Dallas-based T.G.I. Friday’s. Menu items include breakfast coffee crumb cake and sandwiches on specialty breads with fillings such as ham and Swiss cheese, chipotle-flavored chicken salad and a spin on Caesar salad made with smoked Gouda.

READERS' DIGESTION

In its July issue, Consumer Reports takes a break from evaluating washers, microwaves and midsize sedans to give the results of 71,000 readers’ opinions about 88 casual- or family-dining restaurant chains where they had dined during 12 months ending April 2002. Garnering highest overall satisfaction scores were Sarasota, Fla.-based First Watch (highest-rated family-dining chain) and Portland, Ore.-based casual-dining chain McCormick & Schmick’s (tops in seafood), each scoring 87 out of 100 points.

Close behind, all with overall satisfaction scores of 86, were casual-dining chains J. Alexander’s, based in Nashville, and Phoenix-based Houston’s (first and second, respectively, in the American traditional category); Dallas-based Maggiano’s Little Italy (highest-rated Italian concept); and Houston-based Pappadeaux Seafood Kitchen (No. 2 in seafood).

Other segment winners were Seattle-based Azteca (Mexican); Tampa, Fla.-based Hops Restaurant Bar•Brewery (pub style/grill); Metairie, La.-based Ruth’s Chris Steak House (steakhouse), shown at right, and Scottsdale, Ariz.-based P.F. Chang’s China Bistro (various).

Readers rated First Watch, Portland, Ore.-based Old Spaghetti Factory, Carlsbad, Calif.-based Rubio’s Fresh Mexican Grill and Maitland, Fla.-based Sonny’s Real Pit Bar-B-Q as the chains providing the best value.

TRIMMING THE FAT

If the slate of slim-and-trim menu introductions in recent months is any indicator, restaurant chains are hearing loud and clear consumer requests to lighten up. On the heels of successful new products such as Subway’s low-fat Sweet Onion Chicken Teriyaki sandwich and upgraded salads at Wendy’s and McDonald’s, companies including Schlotzsky’s, Arby’s and even Wienerschnitzel have become more balanced in their offerings.

Schlotzsky’s, based in Austin, Texas, is testing “lighter side” selections such as a Baby Spinach Salad Pizza (9 grams fat), hot baked potato stuffed with barbecued beef (9 grams) and a baked Hawaiian ham sandwich (7 grams). Similarly, Fort Lauderdale, Fla.-based Arby’s includes more healthful choices in its new Bistro Sandwich line, currently testing in two markets. President Michael Howe says the chain also is examining opportunities to offer customers more choices in side items, such as fruit and pasta salads or side salads and soups.

Newport Beach, Calif.-based hot dog chain Wienerschnitzel (above) announced the permanent addition of low-fat franks to its menu. Available with six toppings—mustard, chili, chili cheese, deluxe, kraut and relish—the reduced-fat dogs range from 4 to 10 grams of fat depending on toppings.

IVY IDEA

Twenty years ago, Alan Stillman, founder and CEO of Smith & Wollensky Restaurant Group (Ivy ’03), began a recognition program for best customers and friends. “We have a list of people who come to the restaurant a lot or have met [a Smith & Wollensky executive] in person. It could be anybody,” says Jessica Bride, director of marketing and communications for the New York City-based chain. These VIP customers receive private, toll-free restaurant phone numbers. A call to the “Bat Phone,” as Bride calls it, “is a guaranteed reservation.”

Contributors: Scott Hume, Allison Perlik, Margaret Sheridan, Laura Yee.