2003 Year in Review

By Scott Hume, Managing Executive Editor -- Restaurants & Institutions, 12/15/2003

Familiar difficulties, unexpected challenges and fresh thinking have characterized the year drawing to a close. Efforts to improve a sluggish economy inherited from 2002 were complicated by world events that shook confidence in growth—not only military interventions but also such unforeseen incidents as mad cow disease outside the United States resulting in higher domestic beef prices. This has been a year when quick actions were demanded of the foodservice industry, a target of criticisms for all manner of alleged infractions from serving too-large portions and too-fatty foods to failing to keep operations clean and safe. How foodservice met consumers’ and critics’ concerns also should be remembered. Commercial and noncommercial segments, apart and together, strove to make the industry even stronger and more responsive at year’s end.

Self-Fulfillment
It would be difficult to identify a segment that faced a tougher scenario in 2003 than did self-operated noncommercial foodservice. Schools, hospitals and corporate feeders were asked to tighten belts and operating budgets in a weak economy. Management companies moved several self-ops into the contract-foodservice column with offers too good to resist. The Mount Sinai Hospital in New York City was one convert, accepting an Aramark Corp. offer that provides not only foodservice management but also facility upgrades.

However, the creativity and resiliency shown by many self-ops in the face of potentially debilitating pressures also was one of the year’s top stories. Finding ways to survive and thrive, self-op foodservice set the bar for hard-nosed decision-making.

Not Lovin' It
The claim that quick-service restaurants are responsible for consumers’ weight problems didn’t fly, at least not with U.S. District Judge Robert W. Sweet of the Southern District of New York. Twice this year he dismissed class-action lawsuits, filed on behalf of two obese teens, that alleged McDonald’s advertising was misleading by not telling customers that a steady diet of Big Macs and fries could be unhealthful.

In dismissing the plaintiffs’ amended lawsuit in September, Sweet ruled that the suit failed to draw “an adequate causal connection between the consumption of McDonald’s food and their alleged injuries.” That hasn’t stopped QSR critics from continuing to claim that fast-food diets are behind America’s obesity epidemic.

On a Cloud
Desperate to rebuild profits after pleasure travel plummeted following 9/11, airlines rediscovered in-flight meal service as a competitive point of difference. Airline caterer LSG Sky Chefs needed to look no further for partners than the restaurant concepts that operate in airport terminals, signing agreements with Anton Airfood and other airport-concession contract managers to provide food from Atlanta Bread Company, D’Amico & Sons, T.G.I. Friday’s and other concepts that United and American Airlines passengers can carry onto selected flights for noshing.

Other airlines, including Delta and US Airways, tested in-flight meal service for which passengers paid (although first-class passengers on Delta could eat for free).

Three for All
Co-branding isn’t new, but the way Allied Domecq Quick Service Restaurants (ADQSR) is approaching it is an important departure. Jon Luther (r.), ADQSR’s CEO, was on hand when the parent of Dunkin’ Donuts, Togo’s and Baskin-Robbins opened a restaurant called All Day in Burbank, Ill. All three concepts’ menus are available in the 30-seat, 2,300-square-foot restaurant, but the store is its own three-daypart entity, eschewing the three-in-one approach to co-branding ADQSR and others such as Yum! Brands traditionally have followed.

Brand-Name Lobbyists
Norman Van Aken was the first third-party restaurateur invited to check in his brand at a Ritz-Carlton hotel. When he opened a clone of his Norman’s restaurant in The Ritz-Carlton Orlando (Fla.), Grande Lakes, it epitomized hoteliers’ determination to partner with rather than compete against independent white-tablecloth operations.

Once shunned, hotels now are prime targets for chef and restaurant brands. Others creating hotel dining spots this year were New Orleans’ Brennan family, Todd English, Michael Mina and Marcus Samuelsson. Chef Melissa Kelly re-created her Rockland, Maine, organics restaurant Primo at the JW Marriott Orlando Grande Lakes.

Candy Caning
The national obsession with obesity hit school foodservice hard. Politicians across the country inveighed against the threat posed by candy and soft drinks in school vending machines. School districts, many driven to sell exclusive vending rights to offset budget cuts, could tell which way the political winds were blowing and moved to swap fruit juices and granola bars for sugary kid favorites.

In Los Angeles, the board of education outlawed the vending of candy and fried chips in elementary schools. New York City Schools added doughnuts, cakes and cookies to the taboo list and announced it would trim the sugar, fat and salt in the 800,000 meals its school cafeterias serve daily. The Texas Department of Agriculture went further, halting chewing gum sales in schools statewide.

Urban Cowboys
After years spent encircling but infrequently entering downtowns, casual-dining chains this year warmed up to urban sites. Red Lobster made a splash with its first Manhattan restaurant, which opened in New York City’s Times Square. The three-story restaurant sports two 420-gallon aquariums and a 10-foot-tall revolving neon lobster out front.

But there’s room for shrimp in Times Square too. Bubba Gump Shrimp Co. announced plans to open a 12,000-square-foot unit a few blocks north of the lobster’s lair. Both will be neighbors to Applebee’s Neighborhood Grill & Bar, already well entrenched in Times Square, where its store reportedly does $9.5 million in annual sales.

Service With a Style
Feeling the sales squeeze from flashy young fast-casual upstarts, many middle-aged quick-service restaurant chains opted for extreme makeovers. Carl’s Jr. unveiled a prototype (above) that was anything but stodgy. Jack in the Box dubbed its futuristic overhaul the “Jetsons” design. The Silver Diner chain’s next-generation remodel calls for pink-marble floors, while Chick-fil-A’s includes wood-accented interior elements and a subtle earth-tone color scheme.

McDonald’s announced that its staff and outside designers had collaborated on creation of at least 40 different looks for new or renovated Golden Arches that will begin dotting the American landscape. One of those designs, called Arcon (a contraction of “architectural icon”), incorporates large lighted french-fry boxes over doorways. Orlando, Fla., franchisees Gary and Jeanie Oerther opened a jungle-décor “Club Safari” McDonald’s and followed that with an upscale, 99-seat unit sporting French provincial furniture and a marble-topped condiment buffet.

Rocco Rolls
With chefs established as bona fide media stars, television networks moved into kitchens to show culinarians in their natural habitats. Food Network, which has done more than its share to turn chefs into celebrities, gave us “Into the Fire” and its behind-the-scenes look at Los Angeles’ Campanile restaurant and others. “Jamie’s Kitchen” chronicled Jamie Oliver’s attempt to mold amateurs into professional cooks for his London restaurant 15.

The glitziest look at life in the feast lane, however, was NBC’s “The Restaurant,” a tale of anguish and angst, told in six weekly hour-long installments, as Rocco DiSpirito (l.) struggled to open a New York City restaurant with just seven weeks of prep time. More than 1,100 would-be co-stars showed up for an April casting call for prospective cooks, servers and bartenders.

The ratings were solid enough that NBC reprised the series on its Bravo network and plans for “The Restaurant II” reportedly are set.

Hot Spots
If restaurant food is as nutritionally deficient as critics charge, why do so many people want to sit, sip and munch while working on their computers in restaurants? This was The Year of Wi-Fi (wireless fidelity) as chains and independents installed technology to allow diners to surf the Internet or read e-mail while enjoying a meal.

Austin, Texas-based Schlotzsky’s Deli was an early adaptor, providing free wireless Internet access in its stores. Chains with locations enjoying heavy college-student traffic were among the first to be hooked up. McDonald’s joined the party, too, offering free connectivity in select U.S. markets and China as well.

Rising Expectations
Simplicity reigned as a guiding force in American cuisine, and few dishes are as uncomplicated or as versatile as the sandwich, which grabbed the menu spotlight at operations across the foodservice spectrum.

New sandwiches served on baguettes (above) carry Burger King’s sales-turnaround hopes. Arby’s continues to build its Market Fresh deli-sandwich line, with plans to establish itself as an adult-oriented QSR. Quiznos Sub added chicken carbonara on herb-focaccia bread, while Schlotzsky’s Deli menued chipotle chicken on Tuscan herb bread.

At Panera Bread, whose success inspired many improved bread offerings, ciabatta, focaccia and sourdough got star treatment.

Too Much of a Good Thing?
Wahoo’s Fish Tacos’ billboard poked fun at portion sizes, but the debate wasn’t a laughing matter. Operators were caught between consumer perceptions that volume equals value and nutritionists who complain that customers are over-served.

An American Institute for Cancer Research (AICR) study found that 67% of consumers finished restaurant entrées and that 73% judged portions to be “just right.” While that sounds like a job well done to foodservice professionals, AICR Director of Nutrition Education Melanie Polk lamented that “most Americans are ... content to base the amount of food they eat upon the amount they are served.”

Dollar Signs

$2,235
Average U.S. household spending on food eaten away from home in 2001 (U.S. Bureau of Labor Statistics)

$2,182
Average U.S. household spending on healthcare in 2001 (BLS)

$304.8 million
Amount McDonald’s Corp. spent on U.S. measured-media advertising during the first half of 2003 (TNS Media Intelligence/CMR)

$6.7 billion
Amount the U.S. Department of Agriculture spent on the National School Lunch Program in 2002 (USDA)

$7.56 billion
U.S. sales (company and franchises) for brand McDonald’s during the three months ended Sept. 30, 2003 (McDonald’s Corp.)

$2.19
Amount USDA reimburses schools for each free lunch during the current school year (USDA)

$28.10
Average spent per restaurant meal in 2003 by Zagat survey contributors across 30 U.S. markets (Zagat)

$8.77
Average hourly earnings in current dollars for all nonsupervisory workers in leisure and hospitality businesses as of September 2003 vs. $15.48 hourly average for all industries (BLS)

$7.16
Minimum wage in Washington as of Jan. 1, 2004, the nation’s top statewide rate (Washington Department of Labor and Industries)