Nation's Restaurant News On the Go Newsletter #60
Nation's Restaurant News
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Hi, Ron Ruggless here, senior editor for Nation’s Restaurant News. We’ve been busy out here in Texas.?
Surge pricing and restaurant closures topped my week, in which I moderated a fantastic panel at the GuestXM Best Practices Conference in Irving, Texas.?
First, I have to address the conference. Last year it was buffeted by icy storms and freezing weather, but this year it was warm and beautiful. The conference is about eight miles away from my home office. Last year, it took me about two hours to drive that distance, with me fortunately alone on the road. This year, it was 15 minutes.?
This year, I learned about hybrid traditional-digital marketing in a panel with Brooke Perry, vice president of marketing at the 40-unit Dallas-based fast-casual Velvet Taco, and Marty Wadsworth, chief concept officer for the 20-unit Houston-based Willie’s Ice House. They are incredible.?
I thank them both for sharing their brand’s journeys, especially how artificial intelligence is providing a new tool for marketers. Both find it an exciting time to market restaurants.?
One topic we touched on was dynamic pricing, the Uber-style model that is being allowed as more brands embrace digital menu boards. Outside the conference, The Wendy’s Co. was coming under attack after some observers misread the comments from two weeks earlier.?
And last Friday, Tampa, Fla.-based Bloomin’ Brands Inc., parent to the Outback Steakhouse casual-dining brand, said it would close 41 restaurants — 33 of them on Friday — which the consumer media, CNN among others , picked up and ran with.
It was a busy week. Here’s looking at other topics:
Wendy’s pays the price for comments on digital menuboard potential
When the new CEO at The Wendy’s Co. explained on an earnings call two weeks ago that a $30 million menuboard investment through 2025 would allow the company to test dynamic pricing at some of its company-owned restaurants, little could we have known it would create a tsunami of consumer outrage.
But it did.
The tsunami lapped the foundations of the halls of Congress Wednesday when Sen. Elizabeth Warren, D-Mass., issued from her official U.S. Senate X/Twitter account:
“Wendy’s is planning to try out ‘surge pricing’ — that means you could pay more for your lunch, even if the cost to Wendy’s stays exactly the same. It’s price gouging plain and simple, and American families have had enough.”
The earnings call comments by Kirk Tanner, became generously skewed two weeks after the fact. Tanner said the company planned to invest $20 million to roll out digital menuboard to all U.S. company-operated restaurant by the end of 2025 and another “$10 million over the next two years to support digital menuboard enhancements for the global system.”
Tanner added that the digital menuboards will improve order accuracy, grow sales with upselling and merchandising, and improve the crew experience.
“Beginning as early as 2025,” he said, “we will begin testing more enhanced features like dynamic pricing and daypart offerings along with AI-enabled menu changes and suggestive selling.”
Outback Steakhouse parent Bloomin’ Brands closing 41 restaurants
Bloomin’ Brands Inc., parent to the Outback Steakhouse, Carrabba’s Italian Grill and other brands, is closing 41 restaurants across its portfolio as it weighs under-performing units, executives said Friday.
David Deno, CEO of the Tampa, Fla.-based casual-dining company, which also owns the Bonefish Grill, Flemin’s Prime Steakhouse & Wine Bar and fast-casual Aussie Grill brands, said in an analysts’ call after releasing earnings for the Dec. 31-ended fourth quarter: “We periodically review our asset base and, in our latest review, we made the decision to close 41 underperforming locations. The majority of these restaurants were older assets with leases from the ‘90s and early 2000s.
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Restaurant brands enter their ‘co-creator’ era
Last year, Big Chicken CEO Josh Halpern predicted that in five years, consumers will be curating restaurant brands more.
“Younger generations … they want to be a part of the decision-making process. They’re making a conscious decision to attach their personal brand to our brands. It’s a collaboration now,” he said.
His five-year prediction seems to be ahead of schedule, as restaurant brands appear to be entering a “co-creator era.”
What does it mean to co-create? Well, the concept seems to be dynamic in this industry. There are the influencers tapped to co-create content for restaurant brands, for instance. There are also chefs chosen to co-create menu items for restaurant brands. And there are the fans themselves, invited to help make critical business decisions for restaurant brands, just as Halpern prognosticated.
Content seems to be the biggest piece of this puzzle and it continues to grow. In 2023, the creator economy became a $250 billion industry, and Goldman Sachs predicts it will reach about $480 million by 2027. A new survey from Morning Consult shows that nearly 90% of people ages 13 to 38 are willing to try out “influencing,” and 12% consider themselves to be actual influencers.
Chipotle doubles its venture fund to pursue more startup partnerships
Chipotle’s $50 million Cultivate Next venture fund, launched in early 2022, seems to be paying off so much that the company is now doubling down on the idea. This week, Chipotle announced it is increasing its venture fund by an additional $50 million, for a total of $100 million earmarked to pursue new investments in supply chain, agriculture, restaurant innovation, automation, and other areas.
The intention of Cultivate Next is to make early-stage investments into what Chipotle calls “strategically aligned companies” that further its mission to “Cultivate a Better World.” The companies are also considered for their value-add as Chipotle aims to double its footprint to 7,000 restaurants in North America in the coming years.
Applebee’s is creating a new prototype to get back to growth
One of the takeaways from Dine Brands’ earnings call Wednesday morning is that its Applebee’s system plans to close 25 to 35 restaurants this year. Dine Brands CEO John Peyton notes that this is not a right-sizing effort but rather a “deliberate effort to allow franchisees to close unprofitable restaurants, where the market may have moved away from them.”
Given the chain’s 1,660-ish-unit footprint, this 1-2% closure rate is common among brands this size and age, Peyton said during an interview.
Still, the company has an urgency to get back to net new unit growth, similar to its sister brand IHOP, which is forecasting between 15 and 25 net new openings. To do that, Applebee’s is creating a new prototype with a stronger return on investment for franchisees.
The details of this prototype are still being ironed out, but Peyton said the front of house design and guest experience components are completed, but there is still an opportunity to reduce costs in the back of house.
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Owner of The Savory Advisor. Foodservice consultant at Kinney Brokerage, specializing in business brokerage and hospitality.
8 个月I love reading positive articles about our industry!